Part 2 - Off the Beaten Path: Wall Street to Startup Investor - A Fireside Chat with Pankaj Jain, Founder of Invest Stream

Foreign.

Hello everyone.

Welcome to investream. I'm Bunkaj and today we're doing a very special, special episode. We're turning the tables. This episode is part two of a multi part episode talking about my journey from Wall street to being a vc, an entrepreneur, an angel investor, and kind of all the things that I've experienced along the way. I hope you enjoy it. My plan was to just bootstrap it to a certain point and then see, you know, can I build a bootstrap business or a. I going to have to raise money from somebody I didn't know, right? So I just said, I'm just going to bootstrap it to a certain point. So I was very frugal for two years, you know, both in terms of living as well as where I'm spending money. So I had to be very.

Creative.

I had to be very creative, but I also had to be very quick in making decisions. Like if I saw somebody that I hired that really, and this was a big problem, didn't really have the skills that they had studied for on the interview. Like, you know, people would ace technical interviews because they studied for that, right? But when you sit them down and say, okay, here's a real, real problem that we need to solve, get creative and write some code to solve it, it went nowhere. I had to fire people pretty quickly. And part of it was because I was bleeding money out of my personal pocket on two ends, right? Supporting my family, but also supporting the business. And so I had to make decisions to let people go relatively quickly. It's not something that I enjoyed, it's something that I hated doing. And. But I also felt like, you know, the situation was very different in the sense that it wasn't just money that was coming out of my pocket. It was time that I was losing. And I wasn't seeing the same type of enthusiasm or quality of people at that time. Like nobody wanted to work at a startup, right? Like, the only people who would work at a startup at that time were people who couldn't get jobs at Google or Motorola or Infosys, right? Like everybody wanted to work at a big company today. Startups are sexy, they're attractive. People like the smart, smartest people in India want to either start something of their own or go work at a startup. That wasn't the case in 2007, 2008, and that kind of led me to getting involved with organizing events and getting more people.

So at this time you have shut down the company?

No, I was still running the business until 2010. But around 2008, end of 2008, I said, well, I have this problem. I need a co founder who really understands India and some of the complexities of doing business here, because I don't. I'm trying to figure it out as fast as I can, but I really don't. And I need to find somebody who can. So I. I need to get a mentor who can guide me through some of this stuff, and I need to find a co founder. Couldn't find either. I found people that were ready to invest out of or found people that wanted me to come and pitch to Indian Angel Network and see if I can raise money and say, look, I'm not looking to raise money right now. I just. I want people that can help me, and I'm willing to give you some equity to help me and, you know, mentor me. But, you know, time was something that people weren't ready to give at that time. And so I said, all right, I have to find my way through this. And one of them was start organizing things, right? There weren't events happening at that time. There were some.

So you found there was no ecosystem?

No, there was no ecosystem at all. None at all at that time.

So you are in India, where you never lived before. You're starting a business. You cannot find a network, an ecosystem, so you decided to create one. It's just extremely audacious, right? Like, I grew up in India. I would not move there even if you gave me an immense amount of money to start a business. And I'm like, look, I love you, I love money, but thank you very much. I want to stay in New York, right? And I have run trading enterprises in India from here, and that was with very large hedge funds. That was a complete nightmare. We would happily pay someone thousand bucks an hour to consult with us, and even that was a nightmare. And to move there, start something, and then find that, hey, this is not working because there's no ecosystem, so let me just go create one. So tell us about that.

So when you say it like that, it sounds like, you know, you have to be extremely insane and have, like a massive ego, right?

Like, you know, I mean, one. One way is just. Well, that's one angle. The other angle is saying, hey, you know, there's a lack here, right? The reason I was not able to start my company was I could not find these people, right? So what if I try to help bootstrap that? I think that's what you effectively did.

Absolutely. So what started out as it was not about creating an ecosystem. It was solving my personal problem, which is I didn't know anybody. I didn't know. You know, I found recruiters. They were all terrible, right? And they were bringing me talent that just was not going to work, was not going to get me where I needed to go. So, you know, I had to find other ways of finding like minded individuals that would be excited about disruption and creating meaningful impact in some way. Right. And you know, I had to, I had to figure out something. So I was like, all right, I met a couple of folks through, you know, just going to different places constantly. And I started talking to some of these people. Bar camp, I don't know if you're familiar with it. Chris Messina started bar Camp a long time ago. It's the unconference kind of in response to Tim O'Reilly's Fu Fu Con that he used to do. You know, very closed knit group of people. So this was more open to everybody, right? And so I got involved with a couple folks. We said, hey, let's start organizing bar camp in Delhi. So we did a couple of bar camps.

And this is 08.09.

This is around 08. Yeah, early and mid 08. And then you have mid 08. And then towards the end of 08 we were doing another one. And this is right in the middle of the financial crisis. So Lehman had just collapsed and everyone was still like, you know, the world is going to end. Like, yeah, been there, done that. We've seen the story before in 98. And we were organizing BarCamp. And I said, hey, in addition to organizing it, I'm going to do a talk on the financial crisis and, you know, just share a few thoughts on why this happened and what it means. So I put this deck together. It was supposed to be a half hour speaking slot. And you know, even the folks that were going to go after me, they're like, hey, no, no, keep going. And turned into a full crowd of I don't know how many people. And it was about two hours of me just sitting there talking and answering questions about what led up to the financial crisis and what happened. Unfortunately, nobody videotaped it, so I don' have a recording of what I said. I have the deck up on SlideShare and all. But, you know, that that kind of changed a lot. That moment changed a lot for me. You know, prior to that, I was another cog in the wheel that was just kind of running through this maze of individuals and people in Delhi, specifically just Delhi at that time, trying to find a co founder Trying to find technical people to hire, trying to find not investors, but mentors that could potentially help me. And there was no real direction to a lot of this stuff at that time. So what it, what it meant for me was I was just another person, just like everyone else doing this. But at Barkamp, things changed by giving that talk on this topic that very few people knew about or understood. Suddenly I became a. I won't say an authority, but at least somebody that knew something very different than most of the other people there. And this is around the time that I met Nikhil Baba, who was the founder of Medianama. He had just started Medianama at that time and, you know, he was at bar camp. He saw my talk, asked a lot of questions and wound up writing a post about my talk at bar camp on Medianama. And you know, again, that was. It was putting me more out in front and center in the local community. And people took notice. People realize that, you know, oh, maybe punkish can be helpful in certain things. So that's kind of when I got involved with folks from other cities who had visited that bar camp, saw my talk, like, hey, we're doing stuff similar to this in Mumbai and Bangalore and we're thinking about starting something called Startup Saturday. So like just, you know, 10, 20, 30 people on a Saturday get together and talk about startups. Would you be interested in getting involved? So I got involved with them. We launched Startup Saturday in December of 2008. And the idea was like, hey, every month, on the second Saturday of the month, from 2 o' clock to 5 o' clock at the American center, if you have anything to do with startups, if you care about startups, if you want a job, if you, whatever, if you're building something, you don't even know what a startup is, you're just writing code. Just come to this event. And you know, so that started building a community. It started getting people.

You were organizing this. I remember you were like actually setting up the whole event. You were hiring caterers. That's talking to you. And I was like, what is this guy doing?

No, no. So the catering and stuff, that stuff came later. That was Startup Weekend.

Okay?

Startup Saturday was much lower key, you know, at best, maybe we would have some samosas and some chai for everyone that came to the event. And even that in much later, in the beginning was like, look, if somebody wants to sponsor and put some snacks out, great. You know, we didn't charge anything for the event. It was just like, hey, just come, let's just get together and see who's doing what, who's working on interesting things, who needs help with something. And more than anything else, it was just like the fact that this was an event that happened on the same day every month at the same time at the same place. There wasn't anything to think about. There wasn't anything to really let people know about. The only thing we really need to let people know about, hey, this week so and so is going to come and talk. So, like, one of our earliest speakers was Bipin Singh, who was the founder of mobiquik, right. Which is, you know, big fintech startup in India today. They started with mobile phone, prepaid mobile phone recharge. And it grew from there. Right. So, you know, there was a lot of early speakers that we got in that were just starting up at that time. You know, Kunal Bell for Snapdeal, he was a speaker in 2010. You know, so there's. The idea was just to get people together on a regular basis. It wasn't about building an ecosystem, it was more about building a small community. Right. And you know, that's really how I approached it, was like, look, let's, let's get this started. I realized that, you know, I was different from most of the people there and rather than trying to hide my unique background and put it, hide it.

Away and blend in or something.

Yeah, I should just let it out. Like, look, I'm from New York and you know, yes, I speak Hindi with an American accent. And you know, because I lived in New York my whole life and you know, I want pizza. I want real good pizza. Right? Like, just, this is who I am. Right. And that made a big difference and that allowed me to do certain things that would have been harder for other people to perhaps get done.

Right. Because the thing that's very amazing to me is in that culture, especially Delhi, for example, community building is not an onus, which for me is truly astounding how you, an expatriate, for lack of a better word, was able to go there and create this ecosystem which you found severely lacking. And you said, look, no founder should go through this. I remember talking to you back then and you're talking about like, you know, hey, there's not even a simple meetup here. And that's about the time that NYC was really taken off as a startup destination. And you urging me to go to all these things, there's nothing here. And you said, you know, basically you were building it. And I was. You would not say that, that you were Building it. But I was like, this guy is building it, right? One way or the other, he's pulling it together. And that was truly impressive. And I don't think anybody else, somebody local could have done that. It would have taken too much to be fair.

You know, there, there were plenty of locals that I was working with at Startup Saturday, right? There were in, at that time, if I remember correctly, five cities across India. We started with three. Delhi, Mumbai and.

And you would fly there for these things?

No, I wouldn't. They were just local. Local, yeah. You know, there were 16 co founders for Head Start Network and that's what Startup Saturday was by 2010. I had shut down my startup at that point and I said, okay, what's next? And I really didn't know. Should I look for a job? Startups were.

And what made you actually kill the company? What was the decision point?

Oh, there was a whole bunch of things. I mean, you know, my startup journey was a probably another whole hour long episode on just what I learned about myself and, you know, mistakes that I had made along the way. And, you know, some mistakes were in my control, some were just a function of the environment that I was in. And, you know, some of it was stuff that I had already known and, or I had realized relatively quickly, but I wouldn't acknowledge. Like, I probably knew about six months to nine months in, after hiring my first couple of employees that this was not going to work. I think I knew that, but I just didn't want to admit it to myself. And it was more like, no, we're going to get through this. We just got to keep pushing. We got to persevere and get through it.

What did you see in the market? This. As a fellow founder, right. What's very interesting to me is when do you pull the trigger? What is that signal that tells you this? Whether it's a product, whether it's a market, whether it is a whole venture, what is it that tells you that hey, this is not going to work and we should end this product.

This much traction, okay, Right. When you're getting your attraction on it, you're not doing something right. You know, and there's a combination of a terrible marketing job, right? Just like really bootstrap marketing, like telling people, I know, hey, try this out, try this out. Started with that, but in the product was very half baked and you know, there was problems that we had on the supply side, right. There was a whole bunch of operational issues that I had to deal with that I wasn't prepared for. And I didn't have the manpower for. Right. And I didn't know how to solve these problems. Like, you know, some people said, hey, just pay off the cops. I'm like, I'm not paying off the cops. I, I don't know.

You gotta pay off the cops.

Yeah, I don't know how to do that. Right. Like, because it was like, you know, there's no such thing as a background check in India. Right. There's this thing called police verification, which is basically saying that, hey, this person whose information you sent us has committed a crime somewhere in the country at some point in time. And you know, we, we, we found that we were never getting any negative responses back from the police. It was an operational nightmare because we had to go to each police station in each local district or whatever they call it in India where people lived. Right. So what, you know, it was confusing because it's like, hey, all right, the demand side is in this part of the city. The person who's applying for a job there is in that part of the city. He's the person or she's the person who's the information we have to collect and get a verification done on. Do we submit it where the demand is or to that part? So it's like all these logistics things that were very expensive and very difficult to figure out. So my burn was increasing rapidly as well. At some point I realized I was like, look, what we're doing right now isn't working. It's just not. So let's just stop and let's pivot a little bit. So I said, okay, let's try to pivot this to professional services. So like an upwork. Let's try to do that. Right? Build an upwork type of thing. It was basically the same platform. We just have to reskin it and change some, some of the back end stuff. So we tried that, but most freelancers and folks in India didn't want to use it because they were using the ones in the US and they were getting paid by, in dollars and all that. So that was also kind of a two, three month experiment that we said, all right, put an end to it. So we started with services and you know, a woman that I had working with me, she was responsible for working with this one client. Our job was basically to build out a website for them and also then create a marketing plan, an online marketing plan for their organization and how they're going to get the word out about who they are and what they do and all. And, you know, so they paid us to build a website, and we did a whole bunch of other work for them, which they never paid me for. And then this woman who was supposedly working for me just couldn't come to the office every day. And I'm like, what? What's going on here? I found out that she took a job working for them. They were paying her directly. No longer responding to me or paying me. But then she kept asking me for her paycheck also. I'm like, so she's getting double paid, and so it's just a mess. And I was like, I'm done. I can't deal with this anymore. I'm shutting the company down. I came home that day, I told my wife, I'm like, look, I'm shutting things down. I'm going back to New York. And so at this time, you had.

Startup Saturday and Startup Weekend going on?

No, Startup Weekend came later.

Okay.

During that time, I came back to New York for a while, and I stumbled upon Startup Weekend here in New York. I went, loved it. It was fantastic. Shane Reeser was the facilitator of the event. I met with Shane afterwards, and I said, shane, I really want to do this in India. And he laughed. He's like, yeah, yeah, okay, whatever. I'm like, no, I'm serious. He didn't take me seriously. You know, I kept pushing, kept talking to him. It was about three months of me going back and forth, and I just said, look, the Indian ecosystem has evolved. Before, it was about just getting people together. Today, it was more than that. There needed to be something actionable. There needed to be something that people could get out of an event like this. So we kind of went back and said, hey, this seems like the right thing to do in India for that time. This is late 2010. So eventually, he talked to Mark Nagar and everyone else at Startup Weekend and said, all right, we'll support you in doing it. But instead of one event, you got to do two events. I said, okay, fine. So we said, we'll do Delhi and we'll do Bangalore. You know, we had about two months to organize the events.

This is 2010.

This is early 2010. So January, we got the okay. And just through Twitter, I met or chatted with somebody who introduced me to a friend of his, Chidambar Kulkarni. And Chidambar came on board right at the beginning to help me with Bangalore and Delhi. I organized myself sitting here in New York.

And what support was Kaufman? Right. They were giving you?

Yeah. So Kaufman foundation supported Startup Weekend at that time. Time.

What were they giving you as support?

You know, just a little bit of money to kind of get it off the ground. And then of course, there was all the logistical support, right, like, how do you facilitate an event? What are things to expect? You know, how do you handle these things? What's the process like? You know, you need to get judges, you need to get speakers, you know, etc. Etc.

You were doing this voluntary. They're not paying, you're not getting paid.

This was completely voluntary. I didn't make any money during this. It was voluntary. And, you know, the idea was, okay, how do we take the community that started out at Startup Saturday and kind of take it to the next degree? Right? There were people who wanted to start a company at that point. They just didn't know how. So the whole experience of Startup Weekend was how do you take the first three months of a startup and compress it into a weekend, right? How do you come up with an idea? How do we evaluate the idea? How do you hire your first couple of employees or your co founder, you know, all this other stuff. And the final evening was your pitch, right? So how do you pitch to investors? And you know, what does the pitch look like?

It's like it's what they call a boot camp today.

Yes, exactly. Yeah. So it was less of a technology and product oriented boot camp and more of a entrepreneurial boot camp.

A process, packaging, marketing.

Yeah, yeah, exactly. And so, you know, we kicked that off. You know, the first two events were completely sold out. You know, I got a couple of sponsors, not cash sponsors, but sponsors who would give like prizes to their. To the winners. And the prizes were like, you know, free credits to, you know, our product, use our product. So we got other startups to provide credits as prizes to the winners. So it was kind of like, you know, get startups, eat your own dog food, help other startups get some customers as well and some usage. So, you know, that took off that.

I love it. I love it.

Yeah, that was. It was a great experience and, you know, it allowed me to, you know, take what I was doing in Delhi and now take it across, across India, right? And no one had seen anything like Startup Weekend in India before. It had become this. I think by 2012, it had become this rage. Like people just wanted to go to Startup Weekend even if they didn't want to be an entrepreneur. It was just fun to like, hack away at an idea and build something over a weekend. And, you know, I tried to make it something that was very high quality in Every way. So the venue had to be a high quality venue, right? Our first event was at the American Center. The second event was in Bangalore at Microsoft's office. You know, the third event was in Hyderabad at isb, which is an amazing location. So, you know, the location had to be great, the food had to be great. The speakers that were coming had to be people that you wouldn't necessarily get access to immediately. Right? So like Sanjeev Bichchandani, who is the founder of Naukri, he was at the first Startup Weekend, right? He came, he spent the whole evening there as a judge and hung out, had dinner, was mingling with all the participants and everything. And that's kind of why people got really excited about Startup Weekend. Because it's like, I'm never going to meet Sanjeevik Chandani. I'm never going to get a chance to talk to him, but I could if I go to Startup Weekend, right? So, you know, we were able to get luminaries and you know, whether they were VCs or founders or executives, you know, we were able to get celebrities to come and you know, call it luck, call it, you know, building my own network that allowed me to reach some of these people and say, hey, this is about the community. This is, you know, if you could do it, we'd love your time. You know, this is how much time we need. Could you come? By the time I left startup weekend in 2014, you know, we had all kinds of people that would come and just like, I don't want to come for two hours. I want to come and spend the whole weekend there. Yeah, absolutely. Like, like, you know, Rajanandan is a good friend and you know, 2013, 2014, you know, he said to me, no, no, I don't want to be a judge. I don't want to come for two, three hours. I want to come and spend the whole weekend working with these entrepreneurs and mentor them. I was like, dude, if you can spend that time, I love it, please come. Right. So you know, it, it set a bar for experiential education that people really wanted to be a part of. And it also that that is the accidental path of getting into venture capital, Right?

Like, yeah. So tell us. So next app you landed up at Til, right?

Yeah. So part of it was now we are in.

So you did start a weekend you started in 2010, 2011.

I started early 2011 and by the end of 2011, my network amongst founders had grown beyond Delhi to pretty much across India because of Startup Weekend. So Between Startup Saturday and now Startup Weekend, I had a very good network amongst founders. And I met Abhishek Gupta, who had started at TIL, I want to say mid-2011.

So TIL, for our listeners is Times of India Labs.

It's Times Internet Ltd. Ltd. Yeah. So it's a division of Bennett Coleman, which is the largest media company in India. And, you know, he. I had asked him if he wanted to. I'd met him somewhere and then I asked him, hey, you know, we're doing a startup Weekend. Do you want to be a judge? He said, yeah, I'll come down. So he came down and became a judge and was like, you know, this is fantastic. There's some great entrepreneurs here. And Til was starting a accelerator called TLabs. So he asked me, hey, what are you doing for a living? I was like, well, nothing.

I'm fostering the ecosystem here.

Yeah, yeah, I'd love to get paid somewhere sometime because it's been a long time since I've had any money coming in the door. And so he's like, look, you know, we could use your help and, you know, this is what we want to do. So I said, all right, sounds wonderful. So I joined T Labs in the beginning of 2012, in January, and we had our first batch at that time. It was a small first batch.

And by this time you were already investing as an angel.

No. So there was a couple of companies that I had met and I was doing a lot more mentoring at that time. Part of it was like, look, I just didn't have the financial resources to start angel investing in companies. The second part of it was the whole angel investment space at that time was mostly controlled by angel groups in India. Right. So whether it was syndicates. Yeah, yeah. So Indian Angel Network, Mumbai Angels, a couple of these others. That's where most of the deal flow went early on. Right. There weren't a whole lot of independent angels at that time. Most people did their deals through these networks. So, you know, it was. It was tricky to invest. So most of the stuff was like, look, you need help, sure, I'm happy to help you. And I'll tell you exactly what I did wrong and don't do these things. So I wasn't actually investing by 2012, 20 mid-2012. That's kind of when a lot of things started changing and you started seeing individual angels go off on their own. You started seeing startups going outside of the angel networks and you now saw people that weren't necessarily professional investors writing individual angel checks to some degree. So I started around that time when I was at T Labs to start angel investing. And 13.

Around 12. 13.

Yeah, 12 13. And, you know, by October of 2012, 500 had asked me to come on board and help them build out their India strategy. And, you know, they had done one investment in India prior to that, my Gola. And then I joined in October 2012 and, you know, was there for a little over four years, four and a quarter years.

So there you have it. How you become a VC by doing good.

Well, you know, it's an unconventional path. I think, you know, becoming a vc, the most conventional path is be a successful founder first or work at a very different startup. Well, or work at a very successful startup and then get, you know, pulled into a VC firm, you know, and then of course, yeah, go, go to, you know, a Harvard or a Stanford grad school and then become a vc. I took the long, hard path to.

Being a vc, but I think you took the long, interesting path and you helped a whole ecosystem on the way. So let's dig into that. So on the VC spectrum, when we think about VC, you think about the investment in Google, just $25 million, or the first check that Facebook got from Peter Tile, so on and so forth. You hear about these fabled investors, but that's when a startup has built a product, has a team, has customers, has traction, and has gone through some very significant de risking. And where you come in is literally the point of most risk, where it is somewhere between there's a founder, he has an idea, there's a founder, and she has built a prototype, and maybe she has some initial customers trying it out. So you come in somewhere along those lines where they actually, they might have a product, they certainly don't have revenues or somebody paying them. Right. So that, to me, is the most riskiest spectrum and the place where founders need a lot of help. Right. So tell me about the first check you wrote, the first founder you met, and you were like, I gotta fund this guy. Whatever it was. Small check, what was that?

So there was no big bang moment. It was. The journey was a slow and gradual journey. So I'd been meeting founders while I was a founder, and then, you know, through startup weekend, Startup Saturday, I was meeting founders constantly. Right. And, you know, some of them had challenges that were bigger than mine. Some of them were handling them better. Some of them, I didn't quite understand what they were doing, you know, like, going back, if I look at, let's just say Bipin, when he was starting with moby quick. And he was doing one of the first talks at Startup Saturday and his videos up on, I think, my Periscope or my Twitter somewhere from back then, if I go back in time and I think about what he was talking about, like, you know, we're building a mobile recharge business, right? And be able to recharge your cell phone. Prepaid cell phone. Like, I never in my mind would have said, this is really interesting or exciting, Right. Bipin was definitely inspiring and, like, you know, seemed like a great entrepreneur, but as far as what he was building, I just didn't make any sense to me, how's this going to be a big thing? But folks like him and Vijay Shekhar Sharma figured that out, and they grew them into massive businesses over time. So all of those were learnings for me along. Along the way without having to risk any capital, right? So, like, oh, okay, I met Bipin, you know, back in 2010 or 2009, and here he is in 2014 or 2015, and his company's a unicorn or sunicorn or whatever. And what was that path? Right? So.

Right.

That allowed me to kind of look back and say, okay, you know, I met all these guys really, really early and had. I mean, some of them were friends, most of them were acquaintances or people I've met once or twice. But I could at least see that journey, right? And I could evaluate what it took for them to kind of get there. So now, again, like, most VC is pattern matching, right? Like, what patterns can you find there? And can you match those in new founders that you're meeting? Right. And that's kind of where most of us start, right? So you have that part of it, and then there's the passion side of it, right? Like, you meet a really amazing founder who's so inspiring and, like, you know, charming, and you're just like, wow, I want to be a part of this. So I didn't have any of the, like, you know, big bang moments where somebody just hits me over the head. I'm like, I got to. I got to give you my money. Now it was more of. I met a couple of founders. I'm like, you know, and had spent time with them or to kind of like help them with various things, whether it was strategy, whether. Whether it was operations, whether it was go to market, some cases, product. And over time. And then when it came around to them raising money, most of them came to me and said, hey, I'm looking to raise some money. And do you know anybody who might be interested or would you be interested? And that's kind of how it started, where I was like, all right, you know, yeah, sure. I'll. I've known you for some time. I've seen your progression. I'll write a small amount of money into the company, more as I want to continue helping you. And this is kind of my way of saying, all right, now I'm in. And this isn't like doing you a favor. It's more of my money is here, so I should help you so that I can make some money eventually, hopefully, maybe.