Sachin Gupta is a graduate of IIT Roorkee where he majored in Computer Science. He worked at Google before starting his own venture. Prior to that, he interned at Microsoft, where he worked on azure cloud technology. He is the co-founder and CEO of HackerEarth.
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SHRIPATI ACHARYA 0:46
Welcome Sachin to prime podcast, it's great to have you in the middle of this pandemic. So appreciate taking the time.
SACHIN GUPTA 0:54
Thanks Shripati. My pleasure. Absolutely delighted to be on the podcast today.
SHRIPATI ACHARYA 0:58
So I see that you have a haircut.
SACHIN GUPTA 1:06
Yeah. I think you can see it's visibly do it yourself. Actually not myself, My wife did it for me and I trust her with my hair. I've done it twice already in the lockdown.
SHRIPATI ACHARYA 1:16
I think there's a new style of haircut. You'd call it the pandemic style. Although I think she might be getting better over time.
So let me get right into it. So Sachin as a co-founder and CEO of HackerEarth, tell us a little bit about your journey. Like what was the inspiration behind Hackerearth and how did it get started?
SACHIN GUPTA 1:32
All right. So we kind of started in early 2012 but the idea for HackerEarth was seeded even before that. And I was obviously in school. I mean university at that time and the idea came very organically. We were not looking to do a startup frankly, we were kids in 3rd Year and everything is like you know those two starry-eyed kids in an IIT and the world is your oyster so not really committed to anything at that point of time, but we're just experimenting before that we had done tons of things around research and bunch of other things. And of course, TechCrunch and those articles and overnight success stories kind of wooed us into doing something.
So while we were thinking, Hey, let's let's do something interesting and an incident kind of happened. One of my very close friends who was top of his batch and we kind of really respected him for his for what he brought, what he had as skills but he didn't quite get through the top companies during a placement season. When I say top companies I'm talking about the Google, Facebook of the world and if you're not familiar with IIT placements, it's full of excitement and stress. And there's like, there's almost like a finale of a tournament. You’ve got day zero and day one and day two. And everybody's betting, who's going to come back with an offer in hand on day zero or day one. So he was that kind of guy who everybody was saying he's going to get placed on day zero.He didn't get through till day six or seven. And that was a big shock to us because that was the kind of talent companies would kill for.
And I think that was a motivation for us. We thought Hey, there's a problem at hand here because we, being developers ourselves knew that assessing the skillsets of a developer is not that hard. I mean like it's objective. It may be a hard problem but it is still fairly objective. You can devise ways by which you don't make wrong decisions and when we so we did a quick dip check, spoke to some of our seniors and tried to figure out that do they feel that there's a problem at the other end, which is the people who are trying to hire and it resonated with everybody. Like everybody, even till date says recruiting is hard, tech recruiting is harder and I think that was the impetus for us to kind of create a platform that makes the whole process of hiring, tech hiring democratic and skill driven.
We very strongly believe that talent is universally distributed and opportunities are not. But if we can create a system, a platform that allows a kid sitting in some remote part of the world having access to a computer and internet who has the potential to develop those skills and can give the Ivy league school kids a run for their money.
So that was also the belief with this opportunity, the problem that we kind of experienced firsthand led us to start HackerEarth. And then as we just adding onto it as we kind of progressed through the journey, we realized that there was a massive trend that was taking shape at that point of time. This is 2012, Marc Andreesen at that time had just quoted that software is eating the world. And the mega trend was that organizations globally were becoming tech so increasingly every business had to hire technology talent. And realized that this problem is only going to become harder and harder as this thing scales out. So I think that was the motivation as to how we kind of started.
SHRIPATI ACHARYA 4:38
Fascinating. So it's a problem that you felt yourself firsthand and then you figured that let's actually go about trying to solve it. And in one sense remove the qualitative aspects from tech hiring and make it more quantitative and objective seems or was the original inspiration.
So can you take us from then to where HackerEarth is now, so some of the key decisions you have made to get to the point where you are today.
SACHIN GUPTA 5:08
So obviously it's been seven years now, so a lot of history, a lot of things. So I'll try to compress and pick out the key ones. I think the very first key decision that worked out very well for us was that from day one we decided that we wanted to build a business which was not just an enterprise size application but also that there had to be a community element. So if you look at recruiting, there are obviously two parties involved. So one is the employer and the other is the person who's looking for employment. And we wanted to keep the developer centric to our product, our company, our mission and vision. So we invested very, very early into the community. And when I say community, basically we want it to have a version of the product that was available to developers all across the globe, Free of use so that we could get developers onto our platform.
Obviously the promise still continues to be that if we have enough developers on the platform whose skill sets we are aware of, we can leverage that to monetize in various other ways. But I wouldn't say that was the only reason why we invested. We just felt that our business needed to have a community element and that has reaped us a lot of benefits over the years. One is obviously like I said the opportunity that it opens up for you in future in terms of additional business models. The other is the one that we did not know about at that point of time consciously, is that it helps you build a very strong brand.
So the developers who used our product in 2012, 2013 are today senior engineers in a lot of organizations and they influence, they may not be the buyers. They may not be the economic buyers for our product but they are definitely influencers. And that brand goes from, it has gone to 4 million developers today. And that in some way has helped us to build that business. So that's one value that we didn't know at that point of time. And I would recommend everyone to invest in some sort of community. Every business can create some kind of community, large or small is independent of that because it has compounding effects, just like SaaS recurring revenue has compounding effects, Community also has compounding effects. So that's the first kind of key decision that we took.
The second I would say is kind of recent, so I’m kind of fast forwarding many years and this is 2019 or actually 2018 when I finally committed to move to the US and then moved in 2019. And why I would say that as a key decision is because our perspective has changed since then. In the early three, four years of the company we did not feel that assessments was a deep enough market because a lot of our business was coming from India.
And while we were getting good customer growth. So we were acquiring a lot of customers. There were two problems. The depth within each account was low. Indian customers at the end of the day, have a much lesser paying capacity than a U S counterparts, the same organization which has an MNC back office in India would pay you probably one-tenth of what their US counterparts would and the second is the need for software or the value of software is much, much underappreciated in India and that's why they haggle on price. So the organizations are not deep in itself and they don't want to pay you a lot but in the US, it's a completely different thing. The market is massive like it is easily 5 to 10 times in terms of both the depth of the market itself meaning the number of customers plus the paying capacities. So I think that was a seminal decision for us to say that okay, we want to go to the US and commit to that, and that changed our perspective.
So, while in the early years of the company, we felt that assessments could not be a big business but today we are very committed and very strongly believe that assessments alone itself can help us to build a meaningful business. And I think that's the other thing. I can talk about some of the other things that we did in between. One of them was, as we were building out the developer community, we, being in India, there's a Jugaad. So you try and figure out a value. You're trying to extract value for everything that you have right from day one.
And as we were building up this community, we did not have a monetization model in place but we were always open to ideas. So we did a lot of experimentation, a business model experimentation, user acquisition experimentation, and some of those experiments worked very well for us from a community perspective. If I look back there are like, I think about seven or eight different sub products that we built, launched and killed when it comes to community. And I think three or four of them still survive but those have given us organic user growth, 4 million developers till date, and we wouldn't have spent any marketing, some marketing capitals, but compared to a lot of other businesses, very, very little marketing capital that's because we grew organically and a lot of it is all to those experiments that we did, things like experimenting with university networks. How do we tap into colleges, how do we leverage SEO, content, how do we get more people to get their friends to join and be part of the community.
So I think some of those things that we did helped us grow and now coming back to that point of jugaad, so we tried to monetize everything. As we were building out the community, we tried to monetize it at various instances and through all these experimentations, we landed on hackathons. So a part of our business is hackathon. Then if I look back in time, it's both good and bad. Good, because you know, it gave us an immediate way to monetize and grow the community. So hackathons is where your customers are paying you to do a hackathon in your community and their brand gets you more users. So in some sense, your customers are subsidizing your user acquisition costs. I would say what it did result in is that we started on the path of having two business models. So one was the SaaS assessment solution that we have. And the second was hackathons, which was more like a managed service. And that has had both positive and negative over the years. But I think these are two or three key decision points for us over the years.
SHRIPATI ACHARYA 11:13
So I will get back to that US decision in greater detail later in the podcast. So community creation, one key decision, actually driving a monetization engine on top of community and other major decisions as well as moving to the US. So, let me roll back a little bit and we say that we learn more from our mistakes than our successes and you mentioned a few of the dead ends and mistakes which you might have gone and learned from. So if I were to ask you to reflect on the journey of the last six, eight years of HackerEarth, what were some of the deadends or mistakes which actually ring true in your mind that you'd like to talk about which you thought really helped in forming your future decisions.
SACHIN GUPTA 11:58
Great question and I think one of the mistakes that, and all of this is like in hindsight. As a founder, it's very, very hard to kind of do this in real time and what worked for us may not work for others and vice versa. So take everything with a pinch of salt but one thing that I think we should have done sooner is this move to the US and that's really about I'm not advocating every SaaS business to move to the US, I think it's committing to your market. You have to pick a market on day one, I would say day minus one, When you've not even written a single line of code, you need to have absolute clarity in terms of what market I'm going to try for.
I'm not saying stick to that market forever, but you've got to commit to one market in the beginning. If it's India, do your analysis, it has to be deep and upright If you're building a venture backed business, it has to be, it should be big. And it also matches up, you have to see what matches up your aspirations but if not, then look at other markets. Mistake that we did, we had our feet in two boats. India worked for us in the, in the beginning, we kind of grew organically even on the sales side. I hired my first sales guy in June of 2014. And I think in less than a year, I had about 8-10 sales guys. And I didn't have a marketing engine to feed leads to them, but they were just doing business on their own.
So India sales led business grew very fast but we were also trying to do US and we were trying to do US through an inside sales model and we were trying to replicate what worked for us in India. And for the first two years, it just didn't work. So, that's one thing I've learned that if we wanted to do US, I would have even gone to the extent of saying I won't have done India for the first two years and just put all my energy on the US and if it didn't work ,it didn’t work. I think that's one mistake in hindsight.
The second would be as a founder, you're always balancing capital versus control and particularly as a first time founder, you are very sensitive to control because you don't know who you're getting on the board, You're also not that savvy in terms of managing a board but my advice is that there is an amount of capital that gives you the freedom to be bold and do experiments. And because there is no recipe to success for any startup, there's no book/ textbook that you could follow and be successful. Every company that I have spoken with, founders I have spoken with, they've all scripted their own journeys in their own unique ways. Which means you need to have enough serendipity in or around you or take enough chances or do enough experiments. You never know who you meet, where you meet them, that results in a conversation that results in a sale being closed, that results in you launching a new product feature, making it generally available and then business shooting off, you cannot engineer those things.
So capital gives you that room to do experiments. That's the other thing that I would advise founders that raise enough capital but then also don't raise it for the sake of raising. Have a plan of action as to how you're going to use it. And do experimentations on all fronts, mostly on the distribution side. How can I use my capital to do experimentation on the marketing and sales side. I wouldn't recommend doing experimentation on the product side if you do not have a way to get market feedback. So always my take is, apply your capital to do experiments on the marketing and sales side. So you acquire more customers and they will tell you what's the right product for you to build out. Not for hiring 15 engineers and then there are three pods of five engineers each one of them building their own product, doesn't work that way in my opinion.
The third thing that I would say is for a SaaS business, I very strongly feel that marketing as a skill, organizational skill, precedes sales as a skill and that we didn't know, obviously, and we invested in sales more because India's a very sales driven market. But almost all the rest of the world is very marketing driven and there are a lot of nuances which I could dive into but in the interest of time, I'll pause here. So yeah, like I said, those are the three things that I could think of.
SHRIPATI ACHARYA 16:03
So you said, commit to your market, it might not be a final market, but you should get going in one market with both feet on that market and aligning all your arrows towards that. Second thing you said is, the tradeoff between capital and control. How much to raise when, it's not that bootstrapping is always the right thing. It's not like raising a lot of money is always a right thing but raising adequate capital or having access to adequate capital is definitely a right thing and using that capital for experimentation to actually get validation of your business model maybe validation of the value proposition etc and finally we talked about building the marketing skills versus sales skills. It's much easier when you're especially focusing on an Indian market where if I may add the sales costs are low. The cost of actually building a salesforce is actually significantly lower. Whereas marketing is a sort of a flywheel which spins slowly but down the road, it is spinning on its own. So that's fascinating.
So now let's talk about SaaS out of India and we have a lot of SaaS companies and if you were to build the company today and I'm a founder who has got a SaaS product and let's say that the market is the US to simplify our discussion. What advice would you have for them as they go about doing it? That's one, and a related question is that, After you moved a couple of years back to the US, what has been your experience as a founder, which they need to be aware of. So both from a company standpoint and a personal standpoint, what would be your thoughts?
SACHIN GUPTA 17:43
Alright. So maybe I'll, you know, I'll end up blending up the answers to both of them. I'll come to the latter one towards the second half of my answer. As a company, I think you can absolutely build out a SaaS business from anywhere in the world, from a belief perspective, I think it's absolutely possible given that distribution is so digital today.
However, the first thing that you want to need to know, as a founder is you need to intimately understand your customer in your market. which means you need to understand how US buyers buy. What kind of content they want to read when they make a buying decision? What is their sales process? What is the emotional aspect involved in that sale? Every sale has something. To us It looks like a transaction, but whenever a user commits to pay you, there is an emotional element in the back of their minds. If you’re going to develop a tool. All the developer is thinking about how I make my life easier?
How do I build a scalable system? A lot of other functions, particularly in the US and this is an insight that I’ve garnered over the last six months to a year. Everybody wants to show their bosses that they made the right decision. And that decision in terms of a software purchase has resulted in business efficiencies.
That’s their motivation. How do you play into that? So it’s important .India has its own set of challenges, but the US. So you’ve got to understand your customer intimately, which means as a founder, you should have spent some time in this market. Or you’ve experienced that by working in an organization that sells to the US, there are various ways by which you can get exposed to that, but you should definitely develop that understanding.
The second is, and again, my perspective, that building a SaaS business that focuses on SMB. An SMB, I would say deal sizes that go up to a maximum of $10k to $15k. And that’s true on the higher side, a good range would be anything between a thousand dollars to $3,000, I’m talking about ARR. It is absolutely possible from India to the US in the US provided your primary acquisition source is through a touch less or very low touch sales process.
So if you’re in the space where buyers come online. Researches, tries out a couple of products. You’re not really talking to procurement. You know, they’re not extensive sales cycles involved and they swipe their credit card and they move on. it works then, you know, it really works. Hence, which means if you’re in a market, which is kind of well understood. Obviously you do your product innovation, but if the product or the market is kind of well understood, they’re comparing you with another product and you. If you understand what are the motivations that they are switching then obviously we’ll bake that into your marketing message.
It becomes easier because you can leverage SEO. You can leverage search engine marketing. You can leverage a lot of marketing tools, but as soon as you start going mid market, which is, I would say $15k to $20k deals, to enterprise, and I’m talking mostly about land opportunities here, you would land a 15k to 30k, 40K for mid market to enterprise and expand potential goes up to even a million, million and a half in the enterprise segment, you need to be here. Even in the first category, I would say, as a founder, you should spend enough time here, but the majority of your business or your team could be in India, but for an enterprise segment, you need to have sales here.
Because there is a sales process. There’s a sales methodology that is followed here where customers are used to buying that way. And you would never know, as an Indian, you would not know the cultural nuances, you know, how do you walk those corridors? How do you do a small talk?
Coming to your second question .My personal experience, in India, sales is kind of cut and dry or let’s not put it that way. The way you build a relationship with a person is very different from the way you would do it here. Here people expect those first three minutes of small talk. Like it’s part of the culture. And if you cannot do that small talk, then you stand out as someone who’s different. No bias. I wouldn’t say that we face bias per se, but you are different. And on another hand they have another vendor who’s like them. There is this unconscious bias that creeps in, in the selling process, you’re just different to them.
So you’ve got to learn that and, you know, I’ve learned to do that myself over the last year or so, and I’m still developing that, the second would be, you know, how do you in a sales process, it’s very, very important to talk to the economic buyer. And any sales process, which has RFPs and RFIs, the gatekeepers do not typically let you pass through to the economic buyer. Now, how do you work your way up? You’ve got to understand the culture here, your connections help, a local VC helps, hiring a sales guy who’s been in the industry for many years, they come with their own Rolodex. They will not get you the deals, but they’ll help you work with the people here.
So I think those are the things that one needs to keep in mind. Having said that I would kind of end that first part of the question by saying, I think it’s a great combination to have a presence in India and trying to sell here in the US, you just need to understand what components need to lie where.
Tech can absolutely be out of India. We’ve got the same quality, you know, similar quality engineers, I would say in India, they just need the right guidance. And we’ve been, we have successfully shown multiple times that we can build a product that can be sold to the world. So your product can sit out of here. Your operations can sit out of here. Your customers are also okay with support being out of other parts of the world. I think what the US brings onto the table is your marketing and sales skills. And believe me when I say we Indians are not instinctively great at selling, but it’s ingrained here in the culture. You know, kids are taught from the school itself how to be outspoken, how to sell. And, and that’s how you see that the sales and marketing talent is the best here. So that’s from a company perspective, on a personal front, I think, the network, again, it boils down to what kind of business you’re trying to build.
I don’t think today there’s a dearth of capital in India. So earlier, we had the competitive advantage of being in the US or that you could raise money, large money. But we’ve seen, we’ve all been proven wrong in the last two, three years with respect to that. But, like I said, if you’re building out, say a very enterprise business, then as a founder, you need to be working these circles here.
So let’s say you had to raise 10 million but your primary audience customer base is here in the US. I would any day recommend a US VC. At least the brand name should be US because then your customers feel that okay, you’re backed by the US, by a local investor. You could work those connections and get introductions.If you just have an Indian VC who doesn’t really have a connection there, you’re not extracting the most out of your capital. So I think you, as a founder, you ended up building that kind of network if you are here.So I think those are the few things that I’ve personally learned and as for the organization as well.
SHRIPATI ACHARYA 24:20
Very useful. So what you’re saying is, see where your market is. If it’s an SMB less then, say $5k to $10k a year contract, then it can be mostly touchless, maybe some insight at sales entirely out of India, understand what your customer wants to drive SEO and SEM, and you’ll be able to build a reasonable size business.But if you’re looking at mid market or enterprise, that requires the understanding of both.The deep understanding of the sales process for the customer needs physical presence here. And it’s not just about the hard aspects, but also the soft aspects of connecting with your customer.
And second point being that, you need to understand who the economic buyer is, not just the technical decision maker, how the economic process flows and in order to do all of those, you know, having investors who have deep connection in the US ecosystem, it is important because that’s how you’re leveraging your investors to have the company go forward.
So let me switch tracks here. Sachin and one of the things which I have seen you do, and I really admired is the way you communicate with your team. I know that you send monthly updates to your team, and you’re very transparent with your team about what’s going on, both the successes and the challenges in the company and so forth. So talk a little bit about what your philosophy of team building is and how have you managed to do that, continue that, now that you have moved to the US.
SACHIN GUPTA 25:46
Right, so I’ve got one word for that, it’s absolutely critical to be authentic. You are who you are. And, I’m also talking about being very vulnerable, but you’ve got to let your team know exactly who you are. What drives you? What are your passions? What are you afraid of? And I’m not saying, you know, do an all hands where you talk about yourself, but in your conversations, you got to appear as authentic. And I know myself. I like being transparent. Because then I’m not thinking when I’m getting into conversation. Hey, did I tell this thing to this guy? I like being transparent because if there is a challenge that we’re facing as an organization and you’ll always face tons of challenges and you need, you really need people. who as a founder, and I’m not talking about your board and maybe your mentors, but from your team itself who will say, Hey, Sachin, and don’t worry, we’re going to make it happen. And I can’t tell you how many instances I’ve had over the years, where my team has been more aggressive with me because they know I’m being very authentic and genuine when I have a challenge & I’m genuinely seeking help from them.
So I think that’s one thing that I’ve realized being authentic is important. And in line with that is being transparent because people want to know what is controlling their destiny. At least in the early days, people who join you, they’re putting a lot on the stake.
And if they do not know why certain decisions are being taken and those decisions change their life. You spend a third of your life at work and it impacts you in various ways, economically, personally, socially, otherwise, if they do not know what those decisions are, how are those being controlled? Then they will never truly embrace you as an organization. So for me, that transparency really helped because I could connect people to the company. Apart from that I think communication, I can not stress on how much you need to communicate as a founder.
The biggest thing that I miss being here in the US is my all hands. We used to have an all hands, in the beginning, we did like every two weeks, but then we kind of did it every 45 days. And it would go anything between 90 minutes to three hours and people will be rapt in attention listening to it at the time, because that was the time when we could share company information, we could share our challenges, our wins, we could talk about what lies ahead because people want to know. The thing is they don’t ask. People are not great at asking, Hey, what’s our vision, What’s our mission, What are we going to do five years down the line, two, three, but they want to know. Everybody wants to know. So you, as a founder, as a CEO constantly need to have your grounds to the year, understand what people want to know and then kind of relay that information.
So being transparent and over communication I would say both written and verbal. So, I think the former is easier to develop than the latter. Some people actually have a flare, they speak well. But written communication can be developed. So I strongly recommend everyone to send out as a CEO, send out monthly updates to their teams and talk to them. It’s not a list of five things that you want to cover. It’s not a task list for you. It should be an open conversation. This is what we’re trying to do. This is what we’re thinking. This is the challenge we saw. All of those things. So transparency and over communication have worked for us.
To your second part of the question. How I’ve been doing it since I moved to the US. It’s hard, it’s hard in the sense that we are across a 12 hour time zone difference. So I’ve got my mornings and evenings packed. So that was one of the things that I wanted to talk about when you asked me about moving to the US, you got to commit to weird working hours. I never slept in the afternoon while I was in India, but that’s the only time now when I get to catch an hour long sleep because that’s the time I’m most free because both evenings the mornings are packed.
So you’ve got to commit to that and it’s hard. It is both emotionally and physically taxing. Because suddenly your cycle has flipped a new founder here in the US you don’t have that social circle. you used to be, you know, the celebrity for lack of better word, back home, because , you’ve got a hundred person company, people around you, that social interaction that we naturally crave for, is all missing.
It’s all remote, all digital. And by the way, I’m not a great fan of remote work because you don’t get to feel emotions over video. So I think it’s very, very important to have two things, a cadence in communication. So mandatory check-ins things that would get discussed casually in a water cooler chat when you are in there locally, don’t happen here. Because there’s a 12 hour difference and you don’t do that naturally on the chat. So you need to have weekly check ins. I have a weekly meeting with every leader that I have in the company.
The second thing is these conversations need to be structured, you’ve got to take out, believe me, you got to take out time for small talk, you cannot just jump into business and metrics because people are used to spending time with you casually, telling you about themselves, asking about you. But now on video, that doesn’t happen. So now I structured the first five minutes of my call to just talk about, you know, how things are with both the sides. So you’ve got to structure and make sure you cover everything. Otherwise you’ll just be grappling for time.So, cadence in communication is one thing.
The second thing is trust, it is very important. You’ve got to be absolutely able to trust your team and that was a big thing that I made sure I had in place before I moved to the US. One of the reasons I kind of delayed that decision was until I was absolutely sure that the team is what it needs to be a leadership team. I didn’t want to move because as soon as you leave as a CEO, there’s a void. And we do have a void in the organization today, but if your leadership team is somebody you can trust, they can fill in those, fill in that void. So make sure the team is in place and you have constant communication with them.
SHRIPATI ACHARYA 31:22
So, authenticity, regular communication, and then having a team which can actually handle things, required as you move to the US. So before we wrap up, I know that, you have a new podcast, which you have launched. So tell us a little bit about that.
SACHIN GUPTA 31:39
Yeah. So it’s name is breaking 404, and this podcast is for all engineers by engineering leaders. And our intent is to bring knowledge, the so-called tribal knowledge about how various engineering leaders have managed to build a ship and scale some of the best tech solutions out there. So, that’s what the podcast is all about. We interview engineering leaders from different organizations. We’ve done it with an engineering manager from Netflix, and a bunch of other organizations. So it’s for all the engineering guys out there.
SHRIPATI ACHARYA 32:11
I love the name of the podcast. Probably one of the largest developer communities in the world at 4 million, I’m sure that it will have a very very interested audience. So thank you for spending time with us Sachin and all the best.
SACHIN GUPTA 32:27
Thanks Shripati. Thanks for having me, have a good day.
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