Srikanth Velamakanni On Breaking Barriers And Building Billion-Dollar Empires As India’s AI Innovator

Srikanth Velamakanni has raised over $685M for his AI startup. A company that has now been working in this space for over 20 years, and raised funding from top-tier investors like TPG Capital Asia, Khazanah Nasional, Apax Partners, and TA Associates.

In this episode, you will learn:

• Fundraising and managing investors
• The downsides of AI
• How to ensure successful acquisitions
• Reading
• This founder’s top advice for other aspiring entrepreneurs

SUBSCRIBE ON:

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.

About Srikanth Velamakanni:

Srikanth Velamakanni is the Co-founder, Group Chief Executive, and Executive Vice Chairman of Fractal. Fractal is a leading player in the artificial intelligence and transformative enterprise decision-making space.

Fractal’s mission is to power every human decision in the enterprise and to use the power of AI to help the world’s most admired Fortune 100 companies.

Since Srikanth co-founded Fractal in 2000, the company has raised more than USD 300 million from institutional private equity investors. Fractal serves more than 100 Fortune 500 companies with its AI, data, and analytics-driven business strategies.

Under his leadership, Fractal has developed several product lines within the company including Cuddle.ai, Eugenie.ai, and Qure.ai.

Srikanth is the Chair of the board of Qure.ai, which recently raised USD 16MM in funding, less than three years after incubation.

Srikanth is a Co-founder and Trustee of Plaksha University, with a strong academic focus on core engineering, AIML, and mathematics.

Additionally, Plaksha promotes interdisciplinary learning by bringing together science and the liberal arts. A member of the NASSCOM Executive Council Srikanth serves as a subject matter expert on data and AI.

Srikanth’s passion for AI and analytics has made him a thought leader in the space and an admired public speaker. He considers himself a lifelong student of mathematics, behavioral economics, neuroscience, and consumer behavior.

Srikanth reads an average of 40 non-fiction books a year on the aforementioned subjects. He also enjoys memoirs, biographies, and books on leadership.

An active follower of developments in US politics, Srikanth enjoys keeping abreast of late-night American talk shows particularly those hosted by Stephen Colbert, Jimmy Kimmel, Trevor Noah, and Hassan Minhaj.

Srikanth completed his B.Tech in Electrical Engineering from the Indian Institute of Technology (IIT), Delhi, and holds an MBA in Management from the Indian Institute of Management (IIM), Ahmedabad.

Prior to co-founding Fractal, he was an investment banker working on structured debt and CDOs.

Connect with Srikanth Velamakanni:

• Crunchbase
• LinkedIn
• RocketReach
• Bloomberg

Read the Full Transcription of the Interview:

Alejandro Cremades: Alrighty hello everyone and welcome to the dealmakerr show. So today. We have a legend. We have a legend that is you know going to be joining us for this conversation someone that has done this with the same company for over twenty three years I mean unbelievable. You know his company is now valued at one point five billion Ah they’ve raised quite a bit of money too and he’s been around the block you know building scaling financing you name it I think that you know the interview today is going to be very enlightening. You’re all going to find it super super inspiring. You know to really help you all on your own journeys and without far ado. Let’s welcome our guests today. Tri and bellaakani welcome to the show. So originally born in India you moved quite a bit you know because of your parents and jobs. But yeah, you also walk through memory lane. How was life growing up. Yeah.

Srikanth Velamakanni: Thank you Andrew great to be here.

Srikanth Velamakanni: Alandro I was born in andpadesh of a state in India I was I grew up in assam orisa and rajastan these are different states in different parts of the country. My father used to work for an oil company. So wherever you could find oil in India I lived there and then um. I went to one of the iots to do my undergrad in electrical engineering then did my Mba and then um I joined a bank I did asset backed and mortgage back debt for a couple of years and then one fine day dropped everything and started fractal.

Alejandro Cremades: And and and we’ll talk about that in just a little bit because 1 thing that really comes to mind is when you move, you know so many times you know for your father’s job I’m sure that you know every single time it was new friends. He was like new everything. So.

Srikanth Velamakanni: And it’s been a joke me of 43 years since then.

Alejandro Cremades: Obviously the uncertainty as an entrepreneur you deal with uncertainty too. So how do you think that you know, growing up with that. You know has shape in who you are so.

Srikanth Velamakanni: That’s a great question. We had to make friends every few years we had to make completely new set of friends. It was painful but now I feel like I could be anywhere I could live anywhere I could make friends anywhere build a network anywhere and just. You know, be comfortable in not being grounded in one location. So even as in the last few years I have lived in different parts of the world including New York bay area and Mumbai so I’ve traveled between these places as fractal is required me to do.

Alejandro Cremades: And they also 1 thing that they that I find here super interesting in your in your in your story in your own journey is that no one in your family was an entrepreneur and in fact, you know it sounds like you didn’t want to be an entrepreneur either. So why was that the case.

Srikanth Velamakanni: Yeah, historically my entire family There was no entrepreneurial gene in our family and my father used to tell me that an honest businessman is an oxymoron. So ah I grew up with this clarity that I will I will work for big world class companies. But I’ll never start a business in growing up in India in the 80 s and 90 s was was very different. It. There was you know it was the industrial licensing era what was called as licensing Raj ah and I felt that you needed capital to create capital so that was 1 thing. And secondly it felt like you know it’s very hard to be honest and be successful and build a business so because of these 2 key reasons I told myself that look you know I have options of working for large multinational global companies and just work for some really good quality companies and build a career that that’s what I thought I would do but things changed. Ah, but that’s really how I grew up.

Alejandro Cremades: Now for you I mean you were into problem solving. You know you started engineering but you go into something kind of like unique or interesting. You know out of engineering you go into like the financial service base I mean what? why? what? what? a transition.

Srikanth Velamakanni: Yeah, so you know engineering because the problem solving was fun I have always a student of mathematics I Loved Mathematics I did a you know bunch of very interesting math courses during my engineering but what I enjoyed even more than math was Psychology. I was hooked onto doing psychology courses. I I really understand ah really got interested in understanding human Behavior What makes human Beings Stick. So this combination of psychology and math has been through with with me throughout my life. So then I went to my business school and. 1 of the things I thought was that if you not really good at math you should be in finance that was a conventional wisdom. It turns out that it’s not true. In fact, there’s more marketing related mathematics than financeerated mathematics is and finance is all about relationships and and and understanding the law etc. Ah, but my own feeling was that yeah I have a good I’m good at math so I should be ah, an investment Banker I should do some asset back mortgage back debt and then it changed once I you know once I started understanding the field I was clear that you know what I should do something else with my life and now I tell. Many of the youngsters. You know if you’re really building a career and career a meaningful career then think again, do you really want to make that extra buck on the on the stock market with you know, trading high doing high frequency trading or do you want to do something much more meaningful in your life.

Alejandro Cremades: And at what point do you realize that you wanted to do something more meaningful in your life. So.

Srikanth Velamakanni: Very early I think the first year of ah the first year I joined an investment bank. It was 9098 um, Russia had just defaulted on their loans ltcm of the famous hedge fund and by nobel prize winners had just gone bust and the whole world looked very bleak. And that was the time I had some. There were no deals to be had and there was some time for reflection. That’s the time I realized that you know this is not really what I wanted to do things got better and I did some very interesting and amazing deals. So math was still fun and finance was still fun. But I was looking for meaning and entrepreneurship was one of the ways in which I thought. I would provide meaning to my own life.

Alejandro Cremades: But I mean that’s like um, a big shift because obviously in India you know people there’s a lot of pressure. You know, cultural pressure towards studying in the best universities getting the best degrees working for the best companies so you had achieved all of that. So I’m sure that you know that shift you know into entrepreneurship into the unknown something that no one in your family had done I’m sure it was not an easy an easy leap of faith. So so how did the whole idea of entrepreneurship. You know come to mind and then how did you go about embracing it towards. Launching. You know your company. So.

Srikanth Velamakanni: You’re right that it was hard to make that entrepreneur switch and entrepreneurship was not fashionable. These days startups are very fashionable. Twenty something years ago startups were not so exciting people people used to have in. Need to protect their jobs and you know work for high quality companies and it was very difficult for startups to attract high quality talent. It was difficult difficult to attract capital but is even more difficult to attract talent back then so in in those days, you know the 1 thing that helped me was the.com craze. It was the late 90 s of you know around 2000 so there was incredible amount of excitement about the about the.com world and therefore there were a bunch of friends of mine who started businesses I felt like you know what I can raise capital and I saw a company like in enforces in enforces was one of those tech companies in India which was known for its ethics. And values in a business school class. Um called ah it was called business ethics. Ah one of the founders of infos showed up in that class. his name is not and his name is na Anna Murthhi and he talked about how he built in enforce on values and I was quite moved by that experience so when I look back. That 1 lecture that I attended guest lecture by Naan Murthy and the fact that my friends were able to start businesses really removed the friction between me and my ultimate purpose in life which was which is to build a great company that last a test of time.

Alejandro Cremades: So entering fractal analytics at what point does the idea come knocking and how do you go from incuation to launching it.

Srikanth Velamakanni: Yeah, so we we were a bunch of people who got together and we wanted to be entrepreneurs. We really didn’t have an idea it was those days that Ninety Ninety Nine Two thousand you know there were so many people starting companies so we actually got together quit our jobs and then started searching for ideas to do. I mean I would not recommend that to anybody right now. But back then we were somewhat younger and foolish and therefore we did that and then it soon after doing some you know trial and error we figured out that we have to go back to what is our strength so when we did that soul searching math and psychology came to came to rescue. And I propose to our founders cofounders that you know what if we use math and psychology what if we use data to drive. Ah you know mathematics to drive decision making this was a new idea back then because while you know people had known and you know analytics and ai were concepts in the in in universities. Companies using analytics in ai to drive decision making or companies specifically providing analytics and ai for decision making was a complete a new thing so we tried this out. We built a mathematical model with a bank to predict their customer defaults. And to automate and we created a 30 minute loan product where you could walk in and get a loan within 30 minutes ah using analytics and ai and a scorecard and that was very intoxicating because a we could predict customer behavior we could we could figure out who could who default and who would not default we could use mathematics to do that.

Srikanth Velamakanni: So this is a really ideal combination of mathematics and human behavior. We said this is exciting. This is meaningful and this is an area for strength. So this is where we should be in the next many many years we started building this company and because analytics and ai were in nascent industries back then it was very hard for us. But over the years. It has become very very exciting and interesting and there’s so much funding and so much excitement right now in the world of Ai that that decision twenty three years ago has been validated now.

Alejandro Cremades: Now for you guys, especially for the people that are listening to get it. Why didn’t they up being the business model of fractal analytics. How do you guys make money.

Srikanth Velamakanni: We work with fortune hundred to fortune 500 sized companies. We are one of the strategic partners in driving their analytics and Ai transformation in their companies and we get paid for you know delivering those outcomes setting up our teams and working on those projects. And really making them really good on their digital transformation. So this could be around customer insights or customer analytics or personalization or reducing friction. It could be about improving their productivity managing their risks managing the supply chain those kinds of things it could be about building new products and innovation. It could be about just. Reducing the latency of their decision making or it could even be about securing their future in terms of a business model or reinventing the business model but we tried to bring analytics and ai to power all those decisions. That’s the model and you get paid for driving those projects building those teams and driving those outcomes.

Alejandro Cremades: Now now that we’re talking about customers I know that at one point you you were all present to the fact that you were being a little bit arrogant with customers And in fact, you know you did something there to turn it around and to become more customer centric so walk us through what happened there? okay.

Srikanth Velamakanni: Yeah, this is this is a very interesting aspect of our evolution very early on. We were really excited with the craft of analytics. We are a cool Ai analytics company and we really enjoyed the fact that we could teach the whole world. How to build. Mathematical models to predict customer behavior etc so we were really excited about that and customers or clients were just incidental because it was an opportunity for us to use the craft. We did not realize it we thought you’re always very client centric. In fact, client value creation was one of our values. 1 of our 7 values back then. So we had a consultant and a co executive coach who used to be a Ceo of a consumer goods company he after retiring he became my coach. He came to the office he wanted to coach me and he spent a couple of a couple of days and he said you know what? let me tour around the office and spend a day or 2 to understand your culture before I can come and help you. So after those two days he came and said she can. You’re the the most client unfriendly organization that I’ve ever met I said I was in complete denial I said no way he has so we solved such amazing problems. We are so good at serving clients. What are you talking about? he said no, you never have client conversations in your office. Always talking about the craft of analytics. You’re never about delivering outcomes to your clients and really, you’re very customer unfriendly so I took that to heart I process that feedback you know I with me what happens is I’m really bad at receiving feedback I resist I my first instinct is to.

Srikanth Velamakanni: Is to say no or to reject the feedback. But after that I go and process it so I went back home I processed it for the next couple of days I brought my exact team together and told them that this is what I heard from this gentleman was an executive coach and I need to we need to reflect on this. And after we spent a few days reflecting on this. We said you know we have to make a big change. Yes, he’s right and we have to make a big change and we developed a whole new strategy about how we will be how we’ll learn the idea of clientcentricity. One of the things we did was to start measuring our net promoter score that we will. Look at our client feedback as an indication of our success. What value have we delivered to them and how do they process? How do they think of fractal will they give us more business. What what is it feedback on fractal and once we made that as a central point of how we rate our own success. We started making improvements. So first time we measured nps. Ah, Nps was a single digit number as you know Nps is called Net Promoter Score which is you look at the number of people who give you 9 or 10 on the question of will you recommend fractal to others. You look at the percentage of those people you subtract the six and below ones these are called detractors. So promoters percentage minus detracted percentage gives you net promoter score so our first net promoter score was a single digit number which is pathetic so and now for the last many many years our net promoter score is 70 plus so we made the big transition and I think it’s one of the things that we learned as a company.

Srikanth Velamakanni: Which has driven fractal success over the years

Alejandro Cremades: And as you’re talking about over the years you know on long term thinking. How do you guys apply long term thinking when it comes to the you know dealing with customers when it comes to you know, really understanding where you want to take the company. You know to? how do you guys? think about that.

Srikanth Velamakanni: 1 of the things I learned from Jeff Pizos I learned 2 things from Jeff Jeff Piszos which we have used in fractal number one is client centric city or customer-centric city so Jeff beszos’ philosophy is so be so customer-centric that you should invent and invest on their behalf on behalf of customers. Customers are wonderfully dissatisfied but they don’t know what they want next you have to invent on their behalf. So we have taken that and we have actually done a lot of work in in not just serving our customers or clients very well but also inventing and investing on their behalf investing something like 10 to twelve and a half percent of our revenues on r and d. Second one I have learned from ah Jeff is is exactly what you mentioned which is long term thinking and Jeff says in 1 of his interviews with Charlie Rose which I watched in 2009. He talked about how as Amazon they think seven years ahead of the curve whereas most people when they think long term they’re thinking 3 years or 5 years so this is something that I have. You know, tried to process over the years and we as a company what we have done is think of creating an institution that will be there for the long for the long term it means that we will take a very long term over view of our clients. So clients are these relationships are very important and even if. Ah, clients, ask us to go. We have to serve them really well and we’ve seen that people when they quit organizations they go to other organizations. They call fractal to work with them. So I’ve seen this work very well for us second, how do we treat our people especially on their way out. We treat them so well that they are fractals. Biggest brand brand ambassadors.

Srikanth Velamakanni: After they leave Fractal. So The universe of people who don’t work for fractal is much larger than the universe of people who work for fractal. But if you treat those people. Well they become our brand Ambassadors So We’ve seen that work a lot of our business comes from X fractalites as well and three is how do we treat an investors especially on their way Out. We’ve seen that. Also if you take a long-term view of investors and you especially make that exit very smooth. You’ve seen that they obviously speak well of you but they also come back for seconds So We’ve seen multiple people who have invested in fractal got the return and then invested in fractal from another fund in maybe from another organization. This has happened quite often as Well. So Overall the idea is think very long term build those relationships because these world is really small and if you want to be there for the long term these things come back to you and if you do good karma. It comes back to as a force multiplier for your own future success.

Alejandro Cremades: And I and I love that I think that that’s really really profound and we’ll talk about the investment side in just a little bit but on the employee side you know that you were alluding to which I think is is a fantastic you know piece of advice. Also for everyone that is listening. You know when the when the employee is on the way Out. You know you’re probably you know, typically people you know have the ego either. They’re mad or upset that you know they’ve invested all that time on an employee and the employee is leaving so it’s it’s Hard. You know to to really you know, ah execute on that. So The fact that you guys are doing that you know is Remarkable. So Give us a good example of how you you know treat an employee on the way out.

Srikanth Velamakanni: Yeah, 1 is you know, understand that they are here to build a career There is a journey that they are on For example, we so we hire a lot of undergrads who want to go to grad school after a few years at fracting and we make it. We make it very easy for them to do that. We actually encourage them. I write recommendation letters many people in fractal cf stakeholders write recommendation letters so that we build their career. They’re here for a few years we know that and as part of their evolution. They’re going to another another place. We also what I’ve seen you know I’ll give you an example of the biggest client that we currently serve. Actually came from a person who left fractal in 2006 and he called me in 2016 and he 10 years after he had left and he said shikhan I you know it’s been a long time since I’ve you know I’ve connected with you I have an opportunity for you. There’s this you know. Great bay area tech company that wants to ah is looking for analytics and ai vendors I think you fra will do a great job. Can I make an introduction to you I said sure why not and that has become one of our largest clients and this is just one anecdotal thing but there are multiple examples that. Because we’ve treated them really well. They had a great time when they look back. They feel like this was the best time for their learning. We invested in their learning and when they exited we made it extremely smooth for them. We create continue to stay in touch with them. We invited them to our events. They feel like ah they have left fractal the fractal still inside them.

Srikanth Velamakanni: And that is what creates that kind of ah feeling or emotions that that they have towards fracting.

Alejandro Cremades: That sounds like sense of belonging sense of community which I find you know super important now you’re talking about investors to us. We’re in the topic of people and when we are talking about people here and what we’re talking about investors. Ultimately, the people that you’re going to be bringing on in. And and really helping you know, not just with fueling with with money here but then also with strategy and and network tell us about how that investment you know journey has been because you guys have been at it for over twenty years now ah you know people that have invested that have exited that have come back again and invested it again. So just to start off you know on this topic. How much capital too late. Have you guys raised.

Srikanth Velamakanni: So we as fracly have raised 685,000,000 of capital over the years much of this is secondary secondary transactions and in our subsidy called cure dot ai which is now you know we are a minority shareholder in that. Have raised another 60,000,000 in in that subsidiary and we have a couple of other startups which have also raised ah small rounds of capital on their own as well. So that’s been the fundraising journey. The first time we raised some money was when we just started. They were friends who wrote me some checks and wrote some of my co-founders some checks and these people. You know we went through a lot of ups and downs. But we made sure that all of them made a ton of money they got 400 x of their investments and first time we got institutional round which is thirteen years after we started the company. We made sure that they exited and they got the return and I specifically called each of them and said look. You were wonderful. Wonderful to us because you invested when we did not deserve your trust I know we can you can make you know a 400 e x of your investment right now would you like to exit and they ah you know they took some of them exited some of them have continued to stay on in 2013 we got t associates which invested 25000000 they exited in 2019 and then you know some of those people who exist exited have actually followed up with me and they’ve been interested in in investing in fractal yet again in 2016 we got Kazana which invested 100000000 and you know they exited in 2019 but.

Srikanth Velamakanni: You know some of the stakeholders were who are part of our board and are chairman of our board now he is actually agreed to be an independent and a director on cure Ai’s board which is our subsidary so again, he’s come back and 1 of the investors in ta has is now a tpg and Tp invested in fractal. 2021 they invested 360000000 so I’ve seen this play out that because we have treated our investors well and because we’ve actually you know you know returned a good multiple of what they invested in. They have always come back and there’s good karma overall about what fractal is and how fractal is is a. Ethical, honest company thats doing that. That’s doing great work and actually will do right by its investors.

Alejandro Cremades: But it has not been a walk or a path full of roses because I mean you’ve had also investors that told you to your face that they like the business but they didn’t like you. How do you? How do you take that? How do you take that punch.

Srikanth Velamakanni: Yeah, yes, it’s in fact, thanks for reminding me that um of that one. This was two thousand and nine ten oh and these were obviously tough dayss for fractal be where we had not raised a single round of institutional funding at that time so we had. This was a senior of my from my undergrad he was one of the smartest ah guys ah during my undergrad days he had he was part of a fund which is an american fund and he was a India head for this american fund so his us counterparts and he visited visited fractals offices in Mumbai at that time. And spent a day and a half of you know spending spent a day or a day or so with us and the end of that day. He gave me feedback he saidrikan we really like your business It’s really good analytics is a good industry unfortunately we’re not going to be able to invest in your company I said why look we like the business. But we don’t like you so it was ah it was very hard to receive that feedback. So I said really he said yes the the space is good but we don’t think you can scale this business. We’ve seen you at work and you are not the kind of person who think we think can scale this business. It was very hard eating feedback again. I was in denial for the first day or so I processed it and the next day I invited our executive team and I shared with them that this is what happened I wanted to make sure that the executive team knows that it’s not because of them. It’s because of me because we we were.

Srikanth Velamakanni: Doing these fundraising rounds and we were having we’re running into you know problems I Want to make sure that they know that fractal as a business is good. It’s the the problem is with me and that that was my strategy at that time and you know and I also started working on it I said I told myself that I need to get better. In order to be a better leader for fractal or fracting needs a better leader in any case I think this has been the this has been the theme for me throughout my life that every time I have been able to grow I’ve been able to grow fractal as well.

Alejandro Cremades: Now in this case, you know for you like you were alluding to it when it comes to the um you know, allowing the investors you know on the way out. How do you do that? You know if there is like no um, let’s say acquisition or Ipo or.

Alejandro Cremades: Liquidity event. You know how do you structure that so that you know those investors you know can actually cash out and and leave because I mean as as many of the people that are probably listening to to this episode right? now you know obviously when when a Vc you know creates their own fund. They have their own limited partners that are investing as investors in that fund. And they’re expecting that fund to to return back the money with returns on a you know percentage on a period of time which typically is like anywhere between let’s say 7 to 10 years So once you’re past that the pressure you know, really, it’s going to build on from those investors to want to get their money back with returns so in this case, you know, ultimately, the vcs. Would put pressure on the company to go through a liquidity event so that they can get their returns and they they kind provide that the money back to their own lp so in this case for you guys. How did you go about giving that money with those returns to the investors without having to go through ah a liquidity event.

Srikanth Velamakanni: That’s ah, that’s a great great point I think you know fundraising is a decision that you’re making and every decision has its consequences and then one of the consequences of the fundraising decision is that you have to align your interest with the investor’s interests. And investors have a limited timeframe whereas you as a founder is probably building this company for the much longer term and therefore there could be conflicts and therefore understanding that look I am making this compromise as part of this fundraising cycle I am promising them one way or the other that I will find an exit for them. And 4 to 6 years from now right? and therefore start thinking of that and preparing for that in year three or year four so that you can actually provide them a good exit and not really complain about it I’ve seen many people are very good on the way in but on their ah when when it’s time for investors to exit. They. They say but it’s not right for the company etc. No, but you agreed with this deal. You agreed with this deal that you’re bringing an investor in therefore give them the exit that they deserve because this is what this is their business model. Their business model is about running a 10 year fund where you invest and then you exit in four to six years and then you create that written and that’s the business they’re in and they’re going to maximize their business outcomes. You have a different but different business which is building for the long-term and you somehow want it to come together. So if you come together then align your interest and therefore look for that exit. So what we did was in each of these situations. We found new investors.

Srikanth Velamakanni: Could come and do a secondary transaction and buy out the existing investor thankfully fractal is was you know, growing nicely nicely profitable nicely growing so we could we could have these transactions take place. The 1 thing we did not do is to complain about it. We had this very clear clear understanding that look. We will do our best to provide you the exit we will ah we will you know sort of prepare the information we will you know do a sort of a ah run a process and get you the exit that you’re looking for because this is part of building the company for the long term multiple people will come multiple people will go if you make that entry and exit smooth. Then you will have the pathway to building a great company for the long term.

Alejandro Cremades: Now as we continue here on the deal-making side of things. You know you guys have also been very active on the acquisition side. You’ve done over 10 acquisitions. How do you guys think about acquisitions to grow. Um, and then also how do you think about integrating them successfully because most acquisitions typically fail on the integration.

Srikanth Velamakanni: That’s that’s so true. So I think we’ve made our fair share of mistakes in acquisitions and luckily for us the first few acquisitions we made were very small and by design we made you know the first acquisition we made was just a little acqui hire. It was just 3 4 people and we bought a little piece of software along with it and we paid a very small amount of money and this was a complete write off. It didn’t really the people left very early and the software wasn’t very useful so yet we write. We wrote it off that was the first and first thing we did but thankfully it was a really small. Very small deal even in our you know from our scale and then then we did the next one where we learned some of the tricks. So we bought um, a company called four I which was Chicago based this was in 17 and um, this was this had a big presence in Ukraine and this was very helpful in a consumer goods industry where. Ah, we had some very good consulting capabilities came through this acquisition of 4 I so that was that is helpful again. We got some things right in the sense that we we knew the strategic fit but we were not like we were not able to retain the founders for too long. 1 of the things I always think of as a success criteria for ah for acquisitions is a can you? What do you think of it 5 years after the acquisition number 1 and 2 can you retain the founders for that long 5 years or more because if you’ve done both these I think.

Srikanth Velamakanni: Then you really have a good successful acquisition that is at least our thinking so we had these founders for 4 years but they eventually left um in in 2022 so this is this has been one acquisition then we bought a company called final mile which is a behavioral sciences company and again, what we learned here was. Bringing in a sharply new capability to fratly now final mile Chicago based again and is one of the you know leading behavioral sciences companies in the in the world and they’ve done some amazing work. So when we brought that capability in we could bring that to all our clients because now we could bring data science and behavioral sciences together. This is how we started partnering with them six months before the acquisition so that we could test out this proposition of bringing behavioral science and data science because look we power every human decision and human decisions are mostly judgment and intuition and emotion based therefore understanding how humans actually make decisions through be able sciences. But actually augment that data science way of making decisions that we had mastered back then so by bringing these two. We tested that proposition out and then we acquired the company and it’s been one of our most successful acquisitions because this has helped us in solving much bigger and better problems for our clients so over the years we’ve kept refining this. Last year we acquired neil analytics which is ah it’s a great Microsoft goal partner and it Seattle headquartered and does some amazing work in the engineering and Ai space and now so we felt confident that we could do a much better acquisition. This acquisition had about now 250 people.

Srikanth Velamakanni: Ah, with it. Big organization, big integration plan and and then we sort of have built a plan to integrate. So what? one of the things we learned is do not first acquire and then think of integrating think of integration from the time you’ve actually conceptualized the the acquisition in the first place so we built out an integration team. And started involving them as soon as a deal became serious our integration team got involved in thinking through the steps of integration and that’s one of the things that we learned over over time. So yes, we’ve made some mistakes but over the years what we’ve learned is you know make keep the mistakes small do some experimentation and over time. Bring integration thinking right into the acquisition overall and the last point I’ll make is retain the foundlesss. The founders are super important, especially if you’re buying small to midsize companies. The sole of the company is really in the founder if if you lose the founder of the founders then you lose the sense of the company and you may not get value for the acquisition. So. How do you make sure that the founders and the and the senior executives in that company have path to success and career inside fractal is something that we’ve learned over the years and that’s helped us as well.

Alejandro Cremades: So let’s talk about over the years let’s talk about the future here. Let’s say you were to go to sleep tonight and you wake up in a world where the vision of fractal analytics is fully realized what does that world look like.

Srikanth Velamakanni: Or that’s an amazing question. So fractals vision is to power every human decision and we think of a world where the boring and the and the mundane tasks are automated so that we can imagine and create the future right. That future would be a future where a every business is customer centric right? Just imagine. No every business is super customer centric. There’s no friction between your actions and your intent right? So if you want to go and buy something you can you know it’s frictionless commerce like Amazon’s 1 click we can enable that. This productivity and you know there’s no wastage because everything is so you know we have done the right supply chain forecasting. We run the right employee planning to run the right risk management. So we don’t lose any money and waste any money we build new products and new products are not failing but they’re succeeding the latency between when a customer. You know buys a product to when I’m making a decision is zero I’m making businesses becoming real time and businesses are becoming sustainable because now I’m optimally used utilizing all my resources in that world. That’s the word right? and it’s it’s a fascinating world. The only dangerous thing is will there be enough jobs that that’s my only fear is. Okay, we have a ai utopia but in an ai utopia we may not have enough jobs for everybody for the 7000000000 or 8000000000 people on the planet.

Alejandro Cremades: I love that and and and now obviously you know with the Ai you know with chat gp t and and and all of this talk I mean where do you think? Also you know the the world of of Ai is taking us.

Srikanth Velamakanni: Yeah, this is this is the most ah defining year for the world of Ai 2022 to 2023 has been the most significant year for ai in my living memory. Because what we have seen in terms of the significant breakthroughs two significant breakthroughs I’ll talk about 1 we. All know is Chad Gpt you’ve talked about it. You’ve talked about it just now and yes it is a breakthrough not just because it’s you know it’s a nice cute, um, place where you can ask questions and get answers because. Of what it is doing. It is actually saying give me all the data in the world and I will extract all the knowledge from it that is amazing that the the way it is able to extract knowledge from data. It’s able to reason with data is unparalleled and because of that it will become a foundation. Everything all decision making will all be augmented in very not so near and not so far distant future a chad trippi you or some assistant will be helping us in doing many many activities so that’s very exciting but the other one that people haven’t talked about sufficiently is what deepmind did in July of 2022 they actually released the protein structures of 200000000 proteins. This is quite a game changing because this has been a problem. It’s been a grand challenge and in biology for the last fifty years and they actually solve that grand challenge. So if you if you think of proteins the 3 dimensional structure of protein is something that you know it sets.

Srikanth Velamakanni: Settles itself into automatically but because the proteins are so small and you need say christrography to actually see the structure of the protein and even then it’s very hard. So a ph d student spends their and ta ph d in deciphering the 3 d structure of one protein. So what? um. Deepmind debt deepmind is a division of Google what they did was they basically said okay, if you give me the chemical formula of the protein I will predict the 3 d structure within 1 angstrom within one Angstrom and they actually have built a beautiful model which I think is but almost nobel prize worthy. And they released the the protein structures of 200000000 proteins as of last year eighty mean breakthrough stuff in in the world of pharmaceuticals and vaccines and others. So again, what we’re seeing is Ai is doing magical things in the last one year it’s it’s done some amazing things. So I think futured is going to be great with ai. But it also has some risks, especially if responsibility ai is not there if we do this very hastily. It might create destabilize the world economy because the way it the impact it has on jobs. It has on competitiveness labor versus capital there are some risks involved but overall Ai is a force for good.

Alejandro Cremades: Now you have a superpower now we’re gonna be disc closinging here srikant you know to everyone and the superpowers that you read about a hundred books a year now when it comes to observing the information to digesting that information and to implementing. That information to your own journey. Whether it’s personally or professionally how do you go about doing that.

Srikanth Velamakanni: Yeah, so firstly I I read a lot because I feel like a book is for of the cheapest ways to get a lot of learning you know some somebody has put their entire life’s work into a book and you have to pay $20 to buy it I find it to be an incredible bargain. If you are good at selecting the right books. So I try to read as much as possible. Especially I like science and technology and science and engineering type of books I like memoirs where people write their life stories I read a lot of fiction as well because I I find it to be a great way to empathize with with human beings and and the world at large. So I find it very useful what I try to do is you know I try to ah get a multimedia experience of reading. So usually I am reading and listening at the same time so I would have my Kindle version with with audible attached to it so that I can actually listen and read at the same time That’s my favorite way of doing it. And that helps me stay focused and sometimes actually I’m walking when I’m also listening so this gives me completely focused on the book because I’m completely occupied in all other ways. My only focus is listening to the book and then I try to implement whenever I learn something I try to go and implement that I have a conversation with my colleagues. Very next day on this is what I learned and brainstorm with them I have some very smart colleagues and when I brainstorm ideas with them. They sort of I retain those ideas much better and I I never have a problem in rereading a book if I loved a book I don’t mind going and rereading books because.

Srikanth Velamakanni: Because they’re so valuable. You read a second time you get more out of that book.

Alejandro Cremades: So imagine I was to now put you into a time machine and I put you into a time machine with all these hundreds and hundreds of books that you’ve read with those twenty plus years of experience you know in in the startup world and I bring you back in time to that moment. Where you were working in the you know financial service base you know doing investment banking and you’re able to have a chat with that younger self and you have the opportunity of giving that younger self one piece of advice before launching a business. What would that be and why given what you know now.

Srikanth Velamakanni: Um, I would you know the 1 piece of advice I’ll give my my younger self is be bolder take greater risks and think even bigger. I was I think I was when I look back I could have taken a bigger risk and painted a bigger vision for fracture right in the and the first year and these older people now I’m one of those you think that they have all the answers but they’re as clueless as you are sometimes you feel like you know. I am so young I I don’t have I need to spend some time in gaining experience. But I think it’s a young and the foolish who change the world. So I would have I would advise myself to be bolder and take bigger risks as an as an entrepreneur as ah as an as an executive.

Alejandro Cremades: I Love it Sorikant for the people that are listening that will love to reach out and say hi. What is the best way for them to do so.

Srikanth Velamakanni: I’m on Linkedin um, so please do check me out on Linkedin I’d love to stay connected on Linkedin and you can write to me at srican at fractal dot ai let me spell it for you s r I k a n t h at fractal that’s spelled as FRraCTA l

Alejandro Cremades: You see enough wall rican thank you so much for being on the deal maker show today. It has been an on earth to have you with us.

Srikanth Velamakanni: Dot ai.

Srikanth Velamakanni: Thank you Alejandro it’s been great chatting with you today.

* * *
If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at [email protected]

 

Podcast: Play in new window | Download

Subscribe: Apple Podcasts | Google Podcasts | Spotify | Stitcher | TuneIn | RSS | More