In this episode, Ashok Gudibandla, Founder and CEO of Automate.io (Acquired by Notion), talks about why he chose his second startup idea based on its distribution potential. His advice to tech founders - in a world proliferated with SaaS offerings, think visibility before product.
2:08: ‘Distribution not tech is what you need to win’
13:18: SaaS proliferation means you need to build brand fast
16:40: The choice to exit vs. keep growing with funding
12:14: Strategic actions that led to acquisition by Notion
24:31: ‘You’re not hot till you are!’ - Life after exit
Rajan: Welcome to the ValueSaaS podcast. Today on the show, we have Ashok Gudibandla, Ashok G. as I like to call him. Ashok and I went to the same college many, many years ago. Ashok founded Automate.io, built it to a sizable business and sold it to Notion last year. He now runs the Notion India Centre from Hyderabad. Automate.io was seed-funded, a classic case of what I would call growing Value SaaS, and growing really well. And then eventually found a strategic fit with the rocketship called Notion. Ashok, welcome to the show.
Ashok: Hi, Thiyagi, thanks for having me on the show. You and I, we go a long way back to college days. So, it is always a pleasure being here.
Rajan: Awesome. So let me dive in. A few months ago, I was speaking to a corp dev and strategy person, and he asked, ‘do I know another company like Automate.io?’ And in 2015, when I was at Intuit, Intuit had also acquired a similar company. Why is it that what you have built is so strategic for so many companies that are out there? And what I'd like to understand, Ashok, is what was your idea-generation process? You had divergent experiences, but what led you to build Automate.io? What was the reason you picked this idea over anything else that you could have built?
Ashok: Sure. I'll probably start with your later question on how I picked the product and then we can talk about why it is strategic for most other companies.
That goes back to my career as a product manager at another SaaS company that I worked with. This was around 2012 to 2015. As part of my conversations with at least 100 SMB customers, most questions used to be around integrations for SaaS. So, essentially, around 2013-2016 - that's the time when we saw a real mushrooming of SaaS providers because technology was commoditised - anybody who had some kind of a product knowledge would easily build a product. And so we saw a huge mushrooming of SaaS products for every use case.
Integration and data synchronization became a big problem and that's where we saw the likes of Zapier get onto that opportunity at the right point, and that went very well. So my template answer as a product manager to any customer asking questions on our integrations would be, "Hey, we don't integrate with all those products, but we integrate with Zapier. Now you go do your thing.” That was like a sink for us to just drain all the customers and all our integration questions.
That's also how I learned about the business model of Zapier. All of these cloud companies were just pumping customers into Zapier, offloading a problem of theirs and pumping in customers to Zapier. So that’s where it struck, ‘hey, this is a great business model’. And so that's the first seed in terms of how I conceptualized the business model.
As part of my interactions, I also learned that the customer’s need was growing beyond what the market was offering at that point. So, even after we recommended these third-party products, there were at least 10% of the customers who would come back and say, ‘Hey, we know about Zapier, but what we want is more workflow automation spanning multiple cloud business applications’. And I started hearing that more often. And that was the seed for Automate. Where Zapier was still a one-to-one app connector, we started out as a workflow automation product with the ability to connect more than two cloud applications with conditional logic in between. That's how I identified my unique positioning.
Coming to the second aspect on why this later became more strategic, also goes back to the point that cloud and SaaS products were too many in number. This means as a vendor yourself, it's no longer a viable option for you to build all those integrations. You could only build to the most popular five or six that you see from customer requests and from a strategic fit, and leave the rest to other players.
Over the last 3-4 years, this problem of integration has gone to an extent where SaaS vendors cannot just offload it to people like us or Zapier anymore. The data part is so important for their customers that they just cannot completely rely on a systems integrator or a third-party cloud connector like us. So this means they needed - particularly the bigger companies who are entering the league of $100 mn revenue - a platform internally that can handle these ad hoc integration requests. So that's where companies like Automate, and some people in a similar domain, are a hot acquisition target for any big cloud company.
Rajan: Were there other ideas that you were evaluating other than this, or were you like, ‘Look, I've found a large problem for me to solve, so I'm going to just double down on that?’
Ashok: The strategic part of it wasn't playing on my mind when I started this, but yes, what excited me was the customer acquisition avenues that it could open. So we are an 'integrate 10 or 20 products' kind of a company, which means we can partner with all those companies, get organic references from there. And also build strong inbound funnels with use cases of, let's say, how do you integrate Slack with Trello or Salesforce. So build the content around it and then get the organic inbound motion going. So that angle appealed to me a lot more than technology. Although I was a technology person, I've learned from my past experience that tech is not what you need to really win. You need to really know how to drag customers onto your product and then sell it. So that part is what excited me.
Rajan: So you talked about past experience, let's double-click a little bit on that.
Rajan: You made the choice to sell to global customers at Automate. At Synovel, you are actually selling to Indian customers. So what made you make this choice at Automate?
Ashok: I think it's mostly my exposure to SaaS that I'd acquired post my earlier venture Synovel. Just to give you a brief, Synovel was more of an open-source architecture to Microsoft Exchange, which was more a heavy enterprise application. And selling that was always hard. We had to confine ourselves to a network that we could reach in India. So that was one limiting factor, of course. And it was an on-premise kind of a solution.
Coming to Automate previous experience as a SaaS product manager, I got exposed to how to go global with simple cloud applications. So it was more my confidence level of addressing the global markets that was the primary driver.
Rajan: What are some of the other lessons you took away from the Synovel experience?
Ashok: I think that my fundamental learning has been about building something for which you can get customers. Solving a problem is, of course, needed. You can build a product to solve a problem but can you also bring customers? Do you really know where the customers are and what they're looking for? Have you identified enough channels to be visible there and get them to your product?
The visibility and distribution part - that is what I focused on most the second time because that is something that I completely lacked in my first experience. So, choosing an idea that gave me the confidence from day one that I can get eyeballs for this was the biggest learning for me. So, building something for which I can get customers was my priority.
Rajan: The biggest takeaway.
Rajan: From the next step, where you played the product manager role, what were the lessons other than gaining the confidence to go global that you took over to Automate.io?
Ashok: One fundamental learning was mostly on the GTM side. Apart from the product, I was doing a bit of GTM in terms of product marketing. How do you create landing pages, get organic traffic? How do you appeal to early adopters, participate in discussions on Quora on solving their problems? How to get customers from there? And from customer interactions, discovering the integration needs. Those were some key learnings that really helped me.
Essentially, the whole organic customer acquisition part was something that I've completely learned as part of my product management experience. So that really helped me in the long run.
Rajan: So you talked about go-to-market, right? And those of us who come from a tech and engineering background, it first sounds like a very bizarre black box. In your view, how would you explain and what are the things that anybody coming from a tech and engineering background should do to address that black box, or make sense of the black box and make progress there?
In simple words, what is a go-to-market for you?
Ashok: Go-to-market for me is fundamentally how you think through distribution and implement it. Essentially, to put it in more simple terms, how would people who have a problem know that you even exist? And then of course, how do you get the ball rolling after discovery into completing the sale?
Ninety out of 100 SaaS products, or any other products, die because of lack of visibility. So, that I knew, I wanted to solve first. I knew that if I'm able to crack the part of getting more eyeballs, with our engineering skills we can always create products that can be adopted. And of course, we have the Indian advantage in terms of low-cost production and distribution on our side.
So, that would be my primary suggestion to any tech background entrepreneurs - to think product and distribution first, not technology, I would say not even product. Think distribution first, think visibility first. Are you in a position to create something for which you can gain visibility? That should be, if not the top, ONE of the top things that you should be thinking about.
Earlier people used to think tech is a great thing to build. I went from there to think, now, it's not tech, it's the product. Are you building something that is solving a problem? That's the most important thing. But I would rather say, beyond that, are you trying to build something for which you can get eyeballs, get visibility, get the distribution? And then work backwards from there. ‘If this is the domain that I know, if this is the kind of audience that I know, and I know how to reach them, what are their pain points? What is a problem that they have that I can solve with my expertise?’ And thinking back from distribution to the product and then to technology is my biggest advice.
Rajan: But isn't this also valid that if you build a good product, then people will discover you? At least that's what the technology-first thinking suggests.
Ashok: They'll not, let me assure you. That could have been possible maybe even 10 years ago, even five years ago, but I think today, at least in SaaS and consumer apps, it has become so proliferated and the amount of choice people have is so massive that discovery has become a much bigger problem than creating anything. So in today's world, even if you build a great product, nobody's going to come, nobody's going to care a damn about it unless you put it in their eyes and then get them to buy it.
Rajan: You also made a very, very subtle point where you said: ‘it's product, it's not even technology’. In your mind, what is the difference between product and technology? And how has that thinking evolved from your Synovel to Agile to Automate?
Ashok: When I say product I mean building a product with a market fit, whereas tech is all about, "Hey, you know this is a feature to build. How would you design it to scale to 10 million people?" That's a purely technological challenge we're talking about.
The product challenge is not just about building. Anything that is defined as a product is not just a set of features; I wouldn't define that as a product. A product is something which has a market fit. That, in today's world, is the definition of a product. It solves some problems for a certain set of customers. So arriving at something that has market fit is what I would call a product challenge, where a technical challenge is more about how you build a certain set of features that scale properly.
Rajan: You talked about that in today's day and age, you have to first think about that go-to-market, visibility first and how do you make sure that you get discovered. So, for somebody who's trying to get to about $1 million ARR, let's say they think about the distribution first, what are other two or three things that you would suggest are critical for them to think about to get to their first million in revenue?
Ashok: Okay. I think it's a good question, and you're asking this at a time when traditional distribution and discovery channels have become so crowded and polluted, and this is all the more important now when going ahead than ever before.
I think one of the fundamental changes that we are seeing in how we distribute is we need to become more and more brand-heavy. So no matter how great a product is, even if you've figured out distribution, the technology today has become so commoditised that anybody really can oppose you to reach a certain stage, anybody can just replicate it and duplicate your distribution channels as well.
It all really boils down to how quickly, post attaining a minimum fit, how quickly are you able to establish yourself as a brand in the market. And that's unfortunately, a long, investment-heavy thing that we'll have to do. I see that's a bare minimum that anybody has to do today to win - really go after building brands and focus on building a brand for whatever you've created. Unless you create that brand, you're setting yourself up for competition to come and pull you behind.
Rajan: You talked about investment, you said you'll need some investment to build the brand, so that you can stand out in the noisy world that exists today. When you started out, I remember in 2016 or '17, you were trying to meet a few investors and some were willing to talk, some were not. But then eventually, you just decided to raise a very small friends-round, less than a seed round. And then you've been very capital efficient, you've grown this to millions of revenue. Why did you make that choice? Was it because of some constraint or was it because that was the market condition? Why did you choose to be this capital-efficient growth company?
Ashok: I think frankly, it's a mixture of, one, the state of the VC market at that point, and two, my inhibitions on raising a lot of money, I would say.
I was not just a first-time entrepreneur but somebody who was tasting success for the first time. So I was literally apprehensive about taking money and then going all the way, riding a horse. That was my inhibition about how hard or how far I should go, while I had already achieved break even, making revenue, running profitably. It was essentially about, "Should I take it at my own pace and then be comfortable?" versus take the risky route. I somehow leaned on the former.
Second was the funding scenario at that point. I think we weren't seeing such a liberal funding atmosphere at that point. VC firms were still very choosy. And the fact that I was in a domain and there was an incumbent big player with almost a similar kind of a product, and the fact that I was also catering primarily to small and medium-sized business, where you have problems of churn and saturation at some point in terms of revenues. These were also factors.
Rajan: How has that decision of not raising too much money turned out for you, in terms of the eventual acquisition conversation you had?
Ashok: Yeah, I think in retrospect, I would've definitely wanted to raise at least one or two more rounds. And I should have done that, purely going by the state of the same market today. Integration and automation is a really crazy space now.
As I mentioned, every company that was just going near or past the 100 million mark, requires an integrations player to give their customers a platform on which they can build their own integrations. So, purely looking at the state of the market today, I think I would've done better if I had raised more money.
Rajan: Would that have come in your way of having the acquisition conversation? Or do you feel that in retrospect if you had raised a little more money you could have grown the business even more?
Ashok: Even at the time of acquisition, I knew that if I was here for the long run, I'd do very, very well. That was always there. But the reason I even entertained an acquisition discussion with Notion was obviously the fact that it is Notion and we know a lot of things purely associated with that brand.
We have seen how organically they've grown, the kind of passionate user community Notion has. What struck me most was that I haven't seen any other company grow so organically, purely driven by passionate users in the last one decade or so. You probably can count them on your fingertips. And Notion was one such company. And I saw tremendous potential in the document and collaboration space. So I saw a huge upside to getting aligned with Notion and giving it the firepower I thought could take it to a different orbit. So I saw no less opportunity in aligning with Notion and going together.
Rajan: You partly answered what I wanted to ask next. Even today, like you said, the companies that are near a hundred million are looking to acquire companies like Automate.io. Even back then, when you had conversations, you had multiple suitors. Several, right? What led you to pick Notion over others? Other than the passionate user-community, were there other aspects that led you to pick this over other offers that were there first?
Ashok: I think the first fundamental is of course, the upside that we could see. Where they are now, with purely organic customer interest, versus where they can be in the next five years; they're really in the enterprise game. At least one year ago, we were just starting to make enterprise sales and built momentum on the enterprise sales angle. So the tremendous upside to where Notion could be in the next five years is what struck me.
Two is of course, something that is very close to me is how product-driven or how product-focused they are. At Notion, they have a kind of passion with which they build and refine the product to make it pixel-perfect. That intense design and product focus, I have never seen in a company. And that was something that they had, from a culture standpoint, alignment standpoint, that struck me.
Third, is the way the acquisition discussions went and how I felt more comfortable in how my discussions were going, sharing my intel and all that. So that made an impact, I'd say.
Rajan: Many months after the acquisition, you said, "Look, in hindsight, this was supposed to happen' or 'This was fate.'" But you said for a lot of this conversation to happen, you had made specific choices, you had invested in strategic partnership conversation and that is what led to these moments. So the way you selected the idea, the way you invested in some of these relationships early on… if another founder has to think about that, what are such strategic choices?
Ashok: So, there were certain things that we did strategically, but I wouldn't say we did those with an eye on acquisition. Although there's a lot of integrations that we built, a lot of companies that we integrated with, they already had us in mind, in hindsight, as a potential acquisition later - as I mentioned, everybody has a demand for a platform like this. But the strategic things we had done in particular with Notion weren't really acquisition-focused.
I'll give you insights on what we did. So, Notion had this huge user base at least even a year ago, a couple of years ago, but they didn't have an API. It's only about a year ago that they launched the first version of their API. So there was this huge user base, we knew that they were waiting for integrations and data integrations. We were in touch with them for the last two years, saying, "Hey, when are you rolling out your API? We'd be happy to integrate and address the integration needs of your customers."
We were having those conversations and they were telling us that it's coming out in so-and-so time. So, when they were about to launch the API, we were ready to be their Beta API users, integration partners. We had been very aggressive in working parallely with their teams, giving them feedback on their APIs and then building our integrations along with them as they rolled out their beta. We were their launch integration partners when they launched their APIs.
That's how we built a strategic relationship, more from a point of view of gaining a lot of customers when they eventually launch it. So that's how it went. And of course, we landed in the eyes of the senior management and how well we were able to integrate with them, the kind of resonance that Notion users saw with Automate. And so, that all led to the acquisition.
Rajan: So, there are many SaaS startups that are coming out of Hyderabad. But unless they break out, like Automate got acquired by Notion or now we talk about IDBS - there are many that we don't talk about. In SaaS, there is a saying that, "You are not hot till you are." Now post the acquisition, life is very different for you. Like some of the folks that you were trying to reach out to in 2016-2017, are now reaching out to you and saying, "Hey, can we have you share insights with us?" So how has your life changed post-acquisition?
Ashok: Yeah, I think it did change. I was told this would happen by good friends like you and few others, that you'll be looked at differently, completely differently. And that seems to be happening. Suddenly, you are, as you said, "You're not hot till you are." So, suddenly, people see Automate as a success story and me as somebody who they can approach for advice and just have a casual chat to discuss their plans and seek inputs, or even from an investment angle. So that's definitely a change that I'm seeing, and really liking as well.
Rajan: Before we wrap up, is there any question that you think I should have asked and I did not bring up? Or you would like to say a few things to wrap up?
Ashok: Yeah, I'd probably reiterate on my important learnings to help more of the tech-savvy folks who want to be entrepreneurs, which is to think distribution first, not product. Not tech, not even product, think distribution first. Who's your target person? Do you know them well enough? Do you know where they exist? Do you know how to get your product to them? And then work backwards from there.
Once you've done that, of course, product still has to be as great and as cool as people can imagine. And in today's competitive world, there's no second option. The product has to be bang on, it has to be right. So no credit taken away on how great the product should be.
Three, is of course, on branding aspects. I mean, I, frankly - and this is probably not the right forum to say this, but I don't see a tremendous future for SaaS. SaaS has been better long years back and the game is changing. Unless you really, really hop on branding, spending money and focus on branding, it's not going to go far. As somebody who bootstrapped a company, I wouldn't want to advise this, but that's the hard reality. So you'll have to burn money, you'll have to invest in branding, and that is what I would like to up one.
Rajan: Awesome. Ashok, I had a terrific time catching up. It did not feel like an interview, it felt like one of our catch-up calls. But thank you so much for doing this. I had a blast.
Ashok: Sure. Thanks, Thiyagi, for having me. Always a pleasure interacting.
Rajan: Awesome. Thank you. Bye.