Vijay Balasubramaniyan is the co-founder and CEO of Pindrop which is a pioneer in voice security and authentication. The company has raised to date over $200 million from top tier investors such as Andresseen Horowitz, Google Ventures, Redpoint, Felicis Ventures, Sigma Partners, and IVP.
In this episode you will learn:
- The change in positioning which really kickstarted their funding success
- Where the world of voice is going
- How big Vijay’s company is today
- The Conversational Economy
- The only three ways out of a problem
- Why even the most beautiful coding doesn’t matter without this one thing
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 Vijay Balasubramaniyan:
Vijay Balasubramaniyan is Co-Founder, CEO & CTO of Pindrop.
He’s held various engineering and research roles with Google, Siemens, IBM Research and Intel.
Vijay Balasubramaniyan holds patents in VoIP security and scalability and he frequently speaks on phone fraud threats at technical conferences, including RSA, Black Hat, FS-ISAC, CCS and ICDCS.
Vijay Balasubramaniyan earned a PhD in Computer Science from Georgia Institute of Technology. His PhD thesis was on telecommunications security.
Connect with Vijay Balasubramaniyan:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone and welcome to the DealMakers show. Today, we have a guest that before he became a founder, he worked for some of the biggest companies that you can think of in tech. Today, he’s going to be telling us about how he scaled his company from the ground up, how he’s preventing fraud and other things that are super interesting that have to do with some of the stuff we’ve heard on the news left and right. But without further ado, I’d like to welcome our guest today, Vijay Balasubramaniyan. Welcome to the show today.
Vijay Balasubramaniyan: Thank you for having me, Alejandro.
Alejandro: So, originally born and raised in India. How was life growing up there? I believe you were born in a small town and then to Bangalore. So walk us through it.
Vijay Balasubramaniyan: I was born in a small town in North India. My dad was in the steel industry so we’d go to a lot of places where there were brand new steel constructions. But over time as the steel industry started consolidating, there were more consultancy services and Bangalore becoming a place for that. We moved our family to Bangalore, and it was one of the best decisions because, as you know now, Bangalore is considered the Silicon Valley of India. But at that point in time, it was just a city with great weather, great people, and a lot of free areas. We moved to Bangalore, and I spent most of my life growing up in Bangalore. India is filled with extremes of temperature. Bangalore is above sea level. It’s about 2,000 feet above the sea level, so it has temperate and wonderful weather. It was a wonderful childhood growing up in that environment where there was a lot of technology that was coming to be and understanding what part we had to play in that technology.
Alejandro: At what point did you start developing the love for computers?
Vijay Balasubramaniyan: It started early. They have all of these different generations. If you look at Millennial generation stocks in the 1980s – I was born in 1980. I was in this weird state where I was born where everything was analog, but things became digital soon after. When I was young, I started seeing computers all around me, but the first place that I got exposed to it was at school. So at school, we had a computer lab. You could take computer language programming as one of your subjects. All of us went through it, but then, I fell in love with it. I started off with something call Logo, which is this very interesting thing where you can draw pictures, and then it went on to BASIC where you could animate things. We started off with those BASIC languages. Because I come from a low-middle-class company, my story is different from entrepreneurs here. We couldn’t afford a computer at home. Instead, what happened is, I would spend all my time in the lab at my school. The computer teacher would keep the lab open on weekends for people who wanted to do special projects. I spent time on the weekends doing computer science, and it was the most fun-filled time. That’s when I started learning that for me, the programming or getting the computer to do all these crazy kinds of things became the most interesting part of dealing with computers.
Alejandro: Very cool. I believe that after you got your degree, you got some experience working in big companies, and we’re going to be talking about that. But you then went on to do the Ph.D. I know that the Ph.D. was a really big one for you. It changed the course of everything. I guess this happened because you wanted to work on harder problems. Is this true?
Vijay Balasubramaniyan: Absolutely. From that very early age, with a computer, you could always think of the art of the possible. Dream of something in your head, and you would then be able to create that on a computer by writing a bunch of lines of codes. That notion that you could always solve any problem no matter how hard it was meant that over time, I got more and more interested in solving harder and harder problems. The interesting thing is, the fact that I worked many years before coming to do my Ph.D. actually worked out really well. I could have become super academic and worked on problems that had no real-world significance. But one of the things that I kept looking for is what value does this work that I’m doing in my Ph.D. bring to the table?
Alejandro: Got it. While you were doing the Ph.D. and everything, I believe that you went to India, and there was a trip that you had that changed the course of everything. What happened?
Vijay Balasubramaniyan: It was really interesting. As you’re doing your Ph.D. and presenting at all of these conferences, you want to look good. I keep going to India every year to travel, so I went to India, bought a suit, gave it for alterations, and then didn’t think much about it. A week later and one day before I was to fly back to the U.S., I got a call from my bank saying, “There’s this particular transaction on your account, and we want to verify this transaction.” I’m like, “Go ahead. Tell me what the transaction is.” My bank said, “No, no. Before we give you that sensitive transaction, we need to verify you, and we need to ask you for your social security number.” Bear in mind, I’m in India, and my bank is here in the U.S. They were calling me at 3:00 in the morning asking me for my social security number. All kinds of warning signals are going off because I’m in the security industry. I’m like, “You know what? I’m not going to give you my social security number. Let me find out who you are.” So we spent 30 minutes in this stupid cat-and-mouse game trying to find out whether I was Vijay, and whether they were the bank. Ultimately, after 30 minutes and me losing sleep, I said, “You know what? Go ahead and cancel the transaction. It can’t be that important.” The next day when I went to get my suit, they had stopped working on the alterations because I had canceled that transaction. I was like, “This is crazy.” On the flight back home, I was super frustrated because I was like, “We have voice that has existed for over 100 years, and we can’t identify who’s on the other end? That feels like a huge gap. So when I came back, I started talking to my Ph.D. advisor, and we started working on this concept of how do you identify where a call is coming from, who’s behind that call, and how do you give guarantees that it’s the right person making the right call.
Alejandro: Very cool, and obviously, this led to Pindrop. But before we actually go into Pindrop, you’ve worked in some amazing companies: Intel, Siemens, IBM, Google. I’m sure that many of the lessons learned and things that you got that you saw worked in these big corporations – I’m sure that you’re applying them on your entrepreneurial journey. I think it will be super helpful as well for the people that are listening to learn and to hear what were the key takeaways from you being in each one of them. Why don’t we start with Intel?
Vijay Balasubramaniyan: Intel was a great experience. I worked on the ERP side of their business, which is where Intel does all of their inventory management for all their chips and for all their fabrications. The biggest learning there was how do you do things at scale? Even a simple search functionality – bear in mind, this was before search became popular even publicly. It was just starting to become popular publicly. But within a company, if you have to search across all of Intel’s inventory, it wasn’t easy. So a lot of my initial projects were building the basic algorithms that now have become commonplace everywhere for Intel to solve Intel’s problems. That was one of the biggest learnings. How do you do things at scale for even simple problems like search?
Alejandro: Got it. Let’s talk about Siemens’ key takeaways.
Vijay Balasubramaniyan: Siemens was very interesting. Siemens was a phenomenal culture for programming. They had some of the best C++ programmers – some of the folks there who were part of the C++ compiler group that had created the original standards. Siemens was great from a programming standpoint, but also, that was my first foray into telephony. I was responsible for the network management software. This is the software that runs all of the EWSD switches that Siemens provides. These are telephony switches. If there is a call that needs to be connected from Germany to Italy, Siemens would be making all of the routings through these switches. I was writing the software that managed all of these switches. The biggest learning there was this entire world of telephony and what it took to take a call from any part of the world to another part so that two people, that is, the world became closer by that communication means.
Alejandro: Very cool. What about IBM?
Vijay Balasubramaniyan: This was during my Ph.D. At IBM, I was working on a lot of the scalability algorithms in Voice Over IP (VoIP). Telephony had moved from landlines and cellphones to internet-based telephony. That’s where I started working on my first scalability algorithms with IBM to handle internet telephony.
Alejandro: And lastly, Google.
Vijay Balasubramaniyan: Google was a great experience. Google was an experience where I worked on the team that was doing the scalability algorithms for Google’s video chat, which is now Google Hangouts. Google does scale as no one else does. Being able to handle that kind of scale and have all of these Google Hangouts infractions go through Google servers, that was a super interesting challenge.
Alejandro: Now, let’s fast-forward then, and let’s go back to where we left it. You came back after that trip. Now you start to discuss with your colleagues that are in the Ph.D. What happened? What were the immediate steps that you took and right before? What was the transition when you got the idea all the way to finally bringing the company to life?
Vijay Balasubramaniyan: As soon as we got the idea, we realized we had to now figure out how to identify who’s on the other end of a voice infraction or a phone call. When we started looking at the data, and this was based on all the experiences that I had. Like at Siemens, I was doing a lot of the routing between switches to take calls from one place to another. At Google, I was doing a lot of that same stuff on the internet side of things; on the internet telephony. It had given me a lot of background on the gnarliness of the problem. What I mean by that is, when my mom calls from a phone like a [0:12:49] cellphone, [0:12:50] cellphone in India, she starts off there. But because she wants to call me, she’s using a VoIP service call magicJack. The call goes from a cellphone network to a magicJack VoIP service. She’s calling my cellphone. Then it comes to the AT&T Gateway in New Jersey and then comes to me. But the fact is that when I look at the data of that call, all I see is the AT&T Gateway. If I didn’t know it was my mom making that call, I have no clue that it actually originated so many thousands of miles away in India and came here. So that became the challenge. How do you identify where this call is coming from and who this call belongs to? What we quickly realized as part of my Ph.D. was the only thing that comes reliably from the source to the destination is the person’s voice or is the audio of a call. So we started building my entire Ph.D. thesis around the fact that what does the audio reveal to you? When a call comes from India, what does the audio of a call coming from India reveal to you? When a call comes from Nigeria, what does the audio reveal to you? As we started finding these features, we started realizing we could piece together where a call came from anywhere in the world just by the acoustic characteristics in that call.
Alejandro: Got it. So as you were incubating this idea and figuring all these things out, how did you also start putting together all the different members of the founding team of the company?
Vijay Balasubramaniyan: Once I got the idea, and I started publishing papers, a lot of press media started covering these articles. I had NPR, Popular Science, they all covered the Ph.D. work that I was doing. Then what really became interesting is, I then started getting calls from several banks, several of the top ten banks of the U.S. started calling me saying, “You’re trying to solve this problem from the other side. If you were a consumer and got a call from a bank, how do you know it’s the bank? We have the same problem, for example, when you, Alejandro, call the bank, how do they know it’s Alejandro?” They wanted to start licensing my technology to use it in their own call centers and their own voice systems. As soon as they said that, that they wanted to license the technology, I was like, “Wait, wait! Hold on a minute. I think there is the ability to form a company.” So I then started working with my advisor to start finding people who from Georgia Tech had been successful entrepreneurs in their own right. That’s when I met one of our early co-founders, a gentleman by the name of Paul Judge who had done a lot of work in the email security space and in the web security space. I asked him to come join us for this voice security. He was one of my earliest co-founders. As this initial team with me, Mustaque, and Paul, we started building the rest of the management team.
Alejandro: At what point did you make the decision, “I am going to go after this business”? Because, obviously, this was your first rodeo. You had the experience with working with really large companies and with a comfortable paycheck and just being able to turn the lights off and going back to your house without your wheels spinning, which is really what happens for founders where you can’t turn it off. It continues. In this case, at what point do you make that decision?
Vijay Balasubramaniyan: I had offers from all the big companies: Google, VMware, Microsoft. I had several offers. It was an interesting decision. But the funny thing is, if you’re an entrepreneur, you know this. There’s something deep down in you. I come from India, where we tend to be a bit more conservative and a bit more risk-averse. The funny thing is, as soon as I realized this was what I wanted to do, none of those other offers mattered. I had come to my advisor, and I told him, “I’m dropping out of the Ph.D. program to go pursue this.” The only reason I got my Ph.D. was because my advisor was phenomenal. He actually wrote a lot of my Ph.D. thesis helping me out. I got my Ph.D. along the way, but I had already started writing grants to get money into the company so I could hire my first set of engineers and things like that. But where it became real was one of the calls that I got was from a top-four bank in the U.S. They came and asked me to come to their data centers, to come run our algorithms to go solve the problem. We had a month to go find fraud at this data center. For the first 12 days – in fact, most of the algorithms broke because they had given us 1.2 million calls, and we had no way to scale to that with the algorithms that we had. We were writing code along the way. I was sleeping in that data center. In fact, the security guards were telling me, “We don’t need a job because you’re here before we come, and you’re here after we leave.” We kept working on it. Then on day 12 was when I first heard a Nigerian fraudster on a call saying he was John Smith. Then that same Nigerian fraudster was on another call that the system had pulled up, but accessing a completely different account. Then on a third call, he was accessing a woman’s account and changing his voice to sound like a woman using a falsetto. That’s when I knew we had something real. That’s when it completely became real, and I knew this was going to be big.
Alejandro: Wow. I know that you guys also started going to competitions and things like that to get some money.
Vijay Balasubramaniyan: Yeah.
Alejandro: So you knew that this was serious. You knew that you wanted to dedicate yourself to this. Then, after you got the decision, and you started pulling in members of the team, walk us through some of those early days.
Vijay Balasubramaniyan: What happened is that when we started, we had gotten my initial funding because I, as a Ph.D. researcher wrote a National Science Foundation Small Business Innovation Research guidance. It’s one of the best things that’s out there. Not many people use it, but it’s a phenomenal tool to get money in. And through the life of Pindrop, they’ve provided close to a million dollars with no equity. What they want to do is for you to create jobs in your local area. It was a great initial funding. What that allowed us to do is go from these proof of concepts to the first version of the product. Then we sold the first version of the product. We started the company back in 2011. We got the first order at 11:59:41 PM in late 2012. Once we got the first order, immediately what we started doing is we started putting together our Series A. During the Seed Round, about six months back, we’d gotten a whole group of people including Maynard Webb, who’s the ex-COO of eBay. He loved the idea. He put money in during the Seed Round. Andreessen Horowitz also put money during the Seed Round. Then during the Series A, they decided to take the entire Series A themselves. That’s when we started building the team. Between the Seed and the Series A time, we started building the team. This is where Paul was super influential in the early days because Paul had done this multiple times. He built email security and web security companies. Our first VP of Engineering and our first VP of Marketing were people that he had worked with before. I spent time with them telling them, “You’ve done email and web security, but voice is where the world is going to, therefore, let’s go to voice security. Here’s the kicker. This is the hardest thing that we did. That even though we got our Series A – our Series A we got after 60 odd meetings with a whole bunch of financial VCs after seven months. The reason it took us so long is because every time I went to a VC during that period and time, even though we had these deals, everyone had a TechCrunch article that said, “The phone call is dead.” I would have to keep explaining to them that “So what? The phone call is dead.” The way we communicate is through voice. So voice isn’t going to die. It’s going to come and resurge itself in a different format. At that point, I didn’t know how it was going to come back, and now we have Alexa’s, and Google homes, and things like that. They all came only in 2014. But back in 2012, 2013, voice was considered dead, and it was considered, “Why are you spending so much time on an area that has no future?” The large part of the early years was convincing both people that we hired into Pindrop, investors, and customers that voice is the way of the future, and there’s a significant market here. But at that point in time, it was a hard ask.
Alejandro: I mean a hard ask of you said seven months or whatever that was, but you guys ended up getting Andreessen Horowitz at a Seed Round, which is unbelievable. So what do you think clicked for Andreessen Horowitz to say, “We’re jumping in on this.”
Vijay Balasubramaniyan: I think there’s a quote by one of our board members from Andreessen Horowitz, Martin Casado, an engineer. He said, “Learnings as an engineer are bad ideas in engineering one time. A bad idea is always.” Then his learning as an investor is, “Great markets and great ideas were once really bad ideas in investing.” So I think the reason it clicked is Andreessen Horowitz is a VC firm that’s always looking for the counterintuitive idea. In my first pitch with the Andreessen Horowitz team, Marc Andreessen asked me the question, “I understand all of these things that you’re doing in the telephony space, but that’s not interesting to me. Why do you think Pindrop is going to be a meaningful company 20 years from now?” It was there when I started formulating the initial ideas that so what if the phone call goes away. Let’s say all of the old telephony, as we know it, goes away. But the way we communicate is still through voice. That is much faster than any way in which you can type. Therefore, if interfaces got better, we should get there. It’s in that moment that we clicked. Him pushing me to say, “What does this company look like 20 years from now? Because I don’t care about what you do right now. I care about the longevity and how big is this bet.”
Vijay Balasubramaniyan: That got us thinking. It was one of the hardest questions I had to answer then, but it’s actually one of the most meaningful questions for the company.
Alejandro: For the listeners, how do you guys make money?
Vijay Balasubramaniyan: How we make money is we make money per call. What happens is if you’re a large bank or insurance or a retailer or a Telco organization, you get millions of calls coming into your organization where you have to provide service for sales. What we do is on all of those calls is we’re able to tell you, “Yes, this is Alejandro calling” because we know it’s his voice. We know it’s his device. We know it’s his behavior. We’re providing a true multifactor authentication so that he doesn’t have to remember passwords, pins, questions, or any of those things. On the other side, if we’ve never seen you, Alejandro, we provide the ability to detect when that call is risky. So, “You know what? I don’t know who this is, but it’s saying this phone number is coming from New York, but the audio characteristics are telling me it’s a Skype phone calling from Nigeria. So something is wrong with this call.” Those are the two ways that we’re able to protect these things because we do it on every single call. We charge by the transaction.
Alejandro: Got it. Going back to the fundraising and to Andreessen Horowitz, which is super impressive to get a top-tier like that on a seed level, how much capital have you guys raised to date?
Vijay Balasubramaniyan: We’ve raised quite a bit of capital. We’ve raised about 213 million in funding.
Alejandro: Wow. And why would you say so much money?
Vijay Balasubramaniyan: Call center infrastructure is hard. Trying to change the voice telephony world and make sure you’re able to offer services are really hard. The interesting thing with us is even though we’re a startup if you look at our client list, we have eight of the top ten banks. Five of the top seven insurances. Some of the biggest retailers, Telcos, and brokerages. As a stat, 70% of our customers are in the Fortune 500. We don’t have small customers. Dealing with these large customers requires the right kind of customer support. It requires the right kind of sales engine. Initially, it was to build out the voice security solution that is identifying when a call is risky. But over time, we’ve realized that we can also start identifying you, the customer, based on your voice, device, and behavior. The subsequent world around words to enhance a product and to also provide voice authentication. Then the final round was, we’re moving now outside the call center to the VoIP world. It’s the same question: is this Alejandro calling his bank to do a wire transfer. Is this Alejandro telling his Alexa to close the burglar alarm? Is it really Alejandro, or is it the burglar? How do I know? Now, we’re playing a lot in the VoIP space where if you want to open and close your door; or if you want to do stock trades on your Alexa; or if you want to go open your car door, get into it, and change the cruise control; or if you want to go through airport security; or open your hotel door; or turn on your Netflix preferences, you’re starting to use more and more voice in these interfaces. How do you know it’s the right person either for identity or for personalization? We’re playing in those spaces as well. And the last round was an investment for those spaces.
Alejandro: Obviously, you have amazing investors. Andreessen, as we were talking about, Google Ventures, RedPoint, Sigma, IVP, and the list goes on and on. Like you were mentioning, you just did your Series D, so you’ve done a Seed, Series A, Series B, Series C, and Series D financing rounds. Let’s go round-by-round, and you can tell me what you learned out of that financing stage. What did you learn out of the Seed Round stage?
Vijay Balasubramaniyan: The Seed Round was one of the hardest. Especially when you have an idea that is creating a new market, the biggest thing that I learned is persistence. The fact is that most VCs and most investors are doing pattern matching. If they haven’t seen some shape or form of a similar idea – for example, if you’re building a storage company, everyone knows people need storage, and therefore, your idea would probably get funded if you have the right kind of makeup. But if you’re creating a voice security and authentication market, and that market didn’t exist, there’s no way to say which VC is going to say, “That’s a good idea.” It’s a lot about the numbers initially. So we pitched everyone who would listen. That was my biggest learning of the Seed Round.
Alejandro: What about the Series A?
Vijay Balasubramaniyan: The biggest learning of the Series A was the kind of VC you want in your table. Between the Seed and the Series A, Andreessen, through its EBC program, already introduced us to several big customers. We started realizing at our Series A stage that everyone has money, but what you want is true value. Everyone says they have true value, but Andreessen had like 70 people who were helping out businesses to scale and grow. So the biggest learning there was, what’s the kind of money you want to get into your round?
Alejandro: And the Series B?
Vijay Balasubramaniyan: The Series B was a growth stage. It was our first growth stage round. At that point, we were looking to move from one product to another. We wanted people who had that experience of taking companies through growth, either through products or through scale. IVP has done that several times with some of the biggest growth companies. If you look at their portfolio, they have some of the biggest growth companies like Kayak, Uber, TransferWise, and folks like that. It was important for us to get that kind of VC at that point and time.
Alejandro: And the Series C?
Vijay Balasubramaniyan: The Series C was Google Capital, not Google Ventures. Google Ventures also participated, but CapitalG was the one that led that round. That was purely strategic. After we finished our Series B, we realized we didn’t want any more financial VCs. We wanted more people who can provide strategic value. That’s why Google came in to provide that strategic value because they do a lot in the voice world, and we do a lot in the voice world, and that seemed like a perfect match.
Alejandro: What does a strategic value look like?
Vijay Balasubramaniyan: What does strategic value look like? Especially with Google, it’s very interesting. It’s two-fold because Google is one of the biggest engineering cultures. They help us address a lot of engineering problems. “We’re moving to the Cloud in the voice world, and we need streaming data processing.” We’ve been able to get the best experts in this area to come help us out. At the same time, we’re doing this thing in the call center world and in the homes, so Google is able to make introductions to teams that are working. Google is one of the biggest call centers because they have to deal with a lot of this data. They now have what’s known as Contact CCAI, which is their own contact center offering because of all their experience. Working with those teams and understanding the big challenges was something that was super helpful for us. We did that both in the contact center world and also in the home automation with the Google Home products. We got to work with them on a lot of the things that moved into our IOD offerings.
Alejandro: Very cool. Lastly, the Series D.
Vijay Balasubramaniyan: The Series D was more about international expansion. We were doing well in the U.S., and it was time for us to expand in other areas. One of the first areas for us to expand was EMEA. Our Series D was with one of the largest B Firms in EMEA. They came and joined the portfolio in order to help us expand into EMEA. We also had other smaller investors like the government in Singapore EDBI participating in this round to be able to take us to APAC and places like that. The goal was international expansion.
Alejandro: Super cool, and that’s how you break down over 200 million. It’s really, really impressive. Thank you for that. Vijay, if I had to ask you – I’m sure there are a lot of listeners that are wondering as well, where do you think the world of voice as a whole is going?
Vijay Balasubramaniyan: I think voice has an incredible future. We’re actually at the frontend of a big paradigm shift. If you look back, there have been two such shifts. When we were all analog, and the first online presences came, organizations had to create websites to participate in this online economy. Companies that didn’t do that went away, like BlockBuster, which didn’t make the transition from brick and mortar to online. Then in 2007, when the iPhone came, you had another revolution. It was the mobile-app revolution. That gave way to the mobile economy. The funny thing is, there were companies like Microsoft, and I remember a Steve Bomber quote when he said, “I don’t think there are going to be very many mobile devices that do computing. That’s not going to be a great way that we interact with our customers.” And that changed. Every organization now needs a mobile presence. We’re in a similar state right now with the Alexa’s and the Google Home’s, and the connected cars that are all moving to this voice interface. The reason they’re moving to it is two-fold. One, a voice interface requires very little. You just need a microphone, which is less than half a millimeter. It’s at the end of your mobile phone. You see, there are three or four dots. That’s a microphone yeti. That’s why when I went to CES, you’d see devices like smart rings as small as a ring, and all it has is a small little microphone that allows you to give you the entire power of voice. More and more devices are moving to voice. Secondly, voice allows you to convey things at the speed of thought. If you think of a basic thing that you want to do in your online world, like doing a wire transfer, you have to first log into your account, go to Accounts, pick Account Overview, pick the account that you want, then say, “I want to transfer into this other account,” then you have to say “one time,” then you have to say “immediately,” and you have to put the amount in. You have to go through all of those steps to do a wire transfer. It’s a very sequential way of doing things. As humans, we’re random. We’re not sequentially wired. I would just go up to my Alexa and say, “Why don’t you wire $10,000 to my bank account to my Bank of America account?” That transaction because I’ve spoken – it’s my voice. I don’t need to log in. Then because I’ve said all of those things, I know exactly where to where to move money, and I’ve done that in less than two seconds. Whereas, in the other case I’d have to do all of that over a period of a minute. We’re moving to a world where more and more things are going to be voice-based. That’s going to give rise to what a lot of people are calling The Conversational Economy. You, as an organization, have to decide whether you want to be like the BlockBusters of the world and don’t make that transition or whether you’re going to start participating in this conversational economy and interacting with your customers through voice or not.
Alejandro: Wow. This is incredible, Vijay. How big is the business today? How big is Pindrop?
Vijay Balasubramaniyan: We’re a private company, so we don’t give –
Alejandro: Yes, I know. What about employees? How many employees?
Vijay Balasubramaniyan: We’re about 214 employees right now. It started with just two people in a small little broom closet. Now, we’re about 240 people.
Alejandro: Wow. Looking back for you, Vijay, what would you say has been the toughest moment as an entrepreneur, where you learned the most?
Vijay Balasubramaniyan: I think there were two tough moments. One was when no one wanted to invest in Pindrop because we were playing in phone calls. It required a lot of patience to say, “No. This is going to be a big market.” You can’t predict the future, but you’re telling people to look at an idea that you think is going to happen. The other one was an early one because we got a lot of these big customers. We had nine of the top ten banks. Early on, we worked with one of the largest banks, but because they were so early, we couldn’t scale our software to their call volume. Everything came crashing down, and they completely decided to move another way. That was really hard. The first time you lose a big customer, and at that point, we were doing about 10 million in revenue. They were 30% of that revenue number. So it turned out to be a really scary thing, but that’s when you find gritty teams that say, “Okay. Let’s learn from that. Let’s make sure we give the customers the right expectations, and then make sure that we’re providing software that can scale and provide the right kind of service.
Alejandro: Really cool. One of the questions I always ask the founders that come on the show is that knowing what you know now if you had the opportunity to have a chat with your younger self, with that Vijay that was still doing the Ph.D. and thinking about launching a business, what would be that one piece of business advice that you would give to that younger Vijay before launching the business and why?
Vijay Balasubramaniyan: The one piece of advice that I would give that Vijay is the fact that when you’re hiring a team, oftentimes figuring out who’s the right hire and being very diligent about the right hire is super important. One of the things an early mentor told me is, “When you’re faced with a problem, there are only three ways you can solve the problem. Either out hire your way out of the problem, out-innovate your way out of the problem, or out-execute your way out of the problem. And fundamentally being able to know which situation demands which.” That’s probably the biggest advice I’d go back and tell the younger Vijay.
Alejandro: Very powerful. I’m sure that there are a lot of engineers that are going into being an entrepreneur, and more on the business side, or some people that are right now doing their Ph.D., or doing research, or working at labs in universities, what piece of advice do you have for them, for that transition of going from the technical side to the business side?
Vijay Balasubramaniyan: That’s a great question. When you’re an engineer, engineering purity and technical purity is everything. You want to build the most scalable algorithms, the best code, stuff that’s designed beautifully, but none of that matters if you don’t have customers. If you try to prematurely scale or build these systems before you have customers, you’ll just keep designing the system till infinity and never step out of your office. So, one of the big things for me to learn early on was the fact that I couldn’t just keep coding and assume people would come to me. I had to go talk to customers. Keep talking to them and even potentially sending software to them that wasn’t very good, but telling them that it was early software and learning from that and training from that. I think that’s the biggest thing that an engineer has to get over, that fear that someone’s going to tell you your software is ugly.
Alejandro: Yeah. I hear you. For the listeners, Vijay, what is the best way for them to reach out and say hi?
Vijay Balasubramaniyan: They can reach out at firstname.lastname@example.org or Twitter @vijay_voice – either of those ways. I’d be absolutely happy to hear from you.
Alejandro: Amazing. Well, Vijay, thank you so, so much for being on the DealMakers show today.
Vijay Balasubramaniyan: Thank you so much for having me, Alejandro.
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