ST18 | Santosh Katti On Learning From Objections When Launching A New Product

Revolutionary products often have a history of being labeled as “needless” – till people suddenly discover they really need them! That’s how it was with Graphene. Back in 2014, when Santosh Katti first started trying to sell AI as a service to clients, nobody seemed to understand its potential. It took years to build and educate the market, but it paid off in spades as it became one of the earliest players in a major new industry. On this episode of ShopTok we’ll learn from Santosh how he found ways to keep going while trying to sell the value proposition of his nascent product.

Discussion  Topics: Santosh Katti on Learning from Objections When Launching a New Product

• Taking the entrepreneurial plunge after working with established brands
• Identifying what to sell and how
• Starting off: Finding the first few customers
• Building a team within resource constraints
• Positioning yourself differently in the market
• Celebrating small joys

Transcript: Santosh Katti on Learning from Objections When Launching a New Product

Amit Ray: Many business owners start off selling products or services that their prospective buyers are familiar with but with maybe a twist that helps them differentiate from their competition. But what do you do when your business is built on a concept that’s entirely new to the world? Or at least it’s new to the clients that you need to help establish your business. Today, we’re talking to Santosh Katti, founder, and CEO of Graphene, an Analytics and AI-based company founded almost eight years ago, when AI was more the kind of thing you read about in sci-fi books, than something that’s in everyday use.

He’s gonna help us understand how he got started in this space, and also how he overcame some of the early challenges to actually build out a business in this area. But first, please follow ShopTok to get the best small business insights from across Asia. So with that said, Santosh, thank you so much for joining us today. Maybe for a start could you tell us a little bit about yourself and about Graphene?

Santosh Katti: Thank you so much for having me, Amit. It’s an honour. And it’s funny, you said about eight years because April first is when we actually completed eight years of Graphene. So it’s very, very timely.

Amit Ray: Wow. What a date for starting a business.

Santosh Katti: Yes, you know, you’ll say you’re hungry or foolish to be a startup entrepreneur, April Fool’s Day is the right day to start. And I keep joking because a lot of people don’t know that Apple also started on April one. So I keep saying, well, there are other fools who started on the same day. So yes, so that’s kind of the journey. I’m an Engineer by training. I did my Engineering in electronics and worked for a couple of years at IBM, in sales and marketing. And my first boss at IBM actually advised me to go get an MBA and said look, it’s going to really help you if you’re interested in sales and marketing.

And that’s how I went and did my MBA from one of the B schools in India Cordance Institute of Management. And since I was working at IBM, I always thought I’d probably come back and join the IT industry again, but I just accidentally stumbled upon an internship at Unilever. And I loved the FMCG experience, and then, therefore, I worked for a long time at P&G. I joined P&G in India, they moved me to Singapore, in 2001, and I’ve been in Singapore since then, and I spent till 2011 with them. And then I got interested in health care. So I went and worked at Johnson and Johnson for three and a half years and then co-founded Graphene in 2014.

Now, a couple of interesting tidbits on that. The reason that I got into data is because P&G is a fascinating company, it teaches you many things. But of all of that, what it teaches you is that by using data, you can turn marketing into a science and it’s not seen as an art form at all. So that was fascinating for me to understand how to really use the power of data to run a business. The other interesting factor and what I told you is that when I co-founded Graphene, my first boss, who told me to go get my MBA, he was in Microsoft, Singapore, and I somehow conned them into coming and joining me, he now my co-founder of Graphene. So that’s kind of my journey here. So that’s how Graphene started. And here we are stumbling one way and the other, somehow managing to hustle for eight years, and we continue to survive.

Amit Ray: Yeah, that’s amazing. And, I mean, there are so many fun things there. I mean, the fact that you’ve co-founded a company with your boss, most people are trying to run away from their ex-boss, especially nowadays. So, that’s really nice that you were able to build that relationship and actually do that. So, tell me, how did you actually get started on this journey? What are your first steps? How were you feeling at that time?

Santosh Katti: Sure. Actually, the first seeds of this were sown in my first assignment at P&G, because when I was doing my MBA, I opted for a special course and a special project on multimedia communication. So when I joined P&G, I wrote to them to say look, I would like something in the dot com area that was the first dot com boom for those of us who are old enough to remember. And so P&G actually had started a teen portal. So they put me in charge of the teen portal. And it was a different office.

I mean, I was in P&G, but I was not at P&G running a startup within P&G. And that’s when you know, sometimes you experience certain things, and then your primal instinct tells you, that’s what you’re made for. And ever since then, you know, I’ve always wanted to go do something on my own, because the thrill of working in an unstructured environment, the thrill of trying to build something was something that no large company experience could give.

So the underpinnings were always there. And I think, as the digital revolution descended, and for example, back in 2000, at P&G, we used to spend 95% of our money on TV, by the time 2010 came, only around 40% was being spent on TV, that’s how the digital explosion had happened in 10 years. And I was seeing that. And that’s when I saw that, the power of data in the digital space and the way that you could really make an impact with that was fascinating.

And then, one of the things I realised is that, in that new digital space, you needed to have worked in the client world to have understood how leaders use it before you could step out and help them. And because I had a unique advantage, I thought that was the right time to go out and do something with data analytics. That’s how Graphene started.

Amit Ray: Right. So what you’re saying is that, because you had this insight and knowledge, because you’re on the client side, and now you could actually go out and build something which clients like yourself would have wanted to use. And did you focus, like was this only for consumer goods what you were doing?

Santosh Katti: Well, honestly, no. As you know, we are a self-funded start-up. So we went through a journey where initially, I think our biggest issue was the focus. We were just struggling so we took up anything that came our way. And honestly, it’s a funny story now. But we actually survived the first year by actually building software for others, even though we claim that we were an analytics company, we didn’t have the chops, and nobody gave us the business that we wanted. And we sold, and we built software sites, we made specific applications, software, and then survived till we got small projects and established credibility and started building our way.

And I think, the thing that we did do, though, is we focused on the areas we knew well, and to that extent, we always focused on FMCG. And because I’d worked in J&J Pharma. So those were the spaces that we understood well, and as I said, since we were trying to understand it from a client standpoint, we wanted to really enable decisions for those leaders. For example, we didn’t understand the telecommunication business very well, we didn’t understand the hotel industry very well, because none of us had worked there. But because we understood the FMCG and pharma space, and we also then had contacts, we were able to go in and pull others in that industry to come and work for us, we kind of started specialising in those two areas.

Amit Ray: Interesting, maybe let’s spend a little bit of time on the first year because it’s interesting that you say that you ended up doing something altogether different from what your desire was. And obviously, it’s understandable if you’ve started a business you want to do A but they want to pay you for B. So you do B till you can get them to agree to do A as well. But did you feel kind of like you were being diverted from what you wanted to do? Or did you feel demoralised at that time, because you were forced to do something that wasn’t really what you intended?

Santosh Katti: Well, demoralised, this isn’t definitely the word but there was definitely a lot of stress. Because this was self-funded. We were actually using up money from our bank accounts, literally. And we could see our bank balance going down and burning the money to do this. And there were a couple of very, very interesting insights, but that really shaped who we are. I think the first was having spent so long in the corporate world, you tend to believe that hey, you have all these connections and it should be easy to get business from them.

But that was far from the truth. And you know, they were good friends, people who really trusted me or candid to say that look, we don’t know if you’re going to shut down tomorrow. And we can’t trust our business with you, however much I like you as a person, and we can put our careers on the line. And some of them said it overtly, some of them, not so overtly. And it was something you had respect for. Of course, eventually, when the credibility got built the same people who had a certain amount of trust in the capabilities we had established, did give us the business. Still, initially, they didn’t want to.

And that was not something that we had assumed, you know, till you step out there, you don’t realise that, that was one big insight for us to say that, look, you need to stay in the business and build the credibility and be around for some time before people start seeing you as a fly by night operator. And we had to really trust that.

The second is, I would almost say the first year, we did not become self-funded by Design. In the first year, it was almost by accident. We didn’t want to raise funds. But when we went to raise funds, the interesting thing we were told is that because both of us came from the corporate world, both of us were about 40 when we started, we were told that we were too old, and we were not as risk-averse as investors would expect us to be.

And that was one of the reasons why we initially couldn’t be funded. And those two were really important reality checks for us because what we realise is, look, you should initially focus on generating cash, if you don’t have a cash base, then it’s not going to get anywhere. But the way we saw this is we knew that fundamentally, anything you did in analytics had to have a very strong technology underpinning. So as long as we were doing things like say, going and generating posters, trying to do creative stuff, we’re really focused on something which is still the core of what it’s going to help us build.

We thought it was okay. And it was because by actually going and building some of this tech, what we understood was that some of this tech was important. For example, today, when we look at the kinds of dashboards, we build out, we build out custom-made dashboards, we don’t rely on the, you know, as you know, some of the standard dashboard software, and things like Tableau and Power BI, but what we have realised is that if you want to give customers a truly intuitive experience, you need to build your own custom charts.

So to some extent, some of what we did back then in the power of the user experience, helped us look at ourselves to be the Apple of the analytics industry to say that, look, a lot of people may be generating data, how can you be the one that makes it truly intuitive and simple for the senior leaders to get their insights. So there was that benefit, but we didn’t think that we were going too far away from the underpinnings of what was needed to succeed. So we kind of focused on it and generated the cash.

Amit Ray: This is really interesting. So essentially, you were doing something different, but it was still in the same wheelhouse. So it wasn’t time wasted, or as bad as it could have been if you did something altogether different. So this is interesting. And, in fact, the other point I noted was the fact that you had networks and you thought you could tap on them. It didn’t turn out to be, you know, all as easy as one would think, you know, I know this person and they know me, so they want to give me business.

That’s really good to know. Because actually, many of the interviews I’ve done so far and frankly, most service businesses, or product businesses that started out offering services could usually go start with people that they know, but I think everyone should understand that it’s not that straightforward. It’s not just your relationship. It’s also that person’s organisational situation that plays a role in all of this. So this is interesting. So, let’s talk about how you actually got the first few customers we’ve talked about some of the challenges in getting them. But what helped some people actually onboard onto your service especially the analytics one which was not tested?

Santosh Katti: Sure. The way it all started was purely cold calling. As a matter of fact, that is funny because I knew I had to start this for a long time I had been building my networks, and in the network, I met this gentleman who had a catchphrase that said if you have the know-how I have to know who and his role was you paid him flat fee every month. And he would just help organise networking meetings with people who were in senior positions. And we paid that money, we used to land up in those networking sessions.

And finally, we would go and get leads from those meetings, go meet these people. And that’s how we initially started because we started working for some SMEs in Singapore. And they were building out certain semi-analytic, semi-software kinds of platforms, and we helped partner with them and build those out. And that’s how we started some of our journeys through just cold calling on these people. And some of them just liked the fact that they also didn’t want to work with the large boys, they wanted to work with an SME. And we had a few of these SMEs, who told us that they want to work with somebody who’s hungry. And they don’t know what work with the big boys where they’re just a small priority, and they don’t get the priority they want. So that’s how we started.

But eventually, I think the realisation done that, if you’re going to focus on things like analytics, you have to go after the big players, and we were focused on FMCG and pharma. And we continue to then take the money we generated from these SMEs and focus all our business development efforts on pharma and FMCG. And we started getting small projects, really small projects, you know, they would be around $10,000 sometimes, and that’s all it would be.

But what it helped us do is it helped us establish credibility, because some of the work we did there was well recognized. And then, interestingly, one of the large pharma companies came along, and in that large pharma company, they said, look, we’re actually looking for a couple of analysts. And what we did is, we had some of our best talent, who are very, very good analysts, and we said, sure we will support you, we will do the work, we can’t kind of body shop, but we will support you, and then that’s how that relationship started.

And then, interestingly, one of these analysts who was working there, then told us about look, here is the head of insights for this company, and that was sitting in a different country, and then she made the introduction, and we started talking to him about our proposition. And then, this way, what happened is that there are two or three such pharma companies where they have given our RFPs. And, candidly, we want some of those RFPs, because of two reasons.

One is we had similar to this company, done enough work where we met the technical threshold of having been known. And we obviously went in with the lowest price, the others were all the big boys. And they were small projects for the big boys, but they were big projects for us. Because they were, for example, five-month projects with six people. And that was very big for us. And that’s how we started.

We actually started in pharma. And in pharma, we did core analytics, which is used to take their data, do specific models, give them dashboards, and in pharma one of the things that’s the very biggest part, is planning where they actually do scenario planning. So that’s how we started and then started slowly establishing a base in analytics. And that’s kind of how our initial years went before we stumbled upon AI.

Amit Ray: So, if I understood it right, these cold calls, and getting into the room with the management that you wanted to talk to, this would have been your responsibility, right, you and maybe your co-founder, as well. So, did you have a sales team as well doing similar kinds of work? Or was it just you both doing the selling initially or maybe now?

Santosh Katti: Well, that’s a great question. It was founder-led, selling for the first four years of our existence. And even in the founder-led selling, my co-founder was more adept at managing the organisation rather than selling. So I used to front a lot of the selling, and so for the first four years, everything we did was through founder-led selling, when it became interesting came to a point where we had a reasonable amount of revenue, and we had a certain amount of momentum. And one of our mentors then advised us that the time had come for us to switch the model. And he said that look, you cannot continue with the founder-led selling, because otherwise, you’re not going to get to the next level.

So that was when we actually consciously stepped back and started hiring a salesforce to then drive the sales. But as is with startups, we’re still relatively small. Some of the core relationships with senior management continue to be with the founders. Some of the strategic sales still actively involved the founders. But I think it’s important, think, for us to recognize that look, if you want to scale, you have to step away, you need to empower a salesforce. And that’s kind of this journey we’ve been on for the last four years.

Amit Ray: Well, first of all, both the founders were doing sales, but you were taking more of the share of that and your co-founder was managing well, the rest of the actual delivery and managing the work.

Santosh Katti: Absolutely. I think it was important not to step in each other’s shoes and really make sure that we’re not duplicating our efforts.

Amit Ray: Right. And you intentionally kept that going till you were in a position where you thought it was worth building a sales team at that point. That’s a good insight as well, which is, I mean, again, in a service business, I think maybe there is a temptation that Oh, I can grow my business manyfold if I just bring a lot more people and they will be the arms and legs. But you stayed away from that because you needed to build these relationships and these are larger companies. So it’s a bit more high risk, I guess, to have just anyone going and talking to the senior management that you were talking to earlier.

Santosh Katti: That’s one, definitely. The other interesting thing is, I think that’s what helped us evolve. Because as the founders, we were at the forefront of what the client’s needs were. And it helped us shape the proposition, it helped us understand why we were not able to sell in, or when we sold in, what was the real opportunity. So as you know, we are an AI company now. But when we started, we weren’t, we were a core analytics company. And it was really being there at the forefront of trying to sell to the client that helped us understand that there is a big opportunity in AI and therefore go there. And I don’t think that would have happened unless we were so actively involved in the selling. So that was the other advantage.

Amit Ray: Right. So speaking about hiring, since we kind of got to that topic How did you get your first few hires? Because you were a new business starting out even clients themselves don’t believe you will be around for very long. You know, it’s much harder for a prospective employee to believe that. So how did you make that happen?

Santosh Katti: Well, interestingly, all of my first few hires, employees, five were friends and family. And the friends were all people that I knew well, and I think they had a certain trust that, look, this guy is somebody that we’ve known well, and if he’s doing something, it’s worth taking a chance. And they’ve all been with me even now, you know, since the beginning, they’ve been with me.

Where the family was concerned, it was a convenient arrangement, because, for example, there was one family member who had come to Singapore, and she was really desperate to get something to supplement her income and so we just said, fine, come and help us. And it was a very small amount of money we paid, but it was still enough for her versus nothing. And it kept her occupied. So it was a win-win. So that’s how we started, and some of them just came and said, look, it’s a convenient arrangement.

Some of them, especially the friends came, because I think there was a certain amount of trust. And even when we started our India operations, we actually went with somebody we knew who had a development team. We actually outsourced a bit of our work to them, simply because they knew us, and there’s a certain amount of trust. But then, as we started growing, we’ve been conscious to do two things. One is, as you know, we are in Singapore, and we don’t want to be seen in Singapore and made up of only friends and family because automatically that would become an Indian operation.

So we consciously invested in making sure we actually got some locals on board, local Singaporeans. And then that’s how we started building an organisation very consciously making sure that there is sufficient gender diversity, there is sufficient racial diversity. And that’s how we’ve built it. But yes, the first few were our friends and family. But I would say that even if it’s friends and family, we had to pick well, because if these people you pick people who really didn’t represent your company, well, I don’t think the other employees would have come and joined.

So I think there was a bit of discretion applied there. And that has worked out, for example, one of my friends who came on board back then, is still with us, because the way that he trains and helps youngsters really understand technology is so good, that he’s built a name for himself in the industry. And many people now come and join us in India, especially just for him because they say, Hey, we get to work with him, we get to learn from him. And he’s our CTO. So it’s been a bit of that we’re being deliberate about the kind of people that you bring in. And it seems to have worked.

Amit Ray: Actually, that’s a very interesting point, which is the fact that people are joining you on the strength of a person’s reputation. Because nowadays, there’s so much discussion around the difficulty of getting talent. And in Singapore, there’s maybe just a pure shortage of people. In India, it’s hard to get people, because so many companies are trying to hire them. So how are you adapting to this or how have you figured out ways around this today’s challenge?

Santosh Katti: That’s a great question. And I would say that in the eight years that we have existed, nothing has been as challenging to us and from an existential standpoint, as the talent issues that we’ve seen in the last year. We’ve seen 35% attrition, and that is the average in India. We’ve seen salaries go up 50% in India, even in a place like Singapore, especially after the pandemic started, and for various set of reasons, talent mobility significantly declined.

It’s not been easy to find talent even in Singapore. And what we’ve seen is that really, there is a set of companies like us and the larger the state tech players who say, in the services industry do have a profitability target, and therefore have to be prudent about the kind of pay that we can afford. And then, of course, there are the startups both in India and Singapore, which are flush with funds, who really don’t have to bother right now about profitability, and they can really burn what they want.

And what this is created is a dichotomy where there is a market where there is talent who is saying, Hey, I’m getting to 50% outside, people who are paying 50%, are more or less the big tech companies, like the Googles, and the Facebook’s, or the startups, where as long as you got talent, they are pretty much okay to pay what you want.

And we’ve now spent six, eight months where certain positions have not been filled. And it’s kind of a vicious cycle because what happens is those who are left suddenly are carrying more load. And then they get more frustrated. And they start saying, why should I do this when I’m getting a better job outside? So it’s become a bit of a vicious circle. And it has definitely slowed down some of our product plans, and growth plans because it forced us to get into firefighting mode because you need to really serve your existing clients first.

So it slowed down my business development because this is the only capacity we have. What it has done, therefore, is, at least for us, and I know that there are a few other companies in the start-up space who are also thinking like us, it’s forcing us to step away from some of the more sophisticated analytics capabilities that we’re providing, to really bring it down to simple tools that we think can just be launched as software.

So we’ve actually spent the last seven, eight months moving away from some of the more sophisticated capabilities that we were building. And it’s a complete change in our model because we don’t see this issue in talent shortage and the talent gap fixing itself for the next two to three years. And we are not going to be able to sustain in the next two to three years if this goes on.

So we’ve actively started investing in building out simple products that are actually tools, and we don’t have a choice but we evolved that way. And that’s kind of gonna be, I think, the challenge for any self-funded tech start-up who wants to also maintain a certain profitability, and a certain cost cadence as they build their teams.

Amit Ray: Right. Really interesting, Santosh, and thanks for sharing this, it’s so candidly as well, I’ve heard this from a lot of people. So you’re obviously not the only one saying this. And you’re right, I think companies are beginning to have to get more creative. And your solution seems to be to productize to the extent that you can so that there’s less dependence on people. So speaking of product, this is the bit that I kind of alluded to at the start.

So, you didn’t start out as an AI company, but you got into that at some point early in the journey. And AI today, you know, if you tell somebody it’s ubiquitous like all of us know AI, we know what it can do. It’s like, so many things are happening across all industries. But when you were trying to introduce this concept, it wouldn’t have been that well known. And surely not something that a P&G or a Unilever would have been thinking about, you know, how to use in their day-to-day life. So how did you actually get them to even understand what you’re talking about and then get them to adopt it?

Santosh Katti: Great question again. So let me give you a bit of a background on where we started, you know, focusing on AI and then how that journey involved. In P&G, we used to have this theory, which is very sound that you finally have the consumer and the way that the consumer behaves is driven a lot by the marketing inputs you provide. But you have to measure that marketing input. And a big way of measuring that marketing input was to measure the heart and mind of the consumer and how that changes.

And therefore there was a lot of investment in market research. And there was almost as much investment in measuring the heart and mind as measuring the behaviour. You know, there are different data companies that do both like the AC Nielsen, of the world measuring shopping behaviour. But again, there are many other companies that only do market research. And it was easy to do.

When we stepped into pharma, what we realised is it’s not that easy to do market research among doctors, because they’re hardly available. And it’s costly to find them and do that kind of market research. And that’s where we saw an opportunity to say, hey, what if we take what’s happening in the FMCG industry, which is a quantitative measure of the doctors’ perceptions and thoughts? And the reason we thought that there is an opportunity is back, then we realised that there were more than 4 million doctors who were active online.

But they were using anonymous handles, because there were legal and ethical reasons they didn’t want to be known that they were doctors but they were using these handles, and then we found a way. And then we built a collaborative network. We didn’t do all of this ourselves, we built a collaborative network of other tech experts and companies through which we said, look, how do we get this, how do we then take that unstructured data and convert it into market research kind of data? And therefore we went to pharma companies and said, look, we can give you this kind of data, which today you get, but you get it with a lot of effort, and you get it on a small base here is where we can give you that and that’s how we started.

And the fact that we started with pharma was itself interesting, because in pharma given the compliance challenges, given that, you know, they’re far more demanding on understanding how this works, because of their own compliance challenges. It set the bar very high for us. And so, we understood some of the things we need to do to really explain to them how this works.

But we went a step further, because obviously, by that time we had figured out that even in this space, the most demanding client is the Japanese client. Because the Japanese want to get into so much detail, they need to understand things so systematically, that we actually spent a whole year and a half pitching to Japanese companies and Japanese pharma companies. We got kicked out most times, they would not even call us back. But by the six months we had understood enough to say that, look, here are the objections that they’re going to raise. And what used to happen is because AI was so new, they would raise these objections. And all of the meetings were taken up in trying to explain those objections.

So by the end of six months, we knew that here are the most frequent objections that come up. And the way we addressed it is, we said, look, let’s build out demos, which actually show them how this works so that the objection directly gets handled. So by the sixth month, we developed demos where we would go in and we had a flow to say that we almost knew how their minds work. So we would start with some basic concepts. And then we would show them we’d say, look, this is what it’s doing.

And they would see for themselves that okay, what he’s saying it’s doing, and we would then take some sample text, and because this is language-based clustering, so the essential concept we were telling them looks, it can look at opinions expressed by doctors, and then classify it according to say, safety and efficacy. We would take 10 fake reviews from doctors and say, look, we’re pushing it through this, and then it will classify it according to safety and efficacy. And then they could read it for themselves in Japanese, and say, Alright, this makes sense. It’s doing it the way that I would do it. And therefore now, I believe you.

So we built such simple demos, where it was no longer a black box, it was no longer How can I believe you? And then, as we built these demos, and we started getting some business what started happening is we realised that all these companies had additional data and we needed to calibrate it to that data. And we understood that very, very early. So into the day AI is all about pattern recognition.

So the other thing that we very quickly did is we started going to these companies and said, look, if you have existing data, please give it to us, because we want to calibrate our patterns to the data you have because that was the other level. Because otherwise, the big objection we found was, oh, I have data here, your data doesn’t match this. And so because we understood that that’s going to come up, we started asking for the data. And so then that built the additional credibility because then they knew that the data was lining up to some of what they knew.

And, for example, if you went into a market, say you’re doing work on diabetes, and there was a market player who said 70% of the market, which usually happens because, in diabetes, there are usually three big players and one of the players dominates a certain kind of the diabetes treatment option. And then, if we went and showed that, look, there are more doctors who seem to be preferring the competition, then they would turn around and say, how is that possible when we are the market leaders? And so that’s why we had to use the data to calibrate it so that there was a certain correlation between what the doctors were saying versus what the market shares indicated, just as an example.

So that really helped. And then P&G was my old company. And then I think by that time, we had a certain level of credibility, I think the way we want those is because we went in, and there were some unique challenges. And I think P&G being such an innovative, forward-thinking company, they always take bets on startups. And so I think, because we had the credibility, and they knew me, and I was able to kind of explain in their language and how this would work I think they took a punt on us. P&G being P&G will always take a punt on, PNG, and Unilever, are all very forward-thinking Companies. So that was kind of once we had that credibility in pharma, it was easier to win a P&G. So that’s how it worked.

Amit Ray: You know what, Santosh I took away something very interesting from this, which is that you ended up in the hardest market, which is Japan, and then you kept at it for six months, essentially getting thrown out of the room until you knew what they’re going to ask. And so you could pre-address it. But what kept you interested in the hardest market? Why start there and not start somewhere else where it might have been easier to get a foothold, and then you build up to the difficult markets?

Santosh Katti: No, that’s a great point Amit because our number one market is today, the US. And as a matter of fact, pretty quickly, we pivoted to the US. The reason we went to the hardest market was because back then we were trying to establish AI. And it was a very unknown thing back then this was 2015, 2016, when people really didn’t know the concept. The reason we went to the hardest market to learn this was because fundamentally, it has become a global decision-making entity.

So we knew that suppose we went to the US, somebody in the US would then involve somebody globally, and that person is likely going to be Japanese. And we knew that if we’d done that because we’d gone to the large companies, we’d gone to the toughest market across the world some of those objections would get handled. And then we pivoted our focus was Singapore, it shifted to the US. And yes, it’s always happened because we run into Japanese sitting in Brazil, who sometimes join the call and ask us these questions. We have actually run into a Turkish gentleman sitting in Boston who was equally aggressive and saying, I don’t believe you. But because we kind of worked through this rigour, it helped us address all global citizens who are decision-makers in a company.

Amit Ray: Very good learning Santosh. This is not something one would normally use as an approach. But you’re essentially saying, if you go to the hardest country, the hardest decision maker, the hardest company, whoever’s gonna set the benchmark, and you’re able to satisfy them, then you’re almost certainly going to make it easier for yourself down the line. So you can either choose to be easy upfront and then really have a tough time later or just take the hits at the start. But then you open up pretty much the entire world after that. And this is a really excellent point. So thanks for sharing that. So what were some of the other challenges or maybe some difficult decisions or choices that you had to make in the course of Graphene?

Santosh Katti: So, I think some of the difficult decisions we’ve had to make have always been around what aligns with our values. And I have a couple of stories to share that kind of indicate what they are. One of them is a pharma company where we got referred by another, and said, look, in this space, these are the best people to work with. But when we started working with the CTO and his team, what we realised is this was around two months into the engagement and we were still the senior leadership who was engaging them.

And we very quickly realised that the way they were dealing with us was the kind of upfront aggression that they were bringing, and one of my senior leadership members turned around and said, I just feel insulted by the way that they question my capabilities and openly say that I don’t know things. And what we realised is for the kind of company we have built, where we really treat our people with a lot of respect, we foster a growing culture, we foster a curious culture. And we have a rule to say, don’t hire a jerk.

For example, we say it. And it was a very large order. It would have grown our overall revenue by 25% that year if we had taken that order. But I think we took the collective decision to say that we will not take it because we don’t want to expose our people to this kind of organisation.

So I had to call the CTO in the evening and say, look, please don’t take this the wrong way. I understand that your company has a certain culture, which is a lot more confrontational, but I don’t think we’re going to succeed in that culture. Because that’s not how we’ve built our culture. And we don’t want to take on something where we already know we’re gonna fail. So it’s A, we need to be honest with you, we want you to succeed. And we know what we don’t want as a partner. And the second is, this is just who we are. And so we actually took a call to step away.

So that’s one instance, but it really won us respect within the company. And I think our employees really, really said, look, these guys look out for us. So that really helped us gain a certain amount of respect. But it was a painful decision because obviously, it was one of our clients who recommended us so we had to manage that relationship. But I think it was the right thing to do. So that’s been one difficult decision. So it always comes down to sometimes what’s the right thing to do when there’s a lot of money on the table. So a lot of those decisions come down to that.

I think the second was, as we started with some of the legacy analytics business, and there was a client who was in some of the legacy business, and we kept advising that client to say, look, you need to move, this is an outdated technology, it was an analytics technology. And then we continued to support that client for three years, even though the technology was outdated, we actually had one person who was just working on this, and we were making no money on it, but we still supported that person.

But then this client actually went down in the market, looked in Singapore, looked in India, and they could not find one person who wanted to work on this technology anymore. And you know how red hot the analytics market is, unless it’s hot technology, and nobody wants to work on it. And that was one of the other things where it was a difficult decision for us to go and tell them that look, we don’t want to support this anymore.

And I think we had to do it in a way where we had to bring in the right amount of transparency. And the way we did it is we actually said, look, the one person we have who is working with this also wants to move on. And we facilitated and said that if you want to directly hire this person, please talk to him.

But that person did not want to join, because he also said the same thing saying, look, I’m getting something much more exciting to do, I don’t want to come and join you. And so sometimes this decision has also come down to helping clients understand that look if you’re working on technologies, that talent is not considered to be exciting enough, then over a period of time, if you don’t move out the market will force you to change your technology base.

So those were a couple of difficult decisions where you got to look at your talent, you got to look at your client. And sometimes there is always a disconnect between what the client wants, and what’s the right thing by the client and by the talent. And those are the places where we’ve had the most difficult decisions to make.

Amit Ray: Yeah, sounds quite challenging, actually. You’re right, because this is relatively early in your business, and you’re giving up large sums of money. In fact, if anything, in the second example, by supporting an outdated technology, you’d be the only one doing it. So it would be almost as if there was no choice but to keep working with you. It’s like what happens in banks now with mainframes, there’s hardly anybody left who can do it.

But you’re gonna pay them whatever it takes to keep it running. So interesting that you had to make these challenges and you chose people over money, which I think is fantastic. So let’s talk a little bit about the later stages. So your business has been growing, you’re actually in multiple countries as well. So how have you managed this growth or, as in what was your thought process behind growth, where did you choose to focus if at all you chose to focus, and things like that?

Santosh Katti: We initially, as I said, focused because it was healthcare only. And if you see how healthcare works, the US is the largest market, India has another large market for generics and Japan is very big. And then Switzerland is very big. So we kind of kept our focus on these four markets initially. Then what we learned over a period of time is, it’s better to look at it as the English-speaking markets versus to look at it the way we were looking at it as the pharma centres.

And there was a reason for that. One is, as we understood India, we realise that for small companies like ours, unless you’re a huge company, you will always find that for the same amount of shall we say, bandwidth, if you need to make a choice between the US and a developing market, the US will always be far more profit, bang for the buck. So we have realised that look, for a small company like ours, we should only focus on the developed markets. And the other thing we realised is, as much as we thought that you’re upwards is one block, it doesn’t.

When you go and look at Switzerland. And we still do a lot of work across some of these markets. But it is driven by a central decision-making body with the headquarters of one of the pharma companies, what we realised is that they all operate as small independent countries, there is really not enough scale.

And Japan, what we realised is that the sale cycles are really, really long. And all of these are difficult choices that only come up when you’re as smaller a startup as you are where you need to make much more careful choices on where, as you said, the bang for the buck is the best. And so the last two, two and a half years, we’ve made a conscious decision to say we’ll only focus on what we call the English-speaking countries. And English-speaking countries, what we have realised is the biggest is the US and there is almost like a spillover effect to the UK, Canada, Australia, a bit of South Africa, a bit of Singapore, a bit of India.

But we single-mindedly focused on designing for the US. And when we do that because we’re very close to India, there are times when they turn around and say why don’t you start work with our Asian countries first, and we say if so we want to work in either Australia or India, because those are your big English speaking markets. So sometimes the US companies want us to first work here and establish credibility, in which case we can. But that focus is really helping us because we are now single-mindedly focused on one market, other than whatever we build in India.

And so that’s really helping, we’ve now got the sales office in the US, as a matter of fact, on Monday, I’ll be traveling to the US. And between now and the year-end every month, there’ll be somebody from Graphene, probably in the US. That’s the kind of clarity. If you are not doing anything else otherwise before you would be in six different markets. But all that is now get what focused on because we see the scale in the US and then the spillover in the other markets.

Amit Ray: Yeah, this is interesting also, because you’re therefore able to be there for your customers versus like you said, if you’re in 10 different places, and you have only five people, you are going to only get there once every three or six months. And then you will definitely be out-competed by somebody who’s there locally. Versus you’re almost local to that person because you’re there so frequently. Yeah, this is interesting. And the ROI point is a really good one, either on investment or on effort or on time it makes sense because you can’t afford to have a 12-month cycle before you get paid for something, or to take too long, or to work in a complex environment, like a different language where you’d have to get somebody who can actually operate in that language and then they can only do that. So it’s interesting.

Santosh Katti: Yeah, and as you say that Amit, you know the things that are playing back in my mind, and I’m just leaving this for other people who are taking a similar journey is I think many founders, I speak to, many people who I speak to have a couple of barriers in their mind when they look at the US right one is Oh, it’s a different time zone. The second is everybody’s doing it. Why should I do it? Let me do it differently. Maybe there’s an opportunity here. And the third, of course, is the US does have more compliance demands and all these three things usually make people say why I start there.

But I think after having done everything else we’ve landed where most successful companies land. You know, if you look at most of the Indian companies that have scaled today, whether you take the Infosys of the world, the TCS of the world fundamentally, they have not been able to succeed without writing the US waves. It’s almost like that learning never goes away. I mean, if I were to do this all over again, I would probably start a few years earlier to single-mindedly focus on the US because we did try other things. But to your point, if you really want to focus on a scalable bang for the buck, it’s only the US.

Amit Ray: Yeah, and maybe it’s also a function of the fact that because everybody supports the US, the US clients also know how to work with you. So there’s that bit as well like they’re educating you, but you’re educating them as well. And so eventually, it becomes a much easier way to work. Even if you went to a small business in the US, they will probably understand outsourcing and what to do and the time zone problems, and all of that. But if you went to a small business, in a small European country, for example, they might really struggle to work that way.

Santosh Katti: Yeah, no, that’s a great point. And I think, especially the US clients are now so used to seeing Indian startups, Asian startups, that, you know, you’re never the first one. If anything, there’s almost like a fear of missing out saying, what if I don’t work with these startups? So I think it’s definitely a different space versus other countries.

Amit Ray: Right. And maybe a last question Santosh, since we’re on the topic of what people can learn from your experience. So what might you have done differently? You know, you mentioned you would have gone earlier into focusing on the US, what else maybe you might have done differently? Or what advice would you give to other aspiring entrepreneurs?

Santosh Katti: So I think my top three, and I keep thinking about the top three things that I’ve learned in this journey. The number one that I keep telling people is, don’t get too emotionally attached to your own ideas. Sometimes you passionately feel something is going to work. And if it is not working in the market, if it’s not generating revenue, just move on. Because many times, I think what has really helped us succeed is there are just times that we’ve invested a lot in certain ideas, and it’s worked with a few clients.

But then it has not worked beyond. And we’ve been disciplined enough to not get emotionally invested, and we have moved on. And I think that’s one thing I’ve learned, because in the startup world, in the tech world, things change so fast that even something that works, for example, some of the things that we used to do three years ago, were very, very disruptive. But in three years, what’s happened is a lot of the more forward-thinking clients have gone and built in-house capabilities in these.

And if we continue to invest there and get emotionally invested in saying, this is what we did, well, then we won’t see what’s coming next. And then very quickly, we will get shut down. So I think this ability to stay a little detached from what you have invested in emotionally and say that look, no, just move on to the next thing is crucial for survival I think. You know, Andy Grove calls it only the paranoid survive but I think this is another way of looking at it.

The second is how you really grow your talent. And I would say that, even now, after all of this, we don’t do a good enough job. And then we are learning about it, right? And why I say this is the younger talent is extremely aspirational. And they want to see a constant improvement in challenges. They want to see that, hey, what’s the next interesting thing? It’s not really the money alone, it’s really the thrill of the challenge. And if you don’t constantly challenge them with new interesting things, they just feel they’re stagnating.

And it takes a lot to build an extremely proactive talent management system, especially when you are a startup, what happens is you get a few people who are great, but they kind of hold the engine together. But that doesn’t work because the people who are holding the engine together don’t want to be holding the engine together, they want to move on to other things.

So that’s something that if we were to do it all over again, we would start by saying look, how do we build the proactive excitement management organisation from a talent standpoint, I call it so because I think that’s where some of this talent loss is happening. If you have to differentiate, I think that is something that you need to really, really do differently.

And I think the third thing is, if we were to do this all over again, I think the IP that we went and built is something that I think there were parts of it, which I feel we should have just gone and bought. Because I think we were focused on this, we were caught up in this. Look, if we don’t build everything in-house, then we are not going to have a valuation, if I may say so.

But what we’ve learned is the more you’re in this self-funded start-up space, the more I think the challenge is to say, look, what are some of the things where you can just buy it from outside or outsource it and to lesser yourself so that focus on here is the few things that really make a difference and how do you not build everything else in house buy it from somewhere, support from somewhere, we did it. But I still think there’s a big opportunity, and that’s the kind of world we live in today, right?

The number of APIs that are out there, if you just go and look outside, there are always APIs that are available. So in the tech world, I think that the ability to know what’s out there, because 9 out of 10 times there is somebody who’s doing a better job than you and there are a lot of things that are not your core capability. So that’s not an easy one. But I would say that if we could do that better, then we would probably be in a better place by now.

Amit Ray: Right, thanks a lot Santosh. There’s been a lot of good takeaways over here. So if I might just summarise, I was writing them down while you were speaking. So the first one, which is when you first got started, and you were looking for your first customers, networks don’t always work as well as you think you might, for various reasons, and mostly to do with the person’s organisational situation.

So obviously you should approach your networks, but you should be prepared for cold calling and just doing the regular sales route. And you came up with an interesting idea around using an agent or a person like the know-who kind of person who’s going to introduce you to people.

The second one is because you’re a bootstrap company, you need to make money. So it would help if you sold whatever it is that you can initially, ideally in the same space or in something that is still building up towards, you know, the business you want to run. Because this allows you to build credibility. I think my takeaway there also was it takes a year or two years for people to have heard your name enough to know that this person is still around, so we can actually work with them. And so for those one or two years, you need to have something to sustain yourself. So sell what you can.

The third point was around smallness, which can be a strength for a certain kind of client because they’re looking for somebody who’s agile, somebody who’s going to actually pay them attention, somebody, for whom this size of business is going to be meaningful, versus the large players who are just probably just going to treat them like they’re 100 priorities.

Fourth, one, important thing to me was the founders being the first salespeople and continuing to sell as long as possible. Because you learned so much about the customer, you can shape your product based on that. And then you hire later when you’re at a stage where you can afford such people.

You also had a lot of stuff to share on talent. So I’ve tried to put them all together into one bucket. So one is that your early hires come again, from your past networks, people who know you, people who respect you, people who trust you, and vice versa. The related point here was that actually, you might get good talent just based on reputation. And in today’s market that feels like a particularly important tip, which is if you’re well known, then people may want to come and join you just for that experience.

But overall, I think what you’re saying is, one should plan for fewer, more expensive people. And so, therefore, productize what you can focus on what these people actually want to do, keep on the bleeding edge so that they are learning something and so therefore, you know, that’s how you keep folks interested.

The next one was I think focusing on ROI as a small business. You can’t spread yourself all over the place. And that means anything that increases the margins, reduces the time to delivery, has a short decision-making cycle, and lower complexity. Basically, you’ll get more output for the time invested. And hence things like going to develop markets, not getting attached to ideas, if the ROI is dropping, buying, like what you said versus building, if it makes sense, and if it’s not core to your proposition.

The other point was actually going to the hardest market and learning from there and learning from the objections they have. So you can build your pitch. And if you need to demonstrate your product then demonstrate it versus just talking about it, because you’ll never really overcome anybody’s objections with words.

And I think the last point, which you mentioned, is somewhere in between, but I thought it’s a good point to end with aligning with values. So even if you’re giving up your business, your own people will respect the company that they work for. Because you aren’t just saying things for the sake of seeing them, you’re actually aligning with them.

So, Santosh, really insightful, actually. And many of these are things that I can apply to my own business. So thanks for the free advice here. So thanks a lot for joining us today. And for those listening at home, if you liked this episode, and I’m sure that you did, please rate it five stars. And also a link to Graphene. If you’d like to learn more, maybe you’d like to work there. I know Santosh is looking out for great talent in multiple markets. So thanks a lot. We were Santosh and Amit with ShopTalk. See you next time.

Santosh Katti: Thank you so much. This is a privilege. Bye.

Our Guest : Santosh Katti

Santosh Katti, an engineer from the National Institute of Technology, Karnataka, and a Master’s Degree Holder from the Indian Institute of Management, Calcutta, worked in the consumer goods & healthcare segment with Fortune 500 companies like Procter & Gamble and Johnson & Johnson. In 2014, he co-founded Graphene, an AI-based company, that provides unbiased insights from opinions expressed by stakeholders in the healthcare and consumer goods space.