Summary

The Offline Network Episode 17: Inside the New AI Economy (aired 2025-10-08). Guests: Anand Chandrashekaran, Akshay Mehra from Celesta Capital, Hummingbird Ventures. Topics: venture capital and funding, AI and LLMs, crypto and Web3, consumer brands and D2C. The Offline Network is India's live show on startups, tech, and venture — streaming M/W/F at 4 PM IST on YouTube.

Full Transcript

Dhruv Sharma: Hello listeners, welcome to the Friday stream of The Offline Network. We have Akshay Mehra of Hummingbird Bench as a first guest today. We don't have much in terms of news but Utsav and I were at the EquityList Mixer last evening with our friend Kashish and the buzz going around was A16Z is coming to India, it's setting up shop, people asking each other, hey have you gotten in touch already and by the time we got back from the evening it turned out it was fake news.

Utsav Somani: So what do you make of that? And funny but we'll ask our guests at some point today on what they make of it like should A16Z really come to India or this thing but we'll wait for the guests to like warm up first. Dhruv, why don't you open us?

Dhruv Sharma: So Akshay, welcome to the show, it's great to have you on and why don't you start by telling us a little more about the firm, about Hummingbird and the paths that led you there.

Akshay Mehra (Hummingbird Ventures): Yeah of course, it's great to be here Utsav and Dhruv, excited to chat. So a bit about Hummingbird to quickly start, at a high level we're a global fund based out of the UK and London, have teams investing all over the world so people in the Bay Area, New York, Boston, Brussels, London and I'm based in Mumbai. We do proceed to series B investing so typically anything from $500,000 to $20 million in first check and I would say the unique thing about us as a fund and Utsav knows this better because we have a bit of history with him as well which I can talk about but the unique thing about us as a fund is we're extremely low frequency investors so typically venture investing there's this notion of the power law and to some degree placing your bets in such a way where you're and we try to flip that on its head and try to be as precise as possible so we do about three to five investments globally every year at the early stage and we do so by kind of doing that on a global basis but also capping our fund size to $200 million every three to four years and want to work closely with founders, we give them time, we have almost 100% rate of follow-on and we just want to be patient partners to amazing companies and we've had the great fortune of working with amazing businesses in India like Invidio, Jupiter, One Card, Aspora, Pristine Care and globally names like Kraken, Deliveroo, more recently Lovable Labs and Etched. So it's been a great ride for us as a firm and yeah I would say we're agnostic, we take a very geo and vertically agnostic view but we're just obsessed and I want to underscore the word obsessed but obsessed about finding outlayer talent and founders to work with.

Utsav Somani: Akshay, I think you're giving a very modest view of the Hummingbird, like I mean there was this piece in the generalist right, the most successful VC firm that you've never heard of and you've I mean most of our listeners wouldn't have heard of Hummingbird right, even people in the startup ecosystem who I still meet who've spent 10 years in the ecosystem they barely know you but tell us why the firm got started, how it got started, some of the successful ones. I think the biggest early hit was Kraken and a Turkish gaming company as well. How do you find founders in Turkey, in Australia, in India, like paint a picture of the firm for us like more clearly.

Akshay Mehra (Hummingbird Ventures): Yeah I know and I just want to preface this by saying that I had nothing to do with the early success right, I joined about four and a half years ago and we have had a good run since then but a lot of the early success which you spoke about itself but it's back to maybe 2010 I want to say when Hummingbird started officially and no thesis when Byron started the fund was that technology you know the wind always blows in different directions but what stays constant is the founder and we built a view and now that has been much more solidified and and that we think that great founders have a really really strong why behind why they're operating right and the chip on the shoulder is really strong it's linked to often the childhood and the stories they tell themselves and we can speak more about that later if interesting but the early success we basically try to go where other people don't go and so for example Kraken in 2013 or early 14 Mount Gox had occurred nobody wanted to touch crypto but we found this incredible founder in Jesse in this company called Kraken and were the early investors there early lead investors and we also went to geographies where nobody wanted to kind of compete or thought that it was too shallow of a market like Turkey right so in Turkey we invested in two gaming companies one was Peak Games the other was Gram Games and in Gram Games my partner Farad had sourced that at the early days and had built the early team and we were the only round of funding in the company and that eventually got sold to Zynga for 550 million in cash so we had that ownership and that was a multiple fund return for us and similarly in Peak Games Siddharth is a very special founder very non-linear background high intensity he built an incredible team around him and we were early first investors there and sold to Zynga for close to 2 million in cash so that's kind of the early success and it really just solidified this view for us that we want to allow the returns and the companies we back and the founders we work with to speak louder than marketing materials and so that's why it kind of makes sense to some degree that many people haven't heard of us but we truly treat venture as a craft and we just want to make sure that we are as supportive as we can to the greatest founders out there.

Utsav Somani: I want to dig in into the numbers as well the generalist article mentioned some numbers as well the returns on those funds you want to share them publicly?

Akshay Mehra (Hummingbird Ventures): Yeah it was it was quite dated in the sense that it was published I think about a year and a half ago if I'm not mistaken but I'll just give you rough numbers I don't want to go into the too much of detail but yeah the first few funds that have been around for now close to 10 years or so they all have DPI's upwards of 9x and TVP has up close to 14x TVP are being fair market value and DPI means distributions and actually our current fund would serve hummingbird five is off to a good start as well because it's a 200 million dollar fund 2023 vintage and we've been fortunate to work with some great companies like espora lovable etched as well and so we're on track to hopefully do better than the prior performance as well.

Dhruv Sharma: I was asking you Akshay what do you think allows you guys to stand apart from the crowd and make these non-consensus bets is it is it how you're structured is it a cultural thing what's the conversation you have inside of the firm?

Akshay Mehra (Hummingbird Ventures): Yeah so I think it can be split into various ways right I think Dhruv to be honest there are some investments that we lean into much more than our peers in the venture community because we truly believe for us if you think about an investment decision as an equation for us it's really 95 to 99% of founder and a lot of VC firms of course are founder focused but it can probably tap into the 75% probability or potential as opposed to 95 right so we sometimes see special people that are probably operating in markets that are a bit weird too niche or too uncertain and we just have the ability to then make those investments right I think for Vance which is now branded as Espora is a good example where I led the seed round in 2022 and a lot of question marks right they were pivoting while we invested but we saw this special founder in part and wanted to work with him so that's one set of you know circumstances where we tend to to go ahead where we just see a special person and we win those deals the others if you think about like one card in our India portfolio in video for example these are excellent companies where we've worked with local firms like Peak 15, Matrix and in those cases we typically are just a different voice around the table and different being the key word there which is nobody has a right voice in venture I just think it's about providing different perspectives we have a weird DNA Belgian firm based in London operating globally and so I think founders generally appreciate that and want us around the table so that's typically how we think about edge but if I could distill it down to one word is talent we are really laser focused on unpacking or uncovering what makes a great person across the screen that we're speaking to or in person when we meet them and if we can see things that other people miss and also as a fund we've kind of leaned into it heavily such that we don't subscribe to let's let's go back to A16Z right we don't want to compete with the platform we see right like A16Z but we want to have the best talent team in the world where we can place great operators into our portfolio companies as well right so it's really leaning into the whole notion of talent for us and I mean

Utsav Somani: everyone is making noise right I mean everyone has a podcast everyone has a newsletter everyone's active their partners are posting actively in this world of ultra noisy sort of competitive world in the world of venture and big brand building exercises events and all of those things how does I mean what is the right to win for hummingbird suppose I mean you approached a founder a hot founder per se in India would your existing track record be that or what would be

Akshay Mehra (Hummingbird Ventures): the right to win for a hummingbird partner you know I almost feel like if you're marketing in general right as a venture fund as a company you can I think again it's like a barbell situation where if you're on one end of the barbell and you're loud as you mentioned Utsav and you have podcasts and you have events and community that's one way of doing it which is great and which is obviously proven and fairly consensus but I also think there's something to be said about mystique and focusing on quality over quantity I would say obviously we lean into the latter which is we don't proactively want to have mystery around us but I just think by focusing on returns it's much slower but people will kind of get to know you over eventually at least those in the know we have a high quality publication like the generalist kind of write about us after many years have been quiet and look I think it's something we want to work on but it's it's to answer your question more directly on why founders want to work with us sometimes founders they think that signal is really strong right when they when they come across investors that actually aren't leaning too much into marketing they actually prefer that quite a bit but I'll be lying to you if I tell you that we don't lose to the larger brands that are more wellknown because founders want to optimize for brand and signaling that comes from those brands right so there's no correct answer here sometimes it's leaning into the mystique sometimes it's a founder venture capital firm fit where they just prefer our approach and sometimes it's just speed right I think you've seen us before but if we like something and because we're so hell-bent on founders we kind of want to move as fast as possible and nothing beats conviction for breakfast and I'm really sure of that like I think if you can show conviction with speed and

Dhruv Sharma: independent thinking it's really really powerful I'm waiting to get into the founder archetype thing actually you said we'll talk about that later and I read something really cool earlier today from from Tim Draper where he said his son and framing was very interesting his son says that the drapers like to invest in founders who are either you know rational with irrational thinking like rational founders with irrational thinking I'm sorry I'm getting this wrong like I think rational founders with irrational work or something and then the other way around forget forget this they want to invest in both of those categories or just one or the other I'm I'm actually going to look for this because I do want to get this right but over to Akshay to talk about

Akshay Mehra (Hummingbird Ventures): how they like to pick and then we'll yeah look I think it's I think it's a question we get quite often and it's really it's one of those things where you have to kind of live it and breathe it and be exposed to it over a longer amount of time to kind of understand it but I can try my best to to basically share but yeah we basically want to spot people and work with people that have an extremely high sense of urgency they almost feel like they don't have enough time in the day they have a sense of paranoia about them that what they're building has to be done immediately and that doesn't mean that it's a poor work product but they have this really fast clock speed around learning applying those learnings and building their business with speed right I think that's one thing we look for the other thing which goes back to what I was saying around hummingbird but we we we believe that great founders are absolutely obsessed with talent right they just have no room for mediocrity no mental space for mediocrity they they obviously give people enough rope and time but they they want to maintain a high bar and a high bar for excellence and for example what's up is also invested with harsh and pristine care like he interviewed everybody until they were more than 500 employees right even if it's a fiveminute call but you have that paranoia around building a company around maintaining a bar for talent that's key and we also want to work with people that are extreme independent thinkers they almost operate in their own kind of world worldview and don't get kind of pushed around too much so they're a bit disagreeable to your point through what you mentioned earlier so disagreeable people that are maybe not the best employees they don't take too much direction because they have such a firm view of the world of what they're doing that they want to execute on it and that's a byproduct typically of sometimes adversity childhood adversity sometimes bullying sometimes having a strong chip on the shoulder that makes them want to push forward really really hard I mean the quintessential examples out there right whether it's elon musk's relationship with his dad or steve jobs being adopted and having that non-linear path and an independent mind that comes from it so that's what I try to distill it down to it obviously can't be done on a quick podcast but

Dhruv Sharma: how does it how does it show up in in like if you think back to the last couple of founders you partnered with how does it show up in in meetings and in interactions that's the line

Akshay Mehra (Hummingbird Ventures): of questioning right we typically one of the pieces of feedback we collect over the years and founders going back to what what you talked about around winning it's they kind of come off the call with us and they're like what just happened you know because you go into a VC call and it's about churn numbers it's about business models but damn and you come on with us and we're like asking you about your life story and what makes you tick and it's it just it's so it's so different right from most venture calls so it's around the line of questioning I would say it's

Utsav Somani: more than anything else yeah and you've done a bunch in AI as well right lovable I think was a big one for you guys uh what's this there who was the partner involved at hummingbird yeah so Nikita

Akshay Mehra (Hummingbird Ventures): who um is uh based in London but she has a Swedish background she met Anton fairly early before he was ending his previous company I believe and we invested before there was anything he was working on this product called GPT engineer and very early days and we thought we saw exactly what I just described uh around bar for talent non-linear background had a chip on the shoulder from his previous company not being a massive success and he wanted to make things happen and and uh you know fortunately for us first investors uh we continue to be the larger shareholders there as well uh but that's been an amazing ride I think you know um from pre-launch to almost 200 million

Utsav Somani: revenue now in maybe 18 months and actually you write a lot we've uh had a chance to go through your sub stack as well amplify and of course you're a musician as well but we save that for

Akshay Mehra (Hummingbird Ventures): later even though it's Friday uh are you still playing music yeah I try to um I I wrote my last uh original compositions a couple of years ago but I try to actually make time quite you know quite often because it's it's honestly what I grew up doing and I don't want to let go of that I think which instrument do you play actually guitar oh wow where can people find you uh with Spotify I mean I don't I don't advertise it too much but uh oh my Spotify under my

Utsav Somani: nice so one final piece before we uh invite Anand as well uh your last piece is on May 14th it says the invisible game staying awake while playing a game you can't win if you were to give our listeners and us a one minute summary what does it convey yeah look I

Akshay Mehra (Hummingbird Ventures): think it's uh it the game here is obviously the craft of venture investing and I think it's a game that we talk about we try to kind of make sense of it right this is a bit of philosophy where you try to make sense of the boundaries of the game but in actuality it is a mental game out there when you speak to a specific founder or um someone you want to invest in I think there's just a lot of ambiguity uh randomness and this desire to put things into boxes but in actuality I think the the staying awake bit is just keeping a really really open mind and being aware of your biases and the dissonance that comes from past experiences and just going in with a fresh perspective as much as you can so I try to to kind of verbalize that as much as I can and summarize it as possible but that's really what I think about I think about venture especially seed stage and pre-seed stage as a mental game and almost approaching each call with a blank canvas more than anything else and not trying to put things into boxes or thinking about verticals or time and business model too

Utsav Somani: quickly and making assumptions based on that love it on that note let's welcome Anand as well so we will have our first duet segment on the TON show for the first time so we'll spend five seven minutes with both of you together and then we want to Anand's had a bit of a LinkedIn update as well last time he was on the show a few weeks back he was running a different company now he started another one so much to learn from Anand whenever he comes and chats with us so Anand welcome to the show hey guys good to be back yeah good morning again I know it's super early SF yeah haven't met before no we haven't good to meet you actually yeah it's a pleasure I've heard

Akshay Mehra (Hummingbird Ventures): amazing things about you I think we spoke once or twice on whatsapp but that was the extent of it so

Utsav Somani: it's good to see you so Anand I mean what Akshay was describing about pre-seed investing how much of that do you agree with and what's your take you're an active angel investor and I mean of

Anand Chandrasekaran (HiOctave, Khosla Ventures): course with the fund as well um you know I missed a little bit of the segment but I would say the the last part that I heard I I really like that you know I think the even connecting that to uh you know backing the lovable founder before they had uh you know what is now a great product um you know I think sometimes uh these stories are not linear and uh to just uh uh kind of stick with the the founder and the story as it evolves um because I think that it also gives the founder some uh malleability uh as they're building the company um and you know um uh you know sometimes I feel like uh the founders are extremely clear about the vision and what they're malleable about is the tactics right uh my my sort of favorite example of that is uh the first time I met the founders of no broker um I was visiting their office in Bangalore and I used to live in Delhi and uh I had a lot of trouble finding their office right and I was uh like borderline frustrated and I was saying why can't you make your office a little bit more discoverable right you can put your sign up and they're like we're so sorry but all the brokers have gotten together and they've broken out into our office multiple times and they thought that destroying our computers would you know get us to stop building no broker right um and so there like they had to shift their tactics they had to be in a nondescript office they had to hide out for a while but they didn't give up on the vision um and the vision has always been the same it's a very high-tech approach to uh you know bringing supply and demand together in a peer-to-peer marketplace right so um so sometimes I think the vision is really clear from day one and it's the tactics that are malleable but sometimes the vision itself is malleable right like we see so many examples uh the most notable one that all of us probably have heard the story is the slack story right started as a game uh in a gaming company and then it became you know um pretty much the the de facto communication platform in businesses today um and so allowing for a little bit of malleability and um I don't know uh actually perhaps uh the fact that you have sort of an exposure to music and other ways because like you know when I think of collaboration and people say what's a great example um I use the same example that Steve Jobs used to use which is you know like every musician in the Beatles is not the best musician ever but the Beatles are the best band right um and so uh there's uh there's something to be said about like allowing for that malleability both within the founding group as well as between the founders and the investor.

Dhruv Sharma: One typically here's two versions of this Anand which is like one version is you have to first you have to be able to serve in order to lead and then the second version is that the best founders are as Akshay was also saying disagreeable they have a chip on their shoulder they're not always very easy to get along with and so you've of course had a ton of experience so how do you feel about about this?

Anand Chandrasekaran (HiOctave, Khosla Ventures): I mean I think there's something to be said about that archetype and I think where that comes from is um you know like there's this uh heuristic that um you know I've heard from a lot of investors that I really like which is the best founders tend to have like one leg in the past and in the present and one leg in the future um and I think the fact that they are somewhat disagreeable and hard to get along comes from the frustration that they've already lived in the future um right and and they're like quite impatient to like bring everybody there and if somebody is like dragging their feet and will not move fast and you know wants to work from home all the time and all of that stuff right like it's frustrating because they're already living in the future and they're like I want to get there faster and uh you know like people are and and by the way um that's where I would put a lot of these debates is like do you have an impatience for that future once it's so clear how you can go from here to there because I think like in every uh industry um you know going from the present to the future if that's like something that's really important to you uh it's not a straight line right and sometimes you see this through line to go from the present to the future in any space um and at that point if you don't like ramp up execution insanely um you know you could lose that moment right and and then you wait for the next moment but you don't want to lose those moments so you know I think that's where a lot of the frustration comes from um uh sometimes for founders and uh I don't think it's you know a lot of people waking up and saying I want to be disagreeable I think it's that they don't want to compromise on that you know uh taking people from the present to the future.

Akshay Mehra (Hummingbird Ventures): It kind of goes back to what uh Anand that was I don't know if you're joined at this point but Dhruv had asked me what we look for in in some of the founders we work with and it kind of goes back to exactly what you mentioned which is they have this sense of urgency about them right they see the future they want to execute really quickly it's a non-linear path and they know that but they want to iterate as fast as possible to get there and uh yeah basically aligns exactly with exactly what you just mentioned.

Dhruv Sharma: Akshay by the way I found the line that I'd goofed up earlier which is uh you know irrational people doing rational things or rational people doing irrational things um beautiful yes all right coming back to stuff

Utsav Somani: that's more topical uh so on this show we've actually covered so many headlines uh every day there's a fill in the blank between 10 billion to 100 billion is passed around in the CAPEX world of AI. What are your views on what's happening like it's very hard to keep up with this circular economy that's driving this I mean insanely heavy CAPEX into the world of AI and most of it revolving around open AI and you're involved at both of them I mean Anand you're now closely involved as an operator as well in the world of AI you recently raised from Khosla as well yesterday and uh Akshay of course has a view into the world of AI across the world so give us your

Anand Chandrasekaran (HiOctave, Khosla Ventures): individual opinions on this yeah I can start or actually go ahead no no go ahead Anand um yeah I think the the um the idea of uh you know finding design partners for a new product that you put together and as a result uh doing a deeper deal where um you know there's vendor financings involved and there is deeper collaboration involved um especially when um you're looking to uh sort of create a certain amount of capacity uh that you know you can fill up uh with the demand that you have um you know I think of open AI also as less of a LLMs and model company and more of a consumer subscription company at this point right so there is a very clear business model and the models are differentiating themselves also where you know Anthropic is focused on code generation like that's what they are um fantastic at and and and I've developed a niche around and uh you know different models are monetizing in different ways um and then there are folks who are purely monetizing in a b2b API access way which honestly seems to be the least leveraged way in terms of business model uh durability uh because you know the model rates are still uh you know not flat they're still declining and there's a lot of and so on um I think the reason people are a little bit uh worried is because most people in the investing world operate through pattern matching and they're comparing what's going on to like the internet uh build out right when optical build out was happening 20 years ago in the U.S. and there was a lot of these vendor financing deals uh that were done by the vendors uh to the people that bought it uh without necessarily the demand for it right I mean ultimately the internet grew to a point where all that demand was lit up um and all the spare capacity was lit up but it was not done in a way that those vendors could recover the investments that they had done the most notable bankruptcy being Worldcom back in the day uh for those who are like going back in history so I think it's probably bringing up those memories for people who are part of that but I do think it's different um in the sense of the demands seems extremely real um the value of these capabilities that are built are extremely real um and so the question is just kind of is it is it about timing and uh and uh I think what is also happening is uh it will create a culture of haves and have-nots you know there are people who get these jobs are in these companies uh you know build out these startups but there will be like disaffected folks uh stakeholders uh in in our universe you know you think of the human agents uh in a contact center right uh but that you can apply that into you know every sector which is uh got a meaningful automation through AI and um you know the builders of these companies have to take a multi-stakeholder approach or to kind of think about what is the journey of each of their stakeholders right not just the uh the investors and the founders but also these other stakeholders like the human agents and you know I'm sure there's an analogy in other uh sectors as well um I think that disaffection is probably uh driving and will already drive uh will continue to drive some of the you know misalignment between different parties um so that's that's probably what's going on but I think it's uh uh it is it is mind-blowing right like especially the speed of the AI cycle is definitely uh like if you blink you'll miss like a couple of revs of the cycle and so that is definitely you know um it's it's fun for those of us like in it and have seen these platform shifts but it can also be you know a little bit like uh you know it's like driving at you know 150 miles all the time you know it's it can be a little bit overwhelming um and so you know we're seeing all of

Utsav Somani: that and the numbers are crazy and it's the same names like popping up here and there uh at least the hardware side like nvidia amd has come up now warrants uh opening has warrants in uh amd as well so it's all fascinating actually what's your macro perspective on this whole thing

Akshay Mehra (Hummingbird Ventures): yeah just on your last point itself it kind of reminds me of this interesting tweet i saw uh of the japanese term called keritsu where you have all these large companies in japan that are intertwined interest in each other and they become too big to fail so to your point on nvidia and amd everybody kind of working with each other it does seem like we're moving in that direction um told anand was saying earlier look i think at a high level it is a massive platform shift right i would argue um there was this um term that bezos used way back in the day before he started amazon about the internet and how he views it more as electricity that just kind of will go everywhere eventually in every nook and corner of the economy and ai is the internet on steroids right so i do think it will seep into every different sector and vertical and a few years out will just be commonplace you don't even need to have ai in your name anymore it just would be part of your product and service so i think the main theme what we're seeing here is to anand's point and he's seen this build out before in past cycles but i just think it's people don't want to be left behind and i i think there is a gap that exists but the demand is real um it's just about timing as anand said and i think that um it's it's the build out we're seeing and the investments we're seeing in conjunction with a lower cost of capital because investors are willing to pay a lot of money to these companies and premiums on valuation multiples to companies that do these deals but suddenly things also look cheaper in hindsight right if you think about once you announce these deals you get tens of billions in market cap overnight so cost of capital also plays a role i think in announcing these deals and going forward with it so um yeah all said and done it's exciting uh it's a great time to be a founder a venture investor for sure because the upside of these companies is incredible the psychological barrier of one trillion has been passed several times already so uh it's it's an interesting time to to be a tech investor but it's a good time and um there is definitely a part of me and everybody i'm sure that feels a bit nervous but uh i would say still net positive for me personally uh given the demand we're seeing and

Utsav Somani: how these products are changing all right uh actually thank you so much we can go on for longer we'd love to have you back on the show as well absolutely it's a friday good to see you guys take care thanks coming actually all right hanan uh thank you so much for sharing your thoughts as well but let's firstly go uh to the big headlines uh you've recently announced a venture as well and i mean so much happening so quickly what's the story behind the headlines

Anand Chandrasekaran (HiOctave, Khosla Ventures): yeah uh so we launched a high octave earlier this week um you know uh last time we chatted um you know i was uh talking about crescendo um you know last week the week before we hit a hundred million in top line revenue for crescendo um and so nothing changes with andy and my co-founder andy and my roles at crescendo but as we were building that company what we realized is we were moving rapidly up market and uh you know uh addressing labor budgets uh sort of in the mid-market enterprise and what we realized is there is an opportunity for the smallest businesses you know the ones with 1 to 20 employees um and you know as consumers we have benefit of great ai tools and as large enterprises there are lots of tools being built like crescendo but what we felt is there was a segment in the middle which is the very small businesses where they can't use consumer tools but uh they also don't have the it department or vendor selection teams or and so on for an enterprise tool um so we decided to launch high octave to after that um we have a fantastic third co-founder who built a company called vix which is really considered one of the best you know smb tech software companies so he was a chief operating officer of one of the largest divisions um and we're lucky to have him on his uh deep expertise also in building a smb focused software company um you know we feel like uh over the last 20 years there's probably been three or four major franchises building software for smes uh there was uh you know go daddy 20 years ago uh then you had shopify um as a second generation tool then you had vix coming up a third generation tool and i think now there's room for an ai first fourth generation um uh service which really combines um uh takes a little bit of the crescendo principles and the playbook which is uh you know uh how cool would it be if we combined ai software and labor into one like really simple offering um and you know the the problem statement is that 90 percent of smbs die within the first 12 months right and uh you know a long time ago i was running an smb business um and i was very intrigued about that uh problem statement and so the smart question that you are the only smart question to ask is what do the other 10 percent of businesses do right the the 10 percent that doesn't die and the the simplest answer that i got was very interesting to me is uh that they have a thousand people that try out the service or the product once that come back within the first 12 months right and if you can do that uh then you don't die in the first year um and uh if you don't have the tools that uh allow you to do that um then you know you struggle to bring them back and then you know sort of you get into that vicious cycle and so that's what you know the service is designed to do that we're building is is designed to just kind of get you out of the starting gate develop you know one-on-one relationships with the most loyal customers and it really covers a gamut of use cases whether it's post-order cx or you know a little bit of content marketing or uh just a conversation about coming to the store uh if a certain product is available all all of the above um and for different small businesses in different categories there might be small capabilities that are unique to them uh that are vertically oriented but the generic interface and the chat uh that that goes on between the smb and its loyal customers that's like pretty horizontal and anand what's your guess

Dhruv Sharma: and what the adoption curve is going to look like the the other question to ask maybe is when you explain to us what you're doing with crescendo the last time around and when you're going after the largest enterprises ai transformation is like it's it's a it's a c-suite priority but for small business owners do you think there's going to be an actual pull for this

Anand Chandrasekaran (HiOctave, Khosla Ventures): what do you think is going to drive adoption yeah i think the uh you know ultimately the difference between um the two segments is that uh there's very little time to waste and there is uh very little mistakes that an smb can make right it's all kind of life and death right like they're not very large businesses uh but what you realize is that they no one calls themselves a small business right like they all uh have big aspirations and their small business is just a stepping stone to whatever the big aspirations that they have and what you also realize is most of the folks are not technologists themselves right like they um you know grew up uh wanting to make sneakers or bake cakes or what have you and like that's why they started the business not to kind of automate the cx side of the uh of their business um but what has also happened is uh they've had to give up their most loyal customers to third-party marketplaces um you know used to be that you would have a one-on-one relationship in the offline world and as that migrated into the digital world um you know you sort of couldn't have that relationship one-onone and that's what these past platforms tried to do in different platform shift moments uh is that you know one of the platforms carried them to the first website one of them carried them to like the ability to handle inventory and all that in the background um and so on right so now you know we can kind of reclaim the one-on-one relationship with customers uh through you know what is possible with ai and so you know we think that uh the adoption is more likely to be like a consumer adoption you know people using it like having an aha moment really quickly and then the word of mouth spreading among small businesses they also you know most of them go to some like local chamber uh you know sometimes it's run by a city sometimes it's run by private folks where they talk to each other right like they understand what tools each other are using and that's where this word of mouth gets around um you know services that are really great um there's been you know some recent examples of businesses that have you know grown entirely on smb traction uh the the most notable example being in the most recent days uh completely grew on the back of supporting uh small businesses with their outreach campaigns again you go back to this one-on-one relationship that they're craving to reclaim um between them and their most loyal customers and what does the journey

Utsav Somani: look like one year from now what do you see as success uh for this new company yeah i think

Anand Chandrasekaran (HiOctave, Khosla Ventures): much like any other you know new company like our goal is to try to uh launch uh and uh you know we are privately building the product and working with smbs right now uh the goal is to be kind of out there and you know solve this very large pain point for smbs um and i think like we can benefit from uh some of the lessons particularly on product strategy and on uh kind of reframing the industry problem um you know we're in this unique time where two three years ago if we had started the same company it would have truly been incremental uh but we're in this moment where the the product offering can actually be 50 to 100x better than everything that's out there uh the space is also tragically like very underserved um you know sometimes you sort of say oh there are like players they're underserved you could even say they are unserved you know in this space right so um so i think there's a lot of appetite for um for this and the nice thing is like all the smb operators the founders they've all used uh you know chat gpt or grok or something like that and they understand what the benefits are personally right so they're already like sold on what the uh personal benefits are now they're sort of saying i just need something that's custom for my business right so it can't be hallucinating i can't have brand risk uh you know there should be accuracy of responses so they need that level of business sophistication but they also you know need that aha moment where someone can ping the business in the middle of the night and have an agent you know kind of be empathetic and be around and you know take care of the problem do you think

Utsav Somani: a light version of this can actually work in india because i mean indian smes uh what we call them here also have similar characteristics maybe to some of the businesses which you're serving in

Anand Chandrasekaran (HiOctave, Khosla Ventures): the u.s i think so you know i think that uh you know the the biggest advantage is that because the the dynamic between any small business and their most loyal customers is very similar uh you know we sort of just chose to launch it in our backyard i mean even if you sort of look at vix as a role model that's where golan our co-founder came from uh the entire company is based in israel but they are a global company and very successful in the u.s um so i think the empathy that uh you know companies have developed you know shopify is largely based out of canada um you know so so there's uh the problem statement in small businesses is definitely pretty global um there's probably slight nuances and maybe some regulatory differences in uh some markets um but i agree and also this uh this pain point is super common you know like even i'm sure like you guys are now small business founders right like you you want like smb tech where you know you don't want to have a very heavy deployment team and so on to develop these uh capabilities um but there's only so far that you can go with consumer tools right so so having that lightweight uh layer uh but you know from a packaging from a pricing from a distribution perspective this is very different from an enterprise play which is why you know it made sense to kind of launch these speed boats versus a very large uh frigate i actually want to unpack that anand because one

Dhruv Sharma: of one of our hopes with the show is to get a window into in the moment thinking of founders and operators like yourself so this is i mean you just announced a week ago so you're clearly very very early how are you thinking about building the team how are you thinking about going to market are we thinking about pricing uh just walk us through your thinking yeah uh you know i i think

Anand Chandrasekaran (HiOctave, Khosla Ventures): that um you know we were just chatting about having like a very clear vision but being really iterative on the details um you know our our sense is that uh this has to be aligned with the needs of the smb right so uh you know one of the going back to the crescendo playbook you know for 25 years uh you know crescendo only had a right to exist because for the past 25 years nobody had done this where they said we're going to align with the enterprise and we'll only get paid when we meet an outcome right um and if you if you went to your labor only bpo the answer would be fantastic we can help you out we'll give you more people um if you went to your software provider they would say great we can help you out let's give you more seats right but the enterprise does not want more people or more seats they just want an outcome right if you did that with ai if you did that with seats if you did that with software that's kind of your problem right and that's why you are partnered up with the enterprise and so i think we what we found is a very strong resonance of that vision um and so that's the part that we are very inflexible on where we know that this vision is very important to manifest um because you know like we use all these statistics right 90 percent of all um businesses are small businesses and they power such a large chunk of the economy they power a large chunk of who's employed uh but they themselves cannot use the same tools that everybody else seems to be able to use so that's the part that is like very um rigid and inflexible on in terms of how we launch the goal is to be like where you know to build a company in 2025 which is uh that you know speed of iteration and velocity is probably the biggest differentiator and um i think there's also the ability to uh sort of say we already know what the playbook looks like but we have to find out how it applies with this segment right so that's um so you know we've been probably working on it for about four to six months you know the core team is in place um you know we have a good sense for how the company grows we also you know have a great sense for how crescendo and high octave are different right like they uh will not sort of uh you know follow any uh playbooks just for the sake of following them um you know uh the there's a deep chemistry and connection between the people um involved in both sides but they're both loyal to their vision and their manifestation of that vision and uh you know um andy and i are common to both companies and some of the investors are common to both companies but um uh we both have our mandate um and customer base to focus on awesome anand thank you so much for giving us a

Utsav Somani: lowdown on this new venture and i mean of course educating us as always uh you've raised from uh cosla ventures as well we were one of the early investors in opening eye yeah yeah i think the

Anand Chandrasekaran (HiOctave, Khosla Ventures): the you know when andy and i were chatting about it and we said you know what instincts do we want to have on the on the team uh we sort of said look on the one hand we want to have the instincts of an open ai um and the other side we want to have the instincts of a square right like deep alignment and commitment to serving smbs um and as we sort of thought around to like who we knew that was involved in one or both uh you know like we we already knew someone who was on uh the very early stage journeys of both of those companies um so we're very lucky that we sort of agreed to partner with us um afterwards we realized that vinod sort of personally uh is not the sponsor of a lot of deals in in in form so very lucky to personally work with him um at the stage of his incredible uh career uh we've learned a lot you know from from that collaboration already and um yeah i think we're very excited to continue continue partnering with him and samir and harry and the

Utsav Somani: team over there amazing thank you so much for coming on the show and giving us real-time updates thank you anand yeah thank you guys talk to you soon bye all right folks that's it for our friday stream we'll see you on monday please enjoy this festive weekend i hope you're being safe and sound thank you bye