How to Nail Product-Market Fit and Scale a B2B Company with Thejo Kote of Airbase
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Hey, everybody. This is Ben Kesnoka, co-founder and partner at Village Global, a network-driven venture firm. And this is our podcast, where we go deep on all things business and technology with world-leading experts.

Good morning, good afternoon, good evening, villagers. My name is Ben Kaznoka, partner at Village Global, and I'm very excited to have Tejo Cote with us today. Tejo founded Airbase in 2017, the same year Village was founded. Before Airbase, Tejo was co-founder and CEO of Automattica, a connected car platform that was acquired by SiriusXM in 2017.

Today, we're going to talk about how Tejo has grown Airbase from zero to tens of millions of dollars in ARR, raised over $200 million of funding, and worked his way through all number of challenges and route to building a really substantial business. Tejo, of course, is a Village Global Portfolio CEO, and we're delighted to have him with us today to share some of his wisdom with all of you. Tejo, welcome. Thank you.

All right. Thank you, Ben. So let's start with you telling us what does Airbase do? And then specifically, how did you know when you hit product market fit? And where did that occur from day zero until in this first couple of years? Awesome. So Airbase's North Star goal has always been to bring all of the non-payroll spending that happens in a business into a single platform, right? And if you think about how

money gets spent in any business, the non-payroll side of things. It's a combination of a whole set of workflows and just money movement and the fintech element of it. And our goal has always been to say, okay, how do we bring all of that one platform, do that globally? Of course, saying that is fairly easy, but when you break it down into the constituent parts to actually deliver on that vision, it gets fairly complex because you have a

whole host of different problems that historically, at least in the lower end of the market, have been individual siloed products. So you had AP automation products, you had expense management products, you had corporate cards, you had the intake orchestration, request approval workflows, and

those kinds of products. And so you've got to kind of bring all of those elements into a single platform. That's the journey that we've been on over the last few years. And so anyway, essentially, that's kind of what we do. And we target the office of the CFO. And it's a financial operational tool. At the end of the day, historically, the champion that we've always targeted has been

you know, the controller of the business. And, but as we've gone up market, the procurement persona is increasingly someone we target and focus on too. Right. And by the way, just to, I should have asked this Teja, but just to clarify,

You didn't just wake up one day with this idea fully baked. How did you arrive, because you're a successful entrepreneur, lots of things you could have done. How did you decide that this problem area in this market was the one you wanted to go after? Yeah. So, you know, when I started working on my first company, Automatic, which is a very different domain, by the way.

Automatic was a connected car platform in the automotive space. And we had a consumer product and there was an enterprise element to the business. And eventually, as you mentioned, it was acquired by SiriusXM. But I'm an engineer by training, a product person. And when I started my previous company in 2011, I didn't know the first thing about finance or accounting. And so we didn't know the difference between cash and accounting.

cruel accounting, APAR, like what are all the acronyms. It's some of the sexiest stuff in business. Exactly. But then I was forced to learn in some ways because I had this bright idea of building hardware in my previous business and a whole other conversation about why I'm not going to do that again. But when you are

building hardware, though, it's really important for you to stay on top of how you're building inventory and your forecasting muscle as a business and some of those kinds of things, because if you're not doing that well, you can kill yourself, right? And so I made that effort. I was forced to expose myself to that side of the business as we grew and scaled. I was very involved in building out our finance team and operations, and that gave me visibility into lots of different areas of financial operations in general, but

particularly the problem of how we spend money as a business and how we plan for it, how we got visibility into it, how we had control over it. It all seemed very broken. Right. And, and so it went into my ideas notebook and yeah,

when you're building a business, in my view, everything is broken. Like you can see lots of different things that are broken in every area. It could be financial operations. It could be sales. It could be marketing. It could be engineering, product development. And by the way, just to jump in, I find it so funny. Like I do think that's the entrepreneur's mindset. Everything's broken. There's always opportunity for improvement. At the same time, entrepreneurs are often stereotyped as hyper-optimistic and inept.

And it is true. Both are true at once. I think entrepreneurial people are at once always finding problems in the world. And yet they're also always optimistic that like they could build a solution. Yeah. So sometimes we, you know,

There's a naivety that comes in assuming you can build it and then you get into it and you're like, oh shit. There's no competition you can have about how I thought fintech, money movement, all that kind of stuff. It can't be harder than hardware, but oh my God, yes, it's hard in its own way. You went from hardware to selling to CFO. It

deeply mission-critical financial software. It's quite audacious. So you learned, you had felt the problem they were trying to solve with Airbase, you had felt at your previous startup and then set out to sort of solve that problem at scale with Airbase. And how long did it take you until you realized, wait, this actually is a really good idea. We're onto something. Correct. And so by the time I was getting to the end of that journey with Automatic, I had these...

that were candidates for what I would do next. Of course, the first question was, am I going to do something next? And the answer was a pretty easy yes, because I was not going to retire at 35 or whatever. And so I started digging into some of these ideas that I thought had legs and, uh,

This, the kind of idea for Airbase is the one that kind of I kept coming back to because I felt it was an interesting problem. I felt it was a fairly big market because I was a little more methodical in picking what I wanted to do next in the sense that in a way that I wasn't with my first company, I'd learned a little bit more about what makes for an interesting market, what makes for a company that can actually scale revenue to a certain stage.

Can you even give yourself a shot at being a public company someday? And the path to product market fit, the attractiveness of consumer models versus enterprise models and targeting different segments, all those kinds of things, right? So I had certain opinions of,

what I wanted to do and what would be interesting to me. Because for me, partly building companies is an exercise in learning, right? And so, you know, yes, there are some founders who have the mindset of, hey, I'm going to do one thing, build expertise in one area and just do that for the rest of my life. You know, that's an approach. But for me, you know, part of what keeps it interesting is, you know,

waking up every morning and learning something new and doing something I've not done before and being pushed and challenged in ways I haven't been challenged before. And so, you know, anyway, I looked at all of those criteria. I actually spent a good six months. I had a thesis about what was broken, you know, with this overall spend management, procure to pay kind of problem and how it could be

done in a better way. But then I spent a good amount of time speaking to dozens of controllers and CFOs and accounting managers and they made me a lot smarter about the problem, but I ultimately built conviction that those boxes that I cared about are checked and there's actually a real opportunity here.

So, and so Tejo, I want to get, I want to get into sort of the takeoff of Airbase and get to product market fit and then a whole bunch of other questions. So, but, but just in these early days of Airbase, we have a question from Diego that just came in. Did you have an initial wedge that you sold as an, as an initial product? Like what was the V1 that, that allowed you to kind of get started?

Correct. That's a great question because, yeah, the vision was expansive and in many ways we're still working towards it. And so the first kind of wedge for us was, you know, to really look at the corporate card side of the problem and how money was spent and the lack of visibility and the fact that there were all these pieces of plastic being handed out to employees that then controllers were really struggling to get visibility into how that spend was happening, surprise spend happening, that kind of stuff. So we essentially...

the initial wedge for us was to rethink the corporate card as a software workflow product. And this was just possible back then because you had card issuing platforms like Marketer starting to make it a lot easier for early stage companies like us to become a card issuer. So that infrastructure was becoming available. So that ended up being a good wedge for us to solve the card spend management problem first. And so

that ended up having a really good fit because it was a really painful problem in pretty much any growth stage company. So that's where we started. And then we layered on AP automation, expense management, procurement. And then just very tactically, Patrick asked a question. So you developed that first strategy.

initial product wedge, how did you land your early design partners? Like what was the exact process for, was it your own network? Was it cold outreach? Like how did you get those first design partners? - So it was essentially my network, but I can also maybe quickly talk about, you had the question about journey to product market fit. - Yeah.

I actually sat down even before I started and wrote down what my definition of product market fit would be. Of course, a thing I did even before I committed to working on Airbase and I talked about this journey of talking to lots of people, right? And so the first version or step of that was just

having open-ended conversations about the problem and the acuteness of the problem, building a sense for the, you know, the vitamin versus painkiller framework and all that kind of stuff. But then once I had a fairly good idea of that, I didn't just jump in and start building a solution. I,

And I've done that. I'm an engineer and the tendency is to just build, right? And I've learned over time that, you know, the last thing you should be doing is building. And so I actually, you know, got a contract designer. I sketched out what I thought the solution should be. And I worked with the designer to create kind of the flows and the mock-ups of,

the product that I thought would be compelling. And that's a lot cheaper always. And so I had these high-fidelity mock-ups. I took it back to these folks. And I basically said that we talked about the problem, but I will show you the solution as I'm thinking about it. And, you know, you should tell me if this works for you. And I walked them through it. And essentially the conversation was, if you had this tomorrow, would you start using it?

And then would you commit to start using it? So I essentially pre-sold and it helped that finance people look at a high fidelity mock-up and go, wait, this is pretty much done. And so this was great. I'll take it. And so I had pre-sold it to about a dozen customers. Of course, no contracts or deals or anything like that, but pretty strong handshake. You pre-sold wireframes?

Yes. And in that I had kind of handshake commitments that if I delivered on what I had shown them, they would start using it. Right. And so then what was you said you wrote down your definition of product market fit. But like, so what was that definition? Because a lot of people have different ways of defining PMF. So for me, one was.

Pre-selling it and having commitment and knowing that if I build something, I would not then have to start the journey of figuring out, does anybody want this? And because there's a lot of de-risking you can do in a much lower cost way, because building the product is the most expensive thing you can do, right? And then there's also this psychological thing of being attached to it. And then, you know, you're not willing to throw away the baby or take a completely different direction. And so, you know,

anything you can do to de-risk that upfront without actually building something you should be doing. In my case, it was the high fidelity mock-ups and the refining of those mock-ups and getting those initial users excited to use it, all of that. But after we started building, my definition

was fairly simply along a few dimensions. One was usage, right? So are people actually using what I've built? And there was a set of things that I wanted to see related to the usage of the product, including

The feedback from the rest of the employees. Yes, I sell to controllers, I sell to the finance folks, but are the rest of the employee base using it? Are they finding value in it? And so some of those kinds of things. And the other aspect was willingness to pay, right? And so if they're actually using it, fine, that's a good thing. But then at some point, I wanted to start charging and showing that there was a willingness to pay. What was that willingness to pay? Because

a lot of that determines the future kind of execution of the business as a whole, right? So another aspect of it is,

figuring out segment, right? Which segment of customer actually am I solving this problem for? Am I only able to create a solution and building a sense of complexity required to solve a problem for a really small business, a mid-market business, an enterprise business? I think you have to build that muscle and form an opinion. And I think that's important to do in the search for product market fit journey because

your future investments in go-to-market are all determined by the segment that you ultimately have to go after because the go-to-market organization that you build is so different if you're going after you know really small businesses or mid-market businesses or enterprise businesses and so jumping in you know into starting to build a go-to-market team without having an opinion about that can be very expensive over time right because you know i think a lot of you might have heard this adage of you can build up get to 100 million dollars of uh

revenue by having 100,000 customers who pay you $1,000 or 1,000 customers who pay you $100,000 or 100 customers who pay you $1 million. They're all great, valid businesses, but how you build it and how you kind of build the go-to-market motion and everything in product execution, all that dramatically is different. And so...

So you can know what kind of business you are. Yeah, but to be sure, CEO, you can evolve your thinking on that. I mean, even you over the course of the Airbase journey, right? I think you've had some evolution of thought around

smaller businesses, larger accounts and so forth, right? Like from day zero to today. Yes, and that evolves. That certainly evolves over time and there are some twists and turns, but you have to have some sort of an opinion to begin with. And the more you de-risk that as early as possible, because the search for product market fit and that's the phase where

Yeah, you're an absolute cockroach. You're trying not to spend money. You're trying to make that seed round that you raised, whatever funding you have, last as long as possible until you have confidence that, you know, you are ready to kind of scale the business. But also what helps in my experience is if you...

define product market fit in kind of a rational way upfront and you hold yourself to it, it actually makes your series A or future round conversations easier because you can say, look, this is how I define product market fit. This is how I executed in a methodical way to check those boxes. Now I have checked those boxes because I have X number of customers with this kind of usage and they are paying me a certain amount of money and I know how I can replicate that, right? And that's why I want to go raise this money. And now,

build a go-to-market engine because I feel it is replicable now and here's how I went about it. - Totally, so for B2B companies, and obviously it's subjective and it varies and every company is different, every market's different, but if you had to generalize

What are some of the metrics? Because when you said, you know, are people actually using the product? That can mean that can mean a lot of different things, right? Like if you were to generalize for early stage, you know, seed series A stage B2B software companies, when they're asking themselves, wait, do we have product market fit? Is it time to sort of step on the gas pedal here? What are some of the metrics or things that you think people should be looking for?

So one thing in B2B, especially, you know, what I've learned is, do you have an identifiable, recognizable buyer? Right. I think if you can get there, it makes so much of your life easier downstream. Look, can you ultimately build a business which is, hey, the marketing leader in the company can use my product. The sales leader can use my product. The CFO can use my product. Everybody can use my product.

great, but then you just made your life a lot harder from a go-to-market perspective because how do you target each persona? How do you build messaging? How do you kind of position it? Because generic products end up facing that kind of a challenge. You actually, your life becomes easier if there is a single identifiable buyer. And I think for B2B products, I encourage usually when I talk to other founders that if you can make, get there,

you know, that, that is, uh, uh, I think that's a, I think what you just said is a very deep and important point. And I, and, and you said it slowly and deliberately to really make it land, which is a single identifiable buyer. So, so just make sure I'm understanding that you're saying for B2B companies, you want to have inside the organization, a specific singular person who is absolutely your champion, who absolutely is the person who's, who's going to buy, buy the product. And that's the person you sell to.

And ideally that person has influence and a budget to kind of also buy your product. Right. And, uh, it turned out for us, that's a good thing is that controllers, uh, you know, have influence and they have budget, they have the ear of the CFO. And, and, uh, so the controllers and CFOs are the right kind of, uh, folks for us to target. And, and, uh, that worked out well for us. So single persona, if you can get there, uh,

that'd be great. And it also then gives you an idea of the challenges of getting to that persona. Can you even at scale get to that persona? Because what a lot of B2B business also struggle with is, hey, you have a good product, but if you can't take it to market, if you can't build an outbound engine, or if you can't build an inbound engine, like the biggest challenge as you start growing and scaling the businesses, where's the pipeline going to come from, right? And how am I going to kind of build my funnel, right?

and ultimately convert them to paying customers? How easy is it to reach them? So I think those are some of the questions you also have to try to answer in the search for product marketing.

So I want to shift and talk about building out the go-to-market and sales team in a sec. But just before we do that, Omar from Abhi Finance asked sort of a specific question, but I think it's interesting. So we'd love to hear your thoughts on it, which is how did you create high switching costs for your customers? So you're selling and you're developing a product in Airbase, Tejo, where there is competition, there are people doing similar things. As you landed some of these early accounts, how did you think about the competitive dynamic and switching costs?

Look, I think it's important to realize that in the very early days for most B2B products, you probably don't have a lot of switching costs and you make up for it

in many ways by being insanely responsive. And you also have to find the right kind of persona who's willing to work with early stage companies. And I think that part is important. I learned that along the way. The conversation that I will never forget is this controller that I hustled my way and got a meeting. I'm sitting down, I'm pitching. We hadn't even formally launched at that point. We were in the pre-product market fit.

phase at that point and using my relationships, I'd gotten this meeting and this guy halfway through the meeting looks at me and goes, you know, I only use products from public companies.

I'm like, okay, good. Now, this is going to be a great meeting. We're off to a great start already. Exactly. Exactly. And so, and so you have to kind of find out is the person that you are selling to also of the mindset where they like to innovate with startups and engage with startups and be involved in the product development journey and provide feedback and, and, you know, make a bunch of them advisors, give them a little bit of equity in the company. You want to build referenceable customers, those kinds of things, right? So in the early days, you know,

I don't think focusing on replaceability or preventing that should be the biggest focus. It is like, can I build a referenceable champion group? People who are going to be raving about the value of the product. Even though you can be replaced fairly quickly, that's fine. But you need a very...

- A vocal champion group. So you can get there, you can build into becoming hard to replace over time, right? - What I kind of hear in that answer, Tejo, is it's almost like selection effect versus treatment effect. Like select the kinds of customers

who are not going to switch even if they could. Like you can't really solve it at the product level in the early days. You solve it kind of at the relationship level where you're teaming with early customers who actually want to be in partnership with an early stage startup. I think one of the psychology dynamics that I used to employ when I was doing enterprise sales of a company I started years ago was I'd always look for that early adopter and then I'd ask the early adopter at the end of the meeting

Are there any other like-minded, forward-thinking, innovative leaders like you who you would recommend I speak to? So it's both asking for the referral, which you always want to do if you can, but also flatter their own sense of being innovative. And I think a lot of people think of themselves as innovative. They think of themselves as risk takers, even if they're not. Or if they're kind of slower adopters, but no harm in flattering them.

That is a great point of how you can get those early customers. Because what I used to do in the early days was the way I got introductions is because remember, I had a good founder network because I had done this for a few years in my first company and all that. But I didn't have a network of controllers that I automatically wanted to sell to. So the way I got a lot of these introductions in the early days was essentially to say, hey, I'm starting this new company, new product. We haven't even launched yet.

you know, your experience looks awesome. I think your input and advice would be very valuable. Would you be open to taking a look at our product and, you know, giving me feedback and positioning it that way fed into your ego? Hey, somebody wants my advice, right? Great. I'll give this young startup my advice.

and they would get on this call and that's your opportunity to walk them through, hey, here's the problem and here's how I'm thinking about the solution. And you really, that's a sales pitch, right? That's your opportunity to convince them that. And by the end of that call, if you're thinking, wait a minute, this is a problem I have too. And then you can pivot that conversation to, what do you guys think about using this solution? Would you use this? And so I think a whole bunch of the customers I landed in the early days was exactly that path. Right.

Yeah, I like that. And another sort of principle that Reid and I wrote about in the Startup Review around how to build a network, which is try to help people, it seems so simple. But a lot of founders even forget this when they're talking to prospective customers or design partners, which is if you're a founder out there talking, canvassing the world, talking to all these different people, one of the things you can offer is

to these early design partners is insight from what you've heard and learned talking to all of their peers. So one of the things I think you can do is say, "I'd love to learn from you, but also I've spent the last four months talking to all of your peers, and I'm going to share with you three nuggets that we've learned from those conversations."

Yeah, absolutely. And especially in roles like finance where, you know, there aren't five controllers in a company. There aren't like 50 accounting people in the company, right? Like that can happen in engineering and sales and these other functions. And so where you don't have a lot of peers, that works very well.

So, and I do want to shift to sales and so on. But before I do that, Lucinda just submitted a question, which I think is a really good one. Actually, it crossed my mind too, as you're speaking, Teja, which is you're talking to some of these early customers. How do you decide when to charge or not or how to price it? Because you kind of want to vet seriousness, right? And I think Josh Koppelman had a famous blog post like 20 years ago, the difference between zero and one cent.

is a very big difference in tech sales, right? Like someone who pays one cent or more has a different flavor to them. So how did you think about pricing in the early days of B2B sales? - I think there are different schools of thought. I've heard folks say like,

if somebody is not paying from day one, you know, it doesn't matter. They're not a real customer. I didn't do that. I didn't, uh, believe that, uh, for me, it was proving utility, proving value was, was the single most important thing. And it's an uphill and up battle to get those first earlier adopters to start using your product. So the way I positioned it was I told them, uh,

look, I'm just going to give you the product, right? I don't want to add any barrier or friction to you using and adopting the product because I chose to check the box of can I drive value usage? And I wanted evidence of that first. Forget about the is there a willingness to pay part of it? But the way I dearest the willingness to pay part of it early on was by saying,

look, I think you're a fair person. We will figure out what pricing should be, what fair pricing should be later. And so what I told them is as a very early adopter, I will let you set the price, right? Like the thing you might be concerned about is will you adopt this whole thing? And then will I come and spring some huge price on you that you can no longer afford and then it's going to be a change management exercise. Don't worry about that.

And so that will not happen. You can literally set your own price. So I removed that risk from the table. - I'm sorry, are you literally saying you said name your own price? Like they would just email you and say, "Camelinas Bad Price." - Here's what happened. And this worked well for me. I said, "Name your own price." But then six months later, eight months later, after they had used the product for a while, we made them happy, we showed value. I showed them that I could be a good partner. All of that had happened.

Then I went to them with, hey, now I want to start, I want to get your feedback about our pricing model. I'm not thinking we have a bunch of customers like you. They're all using the product. It's awesome. I want to go to this next phase of figuring out product market fit for ourselves. And I've come up with a pricing model and I want to get your feedback on that. Right. And so,

you know, share your pricing model with them and say, here's how I'm thinking about it. By the way, don't worry, I'm not going to ask you to pay this, but give me your feedback on this pricing model that I'm thinking about. Is this fair? If I go to the next 10 people, 20 people, do you think what I'm asking for relative to the value that you've already seen, is this fair? And at that point, it's like, hey, fine, you're telling me this is a fair price. Let me give you a big discount on this. Would you pay me this? Right. If I gave you a meaningful discount on top of this, what would you can we just formalize that now?

And 100% of the cases we converted and that worked out. So ultimately, I don't think people are also unreasonable. Nobody will come back to you and say, I think I'll pay you $1 a year. That won't happen, right? So if you take a reasonable pricing model to them and say, I'm going to apply a discount on top of that for all the work you've done with us over the last,

X number of months. At least in our case, 100% of the people converted. And maybe that's an approach folks can take. Okay. So it's a hotly debated issue. Lots of smart people disagree. But your approach was you were fine not charging...

anything or a lot upfront and you felt like as they use the product, they'd grow more loyal to it, more dependent on it in a sense, and they would be reasonable people. And then you could charge the market price. - Correct. And look, I will also admit that this may not apply in every segment. Like that's why a lot of this advice, it is segment specific. And so you have to kind of, you know,

think about that through that lens too. In like a very large, if you're going after very large enterprises and it's going to be like a 12 month implementation process and all of that kind of stuff, that may not make sense. You might want to get paid something upfront to ensure there is commitment from this large company. And, but,

we were going after largely 100 to 500 employee companies in our initial kind of period, right? And so it totally made sense because there's one person who made this decision. They just had to get buy-in from their CFO. They would deploy it in the company and they could move quickly, make decisions. Implementation happened in a couple of weeks. And so all of these factors meant that...

focusing on utility value made a lot more sense in the early days. And so, yeah. So think about segmental. Okay. So then, and then just to address Enoch's question really briefly, because I do want to get to the sales stuff, which is just from a timeline perspective, you founded the company in 2017. When did, per your own definition of product market fit, how long until you said, ding, ding, ding, we got it? Yeah. Look, my learning there is that product market fit, actually, I think,

Ben Horowitz has this famous article about this, right? And that's very true. Product market fit, you're never done, right? And it's always this hazy feeling you have that, oh, I think I have a product market fit and you can gain it, you can lose it. And so it's not like- Not binary. It's not binary. It's not zero or one and you're like, I have it or I don't have it. It's a feeling of, I think I have something here. I think the level of usage, the willingness to pay-

and kind of the pull that I'm seeing from the market, the reaction that I get when I describe the solution, the enthusiasm of the buyer, the acuteness of the pain point, all of those are signals that tell you,

I think I have something here, but of course, you know, founders by definition are optimistic. And so you should be very careful to not have happy years and, and, and you should kind of validate that and be very intellectually honest. And that part is important. Right. So I totally agree. And only the paranoid survive, et cetera. But at some point you decided like, when, when did you raise, you know, you've raised over $200 million of,

financing the seed round that we did with you was much smaller. When did you say, okay, I'm ready to go sell a whole bunch more of the company and go really, really scale this thing? How many years into the journey was that? For me, it was, I initially funded the business myself. And so I was ready to raise money when essentially I said, I'm ready to scale my go-to-market organization. So start hiring salespeople, start hiring a marketing team. And

take and I think I basically the founder led selling for us was the first 15 customers and I a few hundred thousand dollars in ARR or something like that. And at that point, I felt I had checked the boxes that gave me confidence that we should now

push towards 100 logos. Okay, I've done the first 15, but what's the methodical, systematic demand generation, pipeline generation, selling mode that gets us to 100, it gets us past a million dollars in ARR, and then so on and so forth. You know, I felt we were ready to try to replicate that in a non-founder-led selling model, because from a sales perspective, those are also the stages, right, where you as the founder should be selling. The

Now, first X number of customers, depending on kind of size, scale, ACV, those kinds of things. But at least the first half a million dollars of revenue, if you as a founder are not on the front line selling yourself, you're not learning enough about the problem in the market and the customer and the messaging and the positioning and all that kind of stuff. And then you can start to try and the journey of replicating that outside of the founder selling. Right.

So let's shift now to talk about selling and sales teams. And actually, we can start with Omar's question that he just submitted. He's talking about founder-led sales. And obviously, you're passionate, Tejo, and know how to articulate the vision. As you began hiring founders,

folks on the sales team, how did you ensure that they sold with the same passion that you did? And then more generally, what are common mistakes that founders make as they begin to build out their sales and go to market orgs? I think the simple answer is that you can't. And I don't think any salesperson will be ultimately as effective. And if you get those salespeople amazing, hold on to them and never let them go. But I don't think any salesperson can be as effective as a

founder, ultimately, right? And this is also the part of the journey that I had to kind of go through this realization over time because a lot of the things that you do as a founder, you just can't, you know, a young AE, typically young AE, can't replicate that, can't do that, right? Because it's things like, you know, the way I sell the product

ends up being very different than how, you know, an account executive would sell the product, you know, a salesperson would sell it. Are you saying that, and that's a good thing? Like you're saying the way you sell it is just, is going to be different for good reasons? No, because it's like,

you know, I always leaned on this fact of, hey, how did I learn about this problem? I built this company, I did this, and I went through this exercise, and I learned about all these things that were broken, and I, you know, and ultimately, I built this product, and here's, I spoke to 200, you know, people, and I've spoken to all these people over the last few years, and you bring all of that experience, credibility, all that kind of stuff, and then you're like, okay, salesperson, you do this, and like,

They're like, wait a minute, I can't say any of those things. The words that come out of your mouth are going to be very different compared to what a salesperson can say and get away with. And so founders can say, get away with things. Founders get, founder CEOs get a certain level of leeway that an individual salesperson never will. The buyer never,

is more leaning towards building a relationship with and getting to know a founder and CEO than they are ever with a salesperson. So founders just have all these built-in benefits of selling. And so the challenge ultimately is to ask yourself, okay, how do I create this replicable model

Okay. And I think it's such a great point. And actually, I've never really seen that articulated. I think it's a great nugget from this conversation that founders can draw upon all the history and all this kind of stuff in ways that AEs can't. But just to get really concrete. So let's say you're, Teja, zero through 10. Let's say you're 10 out of 10, right, in terms of your ability to sell and be compelling to prospects and customers.

the very best salespeople that are non-founders, what do they max out? Is it seven out of 10, eight out of 10, nine out of 10? What's that spectrum look like for you? There's a difference between effectiveness. So if you give them a target and they go get the job done. So I'm talking about the difference between the how you get to the end point, right? And so I think the most important distinction there is don't try to replicate what you were doing as a founder because A's probably cannot do exactly what you're doing.

They can still be effective. They can still be effective at convincing the prospect and taking them through a journey and all of that. But the way that happens in the path you take will probably be a little bit different. And because, yes, I've had the opportunity to work with some really good salespeople, but they just have their approach of following the process of discovering pain and then taking the buyer through the journey of, you know, why us and being very methodical and

with timelines and, and do you have the budget? And look, there are lots of these sales frameworks and yes, there's instinct to it, but there are also, you know, fairly good, uh, frameworks that medic and this and med pic, I think it's called whatever standard method and all these methods that have, uh,

value to them, right? Where you take a certain approach and good salespeople fundamentally have that right instinct, but the way they succeed may not always be the way that you would succeed as a founder. So don't try to get them to know what you're trying to do.

Yeah, gotcha. So like be tell salespeople like they got to be the best versions of themselves, not a pale imitation of you. That's an important message to communicate. Now, when you when you when because you've advised lots of founders and so forth, as you see early stage founders begin to grow their sales teams, what are other mistakes they make either? And like how they evaluate sales reps, a common one that we sometimes see is, you know, you pull the fancy senior person out of some large organization, put them in the startup and they're a total failure. So what are examples like that?

You know, I made that mistake too, right? So this whole thing about, we've gone through this back and forth at Airbase about domain expertise, right? And hiring salespeople who have done the job,

or at least have sold to the same persona that you need them to sell to. And so have you sold to controllers before? Do you understand accounting as a problem? Do you understand all the domain knowledge that comes in a particular area? And so we've gone through this process of assuming it does and learning that it probably doesn't. And where we have landed now, ultimately, and

as I've gone through these cycles and scaling journey, we now, when we hire salespeople, we really focus on personality traits, right? So it is the grit. It is, it is kind of the unwillingness to give up the work ethic, you know, the self-awareness and learning mindset and mentality. And it's those kinds of personality traits that we really look for. And as of now, I believe the rest can be taught. The rest can be learned. Right.

unless it's some hugely technical product that takes years and years and years of expertise. I don't know if that applies to most companies, but I can just tell you what we do now. We went through this whole journey of, hey, let's hire people from Cooper because we're going upmarket. And those sales reps have kind of, people have been successful at Cooper all

Obviously they know what they're doing and they know how to sell to procurement people and controllers and stuff like that. And unfortunately, every person we've hired from Cooper never worked out for us, right? Because other things start to matter is when you come from a larger company, you have a brand behind you and then you have a team of people around you to support you, a solutions consultant, a value consultant and this and that. But what does it take to be successful in your environment?

So let's say, let's say like four managers at Airbase interview a potential sales rep and you're looking for say grit. How do you create like a standard evaluation process? Like you, are you grading people on a scale on certain criteria? Because some of these personality traits can be quite subjectively interpreted. Correct. You're right. And so we do have the, every interview, interviewer on the panel, some people focus on something, some areas more than others, but we,

ultimately when the panel comes together to discuss any difference in calibration along a particular dimension hopefully gets surfaced in those discussions because you're right, some of these things are

not purely quantitative, right? You can't put a score to grit and then be everybody be perfectly calibrated that way. So the only way you can get around that is by people discussing it and talking about their concerns and stuff like that. And so I don't... What do you think of like, what do you think of personality tests, Enneagram, Myers-Briggs, these sorts of things?

We haven't done that. And so I'm curious to know if other folks have had big success there, but we have not done that. And probably we won't do that because it adds a lot of friction to the process. And so

In hot markets and difficult to hide markets, I know you can't get away with adding a whole lot of friction to the process. - Well, when you say friction, you mean like friction on the candidate side, like you're having to chase after the best candidates. So putting them through more, having them jump through more hoops is not possible. - Exactly, right? And so, because when you have like three awesome opportunities,

human nature is to go after the one that is least friction for you, right? And so the more kind of hurdles you add, the more difficult it becomes. But that's the balance, right? Because you want to hold a very high bar for talent, right? On the one hand, you want to do that. And we do that in all the ways we can. But at the same time, you don't want to make your hiring process so onerous that absolutely nobody can make it through. But of course,

these environments are a little bit more of a, you know, employer- - Employer-friendly. - Employee market, so you can potentially get away with some of those things. You just have to have your ear close to the ground and adjust your process accordingly, right?

I think it's a fantastic point. It's actually really under-discussed, I think, this tension. And basically where you're getting at is how much leverage do you have as a startup? How much power do you have in the market to sort of mandate certain things? So a lot of people look at Google's hiring process. It's, oh, Google does 14 different interviews and they have all these stuff. It's like, well, that's Google offering a pay package that you can never compete with, etc.,

As a startup, it's nice to talk about how to have high standards. But in practice, if you're courting somebody who has options, you can't always just define the game in the exact way you want it to happen.

Yeah, because and that's the other lesson I've learned is that we don't even interview people from Google ever. Right. It's Google, Facebook, all of these large companies. And then my generalized kind of guidance to our talent acquisition team is if somebody is in a public company where a large portion of their compensation is liquid stock that they're vesting and that they can sell immediately immediately.

probably not going to work out because the mindset of going from that level of liquidity on a regular basis, giving up 50% of it, 60% of it, 70% of it, to now wait and take a risk over multiple years, that's a hard leap that most people can't make. And so...

the number one primary thing that I look for, because look, it's all a preference. There's no right or wrong answer here, right? Different people have different risk tolerances and in different phases of their life, you know, they need different amounts of cash and whatever, that's all fine. But in order to not waste our time and theirs, what I'm really looking for is

do you have a demonstrated history of taking risks like that and working at a startup because the trade-offs of what we can offer are very different than what a large company offers and do you want what we can offer right and and so that's what we try to look for and and uh either

lots of experience working at startups or you are at one right now. And unless that's happening, probably you're not going to be very successful either through the interview process or after you join. And so that's something that we look for is just

It's not an experience, right? Well, we'll move on from this in a sec, but I'm starting to dig more into Enneagram as a framework for personality characteristics, which is after many years of people, founders and people telling me to check it out, I'm such a rebel by nature. The more people tell me to do something, I'm like, I actually am less and less interested. The more people are trying to stuff this down my throat.

Um, uh, but you know, Graham Duncan, who I did a masterclass with a few months ago on reference checking, which was a, if you, if those listening to haven't listened to it, check it out on our podcast. Graham has, uh, just takes a topic that a lot of people think they're good at, but actually are not very good at and, and brings it to a whole nother level on how to do deep referencing. Um,

But Graham is obsessed with Enneagram. And and then a few other people I really respect are. And so I've been reading some books and I think there I do think there may be something to more structure around thinking about personality traits. But I think you're in a hiring context where.

there is this leverage issue. Once you've hired somebody and they're on your payroll, there could be opportunities to more deeply understand them, to put them in positions where they can be successful. That's a good point. I'm definitely going to look that up. So, Dautejo, you referred... I love thinking about the...

of ideas and just how things happen. You referred a founder to us many years ago. We invested in this company. The company is doing well. I was sitting with the CEO recently. The CEO was talking to me about hiring BDRs in India. I post this in our Village Slack group. A whole bunch of other founders are now interested in BDRs in India and how to hire there for US-based enterprise software companies. Curious to hear...

What have you learned so far around growing out a sales org in India? Yeah, so we're in the early part of that journey, but maybe I should take a minute to explain kind of my talent strategy in general. One of the things I didn't really understand when I was building my first company that I like to think I've done better, which in many ways results have shown that

it has been better is around the relationship between, you know, your business strategy, your talent strategy, your financing strategy, these are all different things, right? And so, you know, being thoughtful about, Hey, how, uh,

what kind of a financing strategy do you need to serve your overall business strategy? You need to understand the interplay between those things. And you also have to understand how does your talent strategy ultimately impact your financing strategy? Because in my first company, it was a thoughtless decision in terms of we're going to have an office in San Francisco, right? Everybody's going to come in, in-person office culture, and hey, most expensive place in the world, but

Why not? But I didn't understand back then just what it would do in terms of the level of competition for talent in the market and your ability to retain them as a startup that is going through its ups and downs and kind of the churn and the cost of that that you're paying over time. The overall cost...

and how the challenges of becoming cash flow positive, controlling your own destiny, the amount of extra money you have to raise to kind of sustain that more expensive model, on and on and on, right? Like the second, third order effects of the simple choice of let's just have an office in San Francisco and just start hiring people. You know, I,

I only came to appreciate all those second, third order effects as I went through, you know, that journey. So one of the first questions I asked myself when I started working on Airbase was what's the number one lesson I learned? Of course, there are a whole set of lessons, but the number one lesson was, uh, just don't hire in like extremely expensive, uh, locations and the optionality that you get by not doing that, uh,

That does not mean lower the bar or whatever it is. You just have to understand that there is equally good talent, smart talent everywhere in the world. So an important decision I made was that we would commit to hiring remotely. We will go where the talent is. And it just so happens that not every part of the world is as expensive as a New York or a San Francisco or Bay Area or what have you. Let me jump in because I think it's really provocative. And it's great to get to that distillation of a key lesson for our company was don't just...

sort of sleepwalk your way into setting up an office in San Francisco and trying to compete in the Bay Area talent market. At the same time, let me just push you because there was always trade-offs, right? No such thing as a free lunch. So when you say you're not lowering the bar, I can buy that.

But is the trade-off that you experience that it's harder to find those people? Like, is the search cost longer if you're looking in Kansas City versus San Francisco? No, it depends on very specific roles. I will argue that if you want a density of talent right now in AI, ML-related skill sets, maybe Bay Area is the place where you will find that. And so this is not a, you know...

philosophy is more around go where the best people are. But for your average B2B SaaS product, you know what? That is not rocket science. The kinds of engineers and the experience and the skill set that you need to take your company a long, long way, that talent exists in

many, many, many places around the world. And I'm Indian. I grew up in India. So I have a cultural affinity there. I chose to build that team in India. Come on, half the engineers in the Bay Area are Indian, right? They just chose to get on a plane and come here. That's what I did. And there are lots of folks back there. All of our early employees at Airbase who worked out of India, they ultimately, they used to work in the Bay Area. They had to go back home for personal reasons. You know, I hit it off with them, you know,

cultural cross-cultural connections and all of that and and so now you know most of our engineering product design teams uh you know are in india and the leverage that that investment has given us as a business has been incredible right and even in the face of competitors who have

raised 10 times more money than us, we're able to go toe-to-toe with them because of some of these structural advantages that have been built in to the business. Sorry, just to jump in, I love your point because people shouldn't miss it. If you're your average B2B SaaS business, it's not rocket science. That's a very polite...

It's a very polite and professional way. I give a reminder because let's really differentiate within the world of startups, like who's doing cutting edge innovation versus sort of tried and true business and software practices. And there's no shame in that.

But if you're doing tried and true B2B SaaS, don't over invest in the most expensive. Yeah, and then be intellectually honest about what is the level of expertise you need to excel and succeed and win in the market. Because in my first company,

you know, we were building hardware. We built a custom ASIC of our own at some point and, you know, larger debate about whether all of that was necessary and all that kind of stuff. But if I wanted to do that, I can't find talent that does custom silicon in India. That would never happen, right? And so there's a certain kind of set of people who can do that. And so really ask yourself, like, what does really good look like to accomplish what you're trying to accomplish? What does it, how do you be, you know,

really good in the market you're operating in, given the problems you need to solve? I think that's the question at the end of the day. That's where the intellectual exercise has to be.

So Shaban asks a good relevant question, which is how do you decide which roles to keep in the Bay Area or the U.S.? Have you hired anybody in the Bay since founding Airbase? We have a bunch of people in the U.S., right? It's just that not on the R&D side. I haven't hired anybody on the engineering product design side. We have about 70, 80 people in the U.S. They're mostly on the go-to-market side in the U.S. and Canada, in these regions. Honestly, I also don't even think about it as onshore versus offshore.

I think we have one global team, and we're a fully remote team. The internet is our headquarters. And maybe it's an hour-long conversation about the cultural nuances of making the remote team successful, because thinking of it as onshore versus offshore right there creates a class system.

Right. And so you make the people in the U S feel like they're somehow special. You make the people who are outside of the U S feel like they're second class citizens, which isn't, that is not how I think about it. Every person that we hire anywhere in the world, we have employees in 16 countries. They're all part of one team. Right. And, and so we are very specific about things like, and it's not easy that there are lots of trade-offs that, that come with operating in that model. And, and we have this rule of, uh,

uh you know equitable inconvenience right like who does early morning calls who does late night calls like the people in the us are not special in any way from that perspective they have to get up even today three to four times a week i'm on calls 9 p.m to 11 11 30 sometimes midnight uh

doing calls with our teams in India. And I wanted to be crystal clear to everybody that, you know, nobody is more special than anybody else. And everybody kind of operates as one team because otherwise you are not attracting the very best people in all the markets that you work with because nobody likes to feel like a second class citizen. Nobody likes to feel like this outsourced help. And, you know, that's what holding the bar high means. Yeah, absolutely.

To tell you, I love the phrase equitable inconvenience. I think that's brilliant. And that's both a phrase, but it also has practices that go with it. And it's awesome. And I also like on the question about entreprensation, I like your catch on the phrasing. And it kind of reminds me of, you know, Peter Thiel once had this great line about how we talk about the developing world and the developed world and how that's just the word developed, right?

is a Syrian indictment of the developed world in the sense of, wait, you think of yourself as fully arrived and mature. That's not a very good sign for future progress growth. So we should be attentive to words that we use. Words have power. Phrases have power. And I think I like the challenge in onshore for offshore. Just I want to ask you about raising money before I wrap it. Just a couple of minutes left. Before I do that, just on the BDR thing in India. Yeah.

Any quick tips to startups thinking about, like, are there particular types of products or companies that would be well suited to hiring BDRs in India? So here's what our journey has been on that side, right? So while on the R&D side,

I've always been very confident about the quality of talent, level of talent in the India market. We've always hired there. The majority of our folks on that team are there. When I started scaling our go-to-market team in 2019, I looked into it. I asked the question, "Hey, should we just try to do this out of India, given some of the relative cost advantages and all of that?" I didn't build confidence back then that

the India market had the level of talent density when it came to SaaS selling. SaaS is almost a science at this point. The BDRs with the right level of experience, the AEs with the right level of experience. And for me, it was also about, are there enough companies that I can show

have done and shown that this model can work, doing it out of India, selling into North America. I couldn't find enough, right? So I said, "Yeah, I'm not gonna hire that team over there." And over time, the majority of the folks that we've hired have been in the US, have been in Canada, because again, bars, one bar globally, wherever you hire. And I wasn't convinced that the experience that we needed to allow us to build a team and scale it over time existed back then.

But now I think five, six years later, things have changed quite a bit. And so I spent quite a bit of time second half of last year speaking with a whole bunch of founders and sales leaders who have gone through this journey. I can point to many more companies that have kind of made that model work of having BDRs and account executives. I'm still not, by the way, fully convinced that

large enterprise deals can be done out of India, six figure deals, mid six figure deals, all that kind of stuff that, you know, I think is going to be harder, but as we are adding more capacity to our team on the outbound demand generation side, the BDR team and some of our mid market account executives, uh,

I'm optimistic that we can do that out of India, given all of the other evidence that I see. And so that's what we have started doing now. And so it's a little too early for me to say, have we knocked it out of the park and made that model successful then? But I'm optimistic. Let's address Sean Wu's question because it's the classic question I ask about this, which is comp across geos. Lots of people disagree on this. What's your approach?

Yeah, look, I know this is a super controversial thing, but my stance on this is very simple. It is that as a startup small company like all of us are, we play in the global economic capitalistic system, right? So on the one hand, you know, what tends to happen is

in our everyday life we make these choices right now why do we buy things that are manufactured in china that where the cost of labor is cheap do we go to you know uh uh kansas city and say hey the rent in new york for this airbnb would have been three times more let me be fair and give you you know the same rent we don't do that like we live in a kind of capitalistic system it's competition it's kind of markets it's cost of living it's all of these things

So I think I'm too small to set what market prices is for any given service or whatever it is. And I don't believe ultimately that if you're a software engineer or a marketer or a salesperson, somehow you are immune to market forces. Right. And so the market ultimately decides what competitive is and our compensation philosophy is in any given market that we hire in.

we will be very, very competitive because we want the best talent in that market. Right. And we also make it clear, by the way, that when folks in India have wanted to move abroad, the expectation we set with employees is that then it's a different conversation that we have because the deal has changed in that you are asking the company to either spend, usually spend more money because I'm moving to a different, you know, Canada or UK or somewhere like that. And then we have the conversation. In some cases we have said,

you are valuable enough that I would still hire you if you were in the more expensive location. So we will support that. In some cases, we have said, we don't think, you know, that's something that as a business, when we are changing how we look at the value of a particular employee that, you know, that is something that we can support. And that's okay, right? And so,

We definitely do the be competitive and pay according to that local market. You pay according to the local market. Okay, gotcha. There's lots written about this. If folks who have other questions, we can continue that particular thread on the Village Slack group because there's lots of pros and cons to that.

Tejo, we're out of time. Really appreciate you taking the time to share all your wisdom with founders. We're honored to be a small part of your journey and good luck with all the scaling in the years ahead.

Thank you for having me. And all of this is worth what you guys paid me for it. So please put it through the filter of relevance. Totally. I love the line. There is no such thing as general advice. At the same time, your advice and your insights have given us all a lot to think about. And I'm sure our discerning founders will pick and choose the nuggets that they want to apply in their own

in their own life and industry and so forth. So thank you so much for the time. Really appreciate it. Thank you. Thanks so much for listening to the Village Global podcast. You can check us out online at villageglobal.vc. We'd love to hear from you, your feedback, your ideas, your inspirations. You can email us at hello at villageglobal.vc.