An existential moment for SaaS, Venkat Thiruvengadam on the AI shift

0:01For a SaaS company, the biggest moat they have with their audience is their UX and their workflow, which is very sticky. With AI in one shot, it has basically killed that moat because now you access English in and English out.

0:41maintain your well-being, and navigate the complexities of this ever-changing industry. I'm your host, Alex Deema, and together we'll explore the good, the bad, and the ugly in the journey to SaaS success.

0:54SaaStock Europe is just 11 weeks away, and this year we're evolving. More than a SaaS conference, this year's SaaStock Europe is where machine learning meets go-to-market, where funding meets future, where AI meets ARR. Join 4 ,500 AI and SaaS founders, leaders and investors who are shaping the future of software. Are you ready to build the future? Secure your spot at sassocheurope.com slash tickets. See you there. Welcome back to the SaaS Revolution Show. I am your host, Alex Zuma, CEO and founder of SaaStock, also general partner of BackFuture Ventures. delighted today to be joined by Venkat Thiru Vingadam who's the founder and CEO of Duplo Cloud.

1:42How are you doing Venkat? I'm good Lex thank you thanks for having me. Yeah good to have you on the podcast for the first time. Duplo Cloud have been a partner with our Sassock USA events for the last few years so got to know some of the team there but first time we're speaking and first time you're on the podcast so thanks for joining us at 8am in the morning you know from from California we appreciate that Venkat we always like to start the show getting to know a little bit more about our guests on a personal level so I would like to start with a question who is Venkat Thiruvengadam? Yeah I'm based in California as I said so I'm a developer by background I grew up in India and New Delhi I came from my master's in Chicago in 2005 and then got a job at Microsoft, Microsoft Research.

2:36That went on to become Azure. So in that sense, I think I started working in cloud as like before it was cloud when the industry was sort of transitioning from enterprise computing to SaaS or cloud, so to speak. And then I spent about like nine years at Microsoft, eight to nine years, and then left Seattle. We moved to the Bay Area, worked in a couple of startups and then decided to start on my own. And here I'm at Duplo Cloud. I'm the founder and the CEO for the company. So you mentioned the startup. So you were like an early engineer at Zenefits. You were there for a couple of years. Was that a fun time, a wild ride?

3:21Yeah, for sure. For sure. That was, I would basically say, my first experience being in a startup after working in corporates, right? Microsoft and then I was also at Cisco for a small period of time but yeah that was that was that was a lot of fun I mean that was my first exposure to a Bay Area startup and that too then it was was like a crazy growth company back then very highly funded all the premium venture capitalists and talent and whatnot so yeah that was definitely a very good experience. And so we've got a bit of background there as to your professional career obviously you're found a ceo now duplo cloud for the last seven years outside of work do you have any time to pursue anything um like what what do you do outside of work yeah i mean like uh um we have two kids uh um uh like i mean they are uh six years old and 13 years old so um or like four of us me my wife and killed we we we love to travel so um like whenever we find some time we tend to travel like various different places in the world so that's like a nice favorite pastime and then you know during the winters going to Tahoe skiing over there that's also a lot of fun.

4:37What's the outside of skiing in winter best nicest place you've visited in the last couple of years that you would recommend to to me or anyone? Oh I see yeah I mean we visited a lot of places the most recent one is we went to Cambodia um we went to Angkor Wat so that that was that was pretty nice um then um uh Turkey is nice Egypt is great um right and uh yeah we also went to Sri Lanka um in Abu Dhabi there is this really nice resort uh called Kasar al-Sara we had our um company off-site over there I think that was probably one of the nicest resorts that I've ever seen so um i think those are good places and otherwise i mean if you love nature europe is good right so um and of course in the united states all those national parks but but i would basically say i mean if you like history egypt is probably the top on the list um i mean you can always go to places like cambodia and so on and if it's nature i think europe is pretty nice Yeah, I did Cambodia about 20 years ago.

5:44We did Angkor Wat and Tim Reap and yeah, a very, very fascinating place. So I highly recommend it. And so you started Duplo Cloud. So you went from corporate world to startup world to starting your own business. Why did you do it? Yeah, I think first is that I left Microsoft more. So I think Seattle was too rainy and too cloudy for my taste. So I think it was also an opportunity for us to move to the Bay Area. and back then I mean there was no work from home I'm talking 2013 right and if you're working in corporates like Microsoft and Google and so on I mean it's really your headquarters is where you want to be and Microsoft headquarters was in Seattle or I mean rather so I wanted to move to the Bay Area so I worked for a startup which was eventually acquired by NCME so that was sort of like one motivation to move out of.

6:44And then I think I always was fascinated by startups. When I joined Microsoft, it was like really small group that I joined, which was like the research group and the Azure group. And then over the period of time, I mean, Azure is like the mothership for Microsoft now. It grew like really very big. And I started missing those early days of Azure. And I wanted to sort of like go back to working in a small group, doing, you know, a lot of ground level work. And that's what sort of like attracted me to startups. Getting the idea for Duplo Cloud, like where did you see, you know, the problem? How did you know that this was what you wanted to do?

7:23Yeah, yeah. I think when we were at Microsoft and we were building Azure, I mean, there was no such thing as DevOps, so to speak. You were a dev and you would deal with ops. I mean, they were like millions of workloads across the globe. One engineer, they would manage like 50 ,000 workloads. And this was all a norm, so to speak, right? And we didn't have really an ops team who would do the work for us. Yes, they would help us troubleshoot. Maybe they would be the first lines of defense if there's a customer problem. But otherwise, we were largely on our own, like write code, develop code, test code, ship code, operate code.

8:00But when we moved to the Valley, what I really noticed is that almost no developer was going anywhere close to ops. They would write some code, throw it over the fans. The ops team would basically pick it up and then they would sort of like, you know, deploy it and so on. And then there was, there were like clear inefficiencies in the sense that every 50 odd servers, organizations would have like one or two DevOps engineers. And that, to me, was shocking, given the scale at which these big cloud providers operate versus like how, you know, the mainstream IT companies, even like the cutting edge startups like Zenefits had operated like that.

8:40And that was just a norm. And so then I thought that, you know, Amazon and Azure disrupted enterprise computing with cloud or rather infrastructure as a service and was something very similar, right? I mean, on-prem to cloud. I thought that, you know, how we did infrastructure as a service, maybe there is an opportunity to do DevOps as a service or DevSecOps as a service. And that's how the idea was born. And then one thing led to another. And then we found a duplo cloud. and then sort of went from there. And so fast forward to today, so you've been running it for seven years plus. How big is Duplo Cloud?

9:21What data can you share around the company? Considering that we started with me writing code and the platform and selling it to a handful of engineers, today we are close to 150 people. We're north of 150 people. We have a global team. We were founded just before pandemic, right? And at least we took off during the pandemic before then, maybe like three engineers or so. So we were always a remote first company. So at least in the United States, everybody's remote. In India now, we have a development center in Pune. But otherwise, there also, I think there are a lot of people who are in various different places.

9:58And venture backs, right? Yes, that's right. That's right. We did our, I mean, we bootstrapped ourselves till 2021, the first three years, and then raised capital. we've raised cumulatively about 50 million dollars and yeah and we've done three rounds of funding seed a and b and and mayfield is a lead investor and so tell us a little bit like we want to deep dive into a little bit of like how you've grown and scaled the business and some of the the key lessons learned there so perhaps obviously you know given the amount that you've raised right i i'm uh you know fairly certain you're north of one million a or perhaps also 10 uh 10 million right but uh maybe getting the getting to the first uh sort of like one million um you know in that start of finding product market fit um you you know can you just share a little bit about how how you went about doing this yeah i think the one fortunate thing that i i feel now looking back that happened to me um which sometimes you know i see uh some of my friends, founder friends struggling is that we were able to bootstrap ourselves to a million.

11:09So in the sense that we took our own time, we took about like three years to do that. We found our sort of like space that sort of like works for us, for our product and so on. And I did not have any external capital during that time. So I think that helped a lot, right? At least from my perspective. So we bootstrapped ourselves to a million. That was in 2021. it took us like about three years and maybe like three to four engineers. But after that, we raised our first institutional round. And then I think we've been in a good trajectory. We are on track to grow. I mean, since then we would have probably grown more than 20 times by the end of this year.

11:50So I think after that, once we had that initial traction, then having a good VC like Montarista was immensely helpful. And after that, obviously, Naveen from Mayfield and Patrick from Mayfield, they joined us. And that has been immensely helpful in the sense that I think I went from being a developer to maybe a founder CEO to eventually, you know, really learning how to scale go to market, for example. And I had a lot of learnings from Patrick from Mayfield because he has a very strong sales background, like understandings, like quotas, you know, how to manage marketing, how to think about like next year's growth, how to prepare for that beforehand and so forth.

12:43I think those were all like very good learnings that came in in time by having an institutional investor. it so so with that and i want to jump back to the bootstrapping part the institutional investors a lot like rather than you having to figure out everything yourself and how to scale go to market etc that they have a lot of experience to share perhaps sort of like playbooks etc to help guide you uh to to try and do the right things make fewer mistakes right yeah yeah yeah that's right i mean i think first is definitely the capital right i think once you basically have the capital then you're obviously able to hire a lot more people.

13:23You're able to do more things, both, you know, engineering-wise and sales-wise and so on. And then, of course, they sort of like guide you. I think I would say that initially, till we did our Series B, till about we hit 10 million, I think they provided more like an oversight, I would say, right? I think it was largely the capital that was helpful. And of course, the early investors were helpful, for example. But otherwise, at Mayfield and so, they provided a lot of good oversights and so on. But I think once we crossed 10, then they got like very deeply involved to my benefit. So then, you know, I was fortunate that they spent a lot of time not only just with me, with our, you know, head of sales, head of marketing, head of engineering.

14:12they basically helped us quite a bit granularly understanding customer success growth quotas and so forth so i would say that i think till about 10 million i think it's up to the founder to sort of like go and establish that product market fit um in the business um with a reasonable growth maybe close to like a little north of 100 and then you know um we were able to leverage a lot of advice and help from beyond money from the investors. And you said in the earlier part of your answer to the question around like bootstrapping for the first three years really kind of helped you, right? Was that because you're forced to rely obviously on customer revenue?

14:58You're not sitting on, you know, two, three million in the bank and, you know, having a bit Whilst you're on the clock and perhaps having a high burn rate, you're just forced to operate in a different way. But these are my words. But why did bootstrapping help? Yeah, I feel that when you are founding a company and you're running it, you have a lot of responsibilities, especially if you are venture-backed. It's not just in terms of the returns that you have to produce for your investors, but you also have sold a lot of dreams to your employees and you've hired a lot of them. So there is a lot of pressure, like this external pressure, so to speak, right?

15:36I mean, you have to make the investors whole, you have to make the employees whole. It has to be worth for everybody. A lot of people have made a lot of sacrifices and all that kind of stuff. I mean, in my opinion, having all this overhead when you haven't even figured out your most basic pattern, right, it's not helpful, basically, right? So that's where I think that bootstrapping helped. but then on the downside what that also means is that you would go much slower right i mean like we took three years to do that and nobody asked us like what our growth rate was and whatnot and and that was okay i mean to me it was okay it's not a problem but at least i had i didn't have to worry about anything else that i talked about right it was largely me and maybe a couple of engineers um who played reasonably well because they were offshore engineers so that's how i would look at it.

16:29But having said that, if let's say you are somebody, let's say you're a serial founder or you are confident and you know that you can really make it work, then it might just be a good idea to just go raise capital much early on and then just accelerate, right? And not spend time trying to figure things out. So it's all up to the individual. And some people just do fine with that external pressure that I talked about, right? Or external, so to speak, commitments that they don't have a problem um and if that's the case that's that's fine too right so so this particular thing worked out for me but i mean obviously everybody um you know is their own uh and and yeah and you uh you said what one of the areas uh venture capital and the specific vcs that you mentioned was helpful uh with around scaling gtm uh you also talked about like 20x growth within a certain period so it seems that scaling gtm is something that you've been doing quite well what can you share about the the the gcm motion that you have and how you scale gtm yeah i think we largely sell right now to to startups and small businesses right i think very early on during my bootstrap days i sort of like figured out that the product the way we have it the pitch saying that you know you don't need to have so many devops engineer you can actually do it on your own using developers is not something that would resonate to large enterprises who have like huge IT teams basically right I mean it's one thing for Amazon and Azure to go and sell infrastructure as a service and say you don't need on-prem IT go to cloud but it's different for a very small startup to go and say the same thing so we figured that out very early on but then we also thought that you know why don't we go to startups and small businesses who anyways don't have or can afford having, you know, DevOps engineers.

18:20So that was, I think, a good learning. Then that led to another thing. For example, we realized very quickly that as much as DevOps, it's an optimization thing, but compliance is something which is, you know, existential. So although our product did compliance very much, but we were not talking about it front and center. So then we made that change in our go-to-market we started talking about security compliance and so on so that was a transformational a moment for us right so so so so i think starting off by figuring out what our icp is then second is that what part of our product is really most appealing to that icp so those were like the two important things then after that i think very thankful to our vp of sales who was also our employee number for Ian who then figured out like the partner motion by working with Amazon for example and it took us many years it took us like three years and north of that for them to start referring us deals till then we had to keep proving to them that we are a good partner and we kept it and then you know we also figured out the outbound motion and and so forth so so so and then we got on a track then it was okay you know once we established that fit we were convinced and there is a huge market for it because i mean they're like thousands and thousands of small businesses and startups um then it was about executing right okay how do you scale how do you get more and more people how do you get more efficient how do you train your team how do you basically um get the word out to others and then there's also a snowball motion i think once your organization becomes bigger than i mean it's like it automatically generates a lot of momentum and so forth customer referrals start coming in employee referrals somebody whom you have met over many years and so forth so so i think that's how it sort of like evolved but then i think what also happens is that after let's say you cross 20 million then you have to become a multi then they're like other things that have you have to become a multi-product company or maybe before that you have to sort of like go and see look at churn um and so forth right so they're like and then of course you have to then a lot of other things come in you're a big organization you have an h you have an hr group then they're like employees and so on so so overall i think um once you've established that fit you sort of like follow your north star uh and then go from there and looking at your website um like today uh we can see that you're you're offering like agentic AI solutions are like, you know, position in that way.

21:05And obviously, it makes a lot of sense, given the market and the world of AI that we live in. Perhaps it would be fair to say two years ago, it would have been a different website and, you know, wouldn't have been speaking about agentic AI, but we're moving, living in a very fast paced world. So when did you decide, to move the company in this direction and to have this positioning and really bake AI into the company and become AI native? Because I guess this is top of mind for a lot of SaaS companies, cloud companies right now. Yeah, I think it was about a year back, this thing, right? So one thing is that being an early engineer in Azure from the time of enterprise computing, I've sort of seen that transformation wherein, you know, enterprise, like back then, all non-cloud companies were sort of like getting wiped out in favor of cloud companies or SaaS companies.

22:08So I had seen that transformation, so to speak. Fortunately, I was on the other side, right? I was in the more cutting-edge side of things. So when AI came, I think very, initially I was sort of, I think maybe 20, 23 or something, we were like sort of like watching and seeing how that goes but by early 2024 I was pretty convinced that this is the future and then as it went forward like my perspective right now is that I think in the next few years maybe like whatever five to ten years I think practically all SaaS companies will either get transformed to AI or they'll get wiped out and the reason for that is there's always a very strong technical reason to that what changed from enterprise to cloud was the consumption model like we didn't have to implement it we didn't take weeks to basically consume it and all that kind of stuff now with ai i think what happens is that for a sas company the biggest moat they have with their audience is that it's their ux and their workflow which is very sticky people are used to it if you use salesforce for example i mean if you're trained in salesforce it's super hard for you to let's say move to another product and then let's spot or something and learn their UX, their workflows, their reporting and everything.

23:24So people don't move effectively, right? Even if they will live with it, even if it is not the most efficient one. I don't mean Salesforce isn't efficient, but I'm just saying as an example. With AI in one shot, it has basically killed that moat because now the UX is English in and English out, right? So you just open whatever software you need to and you just basically ask a question. How many deals am I going to sign this month? like what do you think how many late stage and so on there is no workflow basically right for an audience so suddenly it has sort of like taken off completely the strongest mode that you had and it's better that the sas companies realize it sooner than later now given that so what do you do right so that is why i think it is existential for sas companies to move basically right because somebody who has an equally great engine behind the scenes would come and replace you.

24:20Now, with that as the background, the next question is, OK, the SaaS companies also have some advantages. I think the advantages that they have is that they have a good set of an audience, basically. Right. I mean, if you're a successful SaaS company, you probably have hundreds of customers and so on. Also, what you have is that you probably have a very deep subject matter expertise in your vertical. Right. You know your customers, you talk to them all the time, you know how it works. And by virtue of that, you have a very strong backend engine, right, which actually performs, right? AI by itself is a reasoning engine, right?

24:54I mean, in the sense that, you know, you can give in a lot of information and solitaire information. It can make, give you a lot of decisions to make. But you still have to orchestrate and implement those decisions by implementing the right set of tools, producing the reliability, availability and whatnot, which are all done if you are a successful SaaS company. So when we looked at our business, we looked at our core platform as the engine, basically, right, which already has all the cloud automation capabilities. We had hundreds of customers. We knew the subject matter expertise really well.

25:32So we said, OK, let's take this interface basically and replace it with AI effectively. And that, I think, is how we are sort of like approaching it. And of course, the value proposition is also different. So in our case, one fortunate thing is that in AI, the one of the greatest appeals is that it can do labor optimization. You don't need to hire a lot of people. in our automation world although we always wanted to say this but you we wouldn't say it because it was like considered you have we have to basically dance around it like you know what this will make you scale better this that and whatnot so in that sense i think ai is a is a blessing for us all right now we can straight get to the point saying that use the software you will optimize labor and you can basically get so much more done and you don't need to hire a lot more people.

26:19So that way, in that sense, I think AI has been really, overall, I think for us, AI has been helpful. And the fact that I've seen this transformation before in Azure firsthand, I've experienced it. So it makes us pretty comfortable. Well, I think that's a great use case there. And, you know, great that you moved early. I think like 2023, people were just waiting to see, you know, what was happening. But you made that decision early 2024. You've seen it before. And I think you're absolutely right. So hopefully, I'm sure like a lot of the audience that are listening, I mean, certainly if they're new companies, they're probably likely to be AI native.

27:00But with, let's not necessarily call it legacy SaaS, but you know, the SaaS industry has been around for a long time. I think there are still companies that are sitting and waiting, you know, for sure that we're trying to figure out what should we do on AI? And like you mentioned, it's quite existential that, you know, if they don't do anything, that, you know, this could be quite a problem in a few years' time. A certain perception that I think people think that SaaS will sort of like eventually go away, SaaS is in danger, which I share, right? But then there's also a perception that people think that they can build that replacement using AI on their own, for example, right?

27:41That I think is probably not correct in the sense that, I mean, it's one thing to build an agent which can basically go and do a bunch of things using AI, but it is another thing to build a completely vertical AI application. As an example, I mean, like Tesla self-driving is a fully vertical AI application for the self-driving use case, for example. I mean, you can have all the greatest models. it's not easy to build that. You need to have those cameras in place. They need to look elegant. They need to be wired into the machinery. And they're like so many things that needs to happen, for example, in addition to AI, for example.

28:22So that's what I'm saying. I think you can build agents. People will probably be comfortable doing that. But in order to find a replacement for SaaS, I mean, DIY is not like easy. You can do it for a lot of simple use cases. And that's what companies are doing. But I think there'll be a new age of companies which will be like vertical AI applications for specific industry. And they would be very specialized, right? There'll be a lot of orchestration around the AI models and so on. And I think that's where the future lies. ISVs will still be in business. Yeah, yeah. It's not that like every organization is going to build software on their own.

29:02I mean, that part, yeah. No, I agree, I agree. moving into sort of just the quickish fire round as we wrap up Venkat so what's the best advice you've ever received? Received so much of I mean yeah everybody has been very helpful I don't know if there is like any one particular advice but I think approximately the go-to-market advice that I get right you know being from coming from an engineering background you put me in a room I can sell I can be persuasive I can convince someone but that is very different than building a go-to-market motion like how do you build your sales team like how do you think about quota capacity churn and so forth I think all that help that I get from my investors I think that's immensely helpful right I think I really appreciate everything that may feel the time that they spend with us of course like other investors as well that that has been like really helpful what about the hardest thing about being a founder CEO it's it's I don't know where to start um I mean there's always like some fire right I mean like you wake up in the morning it's like I mean I very much share that you know what um the NVIDIA CEO says right I mean it's the hardest thing I mean there's always a fire I mean there's something or the other that is sort of like always is always broken everything everything seems out i don't know where to start yeah no no actually i know i was reading something today where it's like uh it was about whether you wanted to be you know a founder versus you know an employee at a company and uh the the difference around that and what effectively they were saying like well And there's a lot of responsibilities.

30:54When I started, I was talking about all those commitments that you've made and the dreams that you've sold. You have to make them whole. So that, I think, is probably the biggest thing. And rooted from that is all the implementation that you have to do. And then the thing with tech is that you can never be lax. Today, you may be doing very well. You may be a high-flying company. You may be a SaaS unicorn. And guess what? A year later, people don't care about the SaaS unicorn because simply you are not AI. You may be generating a lot of revenue, but the perception is, hey, you know what? You won't be doing it after three years.

31:39Like imagine that you're just high flying like a year back and now you're struggling, right? In spite of making the revenue and whatnot. I mean, and that I think I see, fortunately, you're not in that position, but I see that with a lot of growth stage companies, right? And I feel bad. I mean, like now you do constantly like keep at it, right? Keep reinventing yourself and so on. And I would imagine that it probably gets tiring as well. Yeah, definitely. Definitely. What about, have you got a favorite book on business? No, you know, I'm not much of a book reader, so to speak, right? I mean, I read quite a bit from internet, like blogs and so on, but not so much in books, so to speak.

32:25What about, is there a favorite blog or something you keep going back to? Yeah, I think generally speaking, I think in LinkedIn, there's like a lot of good content. that's what I would sort of like follow. And also like, you know, talking to other founders and other people, I mean, not just founders, anybody, right, in the tech industry, from VPs to CTOs to engineers, overall those things are like very helpful. And lastly, biggest mistake or a mistake that you made and lesson learned from it? I think there are many. I mean, like you always keep making some mistake or the other as you run a company.

33:05Maybe I think one thing I would basically say is that being in the business with startups and small businesses, I started paying attention to churn a little later than I would have expected. I probably could have spent some more time early on and then sort of like figure that out. Because like sometimes when you're working in this business, right, I mean, companies just shut down. I think there's nothing you can do about it, but that can cause a significant impact to your business. And you need to sort of like focus on how you can still keep the NRR up and so on. Like GRR, sometimes you cannot control.

33:42I mean, if the company shuts down, it shuts down. But there are like some things that you can do around it to make sure that at least, you know, your NRR is up, maybe you can sign up better quality deals and you can train your team better, how to identify them sooner and so on. I think that area is something that I sort of like to realize a little late then I should have maybe a few quarters. But if, yeah, if I could go back, I could probably fix that. But that's OK. I mean, you always learn from your mistakes and then sort it out. Yeah, definitely. And so Venkat, for those that are listening to the podcast, perhaps if they have any questions or want to reach out to you, where can they find you online?

34:25where can they find out more about Duplo Cloud? Yeah, LinkedIn, our website, like they can send me messages or venkat.duplocloud.net is my email. Yeah, I'm fairly approachable, but happy to, you know, answer questions and so forth. Good stuff. Well, Venkat, thank you so much for being on the SaaS Revolution Show today and paying it forward to the SaaS.community. Really appreciate it. Thank you. Thanks for listening to the SaaS Revolution Show. if you enjoyed this episode please leave a review and follow the show it helps more sass and ai founders to discover the podcast and keeps us bringing you the leaders who are shaping the future of the industry for more insights and to join the sas talk community head to sas talk.com