Eswar Priyadarshan is a serial entrepreneur. He sold his first company, m-Qube, to Verisign for $275 million. His next company was Quattro Wireless which he sold to Steve Jobs himself also for $275 million. His most recent company is BotCentral which was recently acquired by LivePerson for an undisclosed amount.
In this episode you will learn:
- Riding new trends
- Going from technical to business
- Lessons from multiple acquisitions
- What works and what doesnt work in M&A
- Issues with multiple cofounders
- Negotiating with Steve Jobs
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
ACCESS THE PITCH DECK TEMPLATE
About Eswar Priyadarshan:
Prior to founding BotCentral (acquired by LivePerson), Eswar was Senior Director at Apple Inc., where he held product and engineering leadership positions on Apple iAd, iTunes Radio and Apple TV.
Eswar co-founded Quattro Wireless, which was acquired by Apple in 2010 for $275 million. He subsequently led the technical integration and transformation of the Quattro platform into the iAd platform.
Prior to Quattro, Eswar was the co-Founder and CTO of m-Qube, Inc. While at m-Qube, Eswar was the leader of all technology research and development. m-Qube was acquired by VeriSign for $250 million in April of 2006.
Prior to m-Qube, Eswar was VP Engineering at Open Market Inc. Before Open Market Eswar was the Technical Lead for Adobe Acrobat. Eswar held various engineering positions at Sun Microsystems prior to Adobe. Eswar holds Bachelors and Masters degrees in Computer Science from Boston University.
Connect withEswar Priyadarshan:
* * *
FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello, everyone, and welcome to the DealMakers Show. I’m excited about the guest that we have today because he’s done the full cycle of building, financing, and scaling companies, and also exiting companies. Not once, but several times. So, without further ado, Eswar, and the last name Priyadarshan. I mean, I don’t know if I got it right or wrong. You tell me.
Eswar Priyadarshan: Priyadarshan. Thank you, Alejandro. Thank you.
Alejandro: How do you say it? It’s Eswar and
Eswar Priyadarshan: Priyadarshan. Eswar Priyadarshan.
Alejandro: Okay. Fantastic. I’m just terrible with names. I actually have to tell you that people have given up pronouncing my first name and last name. They just call me Ally. Even my wife. So, I know the feeling. Before becoming an entrepreneur, yourself, Esware, you did your fair share of Corporate America. You were first at Adobe, and then you were at OpenMarket, and you did this for eight years. Is this right?
Eswar Priyadarshan: Actually, before that was Sun Microsystems, so probably 13 or so years in Corporate America. That’s right.
Alejandro: Got it. That’s quite a bit before taking the leap of faith. So, what did you learn during these 13 years?
Eswar Priyadarshan: What I wanted to do was learn my craft, which is building products. At the end of the day, I live to build and ship. So, I think Sun and Adobe and OpenMarket all gave me great opportunities to build teams and build great products like Adobe Acrobat, for example, and work with some amazing people to learn what it’s like to be a good, responsible citizen of the technology world from many mentors.
Alejandro: Knowing how comfortable and stable it is to have your paycheck, why did you decide to really go at it, and I believe the first company was M-Qube. Is that right?
Eswar Priyadarshan: Yes. In ’99, 2000, which is around the dot-com crash, I started to get very interested in mobile technology. I really thought the next decades would be all about mobile, so that was one insight. The second was I really wanted to after doing, like you said, many years in the corporate world, I wanted to start with a blank sheet of paper and learn what it’s like to build a business from scratch. So, both those motivations got me going. I’d also built up a pretty good rapport with a bunch of venture capitalists in the Boston area thanks to my corporate work. They were receptive to me jumping off the corporate wagon and trying my hand at being an entrepreneur.
Alejandro: What was the incubation process, or how did M-Qube really come together?
Eswar Priyadarshan: It’s a great story. General Catalyst Venture Fund was actually thinking of creating a mobile platform for MVNO, Mobile Virtual Network Operators, like Virgin Mobile. The idea was could we do the American Express mobile device or the ESPN mobile device, the Disney mobile device, branded mobile services. That’s where the original idea perhaps started. I joined up to help scope out and understand what the idea might look like. As a consequence of that, I ended up going to London where O2 had a great data service that was somewhat similar. That’s where I discovered the power of Premium SMS, and I’d run back to the United States. It was around that time American Idle, etc. was launching with mobile voting. So, it was a coming together of a couple of trends, one in Europe and one global with SMS voting and the like.
Alejandro: What was the founding team like?
Eswar Priyadarshan: The founding team was myself, a guy named Mark Gwendolyn who was a young Rubicon Agency guy. My colleague Gerald Hughes which is a fellow technologist. The VC’s actually from General Catalyst, Michael Schreck and John Simon also jumped onboard, so we were a pretty hybrid bunch of folks. Then a couple of friends from OpenMarket also came on as well to round out the team.
Alejandro: Wow. That’s quite a bit of people. How did you guys manage, and probably the people that are listening are wondering too. How did you guys manage all the egos?
Eswar Priyadarshan: That was a good question. In fact, we ended up having to look for a CEO because the VCs kept giving us feedback that we were talking over each other, and we should go find ourselves a leader that was not one of us, even though we were all doing fine, but they said, “Listen. You guys seem to be unable.” And it’s one important lesson which is you’ve got to take care of ego and park it somewhere in the parking lot and do whatever is needed for the business. So, we went and found Jeff Glass who’s a great CEO. Then he helped reorganize and pull us all together.
Alejandro: Got it. What was the process for finding this person? Did you guys all get aligned and understood what was the profit or how did that come together?
Eswar Priyadarshan: I think he was seeking his next gig, so he was visiting with the VCs, and then he and I met, and we hit it off almost immediately.
Alejandro: Really cool. What was the business model behind M-Qube?
Eswar Priyadarshan: When it was all said and done, we ended up being one of the few providers that could deliver a Premium SMS for ring tones or dating, etc. all those kinds of SMS apps. We had REVshare with the operators. At one point, our platform was 40% of Singular/AT&T’s data revenue. That’s how much traffic was going through our infostructure.
Alejandro: Wow. You were obviously on the engineering side. Did you experience any type of scaling challenges?
Eswar Priyadarshan: Oh, yes. We had a lot of sleepless nights because especially things like American Idle or Deal or No Deal. SMS is kind of the worse case in that your infostructure is not used at all and then it goes crazy during a show or a game. It spikes like you’ve never seen before, and then goes back down again. So, you really have to get ready for the unknown, unknown, usually under tremendous pressure.
Alejandro: Wow. Wow. We were talking about this. You guys built the business at the time when the mobile, I would say, was kind of like exploding. Right?
Eswar Priyadarshan: Yeah.
Alejandro: Do you think that the timing was a factor of you guys’ success?
Eswar Priyadarshan: Absolutely. I think that the timing, especially on the operator of our miscarrier side. One thing that we did right accidentally, which I continue to try to do is never be a vendor. Always be a partner. Being a revenue share partner for someone that wants to grow a business, like mobile operators wanted to grow the data business. They really gave us all the goodies that we wanted to play with. Since we were a pier, strangely, even though we were a tiny company, they couldn’t torture us the way they normally torture a vendor. They needed to be nice to us, which helped us get our act together and operate as an independent entity throughout.
Alejandro: At what point did you guys decide it was time to raise some money?
Eswar Priyadarshan: Early on, about six months into it. First of all, I first started to raise money in the teeth 9/11. So, the CTIA. I was actually going to be on the United flight to Los Angeles from Boston and switched to the flight the night before because we found a cheaper ticket. Otherwise, I would have been on the morning flight. So, that was a terrible time to raise money. We were all in shock. So, it took us back about six months, nine months or so as the whole world was reeling from that shock. Then we raised money, probably about nine months into it from Bain Capital and then General Catalyst stepped up as well.
Alejandro: How much money did you guys raise in total for the business?
Eswar Priyadarshan: Over the few rounds, I think we ended up doing about 25 to 28 million.
Alejandro: And you had other people like Sigma Partners or HarbourVest?
Eswar Priyadarshan: Yes, HarbourVest, and Globespan.
Alejandro: How did you meet them? What was the process of getting introduced to them or approaching them?
Eswar Priyadarshan: The good thing is the Boston VC community is pretty tight, so that’s another lesson to learn is seek an investor that is part of a network if you will. Maybe he’s the one investor that’s a little more daring in thesis because one you show traction, then their clubs that they belong to will want to play as well. So, the introductions came from our VC partners. Some of them, HarbourVest and Globespan are classic B-round investors. There’s like this ecosystem that is set up, so you need to be aware of that as you’re going in.
Alejandro: It’s interesting that you mention that because right now we live in the world where, especially in the venture space, there’s a lot of noise, and there’s a lot of bs, so I guess when you are vetting someone and really making sure that that investor is part of a network like you’re saying, is there any type of recommendation that you would give to the listeners that we have here listening today?
Eswar Priyadarshan: I’d say it’s super important to give references on the investor from entrepreneurs that have interacted, even if they have not taken money. The other insight is entrepreneurs typically will tell each other, in this kind of context, especially, a pretty accurate story of what the experience is like. At that point, you ask questions like “When you did your follow one round, did you talk to them? What were they like? Did they have set-aside money in the reserve? When they put in Series A, did they set aside money in the reserve for Series B? If they did, then what happened to that reserve since they did come into the Series B? Did they give you update that they were going to do that before they did it? All of those kinds of things because by definition, it’s a little bit of a non-transfer field, so you need to do your homework to extract as much information as you can about the investment philosophy-built investor as well as are they a team or is it just each individual VC is just a free agent in this kind of office, and they really don’t work with each other. That’s the other thing, too, to figure out.
Alejandro: Yeah. At M-Qube was the actual leader acquired? So, what were those terms?
Eswar Priyadarshan: We were acquired by Verisign for 275 million dollars in cash. So, that was a great deal. There was a little bit of a bake-off with another company, and yes, it was a very good exit for all concerned. Since we had raised around 28, it was a great multiple exit.
Alejandro: That’s more than a connect, so I hope that your VC’s invited to dinner that night.
Eswar Priyadarshan: Oh, yes.
Alejandro: You all decided that the money was the way to go?
Eswar Priyadarshan: Just the sheer scale of what we were having to deal with. We literally fell 40% of singular’s data revenue means pretty much any business that wanted to do business with AT&T on the SMS data side for like a branded experience was coming through us. We physically had 120 people were literally physically unablewe were pushing the limits of our own personal lives if you will to handle the demand. So, we started to think what can we do? Who’s got a great infostructure that we can become a part of that is also kind of interested in our space. That’s how. Verisign had a strong desire to play in the space at that time, and so, they were a natural acquirer.
Alejandro: Got it. Did you guys hire a bank? How did that happen?
Eswar Priyadarshan: Yeah, through the VC, there was a bank involved, but most of the negotiation was done by one of my partners, [Rob Roquel 0:13:27] who’s a master atthat’s the other thing is find that person in your circle that is the king or queen of the transaction. Someone who’s going to dispassionately make sure the plane lands and everyone is taken care of. A banker doesn’t necessarily do that. They’ll find a great deal, but they won’t make sure that when you join the company, the RSUs are going to right, the health plan, all that stuff, so Rob did a masterful job of making sure that everyone was taken care of, facilities, everything. It’s a little bit of a back, but it’s a lot more of making sure in the team you have someone who’s got that skill set.
Alejandro: For sure. Eswar, what did you learn from this experience?
Eswar Priyadarshan: What I learned was when you have that instinct that you’ve hit the wall; it’s a good time. Don’t try to fool yourself that you can figure it all out for yourself. The counterexample is once we joined Verisign, we realized that they had bought three other companies that looked almost exactly like us. So, it was very confusing, and within six months, I was out of there because it was pretty clear that Verisign didn’t know what to do with the four assets that they had acquired that looked almost the same. So, you have to be aware of what you’re getting into.
Alejandro: Yeah. Absolutely. Then you go to start your next thing. So, you didn’t have enough with one battle, so you wanted another one.
Eswar Priyadarshan: Yes, exactly.
Alejandro: How did they say Quattro Wireless happened? What was the process?
Eswar Priyadarshan: The process was, the other thing we were noticing at M-Qube was people don’t like to pay for content, so maybe the Premium SMS business, which shows up on your phone bill didn’t have long to live in the world, which is kind of true. So, we started to look at advertising models for mobile content. We were hearing from NBC, and the big content providers that they were not comfortable with this idea of people paying for their content and they would rather go back to the traditional advertising model for television and web. So, it was a natural evolution from M-Qube to Quattro. Quattro, we thought originally was a mobile app platform for the carriers themselves, for their home deck. I don’t know if anybody remembers the home deck. Everyone has an iPhone, and no one thinks to go to AT&T’s home page, but on your flip phone device, you had this home deck of content. So, we thought advertising would be one way they would use to pay for that content. That’s where we began. Within a few weeks, we pivoted hard away from that to helping brands, once again, do advertising on the mobile channel.
Alejandro: Got it. How many co-founders did you have here?
Eswar Priyadarshan: Three. Myself, Andy Miller, Lars Albright teamed up to do this. Then a fourth, [Robbie Shatarie 16:23] was our first employee.
Alejandro: Wow. So, was now, this time around, like a little bit easier havingbecause I think four co-founders is probably the limit and a good number.
Eswar Priyadarshan: Yeah.
Alejandro: Did you guys feel comfortable or did you experience some of the hurdles that you had in M-Qube?
Eswar Priyadarshan: No, this was a lot easier because the nice thing is that we had a great dynamic and that Andy and I could convince each other of anything. Lars is very good at “Show me. Prove it to me.” Robbie still works with me. Robbie can execute instantly almost on anything. Every 24 hours, that was our rule. Decide in 24 hours. You’ve got a problem? Figure it out in 24 hours. Decide. Move on. Don’t let it linger past that timeframe.
Alejandro: I love it. What was the business model just so that folks that are listening understand? What was the business model of Quattro Wireless?
Eswar Priyadarshan: Typically, in an ad-tech platform you do a revenue share on the ad serving. So, if you serve a banner ad at tech platform gets a revenue share. So, we had that classic model. The other thing that we did which was unusual is early one we had some technology. We built some technology that made it easy for brands like NFL and NBA to create mobile sites on which to run their ads, so we actually almost for a brief period there had exclusive access to those properties to sell ads. We said we’ll build you the mobile experience for free in exchange for exclusive ad-serving rights, which really helped us capture early market share from some amazing content brands.
Alejandro: How long did it take until you guys raised your first round?
Eswar Priyadarshan: Thanks to our M-Qube success, Highland Capital basically wrote us a check up front for 6 million dollars. We were off and running with a check, and it really helped to have been a one-time success. So, the fundraising was not thebut the cool part of M-Qube which was a lot of fun was within three months, we were live with NBA and NFL and Playboy.com as an early client, oddly enough, and Univision as well. So, we had four marque clients, four publishers that any ad platform would kill for up and running within four months.
Alejandro: Obviously, I guess, this time around it was probably a little bit easier to raise money? Right?
Eswar Priyadarshan: Raise money, and also, we were like ballplayers that were a lot faster in how we did a cut-off throw or whatever it’s called in being an entrepreneur. We were just a lot better.
Alejandro: I have friends, and maybe you can confirm this, Eswar. I have friends and also people that I know that have gone through, do a really good exit. For example, your last company over 10x to investors, so really nice outcome. When you do your second time around, people are literally throwing money at you. Is that something you experienced too?
Eswar Priyadarshan: Yes. It happened the third time as well, and you have to benow older and wiser, I would counsel even if you get the money, park two-thirds of it somewhere in an interest-bearing account and always work with a smaller budget if you will.
Alejandro: Why do you advise that?
Eswar Priyadarshan: I think scarcity is the best motivator to make decisions quickly, to really, really focus on one thing. It just forces the issue. You have no luxury of hiring another five people to chase some other idea or to take your time or force the issue in terms of revenue and focus.
Alejandro: How much did the company raise in total?
Eswar Priyadarshan: Again, I think around 28. Yeah, that seems to be my kind of magic number for, at least in the first two companies.
Alejandro: That’s nice. The M&A process. How does the M&A process come about?
Eswar Priyadarshan: It is like an Indian arranged marriage. You sort of look for other families who are interested, and it works in both directions. Verisign was seeking assets, and there were other companies seeking assets, as well as we threw our VC network a little bit to the banks, but mostly to the VC network could put out feelers and see where things were at. In the case of Quattro, Apple was interested. Yahoo was interested. So, there were a few bigger players who obviously wanted to get into the mobile ad-serving space. The interesting thing that I would say is you kind of need to get aggressive in terms of building relationships, by which I mean in the case of Quattro, we actually went off, came towe were Boston-based. We came to the west coast to try and acquire a small player in our space. The acquisition didn’t happen, and in fact Yahoo, who we had talked to for a few times, and that acquisition didn’t happen, but the net result of all that is everyone got to know us as these crazy, nice guys from Boston that really everyone should talk to, which really helped us because Apple, by the time they came around said, “Listen. We’ve talked to a few people who seem to think very highly of you.” So, you need to get and play in traffic a little bit, even if it doesn’t go anywhere and it’s very frustrating when things don’t go anywhere. I know this deep down in my heart, but you need to do it.
Alejandro: For example, I believe you were mentioning that in this case and also in your previous company at M-Qube, you used investment bankers in both transactions.
Eswar Priyadarshan: Yeah.
Alejandro: In your experience, how did having an investment banker help?
Eswar Priyadarshan: Not that much.
Alejandro: Okay. Why would you say that was the case?
Eswar Priyadarshan: I think investment bankers are great when the space isit’s kind of timing in the space. I think both M-Qube and Quattro, we were a reasonably early acquisition in this space, so the system has not figured out how to package you. So, investment bankers are good at packaging you. In the case of BotCentral, my last one, we were late in this space, and so the investment bankers were just tired of pitching chatbot companies to bigger companies. You need to find it in the meet of the curve if you will. Then that’s when they’re great. Early or late, the entrepreneur bears the burden of doing the legwork.
Alejandro: Got it. I believe the transaction ended up happening with Apple, and you were talking about there being a competitive process, talks with Yahoo. Did you end up having like a bunch of offers, and then you were like, “Okay, we’re going with Apple.”? Make us like be part of that room where you guys made the decision of going with Apple.
Eswar Priyadarshan: Great. What happened there was we met with Apple in the summer of 2009 with Scott Forstall who ran iOS. They talked to us. Scott cancelled the rest of his meetings for the afternoon. We had a great conversation. Then Apple went completely dark. Come October, we learned a good lesson which is to reach back out to our sponsor within Apple, a guy names Chad Richard who’s now the head of Corp Dev. at Yelp, an amazing guy by the way. So, we said, “Chad, what’s up? Why did you guys go dark?” He said, “Well, Steve doesn’t think you guys are going to move.” I said, “Well, Steve never asked us if we’re going to move.” So, the next meeting was with Steve, Steve Jobs himself. We had a five-hour, most astonishing lifetime experience with Steve Jobs. He had just come back from his illness. It just blew our minds, the whole experience because we talked about everything and anything. It was very emotional and very stressful all at the same time. Then I think there was another company in the horse race. Then our VC Bob Davis from Pilot was adamant. So, Apple put out this price, 275 million, actually, 289 total. Bob was convinced that we were going to dowe should stay together as a team because we were even go public in his mind because he said I’ve never seen a team as talented and efficient as you guys. So, the conference call, I basically said to Bob, “Bob, ever since I was 15 years old if you told me Steve Jobs wanted to buy my company out, I’d just walk across from Bengali, India all the way to Cupertino if I had to. This is what is happening to us right now. We’re getting a direct offer from Steve Jobs. We are going to do it. This is a lifetime kind of thing. This is admittedly not necessarily a business decision, even though it’s a great business decision, we just have to do it because it’s a very for our lives, for emotion, and all that.” So, that’s how we ended up deciding to do it.
Alejandro: Wow. What was it like to negotiate against Steve Jobs?
Alejandro: I guess from those conversations and getting this deal done, is there anything that you specifically learned from Steve Jobs in doing the deal making?
Eswar Priyadarshan: I’d say the CEO, I loved the fact that he, personally, put his stamp on the deal terms. It’s like as an acquirer. Now, I believe the CEO needs to be extremely involved in that kind of “Where does this fit into our product roadmap, and how do I think about this team and the deal structure?” It’s a very personal decision. For you, as the entrepreneur, it’s a very personal decision. I think the other thing you should look for is the team on the other side treating it as a personal decision, which almost always means the CEO needs to be personally involved.
Alejandro: Absolutely. How many employees did you have because we’re talking about people? How many employees did you have at the time of the transaction closing?
Eswar Priyadarshan: 120. So, 50 of us in Boston, 70 in New York doing the ad sales and service side. Forty of us moved to California, families.
Alejandro: You mentioned that this was a cash deal as well. Right?
Eswar Priyadarshan: Yes.
Alejandro: And it was?
Eswar Priyadarshan: 270, 289 if you take the remaining cash that we had in the bank. 275 plus 14.
Alejandro: Definitely, you’re like M-Qube and the Quattro, very similar, the numbers.
Eswar Priyadarshan: Yeah.
Alejandro: Really interesting.
Eswar Priyadarshan: Yeah. That seems to be my magic number.
Alejandro: Absolutely. So, you were for quite a bit of time doing the resting and vesting as some people would call it at Apple, after the transaction. How was this experience for you working at Apple?
Eswar Priyadarshan: It was a pretty cool experience because first, Steve said you have to be a part if iOS in six months. So, we shipped as part of iOS 4. Steve actually demoed our ads and WWDC. I sat on the first row, and he stared at me the whole way, glared at me the whole way. “It better work.” There was no resting. That’s the other thing is that you pray to be part of the bomb run right away. You just want to be. It’s more than just nice meetings and people saying hello and treating you nice. You want to be part of the show. That’s why we do it as entrepreneurs. We want to be part of the show. We were very much a part of the show. Everybody in the company was mobilized. Then it evolved a little bit in that my co-founder left after about a year. Then Steve got very sick, and Steve, obviously, passed away into a year and a half into it. So, with no co-founder and me acting as the acting leader of the business, I actually got to know Eddy Cue and the other folks at the senior level pretty well because I had to explain advertising and privacy and all this stuff to the team. Apple was an amazing place to work because I got to operate at multiple levels. I was doing Apple TV product but at the same time, since I had come through this entrepreneur ranks and people had an institutional memory of that it was a very different type of interaction than I had compared to some of the traditional employees within Apple.
Alejandro: And you actually reported to Steve Jobs. How was that? Was it demanding?
Eswar Priyadarshan: Yes. Every Tuesday he would host a product review. I participated in some of them. My co-founder participated in some of them as well. He was very personally involved. What I learned from him was Pixel. I now can look at any presentation, any UI and point out the minute flaws in the visual. It’s just something you learn, even if a line is off a little bit. In fact, I got to design the UI for iTunes radio for iOS. So, it’s like a skill set that I picked up along the way. Then I did the Apple TV SDK. It’s like it enters your DNA if you will, almost. That kind of experience working with someone, a master like that as to what they look for and how to think about the stuff.
Alejandro: For sure, and I believe at this time, we’re talking about Apple really exploding. You were mentioning before having the chance to meet and work directly with some of the leaders.
Eswar Priyadarshan: Yeah. It was like attending the court of Louis XIV or whatever at the time. The Sun King is in the throne in Versailles. That’s what it felt like.
Alejandro: From that, the rest is history. A trillion-dollar company. Were there some pieces, perhaps, on the structure or regarding talent that you said to yourself, “This is something that I’m taking with me for the next business that I start?
Eswar Priyadarshan: Yeah, I’d say this notion that the CEO is responsible for, not necessarily one product manager that’s the CEO, but that mindset. The CEO is the product visionary. Then just the notion like breaking down some of the silos between product management and engineering management that you need the engineering leadership that’s got great user experience, instincts. They’re not two separate things. There are no back-end people and front-end people. You can go on about obsessing over consumer experience, but you have to have people that naturally, whether they can help it or not just lose it if they feel their user experience is being compromised. It’s not something that waits for a meeting. It needs to happen every minute, every day.
Alejandro: Talking about titles and responsibilities, after you left Apple, you went on to start Tasteful, and this is actually the first time that you go from the engineering role, which is what you were used to, to really the business world. How was this transition for you?
Eswar Priyadarshan: It was easy at first in structuring because I had been through the game before in terms of raising money and all of that. Then, I think, trying to do a consumer startup as a CEO without having done it before. So, we didn’t have consumer DNA in our team. So, we were ad tech, and even though Apple gave us great consumer experience background, we had not done a consumer startup before. I give myself not a passing grade on being a consumer startup CEO.
Alejandro: What was Tasteful about and how did you come up with the concept.
Eswar Priyadarshan: My co-founders, Robbie, John, and I were all at stages in our lives where we were thinking about health and fitness. John has been one of the early ones to include that it’s all about food. Food is an important part of maintaining good health. So, we thought what if we got into this space and try to help people make better food decisions. Tasteful was an app that when you’re traveling or wherever you were, could tell you about restaurants down to the dishes. What you should be eating if you have a specific dietary restriction or an allergy. It was a very nice app. I still use the non-production version because it works throughout the U.S. and it’s great. The problem is, if you’re doing a consumer play, you have to define or change consumer behavior, and that is a massive, massive challenge.
Alejandro: What ended up happening with tasteful?
Eswar Priyadarshan: About 18 months into it18 months of waking up every day and asking “What is going on?” I concluded that I’ve got money in the bank, and this isn’t going to happen. Of course, you can add recipes, we could add deliver, we could do whatever, we could become Doordash, but there’s already a Doordash. We could pivot 50 different directions in this current space, or we could step back and ask ourselves: “Have we built some core IP that could be utilized in another use case?” We had built a coaching interface, a way to converse with Tasteful to get recommendations about health and food. So, that, we have structured a way and turned that into a chatbot platform. That was the birth of what became BotCentral.
Alejandro: Bots has a specific purpose, I believe. Is that right?
Eswar Priyadarshan: Yeah.
Alejandro: How did you monetize this venture?
Eswar Priyadarshan: That became pretty straightforward. First, we started doing bots for movie studios like for Jason Bourne. Talk to Jason, the Jason bot because he’s lost his memory and he needs to learn what happened in the previous episodes, or whatever. We did a bunch of those types of gigs and got paid 10, 20K for those types of projects. Then we latched onto the customer service use case which is where people want to chat with a company to ask FAQ-type questions or product return, and those kinds of use cases. BotCentral was a player in that space where we could get paid on a per-conversation basis typically.
Alejandro: You did raise some outside capital here. How much did you raise?
Eswar Priyadarshan: Nine million dollars.
Alejandro: Nine million. What was the capital structure? What were the type of people that invested?
Eswar Priyadarshan: Myself, some friends and family, and then two investors, CRV, and Matrix Partners.
Alejandro: Really cool. Great investors. You ended up also doing an acquisition. How did this happen? Like you were mentioning earlier, you hit a roadblock?
Eswar Priyadarshan: Yeah, a roadblock.
Alejandro: What happened?
Eswar Priyadarshan: This one was the opposite of the first two where we were running lean and mean, trying to extend the cash as long as we could, and trying to figure out if we would catch fire enough to keep going by ourselves, or if we needed to be acquired. We had built a great relationship with LivePerson as a business partner. We had joint customers like Lowes. So, LivePerson approached and then over a six, nine-month period, we went back and forth. It was not an amazing acquisition by any means, but at least the good news is that the team is right here, all around me in Mountview and doing great.
Alejandro: Because you’re still at LivePerson. Right?
Eswar Priyadarshan: Yes.
Alejandro: What do you think the future is holding for Eswar?
Eswar Priyadarshan: One thing that I’m doing for LivePerson is actually helping on the M&A side. I’ve actually switched focus a little bit in helping with LivePerson to either source new opportunities or maybe help incubate some new business ideas within the company. In general, what I’d like to do is get into a model where I am participating in not ten things, but maybe two or three things where I’m supplying some of the lessons learned in terms of being an entrepreneur, but also being able to dive in from the product perspective. But to not just have one item in my portfolio so to speak, but to have a few things going on.
Alejandro: Talking about the lessons if you could go to the past and give yourself advice before launching a business, what would that be, Eswar?
Eswar Priyadarshan: I would say don’t raise VC money until you’ve figured out how to grow your business with revenue.
Alejandro: Got it. That’s fantastic. A lot of people get really lost on growth, users, and just raising more money because of whatever they read on the press, but I think that revenue is key and also being able to control their own destiny. You know?
Eswar Priyadarshan: Yeah, I think you hit the nail on the head. I think ultimately, it’s you. Right? It’s all you, and you’re the one that’s going to wake up every day furiously asking “What do I have to do? What do I have to do?” So, to the extent that you can control every aspect of your destiny the better.
Alejandro: Absolutely. Eswar, what is the best way for folks that are listening to reach out and say, “Hi”?
Eswar Priyadarshan: You can find me on Twitter @eswarpr That’s probably the simplest way to find me, or you can always find me on LinkedIn as well.
Alejandro: Fantastic. Eswar, thank you so much for being on the DealMakers Show.
Eswar Priyadarshan: Thank you, Alejandro. This was a great conversation.