Srinivas Balasubramanian On Bootstrapping A Billion-Dollar Revenue Company By Delivering AI Services

In the vast expanse of entrepreneurial endeavors, stories of triumphs, trials, foresight, and fortitude abound. One such narrative encapsulates the essence of perseverance and innovation of Srinivas Balasubramanian, a visionary entrepreneur who defied conventional wisdom and carved his path to success.

In an exclusive interview, Srinivas shares the riveting account of his journey from humble beginnings in India to the pinnacle of corporate achievement in the United States. He also reveals how he bootstrapped his company and took it to IPO without raising any funding from third-party investors. Srinivas also talks about the lessons he learned when building an executive team.

In this episode, you will learn:

• Srinivas Balasubramanian’s journey underscores the importance of resilience as he pivoted his ventures amidst the turbulence of the dot-com bubble.
• Prioritizing customer needs over investor demands proved pivotal in Photon’s success, reaffirming the value of serving clientele diligently.
• Srinivas’s unconventional path, devoid of external funding, showcases the potential of organic growth and profitability in sustaining business ventures.
• From co-founding startups in dorm rooms to leading multimillion-dollar enterprises, Srinivas exemplifies the visionary leadership necessary for entrepreneurial success.
• Navigating technological shifts and market dynamics, Srinivas’s ability to adapt and pivot underscored his entrepreneurial agility.
• Viewing entrepreneurship as a lifelong commitment, Srinivas emphasizes the importance of steadfast dedication and perseverance in achieving enduring success.
• Srinivas’s journey serves as an inspiring testament to aspiring entrepreneurs, highlighting the transformative power of vision, resilience, and unwavering commitment to customer satisfaction.

 

For a winning deck, see the commentary on a pitch deck from an Uber competitor that has raised over $400M (see it here). 

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About Srinivas Balasubramanian:

Srinivas is the Chairman and CEO at Photon, and has had a history of building category-leading, highly profitable companies.

Since he was appointed Photon’s CEO in 2007, the company has generated hundreds of millions of dollars in revenue – creating billions of dollars in market value.

Photon is the world’s largest and fastest-growing provider of Digital Experiences, building highly engaging Mobile-First experiences for industry leaders across Retail, Financial Services, CPG Manufacturers, Hospitality, Automotive, Healthcare & Pharma, among others.

In fact, over 40% of the Fortune 100 have chosen Photon as their Digital Agency Partner of choice.

Prior to Photon, Srinivas was the founder, president, and CEO of Infravio Inc., a Stanford University incubated Silicon Valley company, which was a pioneer in the Web Services and SOA Infrastructure space.

Srinivas led the successful sale of Infravio to webMethods in 2006 for a little over $40 million, after which Srinivas served on webMethod’s CEO’s Executive Management team.

Srinivas began his career in 1997 as an equity and derivatives trader at JP Morgan and Credit Lyonnais Securities in Mumbai, India, running the largest Institutional trading desk in India when he was at Credit Lyonnais.

The trading desk was ranked as the best in the country. Srinivas is an alumnus of the Indian Institute of Management (IIM), Calcutta, and Birla Institute of Technology and Sciences (BITS), Pilani.

Connect with Srinivas Balasubramanian:

• LinkedIn
• Crunchbase
• MarketScreener
• TheOrg

Read the Full Transcription of the Interview:

Alejandro Cremades: Alrighty hello everyone and welcome to the deal maker show. So today. We have a really amazing founder a founder that has done it a couple of times you know this time around he is riding a rocket ship but he’s he’s writing not the typical rocket ship that you would encounter out there because he hasn’t raised any money. And he’s literally taking the company public which is absolutely unbelievable. So during you know our session today in addition to really touching and and going through his inspiring journey. We’re going to be talking about why you got to be passionate about what you what you do? How you go about serving your customers versus serving your investors. Also how you go about building an executive team that shares you know, equally the values and then also why when you do what you love you don’t work a day in your life so without further ado. Let’s welcome our guest today shririvas Ballah Subraman and welcome to the show.

Srinivas Balasubramanian: Thank you for having me.

Alejandro Cremades: So originally born and raised in India so give us a walk through memory lane. How was life growing up besides watching cricket.

Srinivas Balasubramanian: Life was um, different a lot of fun much. Ah, fewer loxuries than we have today. Socialist India was different ah semi-socialist India was a shortage of everything shortage of phones shortage of motorbikes ah and everything else. So but we did have a lot of fun doing ah what we did? Um I went to engineering school at the little institute of technology and science in in pilani when the institute of management at calcutta studied that worked as a ah. Derivatives and and and a stock creator at Mumbai running one of the largest institutional trading desks there um eventually figured out I war to or do my ah own thing. Um, and um, eventually came to the United States in 1990 s 7 to form an internet so actually 90 money mine to form an internet startup.

Alejandro Cremades: Well let’s talk about that because your brother you know was the one that took the lead coming to the us you know he was at Stanford and then all of a sudden one day he gives you a call and what does what does he tell you.

Srinivas Balasubramanian: So he starts so I’ve been reading up about the about the internet in probably one of the few highs speeded internet cafes that were available in India at that time. Um I’ve also been leading a lot of magazines we should talk about this great internet boom. And I’m I’m sitting there thinking hey this seems to be me super exciting. Um, maybe I should be speaking to my brother. Ah, who happens to be at Stanford and and he he he starts with yes, there have been a couple of very exciting companies that have been founded over of Stanford recently. From similar projects that I’m working on for my research project one of them just went public. It was called Yahoo one of them ah is creating a lot of buzz. It’s called Google. So absolutely if if you if you think we should be doing something. You should not be in India you should be out here with me. In California so you should come over qui your job and come over and maybe we’ll get a shot now got me thinking. Um I had a good job. Ah, but but figured hey it was it was ah it was a great moment in history that I was kind of well versed with the internet in theory. Figured hey on the hell give it a shot um came into the came to the us took his Stanford research project that became the founding. Um, um, grounds for our first company. Ah, which we incorporated out of out of the Stanford Dom Booms Stanford was a shareholder in the company as well.

Srinivas Balasubramanian: Ah, and that’s how we got started.

Alejandro Cremades: So So walk us through how that process of getting started look like I mean were you guys having conversations with people doing Surveys testing things out What what led you to really understand that the the company. You know Impfrabiio What’s the what’s the right one to start. But.

Srinivas Balasubramanian: Ah, well that’s an interesting story. Ah, um, so no, we did not do any market research. Ah, but we were we were actually just looking at the world figuring out that ecommerce was great that it was going to change everything. Um, I came very different beat. It’s not that I knew anyone in the United States at all so I I didn’t know a single person I didn’t have family here I didn’t have and I came from ah in a very I didn’t come as a student so I came I just came here so it’s not that I had a student ecosystem to back into. Not that I had a professorial ecosystem to back into or anything else. um but um I am a big believer in the power of the cold call. So I just start calling people speaking to them who who was willing to speak who weren’t on the fly. But product just seemed right. The research project that he was he was ah he was basing his thesis on just seemed intuitively the right thing to go to go at which was really the use case we were going at was was ecommerce and shopping ah but really building an abstraction layer on top. Do comparison shopping and consummation from a single destination site. That’s that was the origin of the of the company. It just seemed like the right product at the right time. So not a lot of formal research that went into it but just felt intuitively right.

Alejandro Cremades: So then what were the early days like.

Srinivas Balasubramanian: Um, the early days were like a world went because ah we raised money three days literally three days before the big dot com crash um raised our first seven million dollars of of ah of ah financing three days before the dot com cash ah there was always the um and and if you remember those days that was the that was stable stakes to get a startup going because that’s the amount of money you needed to buy servers by kind of rack space to put your servers in and buy ah buy a few buy kind of like servers and storage. Um, so we raised that with the plan that we would actually be a dot com raise $70000000 six months later which obviously did not come because of the dot com crash so we had to pivot the company into an enterprise software company but it was it was literally a whirlwind. There were ups. There were downs. Um. Then you went into what’s called the tech nuclear filter from between 2001 to 2006 had to pivot the company quite extensively into an enterprise software company but lots of learning lots of ah understanding about customer customer needs enterprise software models. Enterprise Data Enterprise systems so just a ton of learning ah that I believe is invaluable in what we do today.

Alejandro Cremades: And so obviously you know the way that you guys raise money and what ended up being the outcome of the business was an incredible you know lesson you know that you learned because I think that it really influenced. You know the way that you guys have gone about building your business Now. Photon. And and we’ll talk about you know what? you guys have done with fotonni just a little bit but I find that the way that you guys raise money with in frabiio the way that you guys really focused on investors I think that that really you know made an impact in you all. So.

Srinivas Balasubramanian: Absolutely it did um ah and a to be told there were there were people who placed faith in us when we were 25 year old kids out of a Don room. Our official registeredctors was 15 a res apartments at Stanford University so ah I mean a couple of kids two three kids out of a dom room. Um I mean but all of us I mean work together still work together. Um, twenty five years later um it’s a lot more fun now I’ll tell you that it wasn’t that much fun than living out of her dom room and working out of a dom room with fighting about. who’s going to get the boger today and who’s going to get the bed today. It was not fun so this is a lot more fun I’ll have to say that um, but um, yes, inval lessons very grateful to the people who put their faith in us back in the day. Ah we did make them money. Um, and we did ah we were we were loyal to our investors. Ah but guess incredible lessons that we learned um about what to do and more more importantly, what not to do.

Alejandro Cremades: So that’s incredible. So so let’s talk about the um, the acquisition two because I mean you guys raised about seven million bucks and then the company ended up getting acquired so walk us through what that process of getting the company acquired for I really believe it was like about forty million bucks how though is that process like make us make us insiders first.

Srinivas Balasubramanian: So as I said mine is probably going to be the funniest story that we’ve heard on this show because I raised money through cold calling I really didn’t know anyone I actually called call my way into my first round of funding um literally did. I called every investor every person who had recently sold a company one of them was willing to trust me um and raise money from ah from him and thereafter from venture investors that he knew um I sold my company the same way I mean when we figured we were running out of money and the runway was limited. And ah, um, I actually cold call my way into ah into a sale I called into the company that eventually bought us which was web methods which is a pretty but.

Alejandro Cremades: What what? what was it? What was the cold call like was it a cold call I called email and and what and what was the essence of it. So let’s let’s let’s say we are the people on the other line. So let’s say youre calling. What did what? what did you say on the phone.

Srinivas Balasubramanian: I was a cold call actually funnily it was ah it was ah it was probably a really funny.

Srinivas Balasubramanian: Ah, so excuse me, do you run corporate development can I speak to um and I run a company the name of the company is in Farria and she goes wait a minute. Do you guys track things real time. Um. Um, like actually what do you mean what what? exactly do you mean? she’s like I’m sitting here with my Ceo. We’re actually looking at your company ah website right now. Um thinking you might be a great acquisition target for us. How quickly can you get here to speak I was like wow that’s lucky. Um, and that’s great answer your question. It’s four pm in California I can be there at 8 a m tomorrow morning at Washington Dc that was it that was the call.

Alejandro Cremades: So my God and how how much time did it take from that phone call until the deal was closed.

Srinivas Balasubramanian: Funny ah in principle. The deal was post ah very very quickly. I mean it was a company I still believe the people who did the deal were the most honorable people I’ve ever dealt with they. Ah, we did we ah we I mean you you on. Ah, the principles of the real and which which eventually held ah was in out within fifteen days ah but what I realized was the process of selling to a publicly traded company is not as simple as I thought it was which is you actually needed to go through full freded financial audits. And and everything else not all I mean so our our systems were not really the soundest. Um as they probably should have been ah so the process of due diligence order it. Ah and and everything else that came with that literally took six months six sleep but six months of sleepless mits for me. Um.

Alejandro Cremades: Wow.

Srinivas Balasubramanian: But we will ah we will literally living up I mean um on a bridge loan. Um, before we eventually sold the company. So um, so learn again? Ah ah, ah look I mean learned how to we or deal honorably because ah the ah the folks who bought us eventually could have bought us at any price they chose. Stuck to the price. Ah they they paid us what they agreed to even before the company was technically insolvent. Um, ah, but was a great learning experience in terms of like hey get your financial systems. Get your systems at your legal systems in order. First before before trying to pull it all together. Ah during a liquidity event so that’s something that we’ve heavily focused on here at for um, but yes, so the process of took six months the contours of the deal was iron out with in a couple of weeks

Alejandro Cremades: That’s incredible. All right? So then the deal happens and as the saying goes once an entrepreneur always an entrepreneur and then January 2007 you know around that time is when you think it’s it’s it’s time to go out it again. You know what what what? What push you into that direction back.

Srinivas Balasubramanian: Sure I ah while Weboutot was a phenomenal company and a great company to work in. Um I figured corporate ah I done was not for me. So I figured I wanted to do it again. Ah and I figured. Ah, hey I mean we still believed in the concept of what we were what we were doing ah back at infravia we we fundamentally believed that Api’s microservices would eventually lead to another channel which was the mobile phone. Just no one was no one believed us but in 2001 and 2006 when we kept saying. People would eventually shop on a mobile phone and the web and just people were not it just wasn’t you you can be right? but it only can be absolutely wrong and that was what that was the that was what we we we fell into but we still fundamentally believe in the concept but we changed the business model. We said we’d we’d actually take. Ah, the founding. Um the following principles of of both technology and business that we we had built but change the business model tweak. The business model serve your customers better by ah by focusing on a confluence of strategy creative and technology not just a technology middlewide company. But strategy technology and creative as a unified offering um consulting being the business model taking it to our customers. You know in ah in a well packaged format to help them um make that digital presences come to life and build great digital presences that was the founding version of the company.

Srinivas Balasubramanian: Didn’t hurt at all that the Iphone launched soon thereafter. Um, and the word the rest of essay is history. Um I mean when the when iphone on we were like wow everything that we’ve been selling for the last. We’ve been. We’ve been. Ah, ah everything that’s been our vision for the last seven or eighty years can with no really a reality. Thanks to the iphone so started working with a bunch of startups. Ah initially in the San Francisco bay area who were who were dabbling in um, in you know, um, mobile apps and mobile presences. Ah because they were the most innovative they were the first ones off the block. And when enterprises decided to adopt. We were like there when when um, when ah when a walgre or ah or some of these largest retailers or the largest banks in the world decided to adopt mobile as an experiment we were the right port of call for them since we had the most experience most experience in the infrastructure most experienced with startups. Became that first port of call sort of a phenomenal ah way to get started between 2007 through to when 2010 when I think this thing just exploded.

Alejandro Cremades: That’s incredible. So I guess for the people that are listening to really get it. Why didn’t ended up being the business model of photon. How do you guys make money.

Srinivas Balasubramanian: Ah, pretty simple business’s model I mean we we um, it’s consulting. It’s ah it’s a pretty simple but but consulting with ah with a strong degree of specialization in new age technologies which ah, which is new age hyper expanded digital technologies. Includes everything from code digital presences mobile Apps Data Buildings Marketing Tech cloud infrastructure and more recently a lot of artificial intelligence but kind of packaging that up beautifully in terms of like business models and use cases for our end customers for large fortune hundreds. Um. And taking it to them in a palatable form tying together strategy creative and technology and selling selling that to them. Um on on an outcome based um, ah, engagement model which really says hey your revenue will increase by x. Or your um, you know, um, this channel should be producing. Ah $1000000 more of revenue for you. Um, the millions became billions obviously with the mobile phonet. Um, but that’s a pretty it’s it’s a pretty straightforward engagement model. Ah, which says. Here’s the value here’s what you what you get here’s what we will be able to build for you. Um, and ah, it’s ah it’s a very probably 1 of um, most straightforward business models in the world. We come with our tools infrastructure. Um and know how but we don’t charge for it.

Srinivas Balasubramanian: That comes to you for free as a part of like the frameworks that we that we bring to build these great digital presences to life.

Alejandro Cremades: So I guess for for everyone that is listening and we’re gonna get into a part that is pretty mind blowing. You know to me how big is Photon today.

Srinivas Balasubramanian: Um, photo is several hundred million dollars in revenue. Um, just short of ah I mean but sh of a billion short of $1000000000 um has generated several hundred million dollars of free cash flow for its lifetime. Um, ah. As as you probably know the announcement is public. Ah we have we have filed to ideal the us markets um never raised money in our in our history. Um, so ah so that’s that’s the journey in terms of like where we are. We. We work with a significant percentage of the fortune 500. In fact, we work with 40% of the fortune hundred. Um, so and that’s the most satisfying thing which is bringing value to these great customers who have a multitude of options but they select us for our very specific ability. To add value in these particular domains.

Alejandro Cremades: Now here is the ah big question to follow that you know and I hope that the people that are listening. You know they are bracing themselves for impact here. How much capital have you guys raised to late.

Srinivas Balasubramanian: Ah, well, it’s simple it zero. They’ve never raised any money if we bootstrap this company all the way through never raised any money.

Alejandro Cremades: It’s ah incredible. It’s absolutely incredible now now let me ask you this obviously with that type of traction I’m sure that you guys have had you know I mean you just you just mentioned I mean close to a billion you know in revenue several hundreds you know of millions there. So I’m sure that. All along the way I mean you guys have been not enough for 17 years all along the way I’m sure that you’ve been receiving phone calls from venture capital firms private equity firms. Why didn’t you return those calls I mean I’m sure that you did you know, but um, because you you guys sort of seem very polite. But.

Srinivas Balasubramanian: Boot drum the calls all right? We we.

Alejandro Cremades: But I guess in in in in the terms of replying a call or or engaging. Why didn’t you engage on on perhaps doing a deal.

Srinivas Balasubramanian: A couple couple of reasons we never really saw the name I mean because if you if you if you’re really doing something that you love you Want to be able to carve out your own destiny. Ah, we just Believed. We’d have a lot more control over our own destiny. Um, if we did this on our own. Um. Business was generating enough cash to keep funding itself So We we didn’t see the need ah to do that. Ah, the founding team itself which is my brother and I and a couple of ah other folks who have been very closely involved since inception both in my previous company and here. Um. We’ all seen obbiquity event once Um, so no real need to see liquidity again. No real urgency to see liquidity again. Ah so we just believe we just do it on our own. Um and raise capital if needed that time never came the company just ah was profitable all through its lifetime. So we figured hey I mean there’s going to be a liquidity event. Let’s just do you know? Um, ah, let’s potentially um, try to ipo.

Alejandro Cremades: So so why the Ipo route. Why not you know, keeping private because obviously now you don’t have any investors nobody is pressuring you for a liquidity event. So why? why doing an ipo at this point. Ah.

Srinivas Balasubramanian: While my employees are pressuring me that’s for sure. So but but I think it’s the logical. Ah I think it’s a logical extension to where the company should go which is the processes and systems that come with the public company I think will be very beneficial for us. Ah, the whole good. We. All this has been a fully organic growth business. Um I think there will be potential today with this emergence of artificial intelligence and other great technologies that are out there for inorganic slash. Um, exponential growth if you if you’re able to invest um in and invest we can but ah, but I think it’s just the ah it’s the right thing for our employees right thing for the stage of the company and the say a right thing to put the process and systems and governance in place in order to ah be accountable for. Sustainable meaningful growth for the next hopefully decade and a half to 2.

Alejandro Cremades: So That’s Incredible. So Obviously when you guys go Public. You know there’s going to be a lot of eyes on you. You know the investors are gonna be all wondering. You know what? the future is going to look like so I guess to that end imagine if you were to go to sleep tonight and you wake up in a world. Where the vision of Photon is fully realized what does that world look like okay.

Srinivas Balasubramanian: Um, you ask me today. Ah I think our core business which is like the core digital business will be only a subset of what we do I think the world will be I mean there’s a whole new revolution out there many people call it a bubble. Yes, there will be bubbles. There will be ah there will be busts. But we we firmly believe in the potential of artificial intelligence intelligence. Um, so there will be ups and downs and there’ll be cradors and troughs. Ah, but we we we believe that everything that we’ve done is just the beginning to what the world will be as we see it five ten years later thanks to the power of ah. Ai and everything that comes with that. Ah, we think we will have ah a very strong and meaningful role to play in that. Um it could be multiple avenues that we’re exploring ah part of the infrastructure part of applications. Definitely a part of services. And and putting these technologies to work. Ah, but we think it it will be It’s ah the what we’ve seen is just the tip of the iceberg. Ah and what we think is coming is an aur of magnitude. Ah more exciting than what probably mobile was which has been the bulk of our growth. Probably even more exciting in terms of pace and and our ability to change the world than the internet. So ah, fantastic and exciting times coming up.

Alejandro Cremades: So serving your customers versus serving your investors. What can you tell us about this They’m Sure there’s a lot of founders listening now and and they’re about to get inspired on this one.

Srinivas Balasubramanian: Ah, my personal view is it is is is your best case is if the two converge which is if you’re if you’re serving your ministers while serving your customers I think it’s great and that’s what we strive to do and you can do that as a mature company because you have a track record you have a history and and all of that. But ah, the dissonance happens when the 2 diverge right? because um, ah, not wrongly investors have their own pressures. Um, which is they have lps to answer to the fund has a timeframe. It has a horizon. Um. You might not put in their plans. Um in terms of low time. Ah year timef frameme your ah your it just might not fit in and and there ah that becomes ah dis um sort of saying and and therein begins the problems. So um, a firm believer ah in serving the customer has to be your priority not serving the investors. Um, and that’s what to some extent not any own spot I probably could do in my first company which is probably 1 of the reasons why you haven’t raised money as well. Because I really did believe that the idea that we the ideas that we had were much better than the exit that we had um, but for a but variety of reasons we couldn’t take them to fruition. Um, so so I mean as long as the two converge. It’s great when they diverge.

Srinivas Balasubramanian: Ah, usually you have a problem in your hands.

Alejandro Cremades: So that’s incredible. So obviously you know we’ve been talking about the future tool but I want to talk about the past because I mean what you’ve done. You know with the companies remarkable. You know, being at it for close to 18 years I mean hey startups you know it’s like in dock years I mean this is like 200 years corporate now what? what? you’ve done here I mean it’s remarkable. You know all from the ground up and about to ring the bell. So imagine if I was to put you into a time machine and I bring you back in time and I bring you back in time you know maybe to that moment where. You know you had received the phone conversation. You know the phone call from your brother. So let’s say I bring you back to let’s say 2000 early 2000 and is the moment where you guys are taking a look around you’re in the campus of Stanford. And let’s say you are able to appear right? there in front of you and your brother right now and you’re able to give your younger selves one piece of advice before launching a business. What would that be ny given what you know now.

Srinivas Balasubramanian: Well, that’s all of advice I can give myself back then now which is um but it’s difficult to do that when you when you’re short of capital. Ah, but really, there was 1 thing I would do ah I would say um.

Srinivas Balasubramanian: Don’t look at a financing transaction as a transaction I mean think of your job for life I always did I believe that my first company was I was going to run I was going to do that for life I believe I’m going to do this for life. Um, so if unless you have that mindset of saying hey this is this is kind of like ah it’s going to be a real business. You want to do this. For forever if you have if I had a choice I would be doing exactly what I what I am doing today I would I would not wish for anything else I would do exactly what I’m doing today. Um, so as long as you’re doing that and you really love what you’re doing ah and you and and if you think you can do it for life. You’re onto something. Um. Don’t raise money ahead of its time. Um, that’s not a wise thing raise only as much money as you need, um and focus on your customers. That’s where I think a lot of people lose the lose the platform focus on what their customers want. They’re always right? They’ll always tell you what today.

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

Srinivas Balasubramanian: I’m pretty good on email shi us at for.com is the right way to reach me sri and IVAS at four hundred dot Com I’m I’m pretty good on email.

Alejandro Cremades: So that’s amazing you enough? Why hey thank you so much for being on the show today. It has been an absolute honor to have you with us today. Okay.

Srinivas Balasubramanian: It’s a pleasure to be here. Thank you so much for your time and thank you all for listening.

*****

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