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Indian Services Entrepreneurs Venturing Into Products: Suresh Shankar and Srikant Sastri, CoFounders of Crayon Data (Part 2)

Sramana: Srikant, what is your background?

Srikant Sastri: When I was young I studied every possible subject in Hindi. Aside from math and science, which have an English influence, all of my other studies such as history, civics, and geography where all in Hindi. English is not a native language for me. I grew up in a small town, and when I was 10 years old I really started to have the desire to do something on my own. >>>

Indian Services Entrepreneurs Venturing Into Products: Suresh Shankar and Srikant Sastri, CoFounders of Crayon Data (Part 1)

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Suresh Shankar is the Founder Director at Crayon Data. Prior to founding Crayon Data he held various positions at IBM, RedPill Solutions, ANN AMRO Bank, Young & Rubicon, and JWT Fulcrum. He was the CEO at RedPill which was sold to IBM in 2009. Srikant Sastri is another serial entrepreneur and seasoned executive who joined the founding team at Crayon Data. He has held varying positions at Team4U, Vivaki, a Growth-For-All before founding Crayon Data.

Sramana: Before we delve into the story of Crayon Data I would like to get a sense of your backgrounds. Suresh, why don’t you go first.

Suresh Shankar: I was born in Chennai and grew up with a proper middle class background. My father was a lawyer and education was everything. My father also encouraged me to play a lot of cricket which was a lot of fun growing up. When I began looking at college choices I took the easy way out. I knew that I wanted to do an MBA eventually, so I figured I should start out with business studies for three years before my MBA instead of five years of engineering school. I ended up going to IIM Calcutta which is where I met Srikant. He ended up taking all of the notes while I skipped class and took all of his notes. >>>

Getting Customers to Prepay to Start Up, then Building a $300M Business: RMS CEO Hemant Shah (Part 7)

Sramana: That is the beauty of having a really solid set of customer relationships over a long period of time. They trust you and your expertise and are able to participate in the product definition process. That is a huge asset.

Hemant Shah: It is a tremendous benefit. I have only worked in this startup. I have a sense that we have built those relationships by having a product mindset over time. We are building a cool product that is unique and only you can solve. When you bring that to your customers every day they respect you for that. At the heart of our organization is a company that is curious about solving these really tough problems with great product. Customers see that and they are willing to participate. >>>

Getting Customers to Prepay to Start Up, Then Building a $300M Business: RMS CEO Hemant Shah (Part 6)

Sramana: What do you need to build these models in terms of data sets? How do you derive them?

Hemant Shah: The thing that we really stayed true to was recognizing what our core competency was and was not. When we made the shift from earthquake risk to natural hazard risk, we knew that we did not need to be the world’s smartest people on catastrophic peril. We needed to get really good at bridging between the multidisciplinary knowledge that is out there in the world. Our value ad was combining that multidisciplinary knowledge and translating it into a business risk model. >>>

Getting Customers to Prepay to Start Up, Then Building a $300M Business: RMS CEO Hemant Shah (Part 5)

Sramana: Most CEO changes fail miserably. Most VCs will tell you that they want an entrepreneur who will scale up to a certain point. They do not want a CEO change right out of the gate. Most of the relationships don’t work out, but you obviously were successful. What did he do that made it successful? Entrepreneurs by nature are arrogant people.

Hemant Shah: It was a long time ago. I did feel that Tom was looking to learn from me as much as I was looking to learn from him. He was genuinely excited and interested in seeing me grow. It was not like the young founder CEO who had to get a pat on the head and then shoved in the corner when a real CEO walks in. We truly worked together. Perhaps our personalities just worked together. It did work. >>>

Getting Customers to Prepay to Start Up, Then Building a $300M Business: RMS CEO Hemant Shah (Part 4)

Sramana: Did you ever pursue venture funding?

Hemant Shah: We were able to get venture funding in 1992. That was our first proper round of funding which allowed us to build out the business.

Sramana: How many customers did you have before you were able to get venture funding?

Hemant Shah: We initially had five customers. They were real paying customers. When we got our first $25,000 check, we framed it and put it on the wall because that was a lot of money to us at the time. In aggregate, we probably had a few hundred thousand dollars come in. >>>

Getting Customers to Prepay to Start Up, Then Building a $300M Business: RMS CEO Hemant Shah (Part 3)

Sramana: So you had the idea that you could approach your customers and ask them if they felt the problem was significant?

Hemant Shah: Yes. Rather than shying away from the risk, they could have an alternative that was better than burying their heads in the sand. Some of them were so worried, they would not even face the risk. We brought models based on rigorous science to let them evaluate the risk even though there was not a lot of data compared to other types of risks they had to insure against. We were able to bring in physical science to fill in the gaps that would let them make better decisions, which would let them allocate more capital with more confidence.

The end result would be their providing a better product to society, which is the entire point of this exercise. We captured the imagination of a few early adopter clients who provided us with customer funding. They would actually prepay for development of prototypes. >>>

Getting Customers to Prepay to Start Up, Then Building a $300M Business: RMS CEO Hemant Shah (Part 2)

Sramana: It sounds like you were targeting insurance companies.

Hemant Shah: Exactly. From 1989 our initial business plan called out the insurance vertical world-wide as a core market. We served hundreds of insurers, re-insurers, and specialist hedge funds that take on financial risk directly or indirectly from earthquakes, hurricanes, floods, fires, global disease and pandemics. We cover any range of low frequency, high consequence catastrophe. We develop models to help them understand those risks and help them price appropriately. >>>