Sramana Mitra: If you get carried away and raise huge amounts of money, you better have a strategy of doing something that is going to get you to the right exit because all these investors also need exits and you need exits. This is a very complex set of strategic moves that you’re going to have to think through. I think raising lots of capital is something that you should be very careful about. Frankly, I have constantly pushed Freshworks on this topic.
If you read my personal coverage of Freshworks through the last decade, you will see that I’m constantly holding them publicly accountable for raising so much money and not hitting profitability. This year they have hit profitability, which is a great milestone. The reason Freshworks is important is because this is the first company out of India to be able to do stuff at scale.
No other B2B SaaS company out of India has done things at this scale. Nobody has raised this much money. Nobody has been following this acquisition strategy. Nobody has been able to hit the kind of revenue level they have hit. They have hit the $100 million ARR level now. All these are firsts, but I think this opportunity of other people doing it is there. You’re going to have to play this in different ways.
What Yash is explaining to you out of Arka and the platform that they have created is one strategy of playing the B2B SaaS out of India game strategically, effectively, and intelligently. You want to add to that?
Yash Hemaraj: I completely agree with what you just said about paying attention to capital efficiency. Seeing how that will build an economic advantage and a sustainable advantage is extremely important. It doesn’t come naturally to a lot of people. The tendency is to get carried away by other companies.
The biggest mistake that entrepreneurs do is “Company X raised X million dollars from them. We got to do the same.” Playing the game of your competition in the way they want to be played is a losing value proposition. You’ve got to really build a company around what contributes to your economic advantage, your technology advantage, and your operational advantage. That’s what you got to stay focused on and not get carried away by a lot of noise.
When companies do raise a lot of money, they will generate a lot of noise in the market. They will have pretty much your entire product roadmap into their product roadmap. But that’s where you’ve got to persist on your vision and really work with the customer. The customers see through what is fluff and what is product roadmap very quickly. So it’s about persistence. It’s about staying disciplined.