John Dougery: I think that the point about SaaS is all about market size, but we have a different view. We have been doing SaaS companies since we started 10 years ago out of India. We’ve always had a thesis that business software companies are going to be very interesting product opportunities. That came out of our own perspective where we don’t have a geographic bias.
We’re going to invest in startups in Silicon Valley. We’re going to invest in startups in India. We do it out of a thesis-based approach and say, “Which one is the best product?” Even business software that is addressing the Indian market ultimately is going to face competition from overseas or they have to go overseas. They have to have a thesis that they can be number one.
For example in MarTech, we make several investments in companies that are going after the Indian market. They didn’t have any overseas operations. We thought that maybe someday they’d go overseas. We backed the entrepreneurs. We’re very pleased. They’ve now scaled dramatically. That Indian business customer, oftentimes, is more demanding than a US or Chinese customer.
Sramana Mitra: It’s good to validate in the local market and get your product right and then go after the global opportunity. You are reinforcing what we are seeing in terms of trends. The Indian market is a slow growth market. Indian SME and enterprise is a slow-growth market with a slow adoption curve. The marketplace example that you gave is different.
John Dougery: It’s true. That’s absolutely the case of steering the ship in the rearview mirror. We still believe that the Indian industry will value technology over labor.
Sramana Mitra: It has to.
John Dougery: We’re optimistic about that. That change is afoot. We’re starting to see that some of these businesses are adopting software rather than just hiring a dozen more people to do it manually.
Sramana Mitra: Both e-commerce and technology adoption by the B2B world, the trends are in the right direction. Those markets are going to accelerate. They have been slower for the last decade but they’re accelerating and they will continue to accelerate. There will come a point where it will become a lot more viable to build India-facing businesses even on the B2B side.
One last question, you said that you invest both in Silicon Valley and India. You started by saying that you invest mostly in the India community. Our community is not just Indian. We have tons of members from all over the world. Do you only invest in Indian entrepreneurs or do you invest in other ethnicities as well?
John Dougery: That’s an important clarification. We have a preferential and mature deal network in the Indian community and therefore, a lot of our deal flow comes from that community, but we don’t have that bias. We back Indian entrepreneurs. We back plain old American entrepreneurs. We are going to expose them, predominantly, to an Indian opportunity but not exclusively. We just find so many compelling business reasons that has nothing to do with ethnicity.
For example we’ve got this company here in Silicon Valley that’s selling to General Motors and Delphi multi-year large contracts to manage their supply chain. They just have a fundamental cost and business service advantage because they’re doing it all out of Pune. They’ve got 90% of the company in Pune. They’re got the frontend, sales, and marketing here in Silicon Valley.
They are just running circles around their Silicon Valley competitors because they have a fundamentally lower cost of doing business and really deep technology built by a staff of over a hundred engineers out of India. You just can’t do this kind of company in Silicon Valley with any kind of capital efficiency today, but they can.
Sramana Mitra: Bottom line is you’re looking for capital efficiency. How entrepreneurs achieve that is up to them.
John Dougery: Yes. We’ve got teams in Russia as well. The message for us is we are early stage investors. We fundamentally believe that we have to be near our entrepreneurs and our teams. We don’t tend to think about Europe.
Sramana Mitra: Great. Thank you for your time.