Arjun Narayan has already raised some serious money for his tech startup, Materialize. One which is helping businesses automate and make real-time improvements to customer experiences online. The company has attracted funding from top-tier investors like Redpoint, Lightspeed Venture Partners, and Kleiner Perkins.
In this episode, you will learn:
- Arjun’s top advice when starting a business
- Extreme transparency and team building
- How to get a headstart on building complex, capital intensive companies
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Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
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About Arjun Narayan:
Arjun was previously an engineer at Cockroach Labs. Arjun holds a Ph.D. in Computer Science from the University of Pennsylvania. He spends his weekends making Lego rockets and explosion sounds with his 3-year-old son.
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Read the Full Transcription of the Interview:
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Alejandro: Um, hello everyone and welcome to the deal maker show. So today. We have a very interesting founder I think that you’re all going to find his journey very inspiring on how he came to the us how he really you know had to start from nothing. And and and and again you know the company that he’s been able to build because right now he’s riding this rocket ship but I guess without far ado let’s welcome our host to our our guest today. Are you naurrajan welcome to the show. So let’s do a little of a walkthrough memory lane Arjun Narayan: tell us about life growing up.
Arjun Narayan: Thank you so much for having me.
Alejandro: In Bangalore India.
Arjun Narayan: So I grew up in India I think bannglore has a very different vibe today than when I was growing up when I grew up. It was a sleepy sleepy little town with not very much going on. It was actually very nice. In fact I I barely recognize it when I go back to visit because now it’s this thriving. Massive city. So so the bannglore banglore I grew up in is not the bangalore of today. It’s it’s a very boring town where I spent a lot of time with my family and studying that that that that’s a very very It was a very sleeping town experience.
Alejandro: So now how how do you come up with the idea of or perhaps landing in the us because I mean when you came to the us you were very young. You were 17 and I mean it sounds a little bit early not to come to to come here.
Arjun Narayan: Um, yeah I think most most folks, there’s a lot of indians who do imigrate to the Us but they generally do so for a job or after college or or something of that sort. Um I don’t know what when the idea came to me to to come to call ah to come to America for college. Um. I went to sort of intentionally to this boarding school I got a scholarship to this really really nice international boarding school near Bombay which was away from my family and I hadn’t really considered moving away from home during high school but then I had this very compelling scholarship. And and that was the moment because that was sort of an international school with like an international syllabus where I had this sort of decision where it’s like if you go down this path like you can’t really apply for indian universities because the sort of systems were different um and and and it was really you know this just chance application that a friend told me to apply to this amazing school. I did I knew nothing about it then I got the scholarship in my in my lap. Um, it was sort of financially very good for my family for me to take it. Um and that sort of set me down this path of you know if I do this and then sort of you’re more set up to to to apply internationally than than sort of domestically. Um, and then and then I got there and I applied to colleges I I hadn’t been to the Us so I applied off of you know, basically the only information I had which was us news and world report rankings right? So so we just applied to a bunch of colleges and and universities. Um, and I ended up at Williams College which the time I knew nothing about it’s a small liberal lunch college and in in rural massachusetts which I also did not know I was getting myself into and it was an amazing experience. But that’s sort of how I stumbled intos into coming to the us for college earlier and then you know we can get a little bit more into that. But that’s the answer.
Alejandro: And obviously in this case, it was a pretty big effort for the family you know to ah to pay for the flight and you know they even had to sell some retirement bonds and and things like that. So I mean that’s also a lot of pressure on you. So I guess I guess the question here that comes to mind is when you’re coming. A completely different part of the world I mean maybe even 1 of the first times that that you’re getting out of of what you knew of the comfort zone and you’re coming here a completely different culture different everything and at 17 where you’re so young I mean how do you think that affected you and and how do you think that. Build who you are today and and more importantly to to be able to give you that a strategic lens or perspective on how you’re tackling uncertainty. So.
Arjun Narayan: Yeah, so I think I think it was the best thing that could have happened to me was to land in the small wealthy New England College town because ah I think the 1 mistake that I see many sort of immigrants making is they’ll come to America and then they’ll. Shack up in like a dorm with like a bunch of other immigrants and they’ll just like hang out with each other um and and and try and recreate as much of their home country as possible and you see this with immigrants from all sorts of countries and I think I think that’s a mistake because sort of I was thrown into this this this you know, small wealthy. Liberal arts college and I was forced to sort of ah spend time with with ah with ah you know americans and it was great because that that I think gave me a a much faster ramp towards you know integrating and sort of understanding. The culture I was and it was obviously much harder because you know ah people do that they spend time with their immigrant communities naturally because it is more comfortable. So I think it by by being less comfortable at the start. It has made it much more comfortable later on um, it it prepared me to to sort of navigate. Ah. A lot of sort of I think scenarios that would be weird and you know so so like fundraising you know running a company managing a large budget. These things are sort of inherently weird right? You can’t really train for them. Um, but the 1 thing you can train is if you’ve been doing weird stuff for more than a decade then you know this isn’t anything new. Um. Sort of in that context. So yeah, definitely coming to coming I want I want sort of throw throw on throw a pitch out there. The Williams scholar is amazing, right? The financially that they they they really took the care for someone coming in sort of without any money from like a foreign country to sort of be as well integrated as possible. You know you know. October giving you $200 and telling you to buy winter coatat and taking you to the mall and teaching you what a winter coat is is very important in like new england I’ve never seen snow before um and I think I think is made sort of adjusting to to running a company a lot a lot easier because. Fundamentally like the distance gap between growing up in india to like wealthy new england college town that distance is greater than the distance between sort of sort of working at a company to running 1.
Alejandro: Ah, hundred percent now in your case I mean you did a little bit of the the academic side of it I mean you did the college then you did the whole masters ph d type of approach and then from there you joined as an engineer. Cockroach labs but you know I guess you you were destined for building something doing something big and I think that that encounter with coming to the us and and having that a culture shock and everything I think that that that gave you kind of like the understanding that he was okay to to be in front of uns. Undoing and doing big things. So why do you think it took you so long to get at it as an entrepreneur.
Arjun Narayan: So I actually um I would encourage people you know, even if you are very entrepreneurly a mindded as as I was I mean I always intended to start something from from from sort of early in college I sort of read as much about sort of. Tech startups and entrepreneurship and you know the pogram bullet blogs back in the day like that was that was what everybody gravitated to um and the one thing I sort of arrived at early on was I wanted to do is what what I what? I what I I guess I would call a deep tech startup right? The startup that was based off of. Some deep pool of of ip or research and not really sort of a a business model sort of be a company that was innovative more and just sort of a novel business model like I wanted to do something very deep. And I very much went into a ph d in computer science I sort of um, did that because I’d really loved computer science was college was my first real exposure to sort of academic computer science and I loved it and I was like okay this is something really deep here. Um I went straight to a ph d at pen really for the purpose of searching the the sort of. Frontier of knowledge for something that’s very commercializable I mean ah, some of the some of the areas that I considered were like hardware. So so the the companies that I really admired like Intel you know what were those that I viewed as doing a massive amount of r and d and sort of making making ah sort of. Deep contributions through commercialization that ah allowed them to fund billions of dollars of r and d and that’s sort of how I got into databases because in the world of software I think sort of the 2 largest projects or sort of areas in which you know it takes a lot of. Of of capital intensive effort many years longer time horizons many more people are sort of databases and operating systems and there really hasn’t been a commercially viable operating system since you know windows or or that’s mostly become non-commercial sort of shared open source sort of innovation. Ah, since then or tied to sort of some some some other hardware business model. Ah but databases were what you know I sort of stumble into it I was first doing research in in an area called distributed systems which again large scale you know like cloud computing platforms that that were very capital intensive and and and sort of. Ahdjacent to databases and that’s how I got interested in databases was I viewed that as a place that was um, much more likely to result in a deep tech startup.
Arjun Narayan: Then then then then then something else I think I think I think you know it’s not the only one for sure. There’s also machine learning ai like like that was also sort of compelling. Ah but I sort of accidentally fell into databases and loved what I saw.
Alejandro: So Then in that case, you know what was that point where you know when you were at Cockroach labs and you know we say here you are completely in love with databases and distributed systems where you started to visualize, you. Doing something or if your own you know like you really building something from nothing and and and building it to life I mean what was that incuation of the idea and that thought process all the way until that moment that you said I’m gonna be right? I’m gonna go for this.
Arjun Narayan: Yeah, um, it’s actually from before I went to cockroach actually went to cockroach because my co-founder was not Wilton Mayow co -founder frank whose chief scientist said me materialize and the creator of the technology that we are commercializing frank was unwilling to. To to start a company to commercialize his ideas I approached him first to sort of raise the possibility when I was still a ph d student sort of I met him sort of through the research community he was at microsoft research at the time and then he was later on at eta zurich the swiss university um and I was like hey you should commercialize these technologies and he was not interested and that’s actually why I went to cockroach I couldn’t convince him to start something and at that time how I pitched it was. You should start something I’ll be the first one to join um because because I always viewed the technology and the. Technological base is sort of the the the origin and and he was the creative technology. Not me, um, and and it was only because he didn’t do it that I went to cockkorach because that was another you know at that time is I think little less than 20 people. It was it was it was a series a company that had um. You know that was based off of a different area of computer science database research that I also viewed as very compelling. Um, and so I went there and that was an accidental stroke of amazing luck for for 2 reasons one. The people were amazing. Um, and they really particularly the ceo spencer who sort of mentored me and sort of gave me sort of the front row seat and and explained everything that he was doing to build commercial viability for that business. Um, the. Second piece was I grew closer to frank over time and was able to make a much more coherent pitch to frank and by this by this time the pitch had evolved to not just you should start a company sort of abstract question mark question mark question mark like you should start a company here’s the playbook right? Here’s what here’s the activities. The cockroach is doing. Here are the kinds of activities that you should also be doing and soon that sort of turned into ah a more solid proposal at which point frank’s sort of response was this sounds great, but it also sounds like a lot of work that that you know better than I do so why don’t we do this together rather than me do it and you join. Um, and that was really the the genesis of materialize um, what happened at that point was I immediately took the supencer I said hey spencer um to who is the ceo of cockroach I was like frank has approached me with this possibility that we start this thing together. What do you think? and I’ll never forget the first words out of his mouth
Arjun Narayan: Was that’s amazing I would love to invest right? So I think very much the origin story of materialize is you know the luck of working with good people who were supportive and nurturing in in in not just showing. Ah. Me what to do but also then supporting me through that process. So Spencer was the very first check in to materialize Peter Mattis the cto of cockroach was the second check-in to materialize much of the early fundraising was based up. We be pitched basically um, based off of. Introductions that Spencer made to the vcs that he had met over over over the years um we share some vcs um in common redpoint who did our our series c it did cockroaches series b for instance, so um, I would say that that that I’m not sure I would have been able to do it. Was not something internal. It was the environment that I was in I had the great fortune to be in one that was very nurturing.
Alejandro: And and what ended up being the business model of materialized for the people that are listening to get it. How do you guys make money.
Arjun Narayan: Yeah, so this is excellent um so materialize is a database that allows you to do complex analytical queries in real time and by realtime Subsecd or you know tens of millisecond this is very valuable for companies that are taking a lot of the. Massive datasets that they’re sort of collecting and the analytics insights they’re getting and putting them into production. So. So so if you think of the difference between well you have all these data and you have these insights and and then some analysts is looking at some chart and making some decisions you know that’s sort of a manual process. That’s okay for that data to be computed say in snowflake once a day. But if you are doing more automated things. A good example of this would be dynamic notifications to your users or dynamic Coupons or dynamic pricing or any of these things. Um, that requires a similar level of analytics querying capabilities but in real-time while that user is on your website. Ah, and and materialize is a database that lets you do do that with the same sql. It looks and feels like a Sql database but with the first time real-time and it is a database in the cloud very similar to sort of other cloud databases like cockroach or snowflake or or others. Where where where users you know, connected up to their data pipelines and they pay based off of sort of the the amount of of usage that they they do the amount of hardware or that that they did deploy for running the comp computer which of course depends on the complexityity have a compute how much compute they’re doing how much data they have etc.
Alejandro: Got it now in terms of you are alluding to it on how things got a kickstarter with with the first checks of of the folks at cockroach labs but how much capital have you guys raised today.
Arjun Narayan: We’ve raised 3 runs of funding a hundred million dollars total across those 3 rounds most recently a $60,000,000 series c
Alejandro: And what has been the experience because I mean here you are an immigrant right? that came at 17 knowing nothing and then all of a sudden here you are running this company with all these millions of dollars invested you know it’s it’s own bolio. But. But how was that process of going through that fundraising journey I mean I’m an grand too and you know I know that that was not easy because it’s a different way of of really thinking about positioning things asking for help you know like selling you know your stuff I mean in my culture you know back in Spain was just a little bit different from how it’s done here. So. How has that experience that journey for you of going through all these different financing cycles.
Arjun Narayan: I think I think one of the funny things is like it’s I think maybe easier for me than for like a normal american because it is less intimidating to be negotiating a $60000000 term sheet with somebody. You know who’s running a billion dollar fund than it was going to like. My my first college friend’s middle class home in like in like Westchester County it was like that that was way more wealth and and the distance from where I was back then to like you know, billionaires running billion dollar funds today like this is actually once you’ve done the first like the second was not that much. Ah, definite I would say that that that’s the immigrant advantage I is as almost always say it’s like everything is so weird for so long that finally when you’re in a situation that is like just slightly more weird. You’re kind of normalized to to sort of this this great distance between you and and the rest of society.
Alejandro: We got to got it now in terms of the the business you know for the people that are listening to really perhaps get an idea on the scope of the size of materialized to them I mean anything that you can share in terms of number of employees or anything else that you feel comfortable sharing.
Arjun Narayan: Yeah, we’re we’re a little over 50 people. We’re mostly based in New York but we are you know we have our our our team is is global. We have several folks in in across europe the database. Ah. Many of the folks that we we worked with at macheized many of our colleagues are folks that we have worked with in the past there’s a few of us from cockroach. There’s a few of us that we knew sort of through sort of the database community and and and folks that Frank had worked with at et zerich when he was there up that. That you know so there’s about 50 people. Um I would say mostly more than half in the engineering product side engineering is is is is the life of a database company is very much sort of engineering heavy for a pretty long period at a time the sort of rule of thumb in the industry is you know it takes. Takes like ah you know 7 years and $100,000,000 to like get to to a 1 point old product and and we have the advantage that frank did a lot of that work before we even started the company and I think you do need that that that that of r and d times scale to to to make it sort of. Viable on venture timelines. But yeah today where where I think 55 um and and and and growing pretty rapidly in New York
Alejandro: And how hard is the sales. The sales aspect of a business like this I mean I know that sells you gotta really be a strategic on how you’re building the team on how you are thinking oh the cycles to really close those contracts. So so how how does that look like.
Arjun Narayan: So um, one thing that that we had really learned that that I’d learned by observing cockroach which I think they navigated very successfully and that we have sort of learned from is because databases take so long to build and they’re so hard to build. Um. Most people who build and try to commercialize databases. They make the mistake by overselling the the because because how do you compete with Oracle which is being around for for eternity and has billions and billions of dollars well you try and you talk like you have a finished product. You say? Well you know like this is perfect and we’ve did everything we’re 10 x better and you know we polished it and that’s actually the wrong instinct. Um, because it’s not really credible your startup you’ve barely been around of course your product is new. Of course it’s raw. Um, and you actually lose customer. Trust you lose user credibility um by overselling by by by by talking. So the thing that cockroach did very well was by built one by built it in public right? So the the best way to convince people that you know what you’re doing is to expose. Um, um. Everything the including the the ugly sides and the bugs and the things that are breaking and and so this source available model really helps build customer credibility by building it in public and second they were. They were very clear and we’ve also tried to sort of follow down that by being very clear about our roadmap and say here’s what we are building. Here’s how far we’ve gotten you know without without without pretending. We’re further along than we actually are and being very clear about how much more it’s going to take and here’s how we’ve gone about capitalizing the business. So we’re going to get the job done I think in particularly in in saas customers are buying your roadmap. Just as much as they are buying what you have today because particularly for databases these are decisions that people are making with a decade long time horizon they know that it’s not perfect yet but they kind of what they’re really buying is the trust that you build that when they find a bug or there’s a production crash. You know what you’re doing and you will jump on it and fix it and so having that level of transparency and honesty goes a long way in in selling and that’s something that I think ah you know I would not It’s a little bit counterintuitive because I understand the urge to talk up what you’ve done It’s such a natural instinct but it’s actually counterintuitive that you kind of want to talk down and show the bugs first.
Alejandro: Ah, hundred percent now in that regard. You know as you’re thinking about you know what you have today and then also you were alluded to of what you may be able to to have you know down the line imagine you were to go to sleep tonight and you wake up five years later imagine tremendous news and you wake up in a world where the vision of materialize is fully realized what does that world look like.
Arjun Narayan: Um, so materialized. You know our our mission is to make sort of every business react to data in real Time. So a lot of Businesses. You know we have a lot of successful customers that are using materialized to power much more. Much superior user experiences for their users right? So So you know anticipating user needs you know, but whether that be through through through you know. Discounts or or or targeted campaigns or or whether that be in personalization in the services that they provide to their users um and materializes at the heart of this powering all of this quietly under the hood right? So you know one of the nice things I Really enjoy about Enterprise Software is ah. Is. It’s It’s a little bit under the surface. It’s more like infrastructure right? like if it’s doing its job right? Then the user who’s actually getting all their value um doesn’t even know you’re there. Um I Really enjoy that.. It’s a little bit like you get to see behind the scenes of this massive sort of piece of of of infrastructure. And so you know in this world where we’ve succeeded we are powering quietly under the hood in the Cloud All of these amazing user experiences for consumers.
Alejandro: Now imagine if I put you into a time machine and I bring you back in time I bring you back in time to that moment. Maybe where you were in still in cockroach labs and and think it through and figuring out what that the future of you having your your own. Business your own baby. You know like would look like imagine if you had the opportunity of having a sit down with that younger or you and being able to give that younger or June one piece of business advice before launching a business. What would that be and why you know what? you know now.
Arjun Narayan: Go slower. Yeah I think the biggest advice I would give is I think I really lucked out by spending you know, almost three years at cockroach. Um, and those really formative I think the best way to learn how to operate a business particularly in the enterprise b two b world. Is to sort of spend time in a very well-run enterprise b two b company that has very good people who are very open and and and mentoring. Um I think um, yeah, things have turned out great and things are you know? great. But I could have done the first year of materialized even slower. I think by doing that we would maybe be going faster today I think there’s this count again these the best I think it is counterintuitive that yeah I think I think Mike Spiser of the the venture capitalist was the one who who you need to go slow in order to go fast later. Um I think it’s very true I would have maybe grown the team slower in the first year in order to grow the team faster today.
Alejandro: And as you’re talking about good people and mentoring What are some of the the key essence. You know that you guys bring to the culture of materialized to make sure that you know you have employees do that at the end of the day they’re excited about the future that they’re living into and.
Arjun Narayan: Yeah, um I think I think I think I think you know this one this one sounds sounds boring right? It’s transparency I think everyone says transparency I think everybody means different things and and sort of a go a little bit. What I mean by that is you know we go out of our Way. At Materialized to give all everyone who works at Materialize you know, full access to everything right? So So we try and transcribe every board meeting. For instance, the word for word word was said including criticisms. In fact, the criticisms are the most important part of what you want to share and it and made me transparent. And and we make that available to everybody and and oftentimes the first few days when people join Materialize is just clicking through the archives reading hundreds of pages of past transfer but gives them all this amazing context of you know the mistakes we’ve made the where we are here. What are we most worried about what are what are different people worried about um and. I Think you know tre and of course transparency into financials transparency into into into absolutely every aspect of the business I think is is is is is the one that and I think this also attracts great people because so great people have very high standards for the companies that they pick so you. You need to deliver this level of service um to any any any member of the team for them to say Wow This is great I’m going to go tell my really smart friends that this is where they should come and work.
Alejandro: I love that now for the for the people that are listening here. You know to um to be able to say to reach out and say hi Arjon what is the best way to do show. So.
Arjun Narayan: Um I have a Twitter account. It’s ah my last name first name Twitter naion orjun I also love email you can email me at http://arinnetmaterialized.com um and yeah, either of those 2 it would result in ah in a pretty fast response time.
Alejandro: Amazing! Well Arjun Narayan:e thank you? So so much for being on the deal maker show. It has been an honor to have you with us.
Arjun Narayan: Thank you so much I really enjoyed talking with you.
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