Listen to the podcast to learn about
02:55 - How to Approach Your Entrepreneurial Journey
06:00 - What changed after PubMatic’s recent IPO
09:30 - How to Position Yourself in a Crowded Market
14:00 - How to Convince Investors
18:00 - Getting the Most Out of Board Meetings
26:50 - Leveraging the Wisdom of Board Members
32:20 - Amar’s Advice to Amar of 2010
Read the complete transcript below
01:10 - Amit Somani
Welcome to the Prime Venture Partners podcast. Today, we have with us Amar Goyal, founder, former CEO and now chairman of PubMatic. Amar, welcome to the show.
01:21 Amar Goel
Hey, thanks for having me Amit. I’m excited to be here and hopefully, it’ll be an interesting, fun conversation.
01:29 Amit Somani
Absolutely, lots and lots to talk about. So I don’t know how I’m going to fit all of that. But congratulations on your recent IPO. You have been a serial entrepreneur, perhaps a parallel one as well, I remember Komli from back in the day, and then I was reading on your bio that you did your Chipshot. So can you talk to us a little bit about the kind of more recent Pubmatic story in terms of how you started? Perhaps some of the lessons learned and the thrill of taking a company IPO?
01:57 Amar Goel
Yeah. Big Question. Many people don’t know, but we went public in December, just a month and a half ago and it’s been very exciting. Something that took us 14 years, overnight success. So, it’s been pretty cool. Knock on wood, the stock has been doing well and that is also nice to see if you will but lessons learned. I’m just trying to think a couple things. One is that it’s been a long marathon and there’s a lot of ups and downs on the way and in some ways, I think those are like trite comments, in a way, everyone would say that.
But I think it’s true if you follow Buddhism or Hindu spirituality, there are these concepts about be present, don’t have expectations, expectations really are the mother of all evils. You have to approach your entrepreneurial journey that way, as well. Candidly, I don’t think I’ve always approached it that way and I have expectations about whether we’re gonna raise money at this price, or we’re going to get to this revenue or whatever it is. Life has its twists and turns and takes time and I’m not even trying to say that it’ll always work out.
04:15 Amit Somani
Lots to unravel there. And starting right off the high with the spiritual quote. I’m also a big believer in spirituality, and the Bhagavad Gita and so forth. So tell us what is that mindset switch?
04:30 Amar Goel
Amit, it is nice but can you tell us some real advice?
04:34 Amit Somani
Actually, this is quite real. So what does it mean to switch from expectation and since you recently went public and I was a part of a company earlier that went public, Make My Trip, we used to joke that we have now gone from long term thinking to QS and QT and many of the listeners here from India will know a famous movie by that name by Aamir Khan. But this is QS, QT is, “us quarter se is quarter tk”. Everything becomes very short term. So the expectations become very high and actually become even shorter term.
We saw that change in our behaviour at Make My Trip and we would regret it like saying that if we weren’t public, we wouldn’t be QS QT and I know you’re newly public. Unfortunately, I think you’ve probably been going through that. So I do want to understand what does it mean to change that expectation mindset? And how do you continue to think long term? Give us some practical examples of what does it mean to not have those expectations, so to speak, and still keep doing the thing?
05:32 Amar Goel
You asked me to do this discussion last October and you had no idea that we were going public and in fact, I said hey, I’m not going to be able to do the interview. And to be honest, I think I gave you some lame response because we were in a quiet period. So our legal team was like you can’t do an interview right now. So I’m really excited to do it today. But if I were to look at how many interview requests I got last year versus since we went public, it’s a lot more since we went public. It’s probably like 10x. But that’s really just external validation. Nothing’s really changed in what the company does, or how we do it, or what we do day to day.
There’s a few things that have changed. We have a public currency and we have more flexibility to do acquisitions than before, but fundamentally, nothing has really changed. So everyone looks to, “who raised money at a high price, or who went public”. That’s just something that happened along the way. The person, people building the company, the employees, the founders, the investors, all the stakeholders, the customers, they are just going along living their life. There’s just so much luck involved in so many of these things and I personally believe there’s just a lot of luck. I was born to loving parents who said, “Hey, get an education” and pushed that really hard in me. It again sounds trite, but a lot of people just aren’t that fortunate.
So, I think the point is to have that internal fortitude like you are going to go through these really tough periods. We were in the ad tech sector, for folks who don’t know, and it has not been the favoured son of investors and frankly, anyone. I think it’s taken a lot of effort and fortitude to just stick with it. So much credit goes to my brother Rajeev, who’s the CEO, and Mukul who’s co-founder and Punay who runs engineering. I mean sticking with it for so long and putting a foot forward each day and saying, how do we build a better company. One of the things that we think is amazing about what we’ve done, or one of the things I think is our superpowers as a company’s real strengths is that we’re an execution machine. It’s something that we are very diligent about. We try to show up every day, work hard, take notes, listen and discuss, argue it out and move forward.
So I think you have to be very intellectually honest, and stay true to those kinds of values. Jeff Bezos has a great quote, which I’m going to completely mangle, but it’s something to the effect of, when the stock price is going up, you think you’re really smart. And when the stock price is going down, you think you feel really dumb. You’re the same person, it’s just like some machine out there that decided to buy or sell your stock and so that’s really the key to just think about. It doesn’t really matter what’s happening externally, you have to stay focused on where you’re trying to go and what you’re trying to get done. I think that’s a really long answer.
09:33 Amit Somani
No worries, I have lots of follow up questions. So let’s talk about the ad tech business and two things I’d like you to talk a little bit about. One is, like you said, ad Tech has been mostly out of favour. How do you think about fundraising and the journey all along the way? Adtech inherently has better unit economics, broadly speaking. And the sister question is, in a highly red ocean type of market where there are so many players like, hundreds, if not 1000s, of ad tech companies even now.
If you’re an entrepreneur in a red ocean space, ad tech or otherwise, how did you guys distinguish yourself from a positioning point of view from a GTM point of view? I know growth hacking is one of your kind of USPs. But just more broadly from a positioning perspective, as well, if you could talk about both of those, like fundraising in an industry or area, which might be in and out of favour, often, and then positioning in a deeper red ocean.
10:36 Amar Goel
I think, in some ways, it’s simple. You have to go after something with a large TAM, addressable market or could be a small TAM today, but it’s growing fast. So you think it will be a large TAM. You have to focus on that and you have to do it better than anyone else. There are a lot of distractions that come along the way about new things which look good and could be interesting and this is going to help me grow my revenue and all that.
But I think you really have to stay true to our core. Is this really what we’re about? Is this what we are going to be the best at? And if you’re not going to be the best at something, or in the top couple, then I think it’s really hard to build a really valuable company in terms of the kind of the venture ecosystem world that we live in. Probably, most of your listeners are in the tech and venture world.
What does a venture guy do? They pour four or five hundred million dollars into a sector within five companies or could be $5 billion, just depends. And then it’s a fight to the death for few companies and so you have to wake up every morning and be super focused, focus on that one thing and do it really, really well. I do see a lot of companies go in 10 different directions and it’s a press release that sounds good.
One of my friends told me, “We spent so much time looking at our competition and trying to reverse engineer what they did or try to outsmart our competitors”. And he’s like, we should have just stayed focused on our customer and what do they need? You can’t ignore the competitive dynamics out there and if you have got a customer under pricing, that’s significantly your problem too.
The point is you have got to start with the customer and work backwards from there. Apple has a principle around this, which is tremendous. They don’t seem to pay very much attention to competitors. They basically say what is the customer’s needs? Steve Jobs is famous about trying to predict customers or tell customers what they need. But the point is they’re like, this is what we think and this is what we think the customer needs, and we’re gonna go build it.
They’re not very concerned about, this competitor has that feature, or somebody else’s getting into the market. And so, it’s not easy since we’re all startups but how do we compete? We do not have the luxury of time and money that Apple does but you can have the clarity of thought that Apple does. If you think about a cheap car, and an expensive car, you can put good design into it. It costs the same amount to design a cheap car and an expensive car. We can all think clearly and be intellectually honest about what we are going to be best at? And what is valuable to our customers?
14:01 Amit Somani
Absolutely. Let me reframe that a little bit further to say, how do you convince investors? You can say, “I’m very focused on the customer and a large deep market, big TAM”. But you’re one of just 83 players to begin with. So as an investor, now, I’d say, look, I don’t even know who’s going to win here. You seem like a good set of guys and girls and it’s like an interesting product, but how do I really know? So were there any lessons learned from the PubMatic journey in terms of ‘beyond the customer focus’ or in terms of ‘positioning or segmenting the market’? Just trying to be a little bit more blue ocean or is just like relentless execution and things just took care of themselves?
14:46 Amar Goel
Well, that’s a good question.I totally get where you’re coming from. I think that you have to show the progress that you’re making. You can tell a great story and say, “We’re the greatest company on the face of the earth” but then it’s like, Okay, well, let’s look at the data. So then it’s like, well, let’s go talk to your customers. Which customers are you winning? Are you winning tonnes of deals? Who are you competing against? Are you meeting them or not? Why are you winning some deals? Why are you losing some deals and what are the metrics look like? How’s revenue growing? What’s the cost of customer acquisition? How fast are you growing? What are customers saying about why they chose you or why they didn’t choose you?
I think that’s where the rubber meets the road about your sales pitch, if you will, versus reality. Talking about investors, there it’s like you got to be able to show them the data and you have to build. You have to take what you think is important as I was talking about. What do you think is the thing that you’re going to be best at and then be able to show that in the data and in the metrics that we are achieving this.
So, I think if you are making progress on that, then investors are a lot more receptive to what you’re saying. The second thing I’ll add is that, because our sector has not been in favour, that very much pushed a ethos to us to get profitable, and to have our own destiny, and so before IPO, we hadn’t raised any capital since 2012, equities in 2012. We have been profitable since then.
We became a very self-reliant company and I’m not always saying I want to go raise more and more outside money. I’m not bad mouthing that approach but I do think a lot of companies keep raising money, because they actually haven’t. Some companies are really doing it to pour fuel on the fire and to grow faster and accelerate and own all the TAM, and that’s great. I think a lot of companies use it to hide a lot of unhealthy things happening inside the company.
17:39 Amit Somani
Right, very interesting. And the way we got sort of reconnected and we’ve known each other for a few years prior is one of your investors. Who is now kind of one of my partners, Ashish Gupta. I’ve known him for 25 years, he mentioned, and we were in some other conversation, and asked him a question saying you’re on so many boards and I think he’s on the PubMatic board for a while. What are some of the best practices for boards and which companies have done the best board meetings? And he said, “Oh, absolutely. PubMatic”. And then the other one, was Make My Trip which I was fortunately a part of.
So I’m going to switch gears and talk a little bit about it, because also, it’s slightly overextending the analogy here, notion of focusing on the basics, profitability and unit economics and all this. I’m astounded that you haven’t raised since 2012. But in a good way, it clearly says that you’re already behaving like a large mature, dare I say, “public company”. So can you talk to us a little bit, just completely switching gears out of PubMatic business to running effective board meetings to doing the basics. Some of the things that some of the early stage entrepreneurs who have aspirations someday to become a big company or even potentially go IPO can learn from?
19:02 Amar Goel
Yeah. At least say how Ashish used to say that we run effectively. So a lot of that credit goes to Rajeev, the CEO and our CFO, Steve, who were the architects of that. I would say that probably we’ve had some learnings from Komli as well. The board meetings were actually very similar when back I had started another company in the digital advertising space in India and Southeast Asia.
One is board meetings, I find them like they’re a test or like a homework check. A lot of people look to the boards to help them set the strategy and they’re trying to meet these investors to say, “Oh, this is going to be a strategy partner for the company.” I see boards as less than that. I think that you get people with great experience and they can help but they’re for the most part never going to understand the business as well as you do and your management team goes. And so to expect them as outsiders to really be able to tell you how to run the company in terms of like, “Oh, you should enter this market or not”. Frankly, if they can tell you that then you have to wonder if you should be the CEO of the company because it sounds like they know what to do better than you do.
But at the same point they have a lot of pattern recognition skills and they’ve seen a lot of stuff before. Feels early to expand internationally or we haven’t gotten true product market fit here. We’re still burning cash in our core markets and so are we sure we want to go and set up a flag in Europe or whatever it is right. So, I think they can be helpful there.
But getting back to the point I was going to try to say is that I find that board meetings are a very useful check for the entrepreneur and the management team, every quarter. We do our board meetings quarterly and have almost always done them quarterly. We’ve had some periods where we weren’t doing well and so we started doing like a monthly board call as well to keep everyone up to date. But they’re a very useful check for the entrepreneur or the founder and CEO to lay out what is happening in the business and for you to be clear about what is working and what is not, where you’re lost, or where you are struggling.
I think a lot of times you get so caught up in the day to day and working, a board meeting is a great chance to write down your thoughts and clearly with some structure almost like laying out a legitimate argument about what and where you’re going and what you’re doing. Maybe some of that comes from me being an ex consultant. I spent some time in McKinsey and so on. So that’s how we approach it, but it’s a really good way for you to stop and say, let me write down what’s happening and think about what’s happening and try to articulate that to some other person and see if they just look at me with a blank stare and say, that is such BS or “hey, this sounds good”, or, maybe nip and tuck here, but feels like things are on the right track.
So that’s one overarching thought on how to approach a board meeting. It’s like a homework check. I can’t tell you how many board meetings I’ve done. I gotta get this whole thing ready with our CFO and the management team. It’s a pain in the ass, if you will. But, again, it’s good. Tests are a pain like when you’re in sixth grade and you’re taking a test. It’s a pain in the ass. It’s still good and makes you check if you learned everything or anything actually. So that’s kind of one overarching thought.
I think a couple other things I would say is that I would approach it like a sales meeting in the sense of not that you’re trying to sell but some external folks and take it seriously. Do you show up to a sales meeting with no agenda? Do you not have a deck ready? Did you not have each of the points that I’m trying to get across? These are the things I need to make sure I find out. Those are the things that you want to approach and have in your board meeting. Send out the deck ahead of time and if you show up with a 40 page deck at the meeting and it’s the first time people are looking and there’s numbers everywhere, it’s hard. It’s on some projector, and people are not prepared to react.
You should, ideally, send out the board meeting materials out three, four days in advance. Candidly, we don’t always do that but there’s never been a board meeting in 10 years where we haven’t sent the materials out ahead of time. There’s an agenda that’s been discussed a week or two ahead of time and these are the topics we’re planning to cover. I’ve got a bunch of things. Let me add one thing and then I’ll stop, and then you can tell me if you know any other thoughts you have.
But one of the things we’ve done that I think has worked well, and I think it came from Naren in Nexus is like, we have a pre read. So, we’ll sort of say, “Okay, here’s the topics we want to discuss at the board meeting”. The deck that we send out ahead of time has the slides related to those topics, but then we have what we call the pre read section and that’s where we just go through all the financial plan and maybe some updates on certain parts of the business, there’s an engineering update, and there’s a go to market update and what not.
So that’s how people get a holistic view of the business but you don’t spend the whole board meeting, reading that deck and just talking about the stuff that people want to know. It’s not worth everyone’s time and effort to be together to discuss.
So what happens is, when we come to that board meeting, then we say, “Are there any questions on the pre read and then people if they have a question, “hey, I didn’t understand what you guys meant when you said whatever revenue is going 30% here or what’s involved in that or whatever”. We will of course take 10 minutes to do a VoiceOver on the financials, but we’d like to try to get through that relatively quickly. And if there’s a problem you’re going to dig in, but if it’s just a normal quarter, and things are chugging along, then you’re like, Hey, you know, the pre-read we cover in 20 minutes. Now we’ve got, the remaining two hours to focus on the board topics, the topics that we all felt were important to discuss.
26:16 Amit Somani
So lots of interesting insights there. So let me just pick on first the board itself. So I love the pre-read and I think we do that. We encourage that a lot and I think that’s a wonderful idea. I just loved your articulation of treating it like a sales meeting or a client meeting. You wouldn’t be just like, poof, cut to the chase. You would not do any of these things and this is not only the investors, you’re also on the board as the founder and it’s the best use of your time if you get something out of that thing and that’s great.
So going back, what’s the best way to leverage the board? I know you said, “Don’t have them think about or design your strategy, use them as a sounding board”, literally, right, pun intended, because they’re good at breadth and they’ve seen pattern recognition in other companies or whatever. Other examples of how you’ve been able to leverage the board well or any tips on that including the managing. The other thing you said was, “everybody knows what the agenda is going to be a week prior”. So you also need to manage the board. One thing I recommend to entrepreneurs is to have an anti agenda for every meeting saying these are off limits and not for this meeting. We can schedule another one because we don’t want to go into a rat hole. So how do you both manage the board as well as leverage the board? If you can talk a little bit more about that, that would be helpful.
27:46 Amar Goel
Managing the board and talking about it in the context of the board meeting I think again, I go back to the sales meeting. You pay attention in a sales meeting. You’ve got 45 minutes. What are the things I need to discuss with this customer? I have to make sure we cover pricing and make sure I understand if he really is happy and not waste 30 of the 40 minutes talking about something not really that relevant. We have those topics that you have to manage the clock, and you can’t get topics 1-2-3-4 and don’t spend 80% of the time on topic 1 because somebody just happened to start having an interesting discussion, you got into some rabbit hole and you just kept going.
While everyone seems to be enjoying the conversation, we just kept going, no, you’re running the meeting. So you got to say, Hey, guys, like we allocated about 30 minutes to this and this is great discussion. I’m gonna follow up with these two people because they’re having a lot more thoughts but I want to be cognizant of time. So let’s move on to the next topic and so it’s a balance. You’re not trying to cut off discussion. You’re not trying to stifle people to have a conversation but you’ve got a problem if you didn’t cover three, what were supposedly important topics a week before the board meeting and then you didn’t even cover and discuss them.
So you have to manage the time and how to leverage the board. We do an okay job here and I think we probably could do a better job here. There’s a story I’ve heard about Frank Slootman, who’s the CEO of Snowflake. And he supposedly seems like he’s pretty hardcore. He gives assignments to people and I’ve heard from board members like, literally that night, or the next day, he calls you and he’s like, “Hey, have you done it?” and people are like, “it’s just been a day”. He’s like, “yeah, it’s been a day.Where’s your assignment that I needed?” So let’s call that the Olympic standard.
29:59 Amit Somani
Don’t mind me if we edit this part out of the podcast. No, I’m kidding.
30:09 Amar Goel
Well I think candidly, maybe I shouldn’t say this but I noticed a lot of board members don’t take many notes in the meeting. I open my computer and I take notes. Some people do take notes, but some people don’t. If you don’t take any notes, you must have a great memory because a year later, or three months later, how do you really remember and if you’re an investor on multiple boards your time sliced and you’re moving around. How are you going to get your actions done?
So, we will take notes and we will follow up about different topics. Going back to this point about how you leverage the board, I feel like what has happened to us is that we’ve had the last investor join the board in 2012, Eric Carlberg from August. Then we had our first independent board member, Kathy black, joining roughly in 2015. We’ve had that chance to get to know our board members and get to see the strengths and weaknesses of people and where they focus their energies on.
Eric is a former CFO, former banker and he is incredibly knowledgeable about financial matters. I’ve literally called him up before and said, “Hey, can you give me a tutorial about balance sheets?” That’s one of his core areas of expertise.
He’s been on multiple public boards about that on the audit committee, and he really knows that stuff. He knows a bunch of other stuff too but when we’re talking or we’re in a sticky financial situation, or we’re going to get some debt, he’s definitely on that shortlist of people where you’re calling them and saying, hey, help me think through this term sheet, I’m going to send you this thing, can you look at it? How would you negotiate this?” whereas maybe somebody who’s a marketing expert use them in other relevant ways. So, it’s like getting the most out of those folks for their skills and their talents.
32:46 Amit Somani
Wonderful. So as we come to the tail end of the podcast here, you mentioned quite a few attributes that were interesting in terms of your own journey. Execution focus, customer focus, luck, which of course, you can’t control, but just being sort of cognizant of that intellectual honesty, fortitude, etc. Let me ask you a more classic podcasts question which is, If you were to give yourself advice from 10 years ago, not 14 years, when you started the company, but let’s say 10 years ago with your four or five years into the company, which many of our possible listeners are, what would you? What would you rather pay more attention to and what are things that you would pay less attention to if there’s any other things that come to mind? Amar giving advice to Amar in 2010?
33:39 - Amar Goel
So probably the biggest advice I would give is, this is your life. You’re living your life and I think you enjoy the journey, if you will and not just the destination because going back to that I think, how we opened up rotational destiny, I’m gonna leave. So, enjoy that journey, and enjoy what you’re doing and make it fun. Don’t forget to enjoy with your friends and your family along the way. I don’t think it’s just about making my startup successful. It is above and beyond everything else. Candidly, I’ll say that I didn’t approach it that way.
In 2013, I came back to be CEO of Komli and we went through some tough times there. Eventually we managed to sell the company but wasn’t like some great exit. I learned a lot in that process about myself for sure. When you go through some of those tough experiences, you really become a lot more thoughtful about what you are doing in life and where it’s going and that’s the time to reflect a little bit. I think that was when I started to frankly think a lot more about these things. So I hope that might be helpful to somebody. I am sure somebody who’s 25 is going to roll their eyes at me, but such is how the arc of life goes.
35:48 Amit Somani
Absolutely, wonderful. That’s a great high to end this podcast on. So thanks, again Amar for being on the Prime Venture Partners podcast. Delighted to have you.
35:59 Amar Goel
Thank you. I’m excited to see what you guys are doing as you keep building Prime Ventures.
36:05 Amit Somani
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