Jai Shekhawat has built, funded, and sold companies. Now he’s investing in and advising other entrepreneurs on their own ventures.
On the Dealmakers Show Shekhawat talked about the advantages to building a company in a downturn, effective board dynamics, planning what you will do after you sell your business in advance, and why he made the leap from entrepreneur to investor.
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Learning To Operate In New Environments
Being able to adapt quickly, learn new things on the fly, and to operate in new environments are essential traits for entrepreneurs. Many seem to have become accustomed to this early in life after moving and traveling a lot, and becoming comfortable with that level of uncertainty.
Jai Shekhawat is no exception to this. He was born in a desert town in the northwest of India. His father was in the navy, and a submarine officer. Meaning that he spent much of his childhood moving around the coastline of India.
He even spent time living in Moscow, under the old Soviet Union as a kid. Before ending up in boarding school in New Delhi, when his dad was posted to the United States.
It is a life that makes you learn how to adapt and fit in to new places, to make new connections and friends, to be independent and become resilient if you are to survive. He says that also helped him develop a love for reading and individual racket sports.
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Landing His First Job As A Programmer
Finishing college at 22 years old, he ended up landing a job as a computer programmer. Within a few months he was told he would be moved to Georgia. At first not realizing that they meant Atlanta, GA in the United States.
Then Jai ended up working for Syntel for five years before choosing Northwestern, and the Kellogg School of Business for his MBA. That’s when McKinsey brought him in to learn the world of consulting. An experience which he says was instrumental in teaching him frameworks, how to break down and tackle big problems, and gaining the confidence to build a business of his own.
Eventually, consulting alone just wasn’t fulfilling. The entrepreneurial bug drove Jai to want to get his own hands dirty in operations. To build his own team, and see the work through.
Starting & Scaling Through An Economic Downturn
Jai Shekawat’s first venture was IT20 (now called Quinnox after a merger). A successful company that continues to operate today, with around 1,000 employees.
However, within a year of starting, he decided he wanted to be more involved in creating a new product, rather than just providing services. So, he traded some equity in his next venture, and put that company in the hands of some capable friends.
Next was Fieldglass. Before jumping in with both feet he spent time thinking, evaluating, and validating his idea. One of his main criteria he says was that it was a very large and unsolved problem. One that would come with equally large risks of failure, but also huge upside potential. Something which he would regret not trying more than failing at.
Fieldglass began by tackling the challenges of the growing contract workforce. A space which has only exploded in size over the past couple of decades.
However, by the time he had validated the idea, and had brought in his first hire (his CTO), and received a term sheet the financial world was already imploding in crisis.
They took the money, and learned how to make it last. He says they also found a great advantage in launching during a downturn. Most obviously as all the others who weren’t dedicated to their ideas folded and moved out of the space.
Raising Funding For Fieldglass
Fieldglass went on to raise $38M in venture capital across four rounds of funding. Then recapitalized the company with a private equity deal which brought in $220M.
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That downturn not only helped create more demand for what their business was selling, it turned them into a rocketship. They went from securing just 40 customers over the previous years, to bringing in 40, 60, and 100 in just the next 12 months. Their investors were incredibly happy. SAP ended up acquiring them. Making them the first unicorn of their kind.
Going From Entrepreneur To Investor
In spite of the large and successful exit, Jai says he didn’t just rush out to splurge it all. He bought a home for his parents in India. As well as new squash rackets and squash shoes.
Next he decided that instead of being boxed in to working on one thing for 24 hours a day, seven days a week in a new startup of his own, he would take a more portfolio approach to his work.
This evolved into sitting on boards and advising many entrepreneurs, as well as investing in a portfolio of startups. That includes mentoring at a quantum computing accelerator in Illinois, being a trustee with the museum of natural history, and taking field trips with the scientists to places like Madagascar, Guyana, and Peru.
Building The Right Board Dynamics
Jai says it is not only important to bring in the right investors, but to build a board that functions well too.
A lot of this is about alignment. When it comes to funding, entrepreneurs need to bear in mind the timeline that most VCs are on, and their needs for liquidity. Which often means pressure to achieve that on the investor’s schedule, not yours. Private equity, and other investors may have a longer term view. Jai still recommends focusing on building a profitable business.
In terms of the board, Jai says it works best when there are both investors and operators on the board, and who work well with the CEO in helping them tackle the problems, rather than pushing them for their own interests, or without having hands on experience.
Listen in to the full podcast episode to find out more, including:
- Testing and validating your idea
- Risk of failure versus the rewards of trying something big
- Alignment with your investors and board