In this week’s episode of The Breakout Growth Podcast Sean Ellis and Ethan Garr chat with Rajesh Jain, founder and managing director of Netcore Cloud. Rajesh bootstrapped Netcore into existence in 1998. Today, still without any outside investment, this global marketing technology company earns nearly $100 million in ARR.
More than five thousand brands use Netcore to help create digital experiences for their customers with email, personalizations, nudges, and other tools. In India, the company has captured about 75% of the B2C email market, and they are a dominating force in many emerging markets around the world. But for the first ten years of Netcore’s life, growth was slow.
That changed when Rajesh realized that despite his early successes (he sold his first business for $100 million), he did not have the right leadership skills to drive Netcore to its full potential. So, with that self-awareness, he put ego aside and hired a CEO to lead the company’s next chapter.
That decision allowed Rajesh to provide leadership in different ways, and his story offers valuable lessons for anyone evaluating how they can make an impact in their roles. At the same time, Netcore was able to blossom. Today the company shares similarities with businesses like Braze and Twilio, offering services that help customers acquire, engage, and retain users.
So join Sean and Ethan as they learn from Rajesh’s thoughts on everything from the hidden value of conferences to “understanding customers’ vocabulary” and much more.
The Breakout Growth Podcast is also on YouTube: Click Here
- Netcore, a B2B SaaS company for B2B companies (05:19)
- Rajesh’s Early success and the “Midas Touch” fallacy (25:29)
- Moving into Martech (41:44)
- What a new CEO brought to the table (44:01)
- “Don’t lose someone else’s money!” (33:38)
- Growth through acquisition (38:40)
And much, much, more . . .
Announcer 00:00:08 Welcome to the Breakout Growth Podcast where Sean Ellis and Ethan Garr interview leaders from the world’s fastest-growing companies to get to the heart of what’s really driving their growth. And now here are your hosts, Sean Ellis, and Ethan Gar.
Sean Ellis 00:00:26 This week’s episode of the breakout growth podcast, Ethan Garr and I chat with Rajesh Jain founder and managing director of net core cloud, a full stack growth platform for marketers product and growth managers. Not many companies approach, a hundred million in ARR and even fewer do it without raising any money, Rajesh and net core did both. And they may just be getting started. Ethan, what stood out for you in this conversation?
Ethan Garr 00:00:55 Well, I think Rajesh really knows how to get out of the way. Um, we’ve chatted with some amazing founders and for the most part, they’ve been the CEOs of their organizations, but I’m always amazed when we hear about founders, who’ve had enough self-awareness and humility really to step aside and let others lead Rajesh understood that what he’s good at, what he’s passionate about. And there was this moment when he knew that to serve the company best and to give net core its best chance for breakout growth success. He was gonna have to put someone else in the CEO spot and let them operationalize growth.
Sean Ellis 00:01:26 Yeah. You know, it could be really hard for a founder to put their egos and pride aside. And for Rajesh, I think the risk increased because it was really successful early in his career. He sold his first company for a hundred million dollars in cash. And it’s easy to let that kind of success make you think you’re unstoppable. Fortunately, he did have the realization that his leadership alone was not going to allow net core to achieve its full potential. So, um, you know, it reminded me of our interview with Yaya, uh, you know, the, the co-founder and chief revenue officer at Tru bill mm-hmm <affirmative>. Um, you, when Yaya started with the business, he was the CEO, but he stepped aside so that his brother Haroon could assume the CEO spa and it was all about recognizing what was right for the business at the time.
Ethan Garr 00:02:15 Yeah. That was a really great interview as well. And I think it, it’s, it’s a lesson, this is a lesson for our listeners that goes beyond just the C-suite, whether it’s recognizing that your sweet spot is early stage startups or realizing that you have particular strengths or weaknesses that make you better suited for one role versus another. I think it’s just super important to, you know, occasionally just take a step back and try to as dispassionately as possible take stock of who you are and what you’re good at and then adjust accordingly.
Sean Ellis 00:02:43 Yeah, for sure. And you know, it was really interesting to talk about that, but that’s just one of the many things that we discussed that were interesting and, you know, RAs has, has set himself up as a thought leader for his organization and for the larger world of growth. And he’s provided some really great tips to latch onto, you know, from, from learning, uh, you know, a couple things that really stood out like one, uh, learning what he called the customer vocabulary. Uh, I thought that was, that was super cool. And then another thing that’s super important probably for all startups, um, not making a, not allowing you to have a habit of, of making losses in the business. Yeah. You know, that’s, uh, it’s, it’s natural for a startup in the beginning to have those losses, but because he’s, self-funded, they, they, they built that discipline in early. So, um, there was just a lot of things that contributed to a, a thoughtful discussion.
Ethan Garr 00:03:36 Yeah. I, I, I, I enjoyed this one and I think it’s been neat. Like the last few weeks and months we’ve been bouncing around with all these different personalities, you know, some type a leaders, um, and then people like Rajeshwho they just sort of bring us a calm thoughtfulness to their approach to growth. And I think it, it helps our audience. It helps you, and I really get, you know, this broad picture of the inner workings of how growth works across the spectrum.
Sean Ellis 00:04:00 Yeah. And, um, there, there isn’t one right way to approach this and, and hopefully, uh, we’re, we’re helping all of you out there to find inspiration for your journey. So should we get to at Ethan?
Ethan Garr 00:04:11 Yeah, let’s do it.
Sean Ellis 00:04:22 Hey, rose. Uh, welcome to the breakout growth podcast.
Rajesh Jain 00:04:25 Thank you very much, Sean. Glad to be on your program.
Sean Ellis 00:04:28 Yeah. We’re excited to have you. So I’m joined with, uh, by my co-host Ethan, Gar. Hey Ethan.
Ethan Garr 00:04:33 Hey Sean. Hey Rajesh. Good to see both of you. Hi,
Rajesh Jain 00:04:35 Ethan.
Sean Ellis 00:04:36 We’re recording this on Memorial day here and uh, of course Ethan and I, uh, we, we scheduled it without, without even recognizing what day of the week was, but fortunately, uh, I didn’t think either of us had any big trips planned, so this
Ethan Garr 00:04:50 Is, uh, it just lets our audience know just how committed we are to this podcast. <laugh>
Sean Ellis 00:04:56 Absolutely. Absolutely. So, um, I’m, I’m sure that we’ve got, uh, some listeners who are familiar with net core, but there’s probably a lot of listeners who aren’t. Um, so, uh, in India, I understand that you have 75% market share and uh, but still that doesn’t necessarily explain what net core cloud is. So can you give us a, a quick explanation of what it is?
Rajesh Jain 00:05:19 Yeah. Sean, so, uh, net core, like you said, a 75% market share in email in India. And that’s one of the things that we do. So network can best be described as a company, which is a B2C SaaS company, uh, essentially a, a B2B SaaS company for B2C companies. We help companies with their communications engagement, uh, product experience, uh, solutions for building better relationships with their customers. So for the us audience, I think the best way to describe us is we are a little bit of Twilio where we do SMS and email. Um, uh, we are also a bit of brace because we do the marketing automation piece. And then we are a few more things because we also do personalization. Uh, we also do product experience, which is nudges, uh, to help, uh, uh, brands basically, uh, help, uh, their customers, uh, on the contextual walkthroughs and so on. Uh, and I’ll talk about why we have to do so many things in India later on. I’m sure we’ll get to that. <laugh>
Sean Ellis 00:06:24 Sounds good. So, um, and then what, what about the markets that you serve? Where are, is it, is it mostly India or have you spread beyond India?
Rajesh Jain 00:06:32 So we are in India and many of the emerging markets, uh, they account for the bulk of our revenues. So Southeast Asia, middle east Africa, and over the last couple of years, we’ve been expanding in us, uh, and Europe. And those are the two areas to, uh, geos really where we see a lot of future growth coming.
Sean Ellis 00:06:52 Yeah. And then am I correct? Uh, in, and I heard a number that you’re doing more than a hundred million in ARR. Is that a, is that an accurate number?
Rajesh Jain 00:07:01 Oh, yes. Uh, we are close to a hundred million, uh, as of March, uh, this year.
Sean Ellis 00:07:06 Okay, excellent.
Rajesh Jain 00:07:07 We’ve built it organically through the years, uh, with a few acquisitions, but, uh, uh, um, we’ve basically, we are what I call a profit con you know, profitable, private, uh, bootstrapped and, uh, highly valuable. Uh, so it’s one of those rare companies which you find in this space, uh, but, uh, yeah, a hundred million is, uh, where we are
Sean Ellis 00:07:27 Well, fantastic. It’s gotta be exciting as a founder from, uh, from kind of the, the early days when it’s just a, an idea germinating to, uh, to be able to see those kinds of numbers is super impressive. So congratulations on that.
Rajesh Jain 00:07:40 Thank you. It’s been a wonderful journey.
Ethan Garr 00:07:42 Yeah, I know you, um, I read you, uh, you founded the company over 25 years ago. I think so, uh, at the time Sean and I were, we were just cutting our firstname.lastname@example.org at the early, uh, early side of the.com. Uh, boom, can you tell us a little bit about the backstory, how the, how net core cloud came into existence and, uh, just where, you know, how you, the progression from there to here today?
Rajesh Jain 00:08:05 Sure. So, uh, I’ll start the story a little before net core. Um, while you were cutting your teeth at uproar, I was doing, uh, portals, uh, director at the us audience, uh, um, company, which I call, which was India world. So we were India’s first internet portals. I’d launched that in 95 after multiple failures, uh, upon my return from the us after doing my masters at Columbia to become an entrepreneur in India. And, uh, I’d launched India world in, uh, early 1995, just around the time Yahoo and eBay had launched. So we’re the first from India. We grew to be the largest. Uh, we are very small as a company. We were 20 people. Uh, my wife and I essentially, uh, ran the business and, uh, we were about a million dollars in revenue. When in November 99, I got an offer to which I could not say, no, we got an acquisition offer for over a hundred million, uh, predominantly all cash. So those were the heavys
Sean Ellis 00:09:01 Good timing of <laugh>.
Rajesh Jain 00:09:03 Oh, I think, uh, awesome timing as, as my investment banker, uh, uh, uh, Merrill Lynch, they they’re founder and CEO, uh, DSP me in India, said more important, uh, than knowing when to enter a business is knowing when to exit a business.
Ethan Garr 00:09:21 I I’m thinking that was an easy decision. <laugh>
Rajesh Jain 00:09:24 No, it wasn’t for my, both my wife and me, we had sort of built a business over five years, um, and, uh, almost, you know, it’s, you get very attached to it. Uh, we spend most of our time just working through, uh, and, uh, but as he Qari, you know, from DSP Mely explained to me, said, radi, look, this is an offer. You will not get again. Uh, you’ll have the freedom then to do whatever you want in life. You are a creator. You, you, you can come up with new ideas, go out and build new businesses. And, uh, sort of that few conversations with him persuaded me to accept the offer. Uh, and, uh, around that time is when net core was born around 98, just, just before I had sold, uh, because India world was all portals. We were doing a little of Linux based servers for enterprises in India.
Rajesh Jain 00:10:14 That was the early version of net core. And for the first 10 years, we did not grow at all. Uh, um, I mean, we were like, uh, doing probably about $200,000 in, uh, in revenue. Uh, I tried a lot of things. I built probably the world’s first block search engine. Uh, I built a thin client thick server solution for countries like India, where you could bring down computing costs. Uh, I built an RSS IMAP aggregator, you know, when the heavy days of RSS and blogs, uh, were growing. Uh, but I couldn’t sell any of those. That was my problem. <laugh> uh, and then in 2007, I decided I was really the bottleneck in the growth of the company. I then professionalized the management. I got in a CEO, I got a CEO and I said, look, I can build things, but I can’t sell it, help me build this out. And that’s what they’ve done the last 15 years have been, uh, very good growth for us.
Sean Ellis 00:11:10 Wow. So did you, do you think it was, um, you think it was simply a matter of being able to kind of position and sell it, or was it, uh, was it that they helped to tweak the offering to make sure that the, the offering was right for the, for the market or a combination? A
Rajesh Jain 00:11:28 Combination of combination of both? Uh, Sean, I think, uh, we, we did some pivots because the, the, the Linux based mail server market was just too small in India. Uh, but because of some of the experiments that we were, we kept doing, we, uh, latched on to enterprise, uh, uh, services, uh, in India, enterprise software.
Sean Ellis 00:11:49 And then that’s, that’s when the offering kind of came together. And what, like, what did you, what did it start to look like when you actually yeah. Knew that you, that you had something people actually wanted?
Rajesh Jain 00:12:00 Right. So the first offering that we came up with was, uh, enterprise SMS services. Uh, so essentially, uh, what we did was, uh, uh, mobile was growing in India, uh, enterprises wanted to interact with their customer base. Uh, so we launched SMS services shortly after that, given our expertise in email, we came up with email services. So brands were collecting, uh, email, email ID, and they came to us and said, look, uh, you know how to do email very well. And, uh, what we want you to do is basically help us send out mass mails to our customers, bulk mailing, what we called at that time, and that, uh, those two became our, uh, initial offerings. And, uh, they have both stayed till now. They are very, very profitable businesses, business lines for us. And, uh, so that was around 2008, nine, and in 2000 and, uh, 15, uh, we, uh, added on the MarTech automation, uh, uh, suite. Uh, so we realized that we were at the bottom layer of the, of the services, the communications layer, and it was the early days of MarTech that we needed to do, uh, much more. We needed to get into journeys, uh, uh, uh, journey orchestration, uh, customers were asking us for automation and by just listening to them, we just kept adding on our newer and newer services as we went along.
Sean Ellis 00:13:23 And, and, uh, sorry, one more question. <laugh> no worries. <laugh> I know Ethan’s chomping at the bit to, to get in there. Um, did you, uh, so, so essentially, yeah, that’s a lot of time between 1998 and, and 2008. Um, do you think that, uh, that your staying power was, was, uh, largely a, a part of being able to have that earlier exit that, uh, that maybe allowed you to be more patient? And how did you, how did you know it was, we’re not, you know, balancing between we’re being patient and waiting to get this market right. Versus this is just a hobby business and I made my exit, and now I’m just, uh, <laugh> just gonna have fun the rest of my life and not make any money. Like how, how did you balance between the two of those? Yeah.
Rajesh Jain 00:14:11 Great, great, great, great question, Sean. So I’ve always been a person who loves new ideas. Uh, when I, when I try to come up with the ideas, I don’t worry too much about, um, uh, about how it will sell or how I, uh, what’s the potential for it. I just love new ideas. And I think, uh, while I think the products are good, we are probably way ahead of our time. And as happens, you need, you really need to get the timing right too early, and you fail too late and you’re gonna deal with a dozens of competitors. So I think in those days we were a small team. Uh, um, so the burn was not very high. We had some, some cash flows coming in from our Linux mail server business, but I, I wanted to build a bigger business at that time. I was not very ambitious.
Rajesh Jain 00:15:02 Uh, my previous company was 20 people. I said, you know, it would be good to run a company of a hundred people. What does that look like? Because the only place I’d worked at was in the us nine X for two years, which was 10, 10,000 people or something that big. So, um, uh, so in entrepreneurship I said, okay, uh, I’d love to create a larger business out of it, but I had no idea how to do it. I had no idea how to, uh, manage, uh, more than a small number of people. <laugh>, uh, and that’s when a friend of mine said, radish, look, you need to, you need to get in a CEO, CEO, you’re good at certain things, but there are lots of things you’re not good at. And I think that’s probably the best, uh, advice I got and, uh, I’m glad I heated it. And, uh, that really, so since then, net has always been professionally run in the sense that I’ve always had CEOs. Um, I’m not very good at managing a lot of people, so I only have to now manage one person. And I love that. So that gives me a lot of chunky time to think, to read, uh, to travel, to meet with people and so on.
Ethan Garr 00:16:02 So in that role, now that you have professional management in place, do you, do you, have you, you, you mentioned learning from your customers, understanding their needs. Um, are you part of that? Are you part of the engagement with those customers, even at the level that you’re at or, and how do you do that?
Rajesh Jain 00:16:21 Yeah, so that’s what I love talking to customers. Uh, I think in the, uh, in the first 18 odd months of the pandemic, I must have spoken to 150 plus CMOs, uh, with a few ideas that I had, you know, you could do zoom calls, uh, so you could do a lot of conversations. And I think the key is to essentially understand the vocabulary. So rather than just me talking, what I like to listen to is the words that they’re using to describe, uh, some of the pain points that they have. Uh, and there are two places. Typically you get this, you get this in, uh, direct conversations that you can do. And second is at conferences, you know, when you’re going out. And I love attending conferences in the us where, you know, for two or three days, you’re totally immersed in a different world.
Rajesh Jain 00:17:10 You’re not distracted by what’s going on in the company. You’re not distracted by emails or, uh, sort of WhatsApp messages that you’re getting. Uh, and then you’re able to connect the dots. You know, when you sit 15, 20 hours listening to, uh, different people speak, that’s when things start falling in place, the mental models start forming. And that’s the part which I, which I love a lot. And that’s what I did in the previous three weeks, you know, meeting with a lot of customers, uh, listening to them. Uh, I, I also talk about some of my theories, you know, what my view worldview is. Uh, and then I look at what, how they react, what are the words that they sort of, uh, uh, reflect back, uh, to me, uh, what are the phrases that they use to describe their problems? And I think if you listen in that sense, I think automatically the product ideas, the positioning ideas start coming through quite well.
Sean Ellis 00:18:00 Yeah. It’s, it’s amazing. Um, that I, I think so many people look at conferences and, and look at it purely from the view of how many leads, how much time and money was the ROI there. And, and for me by far, what you, what you’ve said is, uh, you know, being able to immerse yourself in, in customers and I, the number of times where I’ve spent, you know, two or three days totally, you know, hours and hours, and then, then going out at night and having drinks and dinner, and then back on the next day, and you’re exhausted by the end, but just somehow the pieces start falling together and you, you start to realize, okay, this is where the business is. And, and I, I don’t hear that talked about enough. So that’s, that’s really cool to hear you mention that, because I think that’s the, by far the biggest value that, that a conference has to offer.
Rajesh Jain 00:18:53 And it’s not the same thing, just listening to, you know, a lot of YouTube videos, uh, or, or, or, uh, even podcast because the connections happen when you are, what you like, the word you used immersion. I think that’s what a conference really does. You know, those eight R nine R when you’re just absolutely there stuck in one place, uh, with no distractions. And, uh, just listening to the words, sort of come by and then how the, how the mental models start to perform in place, how the brain makes the connections. And I think that’s, that’s the best place for ideas.
Ethan Garr 00:19:26 Yeah. And I think, uh, we really felt that during the pandemic cuz the remote conferences, they were valuable to, to an extent. But I think now that we’re coming back to in person conferences and events, um, I think it’s that, you know, there’s that glue that, that you can’t get unless you’re with people having those chats. Like, and, and as Sean said, it’s sometimes it’s not, it’s not in the talk itself, it’s, you know, in the conversation before or after, uh, it’s those little moments, but I just wanted to, uh, to ask you, um, when you come back from conferences or talking back, talking to customers, I think you’re, I think I read that your company is close to a thousand people. Now you can con confirm that, but how do you, what’s your me method for evangelizing those learnings back into the organization in meaningful ways?
Rajesh Jain 00:20:12 Okay. So, uh, great question. So, uh, I just returned last week from the us three conferences and, uh, uh, now that, so I, I, I, I do two things. Uh, I, I write a daily blog. Uh, so I wrote a series over the weekend on a tale of three conferences. And I send that to about 20 of the top people, my core team internally, uh, putting together all the learnings from the conferences, uh, uh, which were there, which I attended. Uh, and I’m gonna of course put that out on the blog also. So then a wider audience, uh, gets access, uh, to it also. And I’m quite open with my ideas because I always believe that, um, if, if you share your ideas, if you sort of open source your ideas, you get a lot of feedback from other people. Uh, the second thing is that, uh, what I also tend to do is, uh, uh, select a few phrases, you know, from some of these conferences, which I then try and distill down repeatedly in one to one conversations, uh, uh, in chats with, in, in smaller groups of people that look, these are the themes, which are there, this is what tomorrow’s world looks like, because what conference are doing is giving you a glimpse of the future in some ways.
Rajesh Jain 00:21:24 So, uh, like one of the conferences I attended was on, on the, on, on, on blockchain essentially, uh, uh, permissionless, uh, in Palm beach was a new area for me. Uh, but the sense I had going in was that crypto and web three are, are gonna be very important. And at the conference, uh, I felt the same energy, which I used to see in 1995 to 1997, attending the, uh, internet conferences in the early days. So you have the extreme believers and you also have the disbelievers and, uh, uh, the believers are really the ones creating the new words imagining tomorrow. What tomorrow is, is, looks like, I mean, as an entrepreneur, really what you’re doing is selling a vision of tomorrow because that’s really the only thing you have along with your passion. And, uh, uh, that’s what I try and do internally is to tell people that, look, this is what, what the future looks like, and we’ve gotta, uh, make some investments in building out, uh, creating some initiatives, creating some experiments in building out, uh, uh, uh, a few creating a few projects, which can help us build out, uh, some ideas for tomorrow’s world.
Sean Ellis 00:22:31 Mm-hmm <affirmative>. So I, I wanna, I wanna take it back to something you said earlier, um, about when you brought in, when you brought in the, the CEO and, and, uh, that was kind of when the, when the pieces started to come together, um, what, what specifically did that CEO do differently from, from how you had been approaching things? When, and, and why do you think those things made the difference?
Rajesh Jain 00:22:57 So I think, uh, ABIs who was our first CEO was very different from me. So I was the sort of thinker, creator, uh, thinker Abijit was the, uh, pure business guy. He came in saying, radish, we need to create a discipline on sales. We see need to set up processes. We need to create weekly sales reviews. We never had that. So my approach was to meet with people and say, okay, you sold so much last week. Okay. You must have done your best efforts. Thank you. Very good. And Aboriginal said nothing like nothing doing, we need to set targets, we need to hold people accountable. We need to set up processes. Uh, uh, we need to be meeting, uh, meeting customers a lot more to understand what do they want, rather than you sitting and deciding what is the thing that they should be having.
Rajesh Jain 00:23:45 So he, he, he brought in this whole, uh, sort of a complimentary skill to me, uh, which I think made all the difference in laying the sort of first foundations, uh, for net core. Uh, he was complimented by a co who brought in the operational discipline. So we had no project management. I mean, think about it. The largest team that I had run earlier was 20 people. Um, and that too, I was traveling half the time. So, uh, my wife, she used to manage, uh, the other 18 people. Um, <laugh> uh, so, uh, I was not very good at delegating. I was sort of forced to delegate because I, I had to travel. So with Abbi coming in, I think we brought a discipline. Uh, we had forward looking numbers that we would start thinking about, okay, this is what we need to do. Uh, sales people were held accountable and the product teams were held, uh, accountable for the product that they would create. And we started listening more to market feedback on what customers wanted, rather than us just creating things and taking them out to market. So I think that was the real start of building a proper business. You know, I think earlier, like you said, it was probably more of a hobby, just try out new ideas. I had plenty of money, so, uh <laugh> yeah, yeah. Try out things sometimes
Sean Ellis 00:24:56 Too much money. Can, can give you too much patience. <laugh> go
Ethan Garr 00:24:59 Ahead. I, I was gonna say, um, really about, uh, my question’s really about timing then. Um, it sounds like, you know, that was a slow process before you decided to bring in that professional team, as you, as you described with the benefit of hindsight, when is the right time for companies to think about being bringing in per, I mean, I, I, I’m guessing that would not have worked on day one, but it worked on, you know, 10 years later now that you look back, when was, when is the right time for companies to do that?
Rajesh Jain 00:25:29 I think it’s important for the founder to understand once, uh, his or her limitations. Um, and I think the mistake I made Ethan was that because I was successful once I thought I had the mid touch, I thought that whatever I would do would basically just sell itself. Um, uh, in India world, I, I came up with a set of ideas, you know, portals, which Indians globally loved. It was a B2C business, uh, primarily, uh, we also used to do websites for Indian companies and I was early. Um, so I had the advantage, uh, of basically being the first, the pioneer. Uh, but then I, I think the right time is really when, uh, you realize that what you’re doing is not taking the business forward. Okay. So, uh, in hindsight, when I look back, we stagnated for too long, we probably lost four, five years because, uh, I think of my sort of, um, of hubris, uh, you know, uh, that, uh, I thought I could do no wrong. I was very successful, even though I had failed earlier in my, uh, uh, in my, uh, ventures before India world. But I thought after India world, I could do no wrong. And now when I look back at my life of 30 years as an entrepreneur, I’ve probably got two successes and 30 plus failures. Um, uh, um, it’s easy to sort of look back and reflect, but, uh, at that time I really thought I, I, I, I, I could not fail. I think that, that was probably my, my mistake.
Sean Ellis 00:27:06 Mm-hmm <affirmative> yeah, that, I think that, that goes back to that phrase of why, why it makes sense, but fail fast. Like, I, I used to hear that and I, I found that so annoying, but if you, uh, if you think about it in the, in the sense of how you’re saying it, if you fail fast, you can have 30 failures and two successes, and your career can be dominated by the successes because you succeed over a long period of ti time. And, and if you’re, if your failures are recognized as failures and you move on to the next one, fast enough, then you get the learning from ’em. And, uh, and again, you wanna be able to put your time into the, into the things that have that potential and, and, and ride those things.
Rajesh Jain 00:27:46 Yeah. In fact, just actually what you said, just, I wanna go, go back and address, uh, uh, Ethan’s question, I think, toward this important advice for entrepreneurs also is that when do you bring in, uh, sort of the, the professionals in the business? And I think for entrepreneurs, it’s one of two things. Either you are very good at the product. Okay. And in which case, most entrepreneurs will not be very good at the go to market and the selling. So I think that’s a good time to start looking for people who are skilled. You, you can get the early successes, but, you know, building a skill business is not going to be easy. The second is that if you are good at sales, you, you then want to get someone who’s very good on the product side, very early on. You need a team, okay.
Rajesh Jain 00:28:34 You can’t do it yourself. Um, so I think it’s the combination of the two, you know, product, of course, the probably talk, the product market fit is very important, but the product has to come first. Uh, and most entrepreneurs tend to be good on the product side, um, because that’s what really drives them. That’s the kick, uh, that they get, you know, creating new things. And I think the realization has to Dawn that if the, if, if they’re having some challenges, getting revenues from the product, then they need to bring in experts who can basically take what they have to market.
Sean Ellis 00:29:07 That’s funny. I I’m I’m think I’m exactly the opposite of you in that sense where, um, my earlier successes led me to, to have the overconfidence that, uh, you know, I, I should be the founder. I should, I should come up with a product idea, but it turns out I’m just not very good at kind of conceiving of the initial product. And, uh, and so I kind of, I, I look at it as, uh, just because, you know, I’ve, I’ve driven a lot of success. So I wanted to be a founder who could, who could create things and, and, and build successful companies. But it’s just, that’s just not what my strength is. My strength is, is seeing small amounts of success and quickly building on those and turning them into, into, into big, exciting things. But I think it’s that recognition, the know the commonality between both of us is the recognition of, of what am I good at? What am I passionate about and how do I compliment myself with the other skill sets? And, and that’s why, why teams build successful companies and not just individuals.
Rajesh Jain 00:30:10 I just wanted to add one more thing. I think one learning that I had, uh, uh, when I, when I brought in, uh, my CEO was that I have to trust him completely. I have to trust his judgment because a company should have only one leader, because if I was gonna be around as the founder, uh, I could not undermine him in meetings publicly. So even if I disagreed with him, I should have the conversation privately. Otherwise once there are two power centers, then people will play one against the other, and that’s a short shot, uh, sort of, uh, road to, to,
Sean Ellis 00:30:46 Yeah. You see that all the time. Yeah. Yeah.
Ethan Garr 00:30:50 So I’m, I’m curious. Uh, so you, you’ve never taken outside capital as far as I know, right. In terms of running, building this business, do you, do you think that, well, two questions, one is, was that always because simply because you had the capital or simply because the markets never lined up, that’s one part of my question then the second part is how has that impacted your decision making? And do you think it’s always been a good thing?
Rajesh Jain 00:31:15 Yeah. Great question. So, uh, in both my companies, India, world and net core, I have, I did not take capital. So in a sense, both are profit cons <laugh>. Um, now, uh, I have tried probably 25 to 30 times in my life to raise capital. So, um, uh, it it’s, it’s not out of my choosing, uh, that I, I did not, uh, manage to raise capital. I think when I look back, my problem has been that, uh, uh, when I go into meetings with, uh, with potential investors, I tell them the valuation expectation right up front. Okay. So, uh, and if I don’t, if they decline to invest, I increase it for the next person. So <laugh>,
Rajesh Jain 00:32:00 Um, and, and I can do that because I’m running a profitable business. See, that’s the prerequisite, uh, uh, I was running a profit profitable business, uh, very early on in India world. Um, because we used to do website development for companies, and that kept the cash flows coming in before the ad started kicking in once we had built up in after action. And, uh, I think what I’ve found is that conversations with VCs and, uh, more recently Pease have been a great help in building network, because you’re dealing with some of the smartest people on the other side, who are telling you in about an R or two, everything that’s wrong with your business. So what I would do is after those conversations, I’d say, okay, so the other problems, now I gotta go fix them. <laugh>. So it was like free consulting <laugh> which happened.
Rajesh Jain 00:32:51 I mean, you got very smart guys, right? I mean, they’re looking at your numbers in a way, which is very different from the way you are doing it. They’re telling you really, what’s why they, why you should not be worth what you are asking for. <laugh> <laugh> um, so, uh, so yeah, so to answer your first question, Ethan, I think I’ve always tried, even now, we keep trying, uh, but I have the confidence that I will not compromise on my valuation because, uh, I am profitable. I can afford to, uh, uh, and it’s not outrageous expectations. It’s, it’s fair market valuation. Uh, most of the time, uh, which I ask, which I’ve asked for in my, in my 30 years as an entrepreneur now, how has that changed, uh, the approach to, to running a business. Uh, and I think this is advice that I got from my father very early on.
Rajesh Jain 00:33:38 Uh, so when I came back here, he has, he was also an entrepreneur, uh, but he never built large businesses. He was a single person and, uh, uh, uh, in, in India of seventies and eighties and nineties, which was very different world at that time. Um, but he gave me one piece of advice. He said, look, the one thing you should never do in life is to take on debt. Okay. Um, so, uh, for me, the sort of venture capital always seemed a little bit like debt. You know, that you are, you have someone else who’s, who’s, who’s money you’re building on. And he said, if you don’t take outside money, okay, you you’ll never lose sleep. Uh, um, uh, it’s essentially, you know, whatever you do, it’s, it’s your destiny, it’s your money, which is there. He said, don’t lose someone else’s money. And sort of these couple of things always stayed with me.
Rajesh Jain 00:34:31 Um, so I was extra cautious when having the conversations and when I was building the business, I had really no choice, but to make it profitable because there was no other source of capital I had, I could not sort of burn cash on, on many things that venture funded companies did. I had to think much harder about, uh, the choices that I made about products, uh, and so on, uh, which would actually make money in the near term. And there was once, uh, in my life, about 15 years ago when I got sort of trapped by this whole valuation, uh, uh, thing. And I started burning a lot of cash, uh, in my company, of course, I had the money at that time. This was 2000 and, uh, seven, eight timeframe. Uh, and then my wife, uh, uh, uh, sort of, uh, uh, one day, um, she had taken a break for a few years.
Rajesh Jain 00:35:23 We’ve always worked together for most of her 30 years. She had taken a break because a baby was born in 2005. So she had taken three years off and then she comes into the company and she sees us sort of, uh, she’s a, she’s a CPA, she’s a finance person, but she can do everything, the company, any, anything pretty much. She’s the HR head now in net core. Um, and she comes and looks at, looks at it and says, you are losing so much of money every month. And I said, look, you know, but this is all going to grow our valuation. And look, we got good valuation previous time. He said, absolute nonsense. You have six months to turn the company around and make it profitable. Otherwise, shut it down. This is no way to run a business. And, uh, by that time, you know, after 10, 15 years of, uh, marriage, you realize, uh, there’s a very high cost to not listening to your spouse. <laugh> um, uh, and I, I said, okay, six months is a little tough, but gimme nine to 12 months and I’ll turn it around. Uh, and we did. And after that, uh, net has been absolutely profitable for the last 15 years. We’ve not lost money at all.
Sean Ellis 00:36:25 And that, that sounds like the timing that led to the CEO as well.
Rajesh Jain 00:36:29 Yes, absolutely. <laugh>. And, and what happens is that just as loss making is a habit becomes a habit of sorts, you know, because it’s very difficult to turn things around making profits becomes a habit, you know, and, and it puts you in a very strong position when you are talking to potential investors, you are not dependent on, on outside people. I I’ll tell you a small story. About three years ago, when we were talking to, uh, uh, PE funds, when we wanted to raise some capital for network, uh, uh, I was not able to do it because most of them said that, look, we don’t want to invest in a profitable company. We want you to cut the profits out and focus purely on growth. We’ll give you the money to grow even faster. And I said, no, I will not do that. Because if for some reason something goes wrong tomorrow, it’ll be very difficult for me to stop the losses, which are there. And now, I mean, you’re seeing a new world emerge, uh, uh, uh, in front of us where profitability is, is the mantra. And, uh, uh, uh, essentially I think my core philosophy has always been that, you know, a business has to be profitable. There is no, no two ways about it. You can maybe take some initial capital for, for building it. But when I see businesses for who have not been profitable for 10 years, 15 years still investing, still calling themselves startups after 10, 15 years and not making money. That makes absolutely no sense.
Sean Ellis 00:37:58 Mm-hmm <affirmative> yeah, of course, Amazon pulled it off. They <laugh>, they went a long time without a profit and everyone thought they were crazy. And then they became a super valuable company, but that’s the, that’s the exception. Yeah, exactly.
Rajesh Jain 00:38:09 <laugh> yeah. 10,000 companies sing their Amazon and none of them are,
Ethan Garr 00:38:12 It is, it is funny how markets dictate the value of profitability. Uh, Sean and I actually probably both remember a conversation where we went to an executive team and we asked this what we thought was a very reasonable question, which is, can somebody tell us the path to profitability? And the eyes looked at us like we were crazy. I I’ve heard who the
Sean Ellis 00:38:36 Hell are you, 20 something. Kids get the hell outta my office. So for the
Ethan Garr 00:38:40 CEO’s response, and, and we, we left there, like with our tails between our legs thinking isn’t that what we’re here for like, to make money. And, and it was just like, it was so far from what the company was trying to do at the time. Um, and I’ve been part of, of other companies that have been acquired. And I thought our profit, our profitability would be like this great weapon. And it was sort of like, okay, well you’re profitable. I’m not sure that’s so exciting for us. Um, and I, you know, I, so I think it’s interesting that, um, maybe to a degree, your own profit profitability has made it, uh, has interfered with any ability to raise money. Fortunately, that hasn’t, that same profitability has given you a lot of freedom to do the things you’ve wanted to do. And I know you’ve mentioned a couple of acquisitions has that, um, uh, I mean, obviously when you’re, when you’re pulling that the, the, the money to make acquisitions out of your own funds, um, that’s a, there’s probably a lot more thought that goes into that process. Um, how do you approach acquisitions and, and looking at those as the potential to be valuable to the company?
Rajesh Jain 00:39:44 So I’ve always believed that acquisitions are gonna be very important in the MarTech space, uh, because there’s no one company which can do everything. Uh, and there was a, a, a, a very successful Indian business person I’d met about seven or eight years ago. And I asked him, I said, you know, he was running a very large company, very successful. And I, I said, what is, what is it that you have learned, which has helped you build such a big company over a number of years? And he said, acquisitions acquisitions done at the right time for the right price. And he said, the best company in this space is a us company called Danaher. Uh, uh, it’s in the chemicals additives business. And I said, look at the HBS, uh, case studies on them. And, uh, you’ll see how, how they approach, uh, AC how they approach acquisitions.
Rajesh Jain 00:40:38 And, uh, since then, I really always believe that, you know, for net to, um, to be what Jim Collins calls an enduring great company, a bill to last company acquisitions would be a very critical path for us. Uh, so we, we did a couple of tuck in tech acquisitions, a few over the last three years. And most recently, two months ago, we made a very big bet. Uh, we invested close to a hundred million dollars, uh, in buying a company unboxed that was about $10 million, uh, in, uh, ARR, uh, serving us customers. And, uh, it’s a very complimentary business to where we are. What I realized is that for us to, uh, build a footprint in the us organically, it would take us a very long time. Uh, so acquisitions, um, uh, which brought us access to us customers, uh, was very important. We also wanted a product that we could cross sell, uh, a complimentary product, which we could then take to our customers back in, uh, India and other emerging markets and unboxed with its presence in search and recommendations.
Rajesh Jain 00:41:44 So onsite search, you know, the way you see great search results on Amazon, uh, they help other B2C brands deliver fantastic results. And, uh, uh, their tech, uh, actually becomes a very complimentary product when we go out and sell to the email, the marketing automation and, uh, journey orchestration, other components that we have. And, uh, uh, and that’s when we decided that that would be the right acquisition for us. Uh, it’s a very big and bold bet because like you said, even, uh, all the monies, our own money, uh, which we are investing, uh, into this. And, uh, then we have to work hard to, to make it work, uh, to get the two companies, uh, uh, to work together. Um, and my belief is that this is there’s gonna be a lot more, that we will do consolidation, I think is gonna be part of the MarTech space because customers are going to demand it. They don’t want to work with 5, 10, 15, uh, companies. They want to work with fewer companies. They want to work with integrated tech tax to get a unified view of their customers. And, uh, for that, I think, uh, brands, uh, like B2C companies, like, uh, B2B companies like us in the MarTech space will have to look at, uh, either building organically the full stack, which is very hard, or look at acquisitions to be able to offer fuller solutions to the end customers.
Sean Ellis 00:43:05 So, so Rajesh, I, I wanted to, to kind of bring together sort of the strengths that I, that I see from, from you and, and founders in general and, uh, from a great operating CEO and, and, and try to kind of get a picture of how, how it fits together. So in my view, I think, uh, a founder tends to be able to really articulate a vision well and, and kind of get people excited about, you know, they’re, they’re just visionary. They get, they get, they tap into the emotions of, of day to day execution. But when you look at the, uh, at the, the strengths that you bring and your CEO, how do you, how do you manage between kind of the, uh, very hit numbers, automate, you know, all, all the, uh, kind of predictability side with, with context and vision and, uh, and, and reconcile be between those.
Rajesh Jain 00:44:01 So, uh, TUPE, who’s our current CEO, he’s our third CEO. Um, he’s, he’s very focused on execution. So he’s, uh, been with, uh, net core right from day one, and he’s done an amazing, uh, he knows every part of the business, uh, very focused on very people’s person, very good on the, on, on getting things done on the operational side, getting things done. Uh, and my strength really is, uh, uh, in, in trying to, uh, think about what are the next turns, which are going to be there. So I have the luxury of chunky time, um, uh, to, to spend time reading, talking to a lot of customers thinking. And I think this combination, uh, works very well. It’s probably not easy in today’s time for a co to do both those things easily. Um, because, uh, of course you can have a very good co which frees up the co same, same basic idea.
Sean Ellis 00:44:57 Mm-hmm, <affirmative> sure how do you actually bring like context and meaning to the team? So they’re not just a, kind of a, a piece in a machine, but they, they, they get that kind of, uh, value from their day to day work and, and, and passion that goes into actually believing in the big, big picture.
Rajesh Jain 00:45:14 So I think it’s very important to have a sort of shared, um, vocabulary, um, to have, uh, uh, you know, words which can describe what you want to do, uh, uh, to have a culture that basically also gives freedom to people at the, at the senior levels, uh, at the top levels to essentially execute one of the things which I did about, uh, um, a year ago, a year and a half ago was I, I did an internal course. I, I conducted an internal course using all of Jim Collins’ writings. So over seven weeks, uh, uh, we read all of his books and discussed it for an hour and a half every two weeks. And I think it was an incredible experience because what it did was gave us, gave us a view of what a built to last companies look like. Um, uh, and, uh, uh, this man I’ve always talked, thought about this idea of Anor in great company, you know, to borrow again, Jim Collins’ language, but more important.
Rajesh Jain 00:46:15 It gave us the, the vocabulary to talk in meetings together, you know, the genius, uh, of the end versus the tyranny of the, or the flywheel, uh, uh, the, the, the brutal truth of facing the brutal facts, the 20 mile March, like I described net’s journey and suddenly for a lot of people, what, what worked was it? What I, I used to articulate many of these concepts, but I was not using the same words. You know, I was, I was using a different vocabulary, uh, and that helped brought us to, uh, brought us, uh, uh, brought the team together, saying, okay, uh, this is what sort of Rajeshhas been talking about. Uh, it’s good to see this articulated by, you know, others that you can actually, you don’t have to build a company to sell. Um, uh, you can build a company to last, you can make decisions which are on a longer timeframe, and that helps, uh, we, we have to balance our quarterly numbers. Uh, even though we are private, I try and ensure that, uh, uh, versus, uh, versus keeping the long term view in mind. So it’s not just about this or that you can actually manage, for example, profitability and growth. It’s not one or the other. So I think there are great, there are very good books which really help you, um, uh, bring these ideas together. And sometimes I think getting everyone together, discussing some of these things together, I think make makes a big difference.
Ethan Garr 00:47:41 So rashes, uh, we always like to ask one final question and, um, that is, what do you feel you understand about growth now that maybe you didn’t understand as well a couple of years ago?
Rajesh Jain 00:47:52 So I think it’s, it’s two things. One is that many times we are called upon to make sort of binary choices that you can be this or that. Okay. That, uh, like for example, you can either be profitable or you can drive growth, um, uh, uh, you can either build or, or sort of buy, uh, or you have to buy. So a lot of these, uh, sort of false binaries, which many times we are, we are asked to choose and I’ve, I’ve come to the conclusion that actually it’s possible to do both the things at the same time. Okay. It, it it’s a harder path. Uh, but I think it’s, it’s the chapter, uh, in Jim Collins’s book, you know, the genius of the end versus the tyranny of the Y, but sort of brought it alive for me. That’s, that’s one of the things which I’ve learned about growth, uh, that you can actually create a model, which combines, for example, uh, uh, uh, meeting short term numbers with laying the foundation, uh, for, for the, for, for a, for a longer term, for example, the McKinsey’s model of three horizons, you know, you build for build the cash flows today, um, then use, uh, build growth businesses, which will be cash flow generators tomorrow.
Rajesh Jain 00:49:10 And the third horizon where you’re experimenting, uh, with, uh, with new businesses for the future. The second one is that I used to think that, um, um, having a monopoly, uh, sort of, you know, 75% market share in India, uh, was, was a great thing. And what sort of struck me a few months ago is that, uh, monopoly is not equal to a moat. Okay. So there are two different things. Um, and I have to think much harder if I have to convert that monopoly into a, a, a, a defensible or an impregnable mode. Um, so just because we have 75% market share, uh, in India, uh, in email today does not mean that that’ll be there forever. Uh, uh, and, and, uh, I sort of used to take that for granted. That’ll become very hard for someone, uh, to basically challenge us. And I don’t think that’s that’s necessarily the case there are.
Rajesh Jain 00:50:09 So we have always got to keep ahead of the curve, for example, in email, uh, it’s an industry where, uh, there has been very little innovation, uh, because most of the companies basically get to a certain scale and then they get bought. So like the three largest email companies were bought have been bought in the last couple, two, three years by CPA players, which are basically voice and SMS players. So most innovation has stopped. And I said, look, if we have to build this monopoly and mode, uh, um, we have to continuously innovate because it’s not just a question of what’s happening in email. Email is competing with other channels, like, you know, SMS, like WhatsApp, like push notifications in the push messaging, uh, space. Um, so we’ve gotta continuously keep innovating. We’ve gotta keep thinking harder on how do we build those moats. Uh, and that’s really where the long term value creation happens. All the great companies, uh, have, have, have, uh, very deep moats. And that’s sort of the next challenge for me as to how do we take the good position that we have, if net’s gotta go from a hundred million to a billion dollars, I think we have to build these MOS.
Sean Ellis 00:51:16 That’s great. So, one, one, uh, question, you, you referenced Jim Collins a few times. Uh, do you have a favorite book from Jim Collins?
Rajesh Jain 00:51:24 Oh, absolutely. The last book, which he wrote beyond entrepreneurship 2.0. Okay. Uh, it’s not as well known. I think people more,
Sean Ellis 00:51:31 Yeah. I have not read that one.
Rajesh Jain 00:51:33 I think, uh, that book, uh, came out about, uh, a year and a half ago. Uh, uh, it’s sort of a partly rewriting of his first book that he had written, uh, with a co-author. Uh, but I, I love that book because it basically brings together all of his ideas in a single book. And it’s essentially the book, which he says is for entrepreneurs who want to just build their businesses and keep growing them forever. What do he call the enduring great company? And in, uh, I think one of the chapters, I think chapter six, he’s got this thing called the map, uh, which gets all of his ideas together in a single graphic. And I think that’s, that’s very powerful and that’s the book I would recommend to all entrepreneurs, uh,
Sean Ellis 00:52:13 To read that is the next book I’ll be reading for sure. Love good, great. Um, some of his other books haven’t, haven’t, uh, like sort of, uh, resonated with me as much as good to great was just like game changing for me. Yeah. But, um, I’m, I’m excited to read this one. It sounds, sounds like a good one. Um, well, we could, we could keep talking forever here, but, uh, we, uh, we better wrap it up, but I, I appreciate so much for you sharing the journey and, and these incredibly insightful lessons that you’ve learned along the way. So, so thank you so much for our time and for everyone tuning in. Thanks for tuning in.
Rajesh Jain 00:52:50 Thank
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