Saikiran Krishnamurthy (Saiki), Co-Founder and CEO xto10x chats with Amit Somani, Managing Partner Prime Venture Partners.
On this conversation, they discuss how the idea of xto10x originated at a breakfast table with Binny Bansal & how business design can help an organization from xto10x.
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Hi, this is Amit Somani from Prime Venture Partners. Today we have with us Saiki, co founder and CEO of xto10x . Welcome to the podcast Saiki.
Hey, thanks very much Amit, lovely to be here.
Saiki. Love to know a little bit about what xto10x is and your own background. You have a very interesting background, having gone from McKinsey in a consulting role to, you know, the deep end of Flipkart. And then now of course, playing, you know, mentoring and other kinds of roles at xto10x. So maybe you can give us a little bit of your story.
So that's already a pretty loaded question Amit. When you say deep end at Flipkart , I guess it was a somewhat unusual transition. I think only Anant & I have done it having spent 15 odd years at McKinsey and being a senior partner there. Everyone says you arrived in life. So why would you change anything? So to quit, come and start afresh at Flipkart, was quite a transition. Frankly, haven't regretted a moment. It's just been an extraordinary journey. So I spend after that 2 years at Flipkart, where for the most part I was running ekart, the supply chain side of the company. And then a year at Ola, leading marketplace there.
And then xto10x or to answer the other part of your question.Well, xto10x frankly came as an inspiration over breakfast with Binny and we were talking about like, what's the really meaningful thing to go after next in life and what has life prepared us for? Are we even useful for anything, frankly, at this point in our lives. Binny, of course, co-founded Flipkart like a massive 10 year journey.
And I having spent time at McKinsey & Flipkart, we said ok this DNA is now, we can do one more company, but can we do something that can make a dent across the world in a very meaningful way? And we said we'd do one company it makes a dent in a part of the world. But if you can impact all startups who are transforming the world, and that's something that could be a lot of fun doing and we could have a lot of impact. So that was just the idea. And then we said, this idea is very special. We had no idea what we're going to do with it. So we said, okay, let's get going. So that's how xto10x was born. Frankly, if I have to blame one person for it, that blame goes to Binny because his idea to do something for the startup ecosystem was sort of where it all began.
Wonderful. So just going back to the McKinsey thing for a moment. So what were some of the things you picked up at McKinsey that you were able to apply right away at Flipkart and Ola? And what were things that were a little bit hard coming from that role.
Got it. So I think if you really tell me , that the basic analytical training of asking the why questions to anything.
Frankly for the first 4-6 weeks I was frozen. I had no idea what was going on. I was leading a fairly large org and they used to keep doing reviews with me and I said, now, should I say something? Should I not say something? I can’t sort of figure out anything that's going on, and for the first time in my life I was looking at p95 metrics, p99 metrics and trying to make sense of all of it.
In Flipkart the one percentile impacts still impacts tens of thousands of customers in a week. So understanding the significance of corner cases, edge situations, being able to problem solve it, all that was relatively new to me. So I was a little bit frozen to be honest, and I said, hang on, I've been doing this for a living for a long, long time.
Like going in and talking to CEOs and asking fundamental questions about what the business is doing. So after six weeks I said, look, everyone is anyway messing around and doing creative stuff. And in Flipkart, everyone is sort of hard charging and aggressive. I also might do a jump in there and have fun.
So frankly, at the end of six weeks, I just gave myself permission to just be myself and went back to the basic McKinsey training of asking questions, deep analytical questions. Caring deeply about people. So anyone that I work with on my leadership team was more than just a report or a colleague. I always felt I could invest deeply in making them successful and asking the fundamental questions of where is all this going? Is this even meaningful stuff to pursue, which can inform things like a product road map, and what are the areas we should work on over the next 3-4 quarters? So I think after 6 weeks I realised just fall back to the basic McKinsey training. Trust your instincts and it tends to work more often than not.
Wonderful. So switching gears and moving onto xto10x there are several things that you guys do over here, right? And you are particularly passionate about. Maybe we'll really pick a couple of them. One term I've heard a lot from you is business design. Another one is org design, so maybe you can tell us a little bit about business design, org design. What are the kinds of things you guys do here in particular with respect to the growth stage startup that you're looking at?
Yes, so I mean, where does this come from? So this business design, org design is not something me, Binny or Neeraj are sort of inflicting on an unsuspecting startup ecosystem. Frankly, that's not where these terms come from. We've done now maybe something like a 65 what we call vision challenges with founders, which is the founder just come and talk to us for two hours. Freewheeling chat, no format, no agenda, and they talk to us about what's going on with the company and what the real unlocks are when they look forward. The reality is if I have to tell you what the most repeating pattern is across these 65 conversations, not a small number, right?
And these are all growth stage companies. Typically series B+. And many of them, series C+ as well. The reality is at series B you hit the first barriers in terms of what do I do next to start facing serious problems. So all the initial excitement of product market fit giving you velocity that carries you through series A and B.
If you build a great company, things take care of themselves. You feel boss, even if I don't come to work, the company will still grow. At series B you have to start answering the questions of, hang on, I'm starting to run out of suppliers. Or that first early blush of 100% quarter on quarter growth, getting to the first million customers.
That's now done. Now where do I go from here? And now that the, reality is expanding product market fit and saying what is the business that that will scale 10 times from here is what we call businesses design in very simple terms. Which may mean now to provide supply at the same quality you have to go more full stack for example.
Or you have to invest in tech on the supply chain side. What was the e-kart moment for Flipkart? So e-cart moment is an example of a business design shift. Well into product market on e-commerce that’s the business design piece. The org design piece is a very, very simple question. You said, okay, you want to achieve this over the next year.
This is the business design that you need to pursue. Now answer one simple question. You shifting now from just growth to growth plus profitability. Is that same org going to be good enough that you had last year? And what astonishes me is that orgs actually don't change by default. Everyone carries the same org year after year when the business context is changing so dramatically.
So we just insist on asking this question. Is the org you had last year going to help you do what you want to accomplish next year.
That’s what these two topics are.
Great. So let’s drill in a little bit into the business design. Let's say I'm a growth stage startup. I have raised series B I have got product market fit, you know, obviously some traction, revenue, et cetera.
How do I do a self assessment, right? I mean, many people will have access to the vision challenge that you offer and many won't. This podcast is meant for entrepreneurs at large. What are some basic tool kits or set of self reflective questions you can ask to say, Hey, look, obviously everybody will do their OKRs or targets, but that's not what this is, right? Saying one of the fundamental ways in which you can do an assessment to say, you know, something's happening.
You have a flare for this. You're using my words. I have to find new words because this is exactly what we do. And we do an Academy session on business design.
The first thing we do 15 minutes into the session is a self assessment with 10 simple questions. Here are have some of the two or three practical questions that we ask. The first one can you put numbers now you've been in the market long enough, can you put mathematics to the practically addressable market as you see it today. The thesis is now no longer a hundred million customers, 100 cities, world domination.
That’s what got you here. Now your product is out there, it's been used by consumers. You have real signals on what's the market where you're solving the problem most deeply. So the first question very simply is, what's the practically addressable market as you see it, based on real evidence today. And that has resulted in, by the way that question alone in fairly profound reorientations.
Boss, this is my ideal customer. You know what happens at Series B, you still have to grow at the same rate. So you start now spending more and more money about consumers where the PMF is weaker. You've heard this famous thing, when you pullback the discount 20% of my customers go away. What is that it basically symptoms of weak product market fit for the larger and larger sets of consumers you are trying to acquire.
And at that point you're not trying to acquire more consumers that love you. You just trying to acquire more consumers. So that's question one. The second question is, what is your funnel and why is your funnel what it is? This question alone, frankly I maybe doing some damage to myself by saying it on this podcast.
This question alone, I'm if hundred people are visiting your app or your website or whatever it is. What's happening to those hundred people all the way to the point of transaction. Do you have the why why analysis for every stage of drop off? So they're showing up. Many people bounce off without even actually spending meaningful time on the app.
Many people will transact once and not come back. Many people will see price for the first time and then drop off. Why is that? And do you have both the qualitative insight as you go out and talk to consumers and do you have the analytical understanding of what's going on. So these are 2 of 10 questions, but you get a sense, this is the, these are the simplest questions that everyone has heard of a hundred times. All we do, frankly, is insist that you answer them well for yourself. Don't make me happy. As a founder, just reassure yourself, you have good answers to these kinds of questions.
It’s phenomenal. Actually very interestingly, also apply it a very early stage, but I can see how when you are going, you know, pun intended from xto10x or 10xto100x, this will be even more profound, right? ‘Cause you may be stuck in a niche of a small market or you may be attracting all kinds of customers. Rahul Vohra from superhuman has this beautiful metric that I've started using a lot called high experience customer feedback.
HXCNE, he calls it saying, what percentage of customers will be deeply disappointed if you shut down your product today. Right. Et cetera. So very interesting. I love those two questions. Now on the org side of it, why is it that people get stuck in, you know, whatever the org was. Is this just inertia, but these are all hard charging entrepreneurs with ambition and hiring everybody and their mother. And so forth. Right. So why are they getting stuck? Is it just, you know, some legacy or inertia or what is it and how do you overcome it?
You said it, I mean, the answer was in your question. I think people don't like change. If I have a job, I'm doing well at it, I'd rather not change. And as the org gets larger, remember as xto10x, we operate disproportionately in the scaling context when you hit meaningful growth. Typically the companies we're seeing already have a two-three hundred people at least. Once when you are above 300 people trying to adjust the structure of what work they're doing and how they work is a tough thing to tackle. Now would we wake up in the morning and rush to work and try and tackle tough things, or would we want to continue on the fun stuff of the next product feature or evolving the design of the product we're doing.
The tendency tends to be focused on products as opposed to focus on org. ‘Cause remember the shift, the game shift here is the product is what got you the velocity up to series A, B. Post that point the org now has to start solving harder problems. So the org has to evolve. So the one hack we try and give founders is think of the org now as one of your products.
And if you had to design the org, to solve the problems, does this work? So you take some examples. A simple functional structure of product, tech, growth, whatever works just fine up to the typical series AB stage. But now you're going to start solving deeper problems of how do I increase usage? How do I get attached for newer products and launching?
Now those are complex problems that are highly cross functional in nature, which means I need product, tech, growth, ops, sales all to come together to solve a problem like that. So in org design for that context, what maybe much more appropriate is a GM structure. Put one business oriented person in charge of it and create a full stack team, product, tech everything else in that team to solve a problem deeply.
If you continue with the cross functional structure, you know what will happen. People will say, Oh, now we become bureaucratic. We have to keep coordinating with each other and these are typical signs of what goes on at that stage. So org design is an incredibly potent weapon. But the tendency is to deploy it means I have to tell so many stories explain to so many people. I’d frankly rather not.
So let's piece this apart, right? So this will have a bearing on how you hire people as well. Let's say we are getting somebody, you know, superstar, like Saiki from McKinsey, and you're saying, come do e-cart. And then I do my org design, you know. You know N.8. And they Sorry, I got you for ekart don't worry, you're going to go do X. So how did that one, the bearing on the hiring process, right? What kind of people do you hire, especially at the leadership level? Two any thoughts on how to do the change management for people that are already there? I was an expert on product and XYZ, and I've been doing that year after year after year in a particular way.
Now suddenly say, Hey, Amit go become the GM. And you're like, Whoa, hang on a second. So maybe a little bit on both of those, right?
Yeah, I know. That's a great question. And frankly there isn’t, please don’t listen to what I’m going to say in the next two minutes and think that's the silver bullet answer because there ain’t a silver bullet answer to this question.
I think if I reflect on my own personal story. I didn't join Flipkart to lead ekart. And the fact that if you think of many of the successful Flipkart leaders over time, they join doing something and they ended up doing something else and they actually hit the purple patch doing that something else. If you look at the journey of leaders like Sameer & Rahul who came in on the back of an acquisition into Flipkart. And where they are now is co-founders of PhonePe.
Frankly that journey no one can predict. And Sachin & Binny didn't even go out to hire the co founders of PhonePe. Even no one had thought of PhonePe at that time. Same in my case, I joined on the eCommerce side and ended up running ekart. Bottom line is a leader is a leader, which means you're looking for some fundamental skills. The ability to lead in a relatively ambiguous environment.
Can this person understand the business problem? Can this person set an audacious ambition? Can this person build and lead a team? Can this person roll up his or her sleeves, which is required 30% of the time when you're working with a PM or an analyst solving in the trenches problems. If you ask the fundamental questions of what makes a great leader and they meet those criteria, then new hired someone who can fit pretty much anything.
So that's the part of the answer. This is not to take away from deep functional specialization. So when you've got tens of thousands of people, like in the ekart context. You need the caliber of someone like Neeraj to be able to run a military machine. Like how Vijay at Mygate for that matter who actually ran military operations.
You meet people who have the DNA where you wake up every morning, and I know something needs to happen by 7:00 AM or I'm in trouble. That's not me by the way, I don't have that sort of discipline. I can only respect Neeraj & Vijay from a distance, but in the ops context, that structure is not going to change that dramatically. So that's where you need to play for depth and specialization in some contexts. Frankly it's a partial answer, but hopefully gives you some conclusion.
Any thoughts on the change management for existing people, people that are already there, or Day zero of Flipkart, or been there seven years. Now, we've hit this inflection, like super inflection point, let’s call it, how do you help them deal with the change?
So this was, I had to throw out all the textbooks frankly. When I used to do org programs at Mckinsey it used to take six months to change a part of one org. In Flipkart we used to change org design pretty much every year after BBD. Every year. It used to be like almost like an operating process and that's because we need to do different things next year org design has to change.
So one thing you have to over invest in is the storytelling. And just investing the time with people to explain why once. And everyone in the company is like this you haven't come to Flipkart to do a bureaucratic job. You want to get on with the business of building a great company. That's true of all, all startups, right? So we just invest in the story telling and explaining why, and this becomes more of the founder's job, right?
Delivering the inspiration, telling the stories, convincing people why the new direction makes sense. Then the structure change and getting people to adapt to new things becomes frankly a relatively obvious corollary to where the company needs to go. If you’ve not convinced people that where a company needs to go, frankly, you have a deeper problem than org design or changing org structure.
Wonderful. Lots and lots of interesting insights we could go on all day. Maybe. Any other things that we haven't talked about? Say things around pitfalls or you know, the sort of do's and dont’s. If you have any before we wrap up here.
I mean, I have just the one. I mean, that doesn't make sort of anyone's radar very naturally, which is founders investing in their own personal growth.
I think the risk beyond a series B stage is this monster can get big on you and get bigger than you. Now the question you have to keep asking yourself is, am I the founder or the CEO this company needs one year from now? And oftentimes the answer will be maybe or partially. So keeping yourselves real, keeping ourselves honest, getting quality feedback.
The other problem is the founder, as you become more successful, you are more and more in a bubble. They hear good news. People are more and more afraid to come and tell you hard truths. Investing in a founder, keeping pace with where a company needs to go is sort of doesn't make everyone’s top five obviously. But according to me it could be the most important piece of ensuring enduring relevance for a founder as a company grows.
I think that's pretty profound and perhaps a dot to call this podcast to a close, so thank you Saiki so much. Lots of interesting insights. Again Saiki, co-founder & CEO of xto10x. Thanks for being on the podcast.
Thanks so much Amit.