381: Airbase: From Solo Founder to 8-Figure ARR SaaS - with Thejo Kote

All right thej welcome to the show thank you for having me over do you have a favorite quote or something that inspires or motivates you or gets you out of bed every day look ultimately U you know what gets me out of bed every day is doing something that I kind of love and enjoy and I've been an entrepreneur for the better part of like what 12 13 years now and this is my second business and either of those Businesses I've never actually paid myself really well and then so it's been very important that you

know the the money is not the motivation of course It ultimately is you're building a business that's a scorecard Revenue value creation and all that kind of stuff but personally for me what I care most about is uh you know would I do this even if nobody paid me like am I kind of being challenged in the right ways am I growing in the right ways have I set Some goals and targets for myself and is there that personal satisfaction of working towards it and increasingly so as I've learned about the company building process am

I doing it with the right people that I genuinely enjoy working with in the culture of that company and and so those are the things that get me out of bed uh in the morning and and uh so I've been lucky enough to have built and exited one company and I'm trying to kind of bring a lot of Those lessons to Airbase awesome so tell us about Airbase what does the product do who's it for and what's the main problem you're helping to solve so very broadly speaking Airbase is a spend management platform and and

uh we sell to uh the office of the CFO and in terms of specific kind of personas that is the controller or the CFO accounting teams increasingly procurement professionals who are typically in the office of the CFO and we uh tend to Target mid-market Early Enterprise companies see The Sweet Spot is say 100 employees to a few thousand employees and that's generally U you know who we Target and the notstar problem that we are trying to solve ultimately is if you think about all of the money that a business spends you can put it in

two buckets payroll which is salaries and then there's the non-payroll or the everything else right right and so if you dig into how the everything else part of spending money As a business works it's very complex and messy right and so there are many different areas uh in both workflows and payments and money movement you know all of those are complex and challenging and as you grow as a business and become a midm market business you know the front end of that problem is largely a collaboration problem how do you decide whether you can spend

money an employee wants to spend money but in a business the moment that process starts lots of People have to get involved right so Finance and Accounting from a budget perspective it people have to get involved legal people have to get involved Security checks have to happen so on and so for right so it's a complex collaboration problem so that is one element that we solve on the front end but then you know on the back end you're receiving invoices and there's an AP automation problem employees are spending their own money and then Getting it

reimbursed and that's an expense management problem and you have corporate cards where company money is being spent and that's a whole other problem and so you know our notstar goal is to say how do we bring all of this nonpar spending workflows and payments globally no matter where employees are where subsidiaries are how do you bring it all into one system and one platform from the typical many different five or six different silos and systems that Companies tend to use right and so that's the key USB and value that we offer okay give us a

sense of the size of the business where are you in terms of Revenue number of customers size of team look broadly speaking uh you know well into uh uh 8 figure uh millions of AR and then um in terms of employees about 300 employees we are globally distributed fully remote team and we have been that way since the very very first day of the business you know way Before uh the pandemic and our employees are currently in about 16 uh different countries cor and I think you've raised um total of about 250 million by now

right yeah so it's about 100 plus million is a little more than 100 million is equity and and the rest of it is a deadline for a specific product that we have which actually we don't offer anymore so from on the equity side uh it's a little more than $100 million and I've been fortunate Enough to work with some really good investors like menow Ventures B capital Ventures and first round capital and and folks like that so I want to talk about where the idea for uh Airbase came from I mean what you've just described

there is such a gnarly messy problem that there's no clear cut you know place to start solving that type of problem right so I'm curious how you how you approach that but before we do that maybe let's talk a little bit About your background and and what you were doing you mentioned you you had a previous startup with a successful exit I think you you started your career as as an engineer and then uh this this previous startup automatic Labs was founded back in I think 2010 so it was yeah 20 2011 or late 2010

is when Micron and I started working on it you know we committed to it in 2011 we went to y combinator in the summer of 2011 and you know had a very I guess uh You know Silicon Valley kind of uh Journey but yeah and then so tell us about that business what what was what was automatic Labs so automatic was actually a connected car platform it was very different than than Airbase in the business that we're building now and and the fundamental thesis of that business was that uh you know essentially k computers and

and but the vast majority of them on the road at least back then uh they weren't connected to the Internet and and uh the key part of the thesis is that if you can get the data in in you know this big moving computer up into the cloud and you could convert it into a usable form uh there's a very big ecosystem you know of that is the automotive ecosystem worth trillions of dollars just in the US that could benefit from that data if you kind of pulled it out and converted it into something useful

now the question is how would you do it and and we ultimately Ended up doing something very complicated where we had a consumer Hardware product that we sold and in the Apple Stores and bestest buy and in in U you know Amazon all these retail places and eventually we wanted to kind of parlay that into an Enterprise business which we did in the second half uh but honestly it was all very complicated right and so I would not recommend kind of having a consumer business model and revenue model and having an Enterprise Uh business and

revenue model and you know that's a big lesson I took away from uh automatic is kind of simplification of you know your business model and and also don't do Hardware I think that's the other other lesson but but yeah largely it was uh not SAS the Enterprise part of the business we moved it into a saslik model but for the most part of the business it was not uh you know a pure uh SAS business but it was during that journey of building that Connected car platform and ultimately you know we sold it to CDs

XM which is the connected kind of the radio and satellite uh radio company so uh it was during that Journey that I learned about the problem of you know spend management and and the struggle of companies as they continue to grow and scale and and uh of course I couldn't do anything about it back then I was building a different company but it went into my ideas notebook to look into when I had The time and you know happy to dig into that Journey yeah yeah so so Sirius XM uh acquired the company in 2016

uh early 2017 for whopping 115 million so that was a a nice chunk of change to to exit from from that startup and then I think it wasn't that long after that when you started Airbase maybe within within a year of of that exit and so was it mainly just from your your your personal experience of spend management that that drove you to go and solve this problem Next or was it was there some something else that you did in terms of you know validation going out and and and talking to other people and and

trying to get a better assessment of what was going on out there yeah so I learned about the problem while building automatic right and and uh as it turned out look I'm an engineer by training I'm a product person and U I didn't know the first thing about Finance or accounting when I started working on my previous company I Didn't know the difference between cash accounting and a cral accounting what is AP what is AR like nothing right and because I had this idea of building Hardware uh that complicates things right and and now if

you want to build Hardware you have to now think about inventory and then forecasting and and demand planning and all that kind of stuff and as a venture funded company I didn't ever want to be in the situation where we did a bad job of that and then You know dramatically overbuilt inventory or whatever and then I had to go back to my board and say oops you know we screwed up and I need you to bridge me uh you know for for some more time and that kind of stuff so I made the effort

to learn I made the effort to kind of be involved in what was happening and over time I built out you know our Finance and Accounting functions and and that kind of gave me you know visibility I asked lots of dumb Questions along the way you know all of the what is AP what is AR what is the monthly close and all that kind of stuff and and uh so you know learned about the problem along the way and and that I think is an important aspect uh you know to any problem right it's it's

just uh if you have experienced uh you know facets of the problem day-to-day you know you can identify Solutions and this is something that I've heard said before which I think is true which is if you Tend to build expertise in two different areas uh then you can kind of bring those together to ultimately build Solutions and what happened in this case was that I was an engineer who knew how to build you know products uh but I learned about Finance and Accounting and and figured out a bunch of things that were broken especially in

terms of how businesses spend money right so how they get visibility how they get control uh and and how archaic a whole bunch of Those processes were uh and and for some good reasons because Financial infrastructure was not as mature you know back then and all that but as I after like I said earlier I didn't have the time to kind of go do something about it back then but it it went into my ideas notebook I you know I still do that I feel like pretty much everything is broken right and and uh if

you want startup ideas uh and and ideas to solve especially in the B2B you know realm uh If you keep your eyes and ears open as you're working in any business you'll see 10 of them lying around but uh the only question then is is okay how big is this opportunity can this actually scale to be a venture fundable business and and and a public company now not all of the problems that you run into fall under that category so you know when I finally was done with automatic and I was thinking about what I

was going to do next you know I uh started digging Into a few of these ideas that I had identified uh over the course of my experience building uh automatic and and uh eventually of course I honed into airbase and the spend management problem and but as I was learning about it I I spoke with dozens of uh you know CFOs and and accountants and controllers and people who do the job day in and day out right and uh because I had a hypothesis about what the problem was how it could be solved uh I

wanted to validate if That was right and those conversations actually made me a lot smarter about the problem and I understood all the layers and Nuance you know that exist uh in the problem but uh that Journey which took maybe the better part of 6 months uh then gave me the confidence that that I can commit to building another company and and I also had identified at a high level characteristics of that next business that I wanted to build if and when I did it and and uh you know it had High level things like

has to be a big Market has to be a SAS kind of product delivery mechanism didn't want to do hardware and things like that exactly and and uh you know it it uh had to be something that could be a system of record for an important functional area of the business so on and so forth like I had I had identified and if you look at all the public companies technology public companies out there SAS businesses especially you can kind of Distill out certain characteristics you know that exist with all of them and I was

like okay you really want to go after that kind of an opportunity right and uh so I was kind of filtering the problems I had identified through that lens and the more I spent uh time you know in this area of spend management the more convinced I became that at checks a lot of those boxes that I care about and and uh and I can commit you know maybe another 10 15 years of my Life you know building another one and and uh so that's how I kind of got started but of course I didn't

start building the product writing code you know if it is interesting I can talk a little bit about you know the mistakes I've made as a Founder especially as an engineer who just jumps into it and starts building stuff and writing code and and and why I didn't do that with air base and yeah yeah we we love talking about mistakes here so please Share as many as you like yeah so look even in the early days uh you know the tendency that you I've had in the past I've made that mistake is uh you

think you you have identified a problem and and instead of spending a lot of time validating it speaking to actual customers uh you know the tendency is to just go start building right I I think I know the problem I'll build a solution for it and then you try to put it in the hands of customers and and uh then you Learn like a lot of these products don't survive first contact with the market right and so you know uh uh and then you also have this uh tendency to uh kind of uh it's a

some cost right and and you you don't want to change it or throw it away youve invested a lot of time energy effort in it so you end up going just down the wrong direction and uh so the lesson I've taken away which I still with new products that we build try to uh follow the same approach is after I Had all these conversations you know about the problem and the pain in the area of spend management and I had even honed it down to a narrow area because you need what the problem I talked

about that we solved today is pretty broad right so we do a lot of things lot of modules it's taken us years to kind of systematically build you know into uh the the vision that we've always had at least I had when I started working the business but in the early days it was Narrower you need a veg to get into it you need to solve some smaller problem in a 10x way to even get people to consider you and so what was that problem that you picked so for us the one I picked of

all the different non-payroll spend areas the first one I picked was uh corporate card spend management it was my thinking was to reimagine a corporate card from this piece of plastic that you put in an envelope and send to a bunch of Employees to a software workflow driven product right and that's a much you know more common approach that a bunch of other companies also do today but you know I'm I'm pretty certain Airbase was the first uh to do this back then where what if you think and that was also now made possible because

of improvements in financial infrastructure card issuing platforms forms as a startup it was now possible for software companies to issue cards and and you know be a issue Visa Branded cards MasterCard branded cards and wrapped software workflows around how spending happened on cards and that was a huge pain point for controllers especially of more mature companies all these employees who have cards are running around and spending money on it and I don't have visibility I don't have control I just get the statement at the end of the month and it is painful right and and

clearly you know there were opportunities to add pre-approval Workflows and and vendor specific and lots of controls over spend and automation of accounting as those transactions were happening on the cards there were all of these things that you could do to solve that problem really really well right and of course today it's like one part of our overall platform but you know I I ultimately had honed in on that and and once we had identified that is the problem uh and uh then I went back I kind of uh sketched Out a solution workflows and

and worked with a designer a part-time designer made High Fidelity mockups and I took that back to all of lot of these early customers and said look we talked about the problem now let me show you how I'm thinking of solving it walked them through the mockup and and uh and then iterated through that as I got feedback on that and ultimately the conversation was if you had this tomorrow would you sign up for it and use it and until I Had about a 10 to 12 customers who were like I would totally use this

tomorrow if uh you kind of had it uh I didn't start building right so once we got to that stage uh and of course I didn't ask them to sign contracts or whatever this was relationships and handshake deals saying that if I bring this to you you're going to use it what also helped was that you know Finance people will look at a high fidelity mockup and go this is almost done right like you can This is almost lives and obviously then it's like okay I'll come back to you in a few months uh it's

going to take me a few months to go build this and and but I essentially had a set of customers waiting to use the product I had drisk you know as much of that as possible in terms of getting the early uh adopters and and uh you know that would be how I recommend uh everybody you know follow kind of the process of discovery and then when do you start building because The most expensive thing you can do is to commit something to code right is to build something and then you get wedded to it

and and there are all of these kind of emotional reasons why you just can end up going down the wrong direction but of course you know I had a lot more confidence that I had customers waiting and then uh you know went and built it put it back in their hands obviously when you do that you learn 100 new things right and so that's when you Iterate very rapidly and the motion of the company in the very early days has to be completely focused on those initial design Partners how do we listen to them how

do you iterate very very rapidly and quickly and be responsive and improve the product because what you're doing in those very early days is you're seeking product Market fit right and so you don't have it and then what does it look like and uh you can Define in advance which I think is a good habit To say okay what are kind of the characteristics at a high level that I want to see which will give me confidence that I have product Market fit right and and that might be slightly different for different products it might

be you know the the degree of adoption it might be the degree of Engagement it might be if you're a kind of product that has a payments element to it the volume of payments process through the platform so On and so forth right so you know that is an element it is the degree of Engagement by the stakeholders and the excitement and the pull that you see it might be you know the willingness to pay there are all of these Milestones that I think you can Define to get to product Market fit and and that

was kind of um you know the journey for the better part of the first 12 to 18 months right and and so from the point where you started to go out and have these conversations With people where you said I've got this idea I want to go and talk to CFOs and and people like that to to really understand if this problem is a real problem that's worth solving to the point where you felt like you had got these High Fidelity designs to a point where you had you know your first potentially your first 10

customers ready to sign up but you still hadn't written a line of code how long did that process take like I said that initial Part where I uh was ready to make the decision to start writing code and commit to actually working on the startup and building it was six months of course I wasn't working on it fully for six months in the middle of that six months my wife and I you know after automatically was sold we you know traveled around the world for a couple of months and all that kind of stuff so

it wasn't like 6 months 6 months full-time you know uh work but it was a Course of from from late 2016 to say middle of 2017 over that period of time when I was having those conversations doing the back and forth identifying the the code problem working on the solution going back to them all that kind of stuff happened mostly over the course of the first half of 2017 okay so then you're ready to start start building the product was that something that you did you you know how how big of a team did you

start building around you Initially it was just me so uh I I built the first early version of the product and as I you know started getting deeper and deeper into it I brought on on full-time uh you know engineers and for the most part I think the first eight employees of uh Airbase Engineers right because uh and that's partly the reason why you know I decided I didn't need a co-founder for the startup happy to talk about that choice if you think it's useful uh because the things that I Needed to do to get

the business to product Market fit um you know I felt like I had those initial skills I could be the product manager I could be the engineer know engineer building it for the most part but then of course as the scope and size of the product started to grow larger obviously I needed more help and that's when I started adding other engineers and as other Engineers started to join the team I was part Tech lead part engineering manager part product Manager and and uh spent the first few months after I truly started building the product

that was most of my time but at some point you know month four five uh six when we had that initial product then I started to go back to being Market facing where half my time was building the product and half my time was onboarding some of these early customers supporting them listening to them talking to them and bringing that back and iterating and and building uh You know and shipping and so yeah so a lot of those business roles I just played uh in the early days and and uh the PM role uh I

just played we didn't even have a full-time designer for the first 18 months of the business I had like a really strong uh part-time designer uh that I was working with and that was good enough for us to build the nature of the product because the whole other element is you know I chose to fund the business myself I didn't raise Round of funding partly because you know I felt like I wanted to take the business to that early product Market fit phase which would then allow me to get more value for the the business

and take less dilution and and that kind of stuff right so uh clearly I was motivated you know which it doesn't matter if you know it's your own money invest your money I think you should until you find product Market fit you got to be a cockroach right it's like Don't die you know keep the burn as low as possible because you have no idea in a lot of cases is the process of finding product Market fit going to take six months a year two years 3 years you don't really know right and you know

you don't want to put yourself in a place where you just run out of money on a promising idea when all it needed was a little bit more time uh to get to that product Market fit which would then allow you to raise that next round of uh Funding and and uh keep building so when you started building the the product in the first few months you were the guy mainly building the product being the PM working with your part-time designer and then eventually you were also the sales guy right yes how how many of

those initial customers came through just you going out and selling the product about 15 to 20 I hired our first head of sales uh after I sold to The first 15 20 customers I'm I'm curious like what was the what was the General response like when you're going out there and you're you're trying to validate this get to the point where you feel like you know some of the you described earlier in terms of you know how much they're engaged how much you know the willingness to pay and and so on how easy or hard

was that that process and I I think one of the reasons I ask is that sometimes I've seen Founders who who go through this process and you can see when you kind of look objectively at the situation that something hasn't quite clicked because people kind of seem interested in the problem people kind of seem willing to give you some time but it's still really painful to convince someone to actually you know get excited enough to pay for The product versus once you you've nailed the problem you've you've really understood it you've figured out the right

solution things seem to flow a lot lot better A lot more easily people seem to lean in they're more engaged you they're almost like you know badgering you in terms of like when they can get access to the product so I'm curious like how how easy or hard was it for you to get to that point because initially you I Guess you were in the same situation right you had this broad problem and no real solution at that point and you you described the process you went through in terms of how to narrow that down

was it easy uh those initial days when you don't have a lot of value to add to uh a potential customer those are the you know hardest kind of uh parts of the process because you don't have anything to give yet you are basically taking value back from the people who are Giving you their time right and so a few lessons that I take away look with Airbase I definitely had the unfair Advantage where I had a network I had a bunch of founder friends and so at least some of the people I spoke with

it was mostly hey can you introduce me to your head of finance and a lot of these friends that I have were other Founders who had like scaled companies midmarket companies and so they had like Finance teams already they Had a head of Finance they had a controller I'm like hey make the introduction and and I'd like to spend time with them and uh so that happened in some cases so so having a network having relationships and those kinds of things um you know that you can bring in and and leverage uh is certainly a

bit of an unfair Advantage but and I did that as I kept going because at some point uh the the one of the steps in building confidence around product Market fit is that you don't want to just send to the people you know or have a relationship with because that might have a bias that then they're like I don't want to make you know him feel bad and then so they might kind of sign up for it and not give you like honest uh kind of feedback so you want to really cold kind of call

and pitch and get in front of people who don't have a relationship with you who don't care about you who don't mind telling you to Your face that this is useless and and because that's the feedback you really need to hear right and so when I went got to that phase after the first few customers a kind of you could call it t take uh that that I used was I usually positioned it as look I I I'm building a problem to the solution at a higher level I think this is a problem that most

companies have and uh you know given your experience I think you could be super helpful I'd love your advice I'd love your input on on how you think about this and so at least uh you know back in 2017 18 when I was getting going there were very few Finance accounting tools in the first place and and controllers and and folks like that they never got this spotlight and they they didn't have anybody reaching out to them and saying hey I think your knowledge it's actually a hard technical kind of field and you know you

need U you know a lot of uh skill training technical Knowledge to be successful in those roles but it's it's seen as this back office function or whatever and and uh so you know but when I reached out to people with that framing which is also true um you know and then a lot of them were happy to help right A lot of them you know yeah in some ways you playing with your ego right in that you're the expert here you know I'm kind of getting going trying to build this product to solve a

particular paino that you have You know my intention is not to sell you anything but you know listen to your expertise and get your feedback and and there will be people who enjoy that process right because even during the kind of any new category product whatever it is it goes to that adoption curve in the market right and in the early days you really want to identify as many people as possible who enjoy being an ear adopter who enjoy providing feedback who enjoy kind of participating In the process of creation of a solution to the

problem they have right and so trying to kind of connect with as many of them as possible and identifying them you know and and if they engage with you they also make the best customers right in in in the grand scheme of things and there are lots of people out there who might be the buyer for your kind of solution but their attitude is I only buy from public companies right so are you a startup are you not established Then I don't even want to talk to you right because I have no appetite for risk

I want something super established in the market which is all fine but what you are trying to do is to find the people who enjoy that process of engaging with early stage customers and you're looking for that Persona and you're going to get lots of NOS right you're going to get lots of no responses you're going to get you know you should reach out to people on link then you Should reach out to people in the network and beg borrow steel hustle do what you have to do but the job is to kind of get

in front of uh you know as many of these people as possible and get them to engage with you right yeah I want to go back to something you said a little earlier about why you decided this time with this startup you didn't need a co-founder conventional wisdom you know we always hear you have to have a Co-founder if you were you know doing this for the first time and taking I base through YC they'd be saying theyo get a co-founder um so why did you why did you feel that that wasn't necessary this time

look it it was a very rational logic IAL kind of thought process which led me to that decision and for my first company for example uh I have no regrets you know having a co-founder we you know worked well together and and uh we Brought in the early days especially complimentary skill sets that I think were important to the business uh that's all fine right it was all good and and I think that was the right choice for that business uh but for a base as I went through this process of kind of do I

need a co-founder uh what are the reasons typically that you might want to have a co-founder one is you just don't have all the skills right so you might be you know a a an engineer good at Building products but you're not that good at selling and and selling a vision getting those ear customers and and all that kind of stuff because there are in some ways two separate uh skill sets or you might be you know a good salesperson but uh you can't really build the product at all okay then you just if you

want to build a technology product guess what you need an engineer right and so you know it is not having all the skill sets uh that you need to get the company To a certain stage is one reason to go get co-founders another one is you can argue especially if you're a first-time founder sharing the emotional board and the ups and the Downs of building U you know business that's another important reason I think uh you know you should consider uh having a a co-founder and those are the typically the two biggest ones right it's

a skill set it's need of the business it is uh carrying kind of and sharing the emotional burden but my Decision was that on the emotional burden side I'd gone through this journey once before right and and I felt like I didn't need anybody to share that emotional burden with me and and that I would be fine partly because I had uh you know made a bunch of mistakes building you know my first company where the business was an extension of me right it was it was an extension of you know my personality and and

every Failure of the business was my failure I was a failure if something didn't work out and and so I had kind of gone through that process in at some you know level mature to the degree where you know I think I am better this time around to kind of distance the business from my own sense of self-worth and and uh you know all of that and so I didn't feel like I needed somebody to kind of share that emotional burden of the ups and the downs and the challenges uh you Know of of building

the business and and on the skills side of things uh for example you know in the first business we built hardware and I didn't really have uh some of those skills and things like that that and this time it was a SAS business software product I knew how to build that product I knew how to sell that product and so I'm like you don't really need uh I didn't need a co-founder for that reason right and so you know as I was ultimately going Through those list of reasons I'm like okay and look also from

a purely tactical perspective I think what every founder needs to understand is that the greatest dilution you will take in the value you create ultimately for your business is likely on day one when you start the business right so if you're to coer who are splitting you know 50/50 three confounders splitting a third each guess what you know in terms of the dilution that you take in the ownership In the ultimate value that you create that's greatest on day one right and so I don't think it should be kind of a de facto you know

reason or assumption that you absolutely need uh a e co-founder so I would think you know it's it's a case- by case thing you know ask yourself why ask yourself if it's definitely necessary and and uh but what I did instead was that you know I just was a soulle Founder but for the the first kind of set of employees who joined the Company uh I was extra generous with the equity grants that they got relative to what was market right in terms of the first second third fourth fifth you know employees so that you

can attract really good ones right so you know it is a thing that as as a company scales uh you want to have incredibly invested people the thing about Founders always is that last line of defense right so you no you can't complain about anything you know you're the last line of defense and and You ultimately uh have to own whatever problem comes up and so you want to have as many people like that in the business as possible and how do you do that and you can still you know be generous relative to this

you know stage of risk that they're taking and I've always done that even as I've hired Executives and and things like that and and that's worked out right so you know purely in very tactical terms yes I think I'm going to Ultimately uh get to keep uh more of that value that I've created over the years uh that's that's one of the reasons and maybe the one other reason you should keep in mind mind is that you know I don't know if this is statistically accurate but the number one reason or very close to number

one reason why startups fail is Goof on a conflict right and while I was lucky in my previous startup that I didn't have to deal with that you know any major Problems in that area I've seen friends and and other folks who' built companies whove had their companies destroyed and and and all that kind of stuff because the co-founders couldn't get along with each other so that's always uh a a big kind of thing that is hanging over uh a business especially as it grows and matures because the chances of every single co-founder scaling with

the business as if it actually become successful is actually pretty low right And one of them might the CEO might or it might be the CEO who's not scaling and then the CTO is actually can do the job for a really long time and however you're splitting it chances are fairly high that one or more of the co-founders will not scale you will not agree with each other about the Strategic Direction and things like that and those are all like way more emotionally taxing compared to having somebody to in my opinion share that emotional burden

uh You know of the business as you're building it so yeah considering all of that you know it's a trade-off like every other kind of decision and and uh my call was to say I don't think I need uh a co-founder and I have zero regrets about that I'm about you know five six years into building a now and no regrets yeah that that's a a very thoughtful answer I love the way you broke down the the thought process in terms of you know when when should it make sense and and Again kind of going

through that list it's I I guess it was a lot clearer to you at the time that right now it didn't seem to make a bunch of sense and I guess every every time you took a step forward and the business got some more more and more traction it was like okay still makes sense I can still keep going and and so on um so okay so that was one piece of conventional wisdom that you didn't follow let's go back to the journey to the first million in AR so we Talked about you doing sort

of founder Le sales getting the first 15 or so customers the other I guess conventional wisdom we we often hear is okay once you've you've kind of done the founder Le sales bring in you know some some a build you know maybe potentially some Junior people around you people who can grow into maybe potentially senior roles and so on but don't go and hire you know a VP of sales and you hired a VP of sales yeah my first full-time Sales had was my VPO sales and uh that decision by the way is tied to

my decision to not have co-founders right so typically I think it's it's fine to follow this advice that uh you know do foundered sales initially I think that's absolutely important I think in the early days Founders should spend a lot of time talking to customers right like you know if if you as a Founder are hiding behind conversations with customers company is going to fail like High probability right and so you have to kind of take the punches listen to the tough feedback like whatever it might be you know and expose yourself to the pain

uh you know every day even today you know if we a grow Stage Company and and lots of customers all that kind of stuff but I spend multiple hours every week speaking to customers right because there is nothing more valuable than speaking to customers about their pain and how you're doing And what you could be doing better and things like that right and so uh that's one thing but now going back to the who should you hire uh first from a sales perspective if you have somebody one of the co-founders who's like fully focused on

sales and somebody else is fully focused on building on the product iterating on the product all that kind of stuff I think that makes sense effectively that co-founder is your VP of sales right and so they can go and Hire their first you know couple of ways and make those account Executives successful write the Playbook initially for how you move from a found Le sales model to an AE lead sales model and you can start that process and you can you know write the initial version of that Playbook and at some point you can bring

in a VP of sales uh who can scale that Playbook right how do I take from go from two AES and and I know there's a model that's working and so how do I add More capacity and how do I build more Pipeline and blah blah blah like how do you kind of take it uh to the next level but in my case if I had done that then I would now be the VP of sales and I would be the VP of engineering and I would be kind of the one responsible for fully building

the product and moving that side forward and I would be the one responsible for managing the goto Market kind of effort for the business and uh that would not have been a good idea I Would not be setting the company up for Success if I try to do both so my call there was I'm going to find a VP of sales because it's also true that a true kind of very mature experienced VP of sales will likely not want to come and be the first kind of employee at a business it it requires at least

most WEP of sales will not want to do that in the market because they have options they just want to go in where the risk is the lowest for them And they just want to go in the Playbook has been figured out you have a bunch of customers you have product Market fit okay I will now scale it right and so you know because V good VPS of sales have those options uh that's what they choose to prefer but there are a smaller number of of sales leaders out there who want to write the Playbook

and not just take over a Playbook and refine it right and so my attempt which I ultimately succeeded at was to find a VP of sales Like that who wanted to get in early who did not mind getting their hands dirty who um you know wanted to kind of write that initial version of that Playbook as it moved from fet sales to uh you know a sales organization taking it and scaling it and and uh you know I was lucky that I kind of found uh that kind of a person and and uh so it

worked out right and and you know that Sader got us past our first 100 120 customers or something like that and and uh you know it's a Whole other conversation for how you know s leaders scale and grow and and fit for different stages of maturity of the business and that kind of stuff but but again the lesson I've taken away with a lot of these decisions is don't take advice in a cookie cutter manner right because a lot of advice may not really apply to you try to think of things from a first principles

perspective right and why why does somebody recommend a certain thing and Does that advice apply uh to does that conventional wisdom apply to you A lot of times it does right and and uh but you know if you think about something from first principles we should also apply to your product by the way right and so you should really think about the problem from the first principles perspective and then the solution to that problem from a first principal perspective and and and you know that's a whole other I guess uh conversation But you know a

lot of these quote unquote conventional wisdom kind of uh aspects uh you know if you really ask yourself if if that applies to you and if you're thinking about it from first principle sometimes the answer is no and and so I think uh that's kind of what happened in in my job in in those early days what was the average contract value like typically for for a new customer uh it it's started off on average being say in the 10 to 20K range but it you know The overall kind of range range from 10 to

50k but the average was somewhere in the 10 to 20K uh range overall right but over time obviously that's grown in the initial days it reflected the majority of the product right and as we added more capabilities as we were able to go after larger customers more use cases all that kind of stuff that is kind of continue to grow over time right so the first 15 or so customers that you got got you the first you know few hundred Thousand in ARR you've got the vpf sales that comes on helps you get to the

first million what was the the main growth channel was it just a lot of you know outbound cold emailing is that the primary way that you you grew to the first million so I I think your go-to Market strategy really depends on you know the segment you're targeting I think the first thing I think uh you should not try to do at least my opinion I know some companies Try to do it is to try to be everything to everybody right like hey I'm going to you know sell my product to a two person company

a 200 person company a 2,000 person company and a 200,000 person company I will be I will serve everybody uh depending on at least in our space if it's deeply workflow oriented products especially in the finance domain like I have I cannot point to a single very successful business uh that has done that like basically serving the needs of Like every uh segment so one thing I think you should typically do is pick a segment and and uh you should also form an opinion and that's what the early part of fet selling and and what

is the value you're delivering what is the willingness to pay you know some of these things come up where you will find out and this is partly the reason why you should not invest a bunch of money in high sales people and try to scale that model until you have a fairly good Idea of hey what's my ACV going to be how much can I actually charge for this thing so to get to a million dollars can I charge a $1,000 a year and and you know do I have to go acquire a th000 customers

or can I charge like $10,000 and acquire 100 customers or is it can I just charge $100,000 and get 10 customers because how you acquire 10 or 100 or thousand customers the strategies for that will differ wildly sometimes right and so the difference between what You're going to do to get 10 customers is so different than what you're going to do to get a thousand customers thousand customers is likely product Le growth it's likely kind of marketing driven and demand generation and things like that inbound mostly but if it's a 10 companies that you're trying

to land they're not going to come and find your tiny company website somewhere and and pay you $100,000 it has to be outbound it's you know this is a whole other Motion that you have to follow to build the pipeline and and generate the demand for that whereas we are somewhere in the middle right and so what we ended up doing was because getting to that first 100 uh customers uh at least in my opinion that's more I was more focused on finding product Market fit and the strength of product Market fit than I was

on answering questions about go to market fit right I think those are two different things Right so do you have kind of a scalable go to market engine that you can put more money behind and scale that answers the go to market fit question but the product Market fit question is largely about you solving a real problem you know and that whole and know wec's like to ask the vitamin versus painkiller question right are you a vitamin or a painkiller yes a bit of a cliche but yes you want to be a painkiller especially in

bad kind of macro environments and All that you don't want to be the vitamin that gets cut and and you want to be important enough to the business so you're trying to figure out those things right so am I you know a painkiller am I you know a system of record am I seeing the right kind of adoption and usage and you know when I ask questions like hey if you just lost this tool tomorrow like would you be really disappointed and then you know The NPS like questions that you're Trying to build confidence you

know around getting to the right answers there and intellectually honest answers there was what I was focused on getting to those first 100 customers and for us it was not trying to make it know programmatic or scalable uh it was a lot more about about just you know B borrow steel hustle a lot of those customers came through the network right so my network other employees networks investors you know Network and and uh You know a bunch of customers came that way Word of Mouth we also focused in the early days what what we thought

of as the give give get kind of model right like how do you give value first right and so you just don't want to reach out to somebody and say hey buy this thing from me that I want to sell to you right it's a how do you just give value and we did things like creative Finance uh community and today that's slack Community has about 5,000 people in it And it's kind of a no sales Zone and then people can come and connect to each other and yes they know it's an air based community

and all that but how do you give value right and that's that kind of a community didn't exist for Finance and Accounting professionals and and we also started this um you know webinar interview series called path to becoming a CFO like this is another way to add value where you know using my network and in invested networks I Interviewed CFOs from Salesforce and Twitter and and zendesk and HubSpot and Robin Hood and and all of these well-known companies uh because that was value to our target audience because you know as a Founder I you know

have consumed a lot of content of Founders and CEOs and and folks further along the journey from me and I've learned from it right and so that's aspirational I want to build you know companies like them and I want to build a pu company Hopefully someday and and so I've kind of found that kind of stuff interesting so my question was okay to my buyer once you have an identified buyer how can you create useful aspirational content and and for our buyer controllers and CFOs of smaller companies you know becoming a CFO of a recognizable

brand name public company was aspirational and so their life stories how they got there and and so that was kind of useful and so that you Know allowed us to reach out to people just offering them value and to get the positive brand Association going so we did stuff like that for the most part right and and uh so yeah we had a you know a bunch of these experiments around paid kind of marketing and and all that kind of stuff but for the most part it was try a whole bunch of stuff largely focused

on kind of providing value back to folks first and and uh you know that included organizing dinners and and as It turned out at least back then uh controllers are not the Persona that is you know invited to lots of dinners and networking events and all that kind of stuff right and sales leaders and marketing leaders are bombarded with with lots of asks and requests and invitations and things like that but the controller is not right and so those kinds of things helped and we found that they really wanted to network and they wanted to

kind of participate you know In some of these events and and uh you know they got value especially if it was a useful you know discussion in a forum that you created and so that allows us to kind of connect and talk about the problem we were solving and and build relationships and stuff like that and so I think all of these tactics helped us get to the kind of first 100 plus customers right yeah that's great I want to talk a little bit about competition you you get to the F you know 100 Customers

so is probably you know get breaks you through the first million in AR you feel like you you you valid you you validate the idea you've gone out and and and proven it in terms of of uh generating sales and and getting customers that you've got product Market fit here great and then I think there was at one point you realized that this opportunity that you had discovered and started to build this business around suddenly everybody was Making a kind of I guess gold rush to get into spend management can you just help us understand

like what what was that realization how big of a problem was this yeah look I think this is something that any valuable idea in a big Market or a solution do a valuable problem in a big Market in some ways you're going to end up there right and and you it's going to become competitive uh you have to have some massive technology mode or advantage or network Effect or something like that you know strategic Advantage but let's be honest in SAS there is no mod or strategic Advantage the big thing you have is you know

execution right and so that's how you win and and for the most part in the early days so what happened in our space was that you know I've always had this vision of spend management consolidation of all of the non payable spending in one platform into to end kind of workflows and payments and all of that U You know corop cards was one small piece of fed that was a initial wedge that we went into Market where then we launched an AP automation product and we launched an expense management product and earlier this year we

launched um you know a guided procurement product as we've gone up Market that front end collaboration problem of how decisions to spend money are made you know that's a whole new modulin product that we've launched and so we have kind of Methodically gone after uh all of these areas over the years and and uh of course you know the the improvements in financial kind of infrastructure ftic infrastructure card issuing and all of that that has also led to the proliferation of corporate card companies like that was a whole thing for a while like hey corporate

card like I'm going to compete with MX and and uh all of that right but very quickly some of those companies realized that oh There's no business model here there was a zero interest rate kind of uh period where money was dumped into a lot of these companies even though they had like 15 20% gross margin Revenue those kinds of things you know growth was all that mattered the quality of the revenue and business model didn't really matter and you know bunch of these companies raised huge amounts of money but over time as as the

pandemic hit in then especially over the last say 18 months As the recession started all that some of those companies started to realize that oh like this corer card thing is not the long-term business uh kind of opportunity here and and U you know I would like to think that a bunch of them looked at as in R wa I think everybody has the right idea of how to think about this opportunity the long-term sustainable business model for example we have always thought of ourselves as a SAS business first that we charge Subscription fees for

and then you know the fintech element of it is an important enabler right and so uh but a lot of other companies they lending companies the fintech element is all there is and and uh stuff like that right so you know if you look at that cooperate card segment and then there's a whole travel companies that during the pandemic got a big scare and and they decided that I need something else to sell to the office of the CFO if Something like this ever happens again and revenue Falls to zero and so they started coming

into the spend management space because they were seeing clear traction and and um you know the the solution to that problem was obviously resonating with uh the market so they came in there hris providers you know started launching their own spend management kind of solution so you know it's gotten noisy right and and uh you know a bunch of these companies have Raised you know lots of money the funny thing of course is like a lot for a lot of these companies if you look at where they were three or four years ago and where

they are today a number of things in from their messaging their positioning their business model and how they monetize increasingly it's looked more and more like air base right and so I mean that's a Founder's worst nightmare that you're you're happily going along building a business and then Suddenly everybody wakes up and decides they want a piece of what your you know the pie and and and not only that but you've got these you know very well-funded competitors entering the space so so just break that down for us like how how did you approach that

the uh the value number one for air base has always been control your own destiny right and so that goes back to my experience building my first company where I didn't do a Very good job of that and and I spent you know more time than I wanted to on sandill road with a begging bow trying to raise money unsuccessfully and all that kind of stuff and and so as I was asking myself like the kind of business I wanted to build it was incredibly important to me that I control my own destiny and I

think we've done that like you know we we over the course of Air Base you know controlling our own destiny being super Frugal the kind of Culture we have as a company you know these things have all been we haven't had to do a big layoff uh you know over the last 18 24 months uh partly for that reason right it's it's because uh we've been very very careful about how we have historically deployed Capital the sustainability of our business model uh and and those kinds of things but it is also true that you have

to live uh in an environment where a huge amount of excess capital is is being kind of Dumped in the market and we are still to a certain extent living through that where many of these companies have raised at frankly ridiculous unsustainable unattainable valuations and and uh but they also have raised a whole bunch of money and so to live up to some of these valuations uh you know they feel the pressure to grow into it to grow at a faster rate and so they spend that money you know very inefficiently and then to kind

of create That noise in the market that and I know it doesn't make sense to go Toe to Toe with uh you know some of that kind of inefficient spending uh but the choice we've made in in strategic areas is to reposition refocus you know go a lot more focused on a particular segment of the market as long as it's large enough you know the whole thing about don't try to be everything for everybody but even in the initial segment that we targeted while I said that we tend to f Target on The 100 to

a you know few thousand employees within that we are increasingly more and more focused on the you know 500 to kind of a few thousand employee segment and that's where a lot of investment you know continues to go and and uh so those are some of the things that you can do that you can control right and yes you might have to make some sacrifices along the way and then that's the expectation you set with the board and every you know Stakeholder important stakeholder in the business that you know maybe we will give up on

growth partly that's the right thing to do in the macro environment we were you know growing at better than the t2 D3 kind of uh Pace that that you look at for uh you know SAS companies right triple triple double double double we were doing you know much better than that but at some point last year it became a lot more important to say we have to control our own Destiny we want Runway uh for a number of years we don't want to put ourselves in a position where we want or have to raise uh

more money uh so what what gives growth gives right and so you're you're okay with slowing down you know on the growth side and and uh but sticking with the the need to do something that is sustainable that's what we have done right and so but look along the way we've made mistakes too right and you know towards end of 2021 For example while we had that discipline of we're going to always charge for software and things like that I was looking at the craziness of the market in in in 2021 of how look everything

is free and I just make money from The Interchange and you know what investors in the market were actually buying this upside down business model and there were companies that were raising between a few companies they Raised billions of dollars right and so our whole thinking at that point at least my and I should take kind of responsibility for that is that look if this persists it doesn't make sense but if it persists we're going to get crushed at some point right but these companies is going to raise so much money that we just not

even going to be able to compete so you know we decided we're going to launch our own free tier and and kind of work on acquiring more Of that card-based interchange Revenue uh you know low margin Revenue that apparently was being valued at 100 150 x and and said fine like if that's just the world's gone Bonkers but you know let's just go do it too and in hindsight that was a mistake right and and so I think we spent the better part of last year unwinding that whole kind of uh experiment and and uh

so you know that was like I said in many ways you know a mistake and I should have stuck to my Intuition and and got feel that we are on the right path and and um you know like I said a lot of those companies that everything was free okay they're all doing a bait and switch now on their customers and saying hey you now have to start paying for this promise product that I promised you for free you know forever uh guess what I need to have a business model so please pay me now

right and so uh you know that whole thing is happening and and all of that So which is all fine but you know it's just a different degree of inefficiency and and unsustainable behavior in the market Market that we have to uh uh deal with now if two years ago it was uh I am I don't even need a business model everything is free let's go uh if that was the business model uh you know now it is uh you know I'm going to ask you for money but still an amount that is in no

way Su helps you build a sustainable business right and so now we have to Deal with that and and uh so it will evolve right and so the question is you got to in many ways just survive uh through the process of Madness goes back to the Cockroach right it's exactly so be a cockroach you to survive through some of that inefficiency and and uh continue to control your own destiny and not put yourself in a place where you just run out of money and by the way that has happened to a few folks in

our space too right in that you know they Could not continue to operate efficiently enough they to try to do inefficient things and and uh um you know I don't think all those companies are going to survive and and I'd like to think you know know we have put ourselves in a good enough place that and we've been willing to make some hard tradeoffs uh and and uh you in terms of expectation setting with the board and investors on what we're going to give up to actually do what we think is the Right thing long

term and I've been very happy and fortunate to have like a mature set of investors and that's the other lesson is to really pick investors who uh you know who don't give you the highest valuation but who are actually going to be good partners you know during the difficult kind of phases of building a company all right uh we should wrap up uh let's get on to the lightning round I've got seven quick fire questions for you just try to Answer them as quickly as you can what's one of the best pieces of business advice

you've received uh look there's a lot but maybe the the one that quickly comes to mind is what I mentioned up front which is uh just make sure you enjoy the thing that you're doing day in and day out otherwise you know building a companies a grind in in its own way in a lot of ways uh and if you don't like the thing you're doing oh my God that that's like an order of magnitude was Grind right so make sure you pick something that you would work on even if nobody paid you right what

book would you recommend to our audience and why uh there are lots of good books and and I've gone through phases of the kinds of books I've read but if you're an entrepreneur if you just want to get this visit feel of persistence and and and you know hard work over a long period of time like one of the books I read cple to three years ago is a shoe Dog by uh you know the the the the autobiography of the Nike founder I just thought that was a really awesome book uh but more lately

because I spent so many years just reading business books I've been more on science fiction bender and you the the most recent book I can recommend that I liked that I just finished reading a couple of weeks ago is this book called uh the last day of night right and and it's the story of Edison and Tesla and Westinghouse and That period in the late 1800s where the light bulb was invented and there was this competition between AC and DC and which would kind of become this kind of the default kind of mode of power

distribution and sounds a little nerdy but it's a fun book I can recommend it if you like historical fiction right love it okay uh what's one attribute or characteristic in your mind of a successful founder persistence yeah it's it's a lot of people Think yeah look absolutely there's luck uh uh involved in in a lot this right place right time luck all that kind of stuff but I think um so much of it is about you know persistence and and just uh being willing to grind through tough situations for long periods of time and having

the stamina to do that and I think uh at least in my view that matters what's your favorite personal productivity tool or habit h i I've honestly given up on a lot of these Things I used to be this inbox zero person for many years uh right now let me look at my inbox I have 5,300 emails W so what what what I have ultimately landed at is you know I've gotten better at asking myself what matters in life right obviously abas work you know keeping my team unblocked all that kind of stuff I also

have a 5-year-old uh daughter and an 18-month-old son and you know my wife who's been wonderfully patient through all of my kind of uh you Know adventures and so I to have Clarity I try to have Clarity around what really matters and you know just ignore uh everything else that's a good attitude what's a new or crazy business idea you'd love to pursue if you had the time or uh what's a an idea we can steal from your ideas notebook uh there are many and and I don't know how many of them are actually scalable

you know businesses uh and uh but one of them you know there are a bunch related to how Distributed remote teams work right I think uh in the process of building Air Base I've uh kind of identified some of them there are various takes on that like I've tried a bunch of them I don't think they all get them right I don't think there's any tool that's really taken off in terms of helping other than the zoom and some tools like that to do basic stuff but uh you know I think that's a whole mind

uh you know that is Rich with possibilities that um you know It's some point maybe I'll have the time to um look into it but also from a product development perspective how do product managers designers ux writers Engineers all collaborate effectively efficiently you know to to build and ship uh a a product clearly there are a number of products in the market but I think there are opportunities to just do a better job there again don't really know if that's a public company on its Own but it's broken it's broken in lots of ways from

from my experience right uh what's an interesting or fun fact about you that most people don't know I think that somebody asked this question in the sales kickoff we had uh two weeks ago for our Q4 and my answer then was that um I ride a motorcycle that's uh you know 550 pounds uh and and uh it's a BMW r1250 GS it's a lot of fun it's one of those my wife thinks it's uh kind one of those uh middle-age crisis Things but uh I used to ride a motorbike back in India when I was

growing up it was just a mode of commuting and hadn't done that for about 10 12 years after I came to the US and recently started uh doing it again love it and finally what's one of your most important passions outside of your work you know reading I just I've always enjoyed reading I I came from a family of academics and all that kind of stuff I growing up I had a library of three ,000 Books uh at home so might seem like a copout answer but honestly with air base and and the kids and

all of that like I I barely get time for anything else so the time that I do get for myself I try to kind of uh read you know because it's just fun and like I said I stopped reading business books uh you know for a while now I'm I'm mostly for the last two three years have almost exclusively just been reading you know good fiction of All Sorts well thank you so much for Joining me it's been a pleasure talking and and thank you for you know taking us back over the years and sharing

you know your both your journey in terms of how you you built this business but also I think a ton of useful insights for many many early stage Founders who are probably going through a lot of those challenges today so I think it was really helpful how you broke down a lot of that you know those ideas and how to think about you know conventional wisdom And whether that's that's the right thing for you or not so I totally appreciate you doing that if uh people want to check out Airbase they can go to airb

base.com and if folks want to get in touch with you what's the best way for them to do that you can find me on LinkedIn and uh please feel free to connect with me and tell me that you uh heard about me and air base on Homer's podcast and and uh I'd be happy to connect and thank you so much for having Me uh my pleasure uh I wish you and the team the best of success thank you cheers