Anoop Gupta On Selling His First Startup To Microsoft And Now Raising $200 Million To Deliver AI-Powered Recruiting

Anoop Gupta had his first startup acquired by Microsoft, just 18 months after launching. He has now raised nearly $200M for his current company. The venture, SeekOut has acquired funding from top-tier investors like Tiger Global Management, Madrona Venture Group, Mayfield Fund, and Founders Circle Capital.

In this episode you will learn:

• What it was like working with Bill Gates
• Pivoting, and why you should do it
• How SeekOut is changing the future of recruiting and tech careers
• Anoop’s top advice before launching your own business
• Who to hire for your startup

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About Anoop Gupta:

Anoop Gupta is the CEO and Co-Founder of SeekOut, the AI-powered Talent 360 platform. Anoop started SeekOut after a 20-year career at Microsoft, which began with the acquisition of his first startup, VXtreme, in 1997.

During his tenure, Anoop was the Corporate Vice-President of the multibillion-dollar Unified Communications group.

He was TA to Bill Gates, advising on technology and product strategy as a Distinguished Scientist at Microsoft Research, leading work on Telepresence and Natural User Interfaces.

Prior to Microsoft, Anoop was a tenured professor at Stanford University and he holds a Ph.D. in Computer Science from Carnegie Mellon University.

Connect with Anoop Gupta:

• Crunchbase
• LinkedIn
• Twitter
• Facebook

Read the Full Transcription of the Interview:

Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. I’m super excited about our guest today. I think that we’re going to be learning quite a bit about going from academics to founder, from founder to corporate, from corporate to founder, and you name it. So without further ado, let’s welcome our guest today, Anoop Gupta. Welcome to the show.

Anoop Gupta: Thank you, Alejandro. I’m delighted to be here and meeting your audience.

Alejandro: You were born in Delhi. You did jump quite a bit because of your father’s job, but doing a little bit of a walk through memory lane, how was life growing up there?

Anoop Gupta: Life growing up was golden. There were not a lot of electronics. There was not a lot of television, a lot of going to the neighbors and playing with the kids, so growing up was a lot of fun in a different world back then.

Alejandro: Tell us a little bit about jumping around. Because of your father’s job, I’m sure that you had to make a lot of new friendships if you were jumping around.

Anoop Gupta: Yes, that is totally true. We used to move every three or four years, so you went to a new school, and you made new friends. One of the interesting things for me was when I was in high school, my parents went to Africa. They went to Livingston, where the Victoria Falls area and they put me in a boarding school. So there were two interesting aspects out of it. First, I used to complain a lot about what I eat and what I do. After two months at a boarding school, all those problems were fixed. No problems. I ate everything without complaining. Also, this year was around 1972/1973. People didn’t fly that much, and we got to fly to Africa, see the world, stop in-between. It was a very eye-opening and broadening perspective for me to look at a larger world, to look at diverse people, and celebrate that diversity and that attitude that came to me.

Alejandro: So obviously, following the course there, from the culture in India where it seems that you are born with either a degree in medicine or in engineering, so you got your engineer degree, but after getting your electrical engineering degree, you thought it was time to come to the U.S. Why was that the case?

Anoop Gupta: It was something I had always thought about. Some of my cousins and uncles had done that and many friends. IIT is the premium institute. At that time, my class size was 42. Thirty-two out of the 42 people came to the U.S. to do graduate studies.

Alejandro: Wow.

Anoop Gupta: It was the done thing at that time that if you’re the best, you go and try to learn more. So it was not a big surprising move for me, but it was a very exciting move. I got to go to Carnegie Mellon, which is one of the best schools in computer science in the world.

Alejandro: And in this case, you decided rather than going the business route, which is essentially what you’re doing now, you thought it was better to teach others. So, where did you get that love for academia?

Anoop Gupta: The love for academia—one option was to do your Ph.D. One of the good things about Carnegie Mellon was I met my wife there.

Alejandro: That’s a big one.

Anoop Gupta: That’s a big one for anybody, and it was a fantastic school. I looked at companies. I looked at research labs but didn’t get an offer from Stanford, and you have that opportunity, that combination of research and teaching and innovating. I couldn’t give that up. It was very exciting to have that opportunity. I’m very blessed and grateful for that.

Alejandro: What is this thing about Stanford and the atmosphere there that gets people hooked when it comes to innovation?

Anoop Gupta: I think there are a couple of things. One is it is the air around you; it is the surrounding atmosphere. There are companies everywhere. The second thing is the culture at Stanford. The culture at Stanford is an entrepreneurial culture. After I got tenure in ’94, ’95, I went to my manager at that time, John Hennessy, who later became the president of Stanford University. I said to him, “I’m thinking about it. What do you think?” He said, “Just go and do it.” He said, “There are two options. One is you’re going to succeed, and that is fantastic, and you learned a lot. The second is, you might fail; the company doesn’t succeed. You still have a job at Stanford. It’s incredible, and you come back, and you will have still learned a lot.” So there is this entrepreneurial culture. He also has done two startups by that time already. In fact, it’s almost weird if you don’t do a startup if you’re a professor of computer science at Stanford.

Alejandro: And you took that seriously because literally ten years in, you decided to go at it on your own, and you started VXtreme. Tell us about VXtreme. How did that come about, and how frightening was that?

Anoop Gupta: Before we founded VXtreme, a couple of my graduate students and I started doing research. It was the very early days of the internet. The Netscape browser and Internet Explorer were just coming out. The network bandwidth was not that much, and we said internet video is going to be big. We had a lot of expertise about how to transmit video on the crappy network and browsers. We said, “There’s going to be a lot of interest.” CNN became our customer. They were postage-size clips, but they were there, and people could watch anytime. Another built-in customer for us was Stanford University. Stanford is very big in a remote education. A lot of the industry community people come into remote Masters at Stanford. Stanford, you see, is microwave technology via the internet to broadcast those lectures to those people, and we became the platform and the foundation for broadcasting those lectures on the internet using our platform, having discussions around it and things that came about only a decade and a half later than with Coursera, edX, and everything else. We were doing that in ’96.

Alejandro: How were you guys making money with that?

Anoop Gupta: We would sell the platform. “If you want to do these videos and here is the amount of bandwidth you need.” It was based on that. There was no cloud, so we had a lot of servers on our internet connection that we had purchased and deployed, so those were crazy and interesting times for us to be doing that.

Alejandro: That’s amazing. How did you capitalize the business? Right now, it has been one of the biggest years in raising money for companies. I’m sure it was not as easy raising money back then.

Anoop Gupta: On Sand Hill Road, the venture companies still existed, Benchmark Capital was there, Kleiner Perkins was there, and there were many other companies, but we bootstrapped the company with some more angel investors. One of my co-founders was Diane Greene, who later did VMware. She had contacts in the industry from many of the CEOs of companies. We raised the money that way rather than the traditional VC route. Then we were acquired by Microsoft, just 18 months into the company.

Alejandro: What was that process like?

Anoop Gupta: Microsoft was getting into streaming media. Rail networks were doing things. I don’t exactly remember, but they contacted us and said, “What are you doing? What is happening?” We visited them. They came and visited us once, and it was a quick transaction, and we were excited.

Alejandro: I remember you were talking about John Hennessy saying that it’s all about learning and that those experiences are what this is all about. In this case, for you, when it came to your first rodeo with VXtreme, if you could pick the three biggest lessons that now you’re keeping in mind as you’re executing with your most recent company, which we’re going to be talking about in a little bit. What are those three biggest takeaways that you took from that experience?

Anoop Gupta: I think the first thing I would take about is culture, values, and executive teams in some sense. All of us were young. For all of us, this was our first startup. For all of us, it was about a little bit too much of what I’m going to make versus what we are going to do together and increase the pie. Those were some hard conversations about who was contributing more and who was contributing less. That’s just not the right thing. We learned a lot. Everybody has gone out and done amazing things, but those were learnings and lessons. I believe a lot of startups may fail because of the dynamics that you may have internally, and those cultural values that you do are rare. We learned fast, and we were successful, so that was good. That is one. The second is focus and understand the market. We were much more technology-driven, and what the technology can do rather than where is the demand and how do we focus and deliver on that. Again, we ended up doing well. Did we end up being as big as we possibly could have been? Probably not, but those are product/market fit, really listening to the customer, focusing in, and not trying to do too many things. Those were all things that we had to learn as we were flying the plane rather than earlier on, and these are all things that get better when you’re doing it the next time.

Alejandro: One thing that is interesting here is that typically when you go through an acquisition, they put you in the vesting period where you’re supposed to be staying on board in the company that is acquiring you for around two years. That’s typically the norm. People call it, in a fun way, vesting and resting, but in your case, there was not a lot of resting because, literally, you were there for 18 years. What hooked you for so long in Microsoft?

Anoop Gupta: I was very blessed at Microsoft, just the opportunities, learnings, and what I could do there. At that time, Microsoft was just starting Microsoft research. It existed for a long time, and given my academic background, I spent my first four to five years at Microsoft research. I built one of the most amazing teams that had some of the best people in vision research, graphics research, UI research, and we built prototypes, and we showed prototypes. All of the CEOs used to have a summit where we would show. We had a great opportunity to work in cross-domains and do it without having to worry about the funding, which is always a big deal in academia and things you have to think about. That was a great opportunity, and I got to interact with Bill Gates and many of the senior leadership at that time. Then I got a call out of the blue that “Bill Gates will like you for this roll-off as technology advisor and work directly with him.” My office was right next to him. You know, you have the self-doubt syndrome: Am I good enough? Can I deal with it? What is it going to take? But I said, “This is a learning opportunity. He’s open to the idea. He doesn’t think I’m going to make a fool of myself, and I’ll help him.” I took on that role. They were some amazing years.

Alejandro: What were you doing there when reporting directly to Bill Gates? What was that like, and what did you learn from reporting to one of the best entrepreneurs of our era?

Anoop Gupta: Yeah. That’s a great question. When I was with Bill, I got a chance to look fundamentally at the product strategy as Bill was thinking about it. I worked with him at that level. I sat in almost each and every product review that he did. Teams used to come and say, “Here is what we are doing.” Bill would be nice, but Bill might also slice them into pieces. [Laughter] I would think a lot about not just what question he asked, but why was he asking the question. What was behind it? Bill was one of the biggest integrators. Every meeting he would go into, he will come out, and he would combine things from everything he knew in the past with the new information that he learned in the meeting. So, how to synthesize, combine, and build that collective you because everybody was caught up in this silo, but Bill built this collective view that was really powerful and great to see. Also, there’s a Netflix movie about Bill and what he does. They talk about Bill’s tank week, which is twice a year. He goes away for a week and reads a lot on everything. My job was to pre-read what he read. People from all over Microsoft will submit hundreds of things. “We want Bill to read this.” Bill trusted me with enough to know what was in his head, what would be interesting to him, so I did a lot of the selection process of that for him. While I was working, I also worked on what we call real-time collaboration, all of the things that you’re doing right now were a big part of the strategy, and we were going to acquire some companies. We were actually thinking about Webex; we were thinking [18:10] that time. Bill, at that time, was the Chief Software Architect and not the CEO; he gave that to Steve Ballmer. Bill used to be our coach on how to pitch to Ballmer. There were two things he would say, “Steve is going to ask you this question. You’d better prepare for it.” Or “This is the right way to answer it, so you don’t screw up.” So I got to work very closely with him. When it came time to do the next thing, the big question for me was to go back to the Microsoft research environment and go lead a business. I was lucky to have the opportunity to go on and lead a business.

Alejandro: Nice, because, obviously, in Microsoft, you did jump quite a bit from one department to another, which allowed you to get to learn different sides of a business, especially from such a successful entity like Microsoft. In this case, after such a long time, 18 years, you decide that it is time to give your notice. Why did you do that?

Anoop Gupta: Basically, Microsoft had been very good to me, and that gave me financial flexibility. One is to go and do something else. Even at Microsoft, I was driving incubations, which was good. One of the things that I said when I was leaving was, at some level in Microsoft someday, the way to think about innovation is, here is an 18-wheeler truck. Drive around and see what is new that you can find because what is of interest to them is things that are very big. They’re a very focused company and rightfully so on what needed to be done. We all have one life, and we all have to do things that we have to do. My co-founders and my feelings were that we wanted to be on a mountain bike. We wanted to go and explore places and roads that you don’t get to in an 18-wheeler. We wanted to do things that may or may not be relevant to Microsoft. We wanted that freedom, and there is something unique about building a business from zero to one rather than having the leverage and the brand and everything [20:34] large and successful business and doing something to start. That’s how SeekOut was born.

Alejandro: Tell us about that process because, as they say, ideas take time to incubate. It’s not like overnight. You’re like, “Okay, I’ve got it. This is it, and I’m going with it.” What was that incubation process like, and how did you guys think about bringing it to life?”

Anoop Gupta: At first, we did not jump ship from Microsoft with this specific idea in mind. We actually did a lot of brainstorming for the first two to three months on what we were going to do and take ideas and a very diverse set of ideas because we are very strong problem solvers. Amongst the founding team, we have 200 issued U.S. patents. So we know how to solve a problem. The problem we initially focused on was messaging, the messaging I had running exchange in Skype. I had a lot of background there, and we said, “Spam is such a big issue. The problem is people hide their email addresses; people hide their phone numbers; people do this thing because they’re afraid of spam. If you do it, everybody will blast you.” So we wanted to do a system where there was friction on the sender’s side, and we built a system [22:03], but you had to put a postage stamp, and you sent a message, and you could decide what the value of a postage stamp would be, how you can give it to a charity, etc. There was a lot of interest in the idea, but we were maybe a combination of bad consumer marketers. We could not scale the audience because, in a messaging system, you need millions and millions and millions of people to do that. We built something called Careers Inside where we could help people on analysis or resumes what they could do next—those opportunities that helped, but there was a lot of interest from the talent tech position community, and we had built a lot of scale. That was in the fall of 2017 when Seekout was born. We pivoted, and pivoting is hard. Actually, a lot of venture capitalists have told me the fact that you pivoted, that you listened, you observed, and you didn’t remain stuck on that idea. So we pivoted, and Seekout was born, and we had an amazing journey at Seekout.

Alejandro: That’s great that you say that because a lot of people think that there’s a negative connotation on doing a pivot, and I’m right there with you. I think that listening when it comes to business is absolutely everything, and a business plan or a pitch deck is not bulletproof. You’ve got to constantly iterate as you’re receiving feedback from customers, employees, or investors. That’s amazing. In your case, Anoop, what ended up becoming the business model of Seekout?

Anoop Gupta: Today, we are a talent tech position platform that helps and gives companies a competitive advantage recruiting hard to find and diverse talent. It is used by recruiters inside a company or otherwise. We sell a per-recruiter seat license. The price is between 5,000 and 10,000 per recruiter seat, and we’ll license it as a SaaS subscription. People can find amazing candidates, see that talent analytics, find the email or other addresses, and engage them. That’s the business model today.

Alejandro: You’ve raised a little bit of money. How much have you raised to date for the company?

Anoop Gupta: I think it’s $189 million.

Alejandro: Wow. That’s a lot of zeros, Anoop. What has been the process of going from one financing cycle to another one for you guys?

Anoop Gupta: We raised a seed round in 2016 when we were still working on a messaging system. Then we raised a Series A in early 2018 from Madrona and Mayfield, $6 million. Then one to two years later, we raised a Series B with Tiger and Madrona for $460 million, almost 20x of what we had done for Series A. Then, in the last nine months, we raised a Series C, which is 2.6x times the valuation of the Series B. So it’s been a rocket ship trajectory in terms of valuation, but it has also been a pretty amazing growth trajectory. Plus, here was your $1 million. The next year was $1-4 million. During the pandemic, we grew 2.5x for $10 million, and this year, we are growing 3x. It is a very rapid increase. One of the other unusual things about our company is, we are essentially breaking even. We’ve raised a lot of money, and we can use it, etc. We are essentially breaking even every dollar we’ve raised so far is still in the bank, available to us to acquire, build, and hire at Seekout.

Alejandro: So why did you raise the money?

Anoop Gupta: We raised the money because we are expanding into a much larger vision and how we plan. From a talent tech position, which is external people, companies, today—you know, the last two years have seen a seismic change in the world of work and how talent and companies engage. There is a lot at stake in how companies hire, retain, and grow their talent will make the difference in how companies are surviving, thriving, or dying. The balance of power is shifting to the employees, accelerating digital transformation, remote and hybrid work, diversity—so a lot is changing. While we are helping companies today with talent tech positions and six of the ten most highly-valued companies are customers of ours and lots of lots. We have over 1,000 customers. We are also hearing from our customers about the need for retention, growth, and development. In all of that, the foundation is having data. One of the things I say is, enterprises have become very data-centric and data about sales marketing everything. But when it comes to their most critical asset, the people they have or the people they want to hire, they don’t have data, the visibility thing. So we’re building a platform where we will provide the best data from internal sources, which are in silos, external sources, which spring them together. That’s what we call a talent 360 data platform. On top of that is a talent intelligence platform because data is useful without great insights and predictive insights. On top of that is a talent action platform that says, “Based on the inside, what is the action to do?” Collectively, we call it Talent360 for enterprise talent optimization because it’s really looking at your whole employee base and accel talent saying: what is the strategy; what is the action I’m going to take to drive success.

Alejandro: Imagine you go to sleep tonight, and you wake up in a world, let’s say five years later, where the vision of Seekout is fully realized. What does that world look like?

Anoop Gupta: What that world looks like is there are two audiences that we think for. One is for employees. Many employees today will tell you that it is easier for them to find a job outside than a growth opportunity inside the company. Employees don’t know one of their possibilities is inside the company. Is there a different career path they can take? Is there somebody they should talk to? What are the open jobs? Where do I match? What should I learn? One is, you will see our platform and a vision where employees are empowered with the help of managers, but otherwise, themselves, too, to grow their careers and to realize their potential. The second side of it is top-down, which is enterprise, the HR leaders and business leaders as they’re making the strategies for their talent and saying, who do we need to hire? Who do we have internally? How does the talent look between divisions? Oh, we’re starting this project; how do we distribute the talent. They will have the data and the insights to do great by the companies and realize their vision.

Alejandro: Imagine if I put you into a time machine, and I bring you back in time to that moment where you were still at Stanford and thinking about taking the leap of faith with your first company, but before taking the leap of faith, imagine you had the opportunity of going back in time and having a chat with that younger Anoop and giving the younger Anoop one piece of business advice before launching a business, what would that be and why given what you know now?

Anoop Gupta: I think who you choose as your co-founder and partner is really important, and the culture and values that you bring to the company from the very first hire to as you hire and build the company is really important. I would tell Anoop to be very thoughtful about that because the problems change. The world changes, but if you have the right team, you can overcome and be adaptable and succeed.

Alejandro: I love that. Anoop, for the people that are listening, what is the best way for them to reach out and say hi?

Anoop Gupta: They can come to my LinkedIn. It’s easy to find Anoop Gupta there. I do have an email: [email protected]. They can send me an email, and I will respond. Those are the two easiest ways to reach me.

Alejandro: Amazing. Anoop, thank you so much for being on the DealMakers show today. It has been an honor to have you on.

Anoop Gupta: Thank you so much, Alejandro.

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