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AI to ROI
Microsoft Product Leader to SaaS Founder - with Anand Subbaraj, Founder and CEO Zuper
00:30:52
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- [00:01]
A
Hello, I'm Ray Reich, founder and CEO of RevOps Squared and your host of the Metrics that Measure up podcast. We talk to a wide variety of B2B SaaS and Cloud Thought leaders, executives, investors and people just like you to discuss the metrics and benchmarks they use to make metrics informed decisions. Now, on to today's show. Welcome to today's episode of the Metrics at Majorette Podcast. We are joined by Anand Subharaj, the founder and CEO of Zooper. Today we'll be covering three main topics with Anand. First, his lessons learned as a product leader at Microsoft that has helped guide his entrepreneurial journey. Second, the unexpected surprises when transitioning from a large company to founding and leading his own SaaS company. And third, the metrics that Anand uses to measure customer value and overall company performance. Anand, please take a moment to give a brief overview of your journey to becoming a guest on the Metrics Major up podcast.
- [01:14]
B
Hey Ray. Hello everyone. I'm Anand Subbaraj, co founder and CEO of Zooper. I have been with Zooper for the last five years, was one of the founders and prior to Zooper, I've spent about 13 years at Microsoft as a product manager first and then as a product leader. I live in Seattle, have spent about 20 years in Seattle and I have been in the technology industry for over 20 years and super excited to be here in this episode.
- [01:43]
A
Okay, well it's super to have Zooper. Right? So let's start not at the very beginning, but definitely after 13 years at Microsoft and the combinations you said product management to product leadership and it was product leadership and a pretty important product, the Azure Data Factory, right?
- [02:01]
B
Absolutely.
- [02:02]
A
Well, what were the key lessons that you learned in these product and product leadership roles at Microsoft that you find yourself leveraging and using today in your own early stage SaaS company?
- [02:16]
B
Yeah, great question. It was an interesting journey for me in Microsoft. I joined in a very interesting role. It was called Forensics Product manager. And my role there was to understand the issues of an early stage V1 product which is the version one of a SaaS product in Microsoft called Windows Live 1 Care. At that time, my responsibility was to understand the customer issues, understand how customers are using the product, and figure out a strategy to reduce the customer support cost of maintaining that product and managing that product. And from that point on I went on to working on about five version one product at Microsoft. And the last product that I worked in Microsoft is Azure Data Factory. That was an amazing journey in Azure Data Factory for three reasons. One, I was Part of the founding team of Azure Data Factory. I was part of the initial team that came together with the idea of releasing something in the data integration space. Microsoft never had a product in that space. Secondly, we were taking on the industry big wigs. There were top names, leaders in that space. Microsoft was just entering into that market. Third was understanding the customer requirements, talking to a lot of customers and figuring out what they are not seeing in the existing products and trying to bring a product that addresses the gaps and meets the requirements of the customers. I worked on the product for about five years and when I quit Microsoft, I was the head of product of Azure Data Factory. And the month that I quit Microsoft, we made it to the Gartner Magic Quadrant leader.
- [04:10]
A
Wow, that's amazing. I can't believe you had five, if I'm not mistaken, different product launches that you were involved or oversaw at Microsoft.
- [04:20]
B
Yeah, it was an incredible journey. People say Microsoft is not where you get startup experience, but I had this opportunity, an incredible opportunity to work on five version one products.
- [04:32]
A
Well, with that experience with Microsoft continuing to invest in innovation and launching new products, I think what they're doing with ChatGPT and generative AI is pretty interesting. Tell the listening audience a little bit about your thought process of leaving such a stable, successful company where you get to actually be involved in great innovation to start your own company. What was the motivation for that?
- [04:57]
B
So I'm a product person. I love building products. I love building products that solve real customer problems. So when I encountered a problem personally, which was the Genesis Op Zooper, I had a terrible personal experience while getting my refrigerator serviced. And I was trying to get my refrigerator service from one of the largest global brands. I had to reach out to the customer support of that brand. After a few weeks of purchasing the refrigerator when it started developing some noise. And from that moment the journey was just terrible. Reached out to the customer support about 10 times. Three different technicians showed up at my place six different times before which the issue was addressed. And in this age of Uberization of all services from ride hailing to food delivery, my experience working with that company was just terrible and archaic. And that was the genesis of super and the genesis of the thought that there's a real problem that I encountered. What is out there to solve that real problem and how do we solve that problem? So yeah, that was the genesis of Zooper. You know, I went on to figuring out what are the key problems that existed in the service industry, identified a few key areas in which we could differentiate, and went on to Creating the product. But in terms of surprises or learnings, I would not call them surprises, rather learnings because in Microsoft we are building products, but our focus is only on building the product, identifying the problem areas that we want to solve and build a product that solves the problem. But while starting a company and building a company, there are a lot more areas to focus on. I never had any experience in marketing in Microsoft. My thought process about marketing while in Microsoft was marketing is all about spending money. And I didn't realize that marketing is about investing to create a brand. Marketing is more science than art. And that was one of the major surprises and learnings for me about how marketing can work and how it can work to create a huge go to market motion.
- [07:16]
A
Let me ask you a question because one of the big differences I found and I went from GE to Silicon Valley startup SaaS World, right? And I found since brand awareness, everybody knows Microsoft. Even if you're launching a new product, people will take a meeting with you, they'll give you feedback. How about lack of anyone knowing who your company is and be able to get those first three to five customers. Was that a big learning for you?
- [07:41]
B
Non. Oh, that was a huge learning. The learning about cold calling, right. I never had to cold call someone, but while at Zooper, I was the first salesperson at Zooper, I had to make a lot of cold calling and my initial number of cold calls, I was extremely jittery, nervous and uncomfortable. I didn't know how to just take the phone, dial a number and talk to a stranger and start pitching. But that was how I got better at pitching the product, understanding the customers. And I started enjoying that experience of cold calling, warm calling, cold emails and so forth, which are great tools for everyone, whether it's a founder in a company or a salesperson to learn those tricks of the trade. And that was a huge surprise, huge learning. But the biggest learning for me was how do I take the learnings forward from a large company like Microsoft but leave the ego behind of that brand? Because here I did not have that brand. I could not get into the door of a customer. Just like how would I have done that as part of Microsoft? I had to earn that respect, earn that meeting with a customer. And that was one of the major takeaways for me on how to leave away that ego behind but take the learnings forward.
- [08:59]
A
Well, a lot of people talk about founder led sales. It's a great way to get feedback from your target buyers, right? It helps evolve your product roadmap at what Point. Did you feel maybe we moved from founder led sales to hiring your first one or two salespeople? Was there a catalytic moment that said it's time?
- [09:18]
B
Yeah, great question. So the way I think about these is as a founder, we need to do a lot of initial selling because it gives an opportunity to meet the customer, talk to the customer and learn about the problems that we are solving. So from my perspective, I wanted to be selling to the first 1 million of ARR. So I took the company from 0 to 1 million as the only salesperson in the company. Once we had that, we had a lot of good learnings, meaning that we knew exactly the problems that we were addressing, how the product was resonating with the customer, what areas of the product were resonating better than the other, and so forth. And also I knew that if I could sell to 1 million, I could also have the next salesperson sales rep at that same quota because I never had experience selling to the kind of target customers that we are selling to, which was SMB and mid market at that time. And if I can do it, I can have that quota for another sales representative in the company.
- [10:20]
A
Interesting. So 1 million you brought in that salesperson and he or she were focused primarily on SMB mid market still?
- [10:27]
B
Absolutely.
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A
Okay, so question, especially when you're selling to SMB mid market, what comes first? The first salesperson or the marketing organization and marketing person to create awareness in top of the funnel demand?
- [10:41]
B
It was the marketing. We had marketing led growth. Initially it was marketing that was creating the brand, the awareness, the organic inbound leads. And once that came in, it was founder driven sales model in the beginning. But marketing came first before having the sales team.
- [10:59]
A
Now we're going to double click on Zooper and what you do. Because when I think about the field service organizations of these major manufacturers, there's been other generations of field service automation. Even companies like ServiceNow, right. They do field service automation. What was the gap that you saw missing from a technology perspective? And after you had that first million dollars of revenue, was the actual pain and value different than what you assumed going in?
- [11:29]
B
Yeah. So you know, I mentioned to you about the genesis of Zooper, how we came across the idea of, you know, creating the product that we have. But as you were going through the initial set of analysis and doing the research on the market, there were three core theses that we had. Number one is that service organizations were thinking field service management as an extension of CRM or erp, which is not the case. Field service management is A niche product, which in itself requires a lot of richness and a lot of capabilities and never an extension of CRM. Secondly, the customer expectations are evolving and changing drastically with customers conditioned by the likes of Amazon and other modern age consumer products. Every customer expects that same seamless end to end experience from any business that they're dealing with, whether it's a refrigeration service, landscaping or ride hailing. And third is that organizations needed a product that integrated with their entire tech stack or business applications so that they can offer that integrated experience to their customers. And last but not the least, we also identified that there needs to be customizability and flexibility in the product and it cannot be opinionated in how businesses needs to run their business. Because a lot of times these businesses, they have developed the tribal knowledge that experience building their business, running their business for many, many years and they want technology to complement their processes and workflows rather than creating new challenges and new complexities in running their business. So these were essentially the theses with which we came up with our product. And those continues to be the main differentiators of our platform. Compared to many other field service management products out there, Zooper is the most comprehensive field service management product out there in the market. We are flexible, we are customizable, and we allow organizations to offer an on demand experience to their customers.
- [13:41]
A
Point number one was all about the consumer experience, the Uberization.
- [13:45]
B
Right.
- [13:46]
A
So also when companies are investing in technology, they're trying to measure the return on investment. I spend this much on Zuber, how much more revenue can I get? Or better customer satisfaction or reduced cost? So how do you measure the ROI you're providing to your customers? Or maybe I should say how are they measuring the roi?
- [14:05]
B
Yeah, great question. So in terms of ROI and the value that we offer to our customers, the value is kind of broken down into few categories. The first category of value is around improving efficiencies in the business process flows. How does organizations improve efficiencies, meaning some work that they were either doing manual using pen and paper and now they are able to digitize and automate those work. Secondly, are they doing repeated mundane work on a day to day basis? And now we are identifying best practices and patterns and automating them. Third is around improving the productivity and utilization of their field workforce. A lot of times we have seen the challenge. That field workforce is spending more time driving on road rather than on at work on site where they have to perform the work. So with the capabilities that we offer around intelligent work order management Smart routing, route optimization and location intelligence. We allow businesses to ensure that technicians are spending less time on road and more time doing their actual work. Then there are a bunch of values that we add around offering that best experience to customers. But one thing which is very critical is first time fix rate, meaning the work that the technicians are doing, they're able to fix it right the first time. And this is an extremely measurable and quantifiable metric by the business. They measure that metric and they have that information before they use our platform and after they use our platform. And once they have that, we have seen that there is at least 30% increase within the first six months of using our product and improving the first time fix rate.
- [15:53]
A
That's interesting. How do they do that? Do you provide also some insights on what techniques need to be used to fix the product or what parts should be used? How do you increase the one time fix rate percentage?
- [16:05]
B
Yeah, our goal is to ensure the businesses are dispatching the right person at the right place with the right tools, right knowledge at the right time, every time. And the right tool and right knowledge is very important. And the way we do that is when a business needs to dispatch a technician to a work, we match the technician's skill set to the work that they need to perform. So it's very critical from that perspective that the right person, not just in terms of their availability, but also in terms of the skill set that they're getting dispatched to the job. Secondly, what we also do is to ensure that the technicians are carrying the right parts for the job. And this is very important aspect because a lot of times the first time fix does not happen because technicians are not carrying the parts in the first time. They have no insights about what product that they are addressing, what product they are fixing, what are the preferences of the customer. Now here with our system, we enable technicians to understand the customer preference. We enable them to understand the product that they are working on, the history of the product and the parts that they need to carry to fix that product and combination of all of these things. Ensure that there is a high likelihood of the technician fixing the product, fixing the issue right in the first time.
- [17:33]
A
Interesting. Well, this is the metrics major at podcast. So I'm going to now flip it from the metrics that your customers use to determine the value of your solution to to as you scaled above 1 million to can I ask how large you are today?
- [17:48]
B
We have been growing, you know, 3x year over year. It's been few years that we are in the Business about five years now and we are doing extremely well from, from that perspective, seeing a huge momentum. We have grown 10x in the last 24 months.
- [18:04]
A
Wow, that's amazing. Well, tell me a little bit about your journey on the performance metrics you use. Because to help understand how you're performing and where you need to be, especially if you're looking at external investments, et cetera. Have those primary metrics changed much over the last two years where you've grown 10x?
- [18:24]
B
Yeah, absolutely. So the primary metrics have kept evolving over time, but at this point in time there are a few leading indicators and lagging indicators. And in terms of core business metric that we measure, we measure things like our revenue, which is our annual recurring revenue. We call that ARR or monthly recurring revenue mrr. But that is one metric that we need to report up to our board so that everyone understands how we are doing as a business. It's a kind of a lagging indicator. That's one very important aspect that we measure. The other thing is about customer churn. Customer churn is one of the most critical metric for a SaaS company. We measure that. We measure both leading and lagging indicators. Customer churn in itself is a lagging indicator, but I'll get to the leading indicators. But from a lagging indicator perspective, the financial aspects, which is our MRR or ARR customer churn and our burn rate and our cash Runway, these are very, very important metric for us, especially given the current market and macro conditions. Cash Runway or the Runway that we have and our burn rate is very, very critical aspect of the business. So these are some of the top metric that we look at from a lagging indicator perspective. From a leading indicator perspective, we look into our active usage on the product. That's a leading indicator to indicate or give us any signals whether there is going to be any customer churn and how we can be proactive and about two things, preventing a customer from churning and secondly, identifying any opportunities to upsell or cross sell. The next one is about cost of acquiring customers. We call that cac, cost of customer acquisition and the lifetime value of customers ltv. So the CAC to LTV ratio is a very, very important aspect of SaaS business and we monitor that on a daily, weekly, monthly basis to ensure that our cost of acquiring customer is stable and the lifetime value of customer is at least 2 to 3x. And one of the new metric that we are starting to measure is what is the payback period of a customer from a CAT perspective? Meaning if you are spending say $5,000 to acquire a customer. What is the payback period of getting that $5,000 back from that customer? But these are some of the leading indicators that we measure. And apart from that, from an employee perspective, we measure things like, you know, the health of the employee and the employee index, their mindset and how we are dealing with employee retention and all of that.
- [21:10]
A
Well, this is a really good overview of both the lagging and leading indicators. I'm going to double click on one because I like the fact that you use product utilization as a leading indicator to retention or churn. But there's this new kind of, I don't know if I'd call it a metric but activation rate, there's a high business value. Maybe it's the inventory matching technique you talked about or even the technician to issue matching. Do you find that there's some of those more value added pieces of functionality that lead to a higher retention rate?
- [21:47]
B
Oh yeah, absolutely. That is a great point that you're bringing up, Ray. So as part of the product usage metrics and the utilization metric, we look into various things. We look into absolutely. From a dispatching perspective, how many of our customers are using automated intelligent dispatching versus manual dispatching in case they are using intelligent dispatching, how often we match the right technician to the right job and does not require override by a dispatcher manually, our inventory forecasting, how are the inventory forecasting looking and stuff like that. So those things are leading indicators to not just understanding the usage patterns but as I mentioned also on upselling and cross selling capabilities and improving net revenue expansion and retention.
- [22:36]
A
Well, you've mentioned those cross sells and upsells a couple times now. Non so. But you didn't mention net revenue retention as a key metric. Is that something that you and your investors are pretty focused on right now?
- [22:48]
B
Yeah, net revenue retention and net revenue expansion both are very important criteria. And a business like ours where there's high stickiness and extremely low churn rate once customer adopts the platform, we want to make sure that we continue to build on the customer's confidence and we continue to expand on that customer with either they're adding more licenses or are offering them value added complementary capabilities. And the net revenue retention also is an important metric to ensure that like you know, we are retaining the value from the initial value that the customer brings in in terms of revenue and it's not, you know, going low or going down year over year.
- [23:36]
A
Well, you said something and I was going to wrap it up but I have to Ask this question because I don't use or strongly recommend net revenue expansion on a regular basis. Can you define for the listening audience what net revenue expansion? What's that measuring?
- [23:51]
B
Yeah, absolutely. So we from a net revenue expansion perspective, we measure how we are able to incrementally add value to our customers and increase revenue from an existing customer. For example, if a customer is paying $10,000 as part of their annual contracted value when it comes to either their renewal, can we expand from that customers from that 10,000 to a higher value because they have increased the number of licenses or they are using additional capabilities from the company?
- [24:25]
A
And do you include churn customers in that or do you exclude churn customers and it's only those customers who actually did renew to calculate net revenue expansion.
- [24:35]
B
We do calculate churn customers as well because it is the overall number of customers who have who have expanded. We also use the customers that have churned out to ensure that next net revenue expansion stays over 100%.
- [24:50]
A
Thank you. Well, I cannot believe our time's already coming to an end. But there's three questions I'd like to ask. I ask every guest to give the listening audience a chance to get to know you a little bit better. So Is there a CEO or company that you think must follow for fellow SaaS entrepreneurs such as yourself?
- [25:08]
B
Just thinking out, there are a lot of names that comes to mind. But One of the CEOs that I follow very closely is Elon Musk. The reason why I follow Elon Musk is because of he being a visionary. He can come up with out of world ideas and he has the passion and the persistent to go after them and make them into a reality. And his risk taking abilities, those are very close to my heart when it comes to being a visionary and able to take risk and able to execute in a relentless manner to make those visions into reality?
- [25:44]
A
Yeah, and I think that's the thing too many people don't appreciate about wonderful entrepreneurs is the persistence and passion that you have to show up with every day because ideas, with all due respect, are a dime a dozen. Implementing and executing much harder. Right?
- [26:00]
B
Absolutely.
- [26:01]
A
Is there a tool? So you're a B2B SaaS company. Is there a tool not your own that you think every B2B SaaS company has to be using? It's really helped you with your growth and efficiency.
- [26:13]
B
Yeah, I do not know much about B2B but like you know, I'm, I was just. In the last few weeks I have started using the chat GPT of Bing and I am loving it because it is helping me to be more productive. I am almost treating this like my personal assistant. Whenever I am preparing for a meeting, when I'm getting late on something and I need someone to do something for me, I do not need an assistant anymore. I can go and ask Bing Chat that question and I get immediate responses in a way that is structured for me to deliver and it has worked tremendously. I have seen a lot of hype around generative AI and ChatGPT but until I started using Bing Chat I didn't realize the power of that. So as of now, that is my personal assistant.
- [27:03]
A
Spoken like a true former Microsoft executive. You actually are able to promote search, AI and Microsoft all in one. That's pretty good. Okay, last question. And I usually ask about advice you'd give to an early career professional, but I'm going to change it up for you, you know, because 13 years at Microsoft, very high prestige job. What advice would you give to someone who's at a Google or HP? Microsoft has 13, 15 years of experience, who's considering the entrepreneurial founder journey. What advice would you give them?
- [27:43]
B
Wow. See there are three things that I'd like to tell the audience who meets that Persona. Number one is, you know, take risks, take your bets, follow your passion. Because a lot of times I've seen like with my colleagues at Microsoft or other places, people are always wanting to do something more creative, something more deliberate, but they are not able to take that plunge. It is important to take that plunge. It's never the right time. If you're waiting for that right moment, it'll never come. You need to take that plunge and take that risk. And only good things are going to happen because I strongly believe that. Back your passion. If you're passionate about something, just do it. Never wait for the right opportunity. That will never happen. And secondly, be persistent. We discussed a little bit earlier, I strongly believe that rarity of talent is not in the skill set but in the persistence. And it is very, very important to be persistent and follow the passion. And third is that it is very important to form the right team and have the right support system to have the right mentors. And then if somebody wants to build their startup, think of building the right team. And it starts with finding the right co founders. And when you're thinking about the co founders it is don't think of them as someone that you are just going to lean on in case there is an emergency or then in case you want to go for an advice. But it is a long term partnership. It's like, you know, a marriage and you need to ensure that you're finding the right person that you can lean on for lifetime.
- [29:24]
A
It's interesting. That's really the third point is such they all were good third point so important because co founders for those early stage partners, one of the biggest issues that founders find is that co founder was great for the first year but now that times are tough, it just doesn't work as well. Well, that is unfortunately the end of today's conversation. Arnan Subharash, Founder and CEO of Zooper, thank you so much for being a guest here on the Metrics of Measureup podcast.
- [29:54]
B
Thank you so much Ray. I love the conversation.
- [29:57]
A
And to our listening audience, if you're enjoying the conversations we have with entrepreneurs and highly successful tech executives like Anon, it would mean the world to us to go ahead and subscribe to the Metrics of Asia rep podcast on your favorite podcasting app. Go ahead and give us that 5 star rating. Not because it's a vanity metric, but that helps amplify the distribution of the podcast so your colleagues and peers out in the industry can take advantage of great conversations like we just had with Anand. Anand, thank you very much. And to our listening audience, thank you so much everyone. Have a great day. Thank you for listening to today's Metrics Measure up podcast. If you would like to learn more about B2B SAS metrics and benchmarks, please visit RevOpsquared.com.