Thejo Kote - Airbase

Airbase: From Solo Founder to 8-Figure ARR SaaS – with Thejo Kote [381]

Airbase: From Solo Founder to 8-Figure ARR SaaS

Thejo Kote is the founder and CEO of Airbase, a spend management platform for mid-market and enterprise companies.

In 2016, following the successful exit of his previous startup, Automatic, Thejo began brainstorming ideas for his next venture.

At Automatic, managing company spending had been a major challenge. This led him to explore potential solutions to this widespread problem.

But instead of diving right into building a new product, Thejo spent 6 months interviewing CFOs to validate his idea and ensure it addressed a real problem.

He hired a freelance designer to create software mockups, which he used to get feedback. After each interview, he iterated and improved the designs.

Once his initial product was built, Thejo was ready to start his sales outreach.

Despite his previous startup success, he faced struggles as potential customers were still apprehensive about trusting an unknown startup.

It took significant persistence and hustle for Thejo to get those initial customers.

Fast forward to today, and Airbase has surpassed 8-figures in ARR, grown to around 300 employees, and has raised over $100 million in funding.

In this episode, you will learn:

  • How Thejo balanced creating the product while also taking the lead in sales and the key decisions that helped him land the first big customers.
  • How zeroing in on exact customer problems and solving a significant industry challenge laid the foundation for Airbase's early growth.
  • How Thejo guided Airbase through a crowded market filled with well-funded rivals and the tactics that effectively set them apart.
  • How Thejo prioritized building a sustainable business, consciously slowing down growth, and resetting stakeholder expectations.
  • Why Thejo started Airbase as a solo founder, breaking the usual startup rule, and why he thinks not having a co-founder is sometimes a better choice.

I hope you enjoy it!


Click to view transcript

This is a machine-generated transcript.

[00:00:00] Omer: All right, Thejo. Welcome to the show.

[00:00:02] Thejo: Thank you for having me Omer.

[00:00:03] Omer: Do you have a favorite quote or something that inspires or motivates you or gets you outta bed every day?

[00:00:09] Thejo: Look, ultimately you know what gets me outta bed every day is doing something that I love and enjoy, and I've been an entrepreneur for the better part of like, what, 12, 13 years now.

[00:00:19] And this is my second business. And either of those businesses, I've never actually paid myself really well. And, and so it's been very important that, you know, the, the money is not the motivation of course, it ultimately is you're building a business that's a scorecard, revenue, value creation and all that kind of stuff.

[00:00:37] But I. Personally for me, what I care most about is you know, would I do this even if nobody paid me? Like, am I kind of being challenged in the right ways? Am I growing in the right ways? Have I set some goals and targets for myself? And is there that personal satisfaction of working towards it? And increasingly so as I've learned about the company building process, am I doing it with the right people that I genuinely enjoy working with and the culture of that company?

[00:00:59] And, and so those are the things that get me outta bed in the morning. And, and so I've been lucky enough to have built and exited one company and I'm trying to kind of bring a lot of those lessons to Airbase.

[00:01:10] Omer: Awesome. So tell us about Airbase. What does the product do? Who's it for and what's the main problem you're helping to solve?

[00:01:16] Thejo: Oh very broadly speaking, Airbase is a spend management platform and, and we sell to the office of the CFO. And in terms of specific kind of personas, that is the controller. Or the CFO accounting teams, increasingly procurement professionals who are typically in the office of the CFO and we tend to target mid-market, early enterprise companies.

[00:01:38] See, our sweet spot is say a hundred employees to a few thousand employees. And that's generally you know, who we target. And the North Star problem that we are trying to solve ultimately is if you think about all of the money that a business spends, you can put it in two buckets. Which is salaries.

[00:01:52] And then there's the non-payroll or the everything else, right? And so if you dig into how the, everything else part of spending money as a business works, it's very complex and messy, right? And so there are many different areas and, and both workflows and payments and money movement, you know, all of those are complex and challenging.

[00:02:11] And as you grow as a business and become a mid-market business, you know, the front end of that problem is largely a collaboration problem. How do you decide whether you can spend money? An employee wants to spend money, but in a business, the moment that process starts, lots of people have to get involved, right?

[00:02:25] So finance and accounting, from a budget perspective, IT people have to get involved. Legal people have to get involved, security checks have to happen, so on and so forth, right? So it's a complex collaboration problem. So that is one element that we solve on the front end, but then, you know, on the back end.

[00:02:40] You're receiving invoices and there's an AP automation problem. Employees are spending their own money and then getting it reimbursed. And that's an expense management problem. And you have corporate cards where company money is being spent, and that's a whole other problem. And so, you know, our Northstar goal is to say, how do we bring all of this non-payroll spending workflows and payments globally, no matter where employees are, where subsidiaries are?

[00:03:01] How do you bring it all into one system and one platform from the typical. Many different five or six different silos and systems that companies tend to use. Right? And so that's the key USPN value that we offer.

[00:03:13] Omer: Okay. Give us a sense of the size of the business. Where are you in terms of revenue? Number of customers, size of team.

[00:03:19] Thejo: Look broadly speaking you know, well into eight-figure millions of ARR.

[00:03:24] And then in terms of employees, about 300 employees. We are a globally distributed, fully remote team, and we have been that way since the very very first day of the business, you know, way before the pandemic and our employees are currently in about 16 different countries. Got it.

[00:03:41] Omer: And I think you've raised total of about 250 million by now, right?

[00:03:46] Thejo: Yeah. So it's about a hundred plus million is a little more than a hundred million is equity and, and the rest of it is a deadline for a specific product that we have. It actually we don't offer anymore. So from on the equity side it's a little more than a hundred million dollars and I've been fortunate enough, enough to work with some really good investors like Menlo Ventures being Capital Ventures and First Round Capital and, and folks like that.

[00:04:07] Omer: So I want to talk about where the idea for Airbase came from. I mean, what you've just described there. Is such a gnarly, messy problem that there's no clear cut, you know, place to start solving that type of problem. Right. So I'm curious how you, how you approach that. But before we do that, maybe let's talk a little bit about you background and, and what you were doing.

[00:04:33] You mentioned you, you had a previous startup with a successful exit. I think you, you started your career. As, as an engineer. And then this, this previous startup, Automatic Labs, was founded back in, I think 2010.

[00:04:48] Thejo: So it was, yeah, 2011, no, late 2010 is when my co-founder and I started working on it. You know, we committed to it in 2011.

[00:04:56] We went to Y Combinator in the summer of 2011, and I had a very, I guess you know, Silicon Valley kind of journey, but yeah.

[00:05:04] Omer: And then, so tell us about that business. What, what was, what was Automatic Labs?

[00:05:07] Thejo: So Automatic was actually a connected car platform. It is very different than, than Airbase in the business that we are building now.

[00:05:13] And, and the fundamental thesis of that business was that you know, essentially cars, the computers and, and but the vast majority of them on the road, at least back then they weren't connected to the internet. And, and the key part of the thesis is that if you can get the data in, in, you know, this big moving computer.

[00:05:29] Up into the cloud and you could convert it into a usable form. There's a very big ecosystem you know, of that is the automotive ecosystem worth trillions of dollars just in the US that could benefit from that data if you kind of pulled it out and converted it into something useful. Now the question is how would you do it?

[00:05:45] And, and we ultimately ended up doing something very complicated where we had a. Consumer hardware product that we sold and now in the Apple stores and Best Buy and, and, and you know, Amazon, all these retail places. And eventually we wanted to kind of parlay that into an enterprise business, which we did in the second half.

[00:06:01] But honestly it was all very complicated, right? And so I would not recommend kind of having a consumer business model and revenue model and having an enterprise business revenue model. And, you know, that's a big lesson I took away from Automatic is kind of simplification of, you know, your business model and, and also don't do hardware.

[00:06:18] I think that's the other, other lesson. But, but yeah, largely it was not SaaS the enterprise part of the business. We moved it into a SaaS like model. But for the most part of the business it was not you know, a pure SaaS business. But it was during that journey of building that connected car platform.

[00:06:33] And ultimately, you know, we sold it to CDS xm, which is a connected kind of the. Radio and satellite radio company. So it was during that journey that I learned about the problem of, you know, spend management and, and the struggle of companies as they continue to grow and scale. And, and of course I couldn't do anything about it back then.

[00:06:53] I was building a different company, but it went into my ideas notebook to look into when I had the time and, you know, happy to dig into that journey.

[00:07:00] Omer: Yeah, yeah. So, so SiriusXM acquired the company in 2016 only 2017, so for a whopping 115 million. So that was a, a nice chunk of change to, to exit from, from that startup.

[00:07:15] And then I think it wasn't that long after that when you started Airbase, maybe within, within a year of, of that exit. And so was it mainly just from your. Your, your personal experience of spend management that, that drove you to go and solve this problem next, or was it, was there some other something else that you did in terms of I.

[00:07:44] You know, validation, going out and, and, and talking to other people and, and trying to get a better assessment of what was going on out there.

[00:07:50] Thejo: Yeah. So I learned about the problem while building Automatic, right? And, and as it turned out, look, I'm an engineer by training. I'm a product person. And I didn't know the first thing about finance or accounting, when I started working on my previous company, I didn't know the difference between cash accounting and accrual accounting.

[00:08:06] What is ap? What is ar, like nothing. Right? And because I had this bright idea of building hardware that complicates things, right? And, and now if you want to build hardware, you have to now think about, I. Inventory and then forecasting and, and demand planning and all that kind of stuff. And as a venture funded company, I didn't ever want to be in the situation where we did a bad job of that and then, you know, dramatically overbuilt inventory or whatever.

[00:08:27] And then I had to go back to my board and say, oops, you know, we screwed up and I need you to bridge me you know, for, for some more time and that kind of stuff. So I made the effort to learn. I made the effort to kind of be involved in what was happening. And over time I built out, you know, our finance and accounting functions and, and that kind of gave me, you know, visibility.

[00:08:43] I asked lots of dumb questions along the way, you know, all of the, what is ap, what is ai, and what is the monthly close and all that kinda stuff. And, and so, you know, learned about the problem along the way. And, and that I think is an important aspect you know, to any problem, right? It's, it's just if you have experienced you know, facets of the problem day to day, you know, you can identify solutions.

[00:09:05] And this is something that I've heard said before, which I think is true, which is if you. Tend to build expertise in two different areas then you can kind of bring those together to ultimately build solutions. And what happened in this case was that I was an engineer who knew how to build, you know, products.

[00:09:20] But I learned about finance and accounting and, and figured out a bunch of things that were broken, especially in terms of how businesses spend money, right? So how they get visibility, how they get control and, and how archaic a whole bunch of those processes were. And, and for some good reasons, because financial infrastructure was not as mature, you know, back then and all that.

[00:09:40] But as I, after, like I said earlier, I didn't have the time to kind of go do something about it back then, but it, it went into my ideas notebook. I, you know, I still do that. I feel like. Pretty much everything is broken, right? And, and if you want startup ideas and, and ideas to solve, especially in the B2B, you know, realm if you keep your eyes and ears open as you're working in any business, you'll see 10 of them lying around.

[00:10:03] But the only question then is, okay, how big is this opportunity can actually scale to be a venture fundable business and, and, and a public company? Not, not all of the problems that you run into fall under that category. So, you know, when I finally was done with Automatic and I was thinking about what I was going to do next, you know, I started digging into a few of these ideas that I had identified over the course of my experience building Automatic.

[00:10:27] And, and eventually of course, I honed into Airbase and the spend management problem. And, but as I was learning about it, I, I spoke with dozens of, I know CFOs and, and accountants and controllers and people who do the job day in and day out. Right. And because I had a hypothesis about what the problem was, how it could be solved I wanted to validate if that was right.

[00:10:46] And those conversations actually made me a lot smarter about the problem. And I understood all the layers and nuance, you know, that exist in the problem. But that journey, which took maybe the better part of six months then gave me the confidence that, that I can commit to building another company.

[00:11:01] And, and I also had identified at a high level characteristics of that next business that I wanted to build if and when I did it. And, and no, it had. High level things like, has to be a big market, has to be a SaaS kind of product delivery mechanism. They'd want to do hardware and things like that. Exactly.

[00:11:18] And, and you know, it, it had to be something that could be a system of record for an important functional area of the business, so on and so forth. Like, I, I, I had identified, you know, if you look at all of the public companies, technology, public companies out there, SaaS businesses especially, you can kind of distill out certain characteristics, you know, that exist with all of them.

[00:11:38] And I was like, okay, you really want to go after that kind of an opportunity. Right? And so. I was kind of filtering the problems I had identified through that lens. And the more I spent time, you know, in this area of spend management, the more convinced I became that look, it checks a lot of those boxes that I care about and, and and I can commit, you know, maybe another 10, 15 years of my life, you know, building another one.

[00:12:01] And, and so that's how I kind of got started. But of course, I didn't start building the product writing code, you know, if it is interesting, I can talk a little bit about, you know, the mistakes I've made as a founder, especially as an engineer who just jumps into it and starts building stuff and writing code and, and, and why I didn't do that with Airbase and yeah.

[00:12:20] Omer: Yeah. We, we love talking about mistakes here, so please share as many as you like.

[00:12:25] Thejo: Yeah. So look, even the early days you know, the tendency that, you know, I've had in the past I've made that mistake is you think you, you have identified a problem and, and instead of spending a lot of time. Validating it, speaking to actual customers.

[00:12:39] You know, the tendency to just go start building, right? I, I think I know the problem. I'll build a solution for it. And then you try to put it in the hands of customers and, and then you learn like a lot of these products don't survive first contact with the market, right? And so, you know and then you also have this, it's a sunk cost, right? And, and you, you don't want to change it or throw it away. You've invested a lot of time, energy, effort in it. So you end up going just down the wrong direction. And so the lesson I've taken away, which I still, with new products that we build, try to follow the same approach is after I, I had all these conversations, you know, about the problem and the pain in the area of spend management, I, I had even hone it down to a narrow area because you need, what the problem I talked about that we solved today is pretty broad, right?

[00:13:21] So we do all those things, a lot of modules. It's taken us years to kind of systematically build, you know, into the, the vision that we've always had, at least I had when I started working in the business. But. In the early days, it was narrower. You need a veg to get into it. You need to solve some smaller problem in a 10 x way to even get people to consider you.

[00:13:40] And so what was that problem that you picked for us? The one I picked of all the different non-payroll spend areas, the first one I picked was corporate card spend management. It was, my thinking was to reimagine. A corporate card from this piece of plastic that you put in an envelope and send to a bunch of employees to a software workflow driven product.

[00:13:59] Right? And that's a much, you know, more common approach that a bunch of other companies also do today. But, you know, I'm, I'm pretty certain Airbase was the first to do this back then where what if you think when that was also now made possible because of improvements in financial infrastructure card issuing platforms as a startup, it was now possible for software companies to issue cards and, and, you know, be issue Visa branded cards, MasterCard branded cards, and wrap software workflows around how spending happened on cards.

[00:14:27] And that was a huge pain point for controllers, especially of more mature companies, is all these employees who have cards are running around and spending money on it. And I don't have visibility. I don't have control. I just get the statement at the end of the month and it is painful. Right. And, and.

[00:14:39] Clearly, you know, there were opportunities to add pre-approval workflows and, and vendor specific cards and lots of controls, overspend and automation of accounting. As those transactions were happening on the cards, there were all of these things that you could do to solve that problem really, really well.

[00:14:55] Right? And of course, today it's like one part of our overall platform. But, you know, I, I ultimately had honed in on that. And, and once we identified that is the problem and then I went back, I kind of sketched out a solution workflows and, and worked with a designer, a part-time designer, made high fidelity markups.

[00:15:14] Then I took that back to all of a lot of these early customers and said, look, we talked about the problem. Now let me show you how I'm thinking of solving it. Walk them through the mockup and, and and then iterated through that as I got feedback on that. And ultimately the conversation was, if you had this tomorrow, would you sign up for it and use it?

[00:15:34] And until I had about a 10 to 12 customers who were like. I would totally use this tomorrow if, if you kind of had it I didn't start building, right? So once we got to that stage and of course I didn't ask them to sign contracts or whatever. This was relationships and handshake deals saying that if I bring this to you, you're gonna use it.

[00:15:51] What also helped was that, you know, finance people will look at a high fidelity mockup and go. This is almost done, right? Like you can this this almost lives. And obviously then it's like, okay, I'll come back to you in a few months. It's gonna take me a few months to go build this. And, and, but I essentially had a set of customers waiting to use the product.

[00:16:07] I had de-risked, you know, as much of that as possible in terms of getting the early adopters and, and you know, that would be how I recommend everybody, you know, follow kind of the process of discovery. And then when do you start building? Because the most expensive thing you can do is to commit something to code, right?

[00:16:26] Is to build something and then you get vetted to it. And, and there are all of these kind of emotional reasons why you just can end up going down the wrong direction. But of course, you know, I had a lot more confidence that I had customers waiting and then you know, went and built it. Put it back in their hands.

[00:16:41] Obviously when you do that, you learn a hundred new things, right? And so that's when you iterate very rapidly. And the motion of the company in the very early days has to be completely focused on those initial design partners. How do we listen to them? How do you iterate very, very rapidly and quickly and be responsive and improve the product?

[00:16:59] Because what you're doing in those very early days is you're seeking product-market fit, right? And so you don't have it. And then what does it look like? And you can define in advance, which I think is a good habit to say, okay. What are kind of the characteristics at a high level that I want to see, which will give me confidence that I have product market fit.

[00:17:17] Right. And, and that might be slightly different for different products. It might be, you know, the, the degree of adoption, it might be the degree of engagement. It might be if you're a kind of product that has a payments element to it, the volume of payments process through the platform, so on and so forth.

[00:17:33] Right. So, you know, that is an element. It is the degree of engagement by the stakeholders and the excitement and the pull that you see. It might be, you know, the willingness to pay and there are all of these milestones that I think you can define to get to product market fit. And, and that was kind of you know, the journey for the better part of the first 12 to 18 months.

[00:17:51] Omer: Right. And, and so from the point where you started to go out and have these conversations with people where you said, I've got this idea. I want to go and talk to CFOs and, and people like that, to, to really understand if this problem is a real problem that's worth solving, to the point where you felt like.

[00:18:09] You had got these high fidelity designs to a point where you had, you know, your first, potentially your first 10 customers ready to sign up, but you still hadn't written a line of code. How long did that. Process take?

[00:18:25] Thejo: Like I said, that initial part where I was ready to make the decision to start writing code and commit to actually working on the startup and building it over six months.

[00:18:33] Of course, I wasn't working on it fully for six months. In the middle of that six months, my wife and I, you know, after Automatic was sold, we, you know, traveled around the world for a couple of months and all that kind of stuff. So it wasn't like six months, six months, full-time, you know work. But it was a course of, from, from late 2016 to say middle of 2017.

[00:18:54] Over that period of time when I was having those conversations, doing the back and forth, identifying the, the, the core problem, working on the solution, going back to them, all that kind of stuff happened mostly over the course of the first half of 2017.

[00:19:08] Omer: Okay. So then you're ready to start building the product.

[00:19:10] Was that something that. You, did you, you know, how, how big of a team did you start building around you?

[00:19:17] Thejo: Initially? It was just me. So I, I built the first early version of the product and as I, you know, started getting deeper and deeper into it, I brought on the full-time you know, engineers. And for the most part, I think the first eight employees of Airbase engineers, right?

[00:19:33] Because and that's partly the reason why, you know, I decided I didn't need a co-founder for this startup. Happy to talk about that choice if you think it's useful because. The things that I needed to do to get the business to product market fit. You know, I felt like I had those initial skills.

[00:19:48] I could be the product manager, I could be the engineer, you know, engineer building it for the most part. But then of course, as the scope and size of the product started to grow larger, obviously I needed more help. And that's when I started adding other engineers. And as other engineers started to join the team, I was part tech, lead, part engineering manager, part product manager.

[00:20:07] And, and spent the first few months after I truly started building the product, that was most of my time. But at some point, you know, month four, five six, when we had that initial product, then I started to go back to being market facing, where half my time was building the product and half my time was onboarding some of these early customers, supporting them, listening to them, talking to them, and bringing that back and iterating and, and building you know, and shipping.

[00:20:30] And so, yeah. So a lot of those business roles. I just played in the early days and, and the PM role I just played, we didn't even have a full-time designer for the first 18 months of the business. I had like a really strong part-time designer that I was working with. And that was good enough for us to build the nature of the product because the whole other element is, you know, I chose to fund the business myself.

[00:20:52] I didn't raise around the funding partly because, you know, I felt like I wanted to take the business to that early product market fit phase, which would then allow me to get more value for the business and take less dilution and, and that kind of stuff, right? So clearly I was motivated, you know, which, it doesn't matter if you know it's your own money, investor money, I think you should, until you find product market fit, you gotta be a cockroach, right?

[00:21:17] It's like, don't die, you know, keep the burn as low as possible because you have no idea, in a lot of cases, is the process of finding product market fit gonna take six months, a year, two years? Three years, you don't really know. Right. And you know, and you don't wanna put yourself in a place where you just run out of money on a promising idea when all it needed was a little bit more time to get to that pro product market fit, which would then allow you to raise that next round of funding and, and keep building.

[00:21:45] Omer: So when you started building the, the product in the first few months, you were the guy mainly building the product, being the pm working with your part-time designer, and then eventually you were also the sales guy, right? Yes. How, how many of those initial customers came through just you going out and selling the product?

[00:22:10] Thejo: About 15 to 20. I hired our first head of sales after I sold to the first 15, 20 customers.

[00:22:18] Omer: I'm, I'm curious, like what was the. What was the general response like? When you're going out there and you are, you're trying to validate this and get to the point where you feel like, you know, the, some of the criteria you described earlier in terms of, you know, how much they're engaged, how much, you know, the willingness to pay and and so on.

[00:22:37] How easy or hard was that, that process? And I, I think one of the reasons I ask is that sometimes I've seen founders who, who go through this process and you can see when you kind of look objectively at the situation, I. That something hasn't quite clicked because people kind of seem interested in the problem.

[00:23:00] People kind of seem willing to give you some time, but it's still really painful to convince someone to actually, you know, get excited enough to pay for the product. Versus once you, you've nailed the problem, you've, you've really understood it, you've figured out the right solution. Things seem to flow a lot, a lot better, a lot more easily.

[00:23:24] People seem to lean in, they're more engaged. You, they're almost like, you know, badgering you in terms of like, when they can get access to the product. So I, I'm curious, like how, how easy or hard was it for you to get to that point? Because initially you were, I guess you were in the same situation, right?

[00:23:41] You had this broad problem and no real solution at that point, and you, you described the process you went through in terms of how to narrow that down.

[00:23:50] Thejo: Was it easy? Those initial days when you don't have a lot of value to add to a potential customer, those are the hardest kind of, parts of the process, because you don't have anything to give yet.

[00:24:04] You are basically taking value back from the people who are giving you their time. Right. And so, a few lessons that I've taken away, look, with Airbase, I definitely had the unfair advantage where I had a network, I had a bunch of founder friends. And so at least some of the people I spoke with, it was mostly, Hey, can you introduce me to your head of finance?

[00:24:22] And a lot of these friends that I had were other founders who had like scaled companies, mid market companies, and so they had like finance teams already. They had a head of finance, they had a controller. I'm like, Hey, make the introduction and, and I'd like to spend time with them. And so that happened in some cases.

[00:24:35] So, so having a network, having relationships and those kinds of things you know, that you can bring in and, and leverage is certainly a bit of an unfair advantage. But, and I did that as I kept going because at some point the, the, one of the steps in building confidence around product market fit is that you don't want to just sell to the people you know or have a relationship, right?

[00:24:54] Because that might have a bias that, that then they're like, oh, I don't wanna make. Him feel bad, and then so they might kind of sign up for it and not give you like honest kind of feedback. So you want to really cold kind of call and pitch and get in front of people who don't have a relationship with you, who don't care about you, who don't mind telling you to your face that this is useless.

[00:25:13] And, and because that's the feedback you really need to hear. Right? And so when I went, got to that phase after the first few customers, a kind of, you could call it tactic that I, that I used was, I usually positioned it as, look, I, I, I'm building a problem to the solution at, at a higher level. I think this is a problem that most companies have.

[00:25:32] And you know, given your experience, I think you could be super helpful. I'd love your advice. I'd love your input on, on how you think about this. And so, at least you know, back in 20 17, 18 when I was getting going. There were very few finance accounting tools in the first place and, and controllers and, and folks like that, they never got the spotlight.

[00:25:51] And they, they didn't have anybody reaching out to them and saying, Hey, I think your knowledge it's actually a hard technical kind of field and, you know, you need you know, a lot of skill training, technical knowledge to be successful in those roles. But it's, it's seen as this back office function or whatever.

[00:26:05] And, and so, you know, but when I reached out to people with that framing, which is also true you know, and then a lot of them were happy to help, right. A lot of them, you know? Yeah. In some ways you're playing to your ego, right, in that you're the expert here. You know, I'm, I'm kind of getting going, trying to build this product to solve a particular pain point that you have.

[00:26:23] And my intention is not to sell you anything, but you know, listen to your expertise and get your feedback, and, and there will be people. Who enjoy that process, right? Because even during the kind of any new category, product, whatever it is, that goes to that adoption curve in the market, right? And in the early days, you really want to identify as many people as possible who enjoy being an early adopter, who enjoy providing feedback, who enjoy kind of participating in the process of creation of a solution to the problem they have, right?

[00:26:52] And so trying to kind of connect with as many of them as possible and identifying them, you know, and, and if they engage with you, they also make the best customers right? In, in, in the grand scheme of things. And there are lots of people out there who might be the buyer for your kind of solution, but their attitude is, I only buy from public companies, right?

[00:27:11] So are you a startup? Are you not established? Then I don't even wanna talk to you, right? Because. I have no appetite for risk. I want something super established in the market, which is all fine. But what you are trying to do is to find the people who enjoy that process of engaging with early stage customers.

[00:27:27] And you're looking for that persona and you're gonna get lots of nos, right? You, you're gonna get lots of no responses. You're gonna get, you know, you should reach out to people on LinkedIn, you should reach out to people in the network and beg, borrow, steal, hustle, do what you have to do. But the job is to kind of get in front of you know, as many of these people as possible and get them to engage with you.

[00:27:44] Right? Yeah.

[00:27:45] Omer: I want to go back to something you said a little earlier about why you decided this time with this startup, you didn't need a co-founder. Conventional wisdom. You know, we always hear you have to have a co-founder. If you were, you know, doing this for the first time and taking Ibase through yc, they'd be saying, Pedro, you get a co-founder.

[00:28:09] So. Why did you, why did you feel that that wasn't necessary this time?

[00:28:15] Thejo: Look, it, it was a very rational, logical, kind of thought process, which led me to that decision. And for my first company, for example I have no regrets. You know, having a co-founder, we, you know, worked well together and, and we brought in the early days, especially complimentary skill sets that I think were important to the business.

[00:28:33] That's all fine, right? So it was all good and, and I think that was the right choice for that business. But for Airbase, as I went through this process of kind of do I need a co-founder what are the reasons typically that you might want to have a co-founder? One is you just don't have all the skills.

[00:28:48] Right. So you might be, you know, a, a, an engineer good at building products, but you're not that good at selling and, and selling a vision, getting those only customers and, and all that kind of stuff because they are in some ways two separate skillset sets. Or you might be, you know, a good salesperson, but you can't really build the product at all.

[00:29:07] Okay? Then you just, if you wanna build a technology product, guess what? You need an engineer, right? And so, you know, it is not having all the skill sets that you need to get the company to a certain stage is one reason to go get co-founders. Another one is, you could argue, especially if you're a first time founder, sharing the emotional burden and the ups and the downs of building you know, business.

[00:29:26] That's another important reason I think you know, you should consider having a, a co-founder. And those are the typically the two biggest ones, right? It's a skillset, it's need of the business. It is carrying kind of, and sharing the emotional burden. But my decision was that on the emotional burden side, I'd gone through this journey once before, right?

[00:29:47] And, and I felt like I didn't need anybody to share that emotional burden with me. And, and that I would be fine, partly because I had you know, made a bunch of mistakes. Building, you know, my first company where the business was an extension of me, right? It was, it was an extension of, you know, my personality and, and every failure of the business was my failure.

[00:30:08] I was a failure if something didn't work out. And, and so I had kind of gone through that process and at some, you know, level mature to the degree where, you know, I think I'm better this time around to kind of distance the business from my own sense of self-worth and, and you know, all of that. And so I didn't feel like I needed somebody to.

[00:30:26] Kind of share that emotional burden of the ups and the downs and the challenges you know, of, of building the business. And, and on the skill side of things for example, you know, in the first business we built hardware and I didn't really have some of those skills and things like that. And this time it was a SaaS business software product.

[00:30:43] I knew how to build that product. I knew how to sell that product. And so I'm like, you don't really need I didn't need a co-founder for that reason, right? And so, you know, as I was ultimately going through those list of reasons, I'm like, okay, and look also from a purely tactical perspective, I think what every founder needs to understand is that the greatest dilution you will take in the value you create ultimately for your business is likely on day one when you start the business, right?

[00:31:07] So if your two co-founders who are splitting, you know, 50 53 co-founders splitting a third each, I guess what, you know, in terms of dilution that you take and the ownership and the ultimate value that you create. That's greatest from day one, right? And so I don't think it should be kind of a defacto, you know, reason or assumption that you absolutely need a co-founder.

[00:31:28] So I would think, you know, it's, it's a case-by-case thing. You know, ask yourself why, ask yourself if it's definitely necessary. And, and but what I did instead was that, you know, I just was the sole founder, but for the first kinda set of employees who joined the company I was extra generous with the equity grants that they got relative to what was market, right?

[00:31:47] In terms of the first, second, third, fourth, fifth, you know, employee so that you can attract really good ones, right? So, you know, it, it is a thing that as, as the company scales you want to have incredibly invested people. The thing about founders always is that last line of defense, right? So you, you know, you can't complain about anything.

[00:32:04] You know, you're the last line of defense and, and you ultimately, I have to own whatever problem comes up. And so you want to have as many people like that in the business as possible. And how do you do that? And you can still, you know, be generous relative to this, you know, stage of risk that they're taking.

[00:32:18] And I've always done that. Even I, as I've hired executives and, and things like that. And, and that's worked out, right? So, you know, I'm purely in very tactical terms. Yes. I'm, I think I'm gonna ultimately get to keep more of that value that I've created over the years. That's, that's one of the reasons, and maybe the one other reason you should keep in mind is that, you know, I, I don't know if this is statistically accurate, but the number one reason, or very close to number one reason or why startups fail is co-founder contract.

[00:32:46] Right. And while I was lucky in my previous startup that I didn't have to deal with that, you know, any major problems in that area, I've seen friends and, and other folks who've built companies. Who had their company is destroyed and, and, and all that kinda stuff because the co-founders couldn't get along with each other.

[00:33:02] So that's always a, a big kind of thing that is hanging over a business, especially as it grows and matures because the chances of every single co-founder scaling with the business as if it actually becomes successful is actually pretty low. Right. And one of them might, the CEO might, or it might be the CEO who's not scaling, and then the CT is actually can do the job for a really long time.

[00:33:24] And however you're splitting it, chances are fairly high that one or more of the co-founders will not scale. You will not agree with each other about the strategic direction and things like that. And those are all like way more emotionally taxing compared to having somebody to, in my opinion, share that emotional burden you know, of the business as you're building it.

[00:33:43] So yeah, considering all of that, you know, it's a trade-off like every other kind of decision and, and, my goal was to say, I don't think I need a, a co-founder, and I have zero regrets about that. I'm about, you know, five, six years into building Airbase now and no regrets.

[00:33:57] Omer: Yeah. That, that, that's a, a very thoughtful answer.

[00:34:00] I love the way you broke down the, the thought process in terms of, you know, when, when should it make sense? And, and again, kind of going through that list, it's, I, I guess it was a lot clearer to you at the time that right now it didn't seem to make a bunch of sense. And I guess every, every time you took a step forward and the business got some more, more and more traction, it was like, okay, still makes sense.

[00:34:25] I can still keep going and, and so on. So okay, so that was one piece of conventional wisdom that you didn't follow. Let's go back to the journey to the first million in ARR. So we talked about you doing sort of founder-led sales, getting the first 15 or so customers. The other, I guess, conventional wisdom we, we often hear is, okay, once you've, you've kind of done the founder-led sales, bring in, you know, some, some AEs, build, you know, maybe potentially some junior people around you, people who can grow into maybe potentially senior roles and so on.

[00:35:02] But don't go and hire, you know, a VP of sales and you hired a VP of sales.

[00:35:06] Thejo: Yeah, my first full-time sales hack was my VP of sales. And that decision by the way, is tied to my decision to not have co-founders. Right. So typically I think it's, it's fine to follow his advice that you know, do founder-led sales initially.

[00:35:22] I think that's absolutely important. I think in the early days, founders should spend a lot of time talking to customers, right? Like, you know, if you as a founder are hiding behind conversations with customers. Company's gonna fail, like high probability, right? And so you have to kind of take the punches, listen to the tough feedback, like whatever it might be, you know, and expose yourself to the pain.

[00:35:42] You know, every day. Even today, you know, we are a growth stage company and, and lots of customers, all that kind of stuff. But I spend multiple hours every week speaking to customers, right? Because there is nothing more valuable than speaking to customers about their pain and how you're doing and what you could be doing better and things like that, right?

[00:36:00] And so that's one thing. But now going back to the who should you hire? First from a sales perspective, if you have somebody, one of the co-founders who's like, fully focused on sales and somebody else is fully focused on building on the product, iterating on the product, all that kind of stuff, I think that makes sense.

[00:36:15] Effectively, that co-founder is your VP of sales, right? And so they can go and hire their first, you know, couple of AEs and make those account executives successful. Write the playbook initially for how you move from a founder-led sales model to end. AE LED sales model, and you can start that process and you can, you know, write the initial version of that playbook.

[00:36:36] And at some point you can bring in a VP of sales who can scale that playbook, right? How do I take from, go from two AEs and, and I know there's a model that's working, and so how do I add more capacity and how do I bring more pipeline and blah, blah, blah? Like how do you kind of take it to the next level?

[00:36:50] But in my case, if I had done that, then I would now be the VP of sales and I would be the VP of engineering and I would be kind of the one responsible for fully building the product and moving that site forward. And I would be the one responsible for managing the Go-to market kind of effort for the business.

[00:37:06] And that would not have been a good idea. I would not be setting the company up for success if I tried to do both. So my call there was, I'm gonna find a VP of sales because it's also true that a true kind of very mature, experienced VP of sales. We'll likely not want to come and be the first kind of employee at a business.

[00:37:25] It, it requires at least most VP of Sales will not want to do that in the market because they have options. They just wanna go in where the risk is the lowest for that. And they just wanna go in where the playbook has been figured out. You have a bunch of customers, you have product market fit. Okay, I will now scale it.

[00:37:41] Right? And so, you know, because VP good VPs of sales have those options that's what they choose to prefer. But there are a smaller number of, of sales leaders out there who want to write the playbook and not just take over a playbook and refine it. Right? And so my attempt, which I ultimately succeeded at, was to find a VP of sales like that, who wanted to get in early, who did not mind getting their hands dirty, who you know, wanted to kind of write that initial version of that playbook as it moved from fund sales to you know, a sales organization taking it and scaling it.

[00:38:15] And, and you know, I was lucky that I kind of found that kind of a person and, and so it worked out, right? And, and you know, that sales theory got us. Past our first a hundred, 120 customers or something like that. And, and I know it's a whole other conversation for how, you know, sales leaders scale and grow and, and fit for different stages of maturity of the business and that kinda stuff.

[00:38:36] But, but again, the lesson I've taken away with a lot of these decisions is don't take and advice in a cookie cutter manner, right? Because a lot of the advice may not really apply to you try to think of things from a first principles perspective, right? And why, why does somebody recommend a certain thing?

[00:38:54] And does that advice apply to does that conventional wisdom apply to you? A lot of times it does, right? And, and but you know, if you think about something from first principles, which should. Also apply to your product, by the way. Right? And so you should really think about the problem from a first principle's perspective and then the solution to that problem from a first principle's perspective.

[00:39:13] And, and, and, you know, that's a whole other, I guess conversation. But, you know, a lot of these quote unquote conventional wisdom kind of aspects you know, if you really ask yourself if, if that applies to you, and if you're thinking about it from first principle, sometimes the answer is no. And, and so I think that's kind of what happened in, in my job, right?

[00:39:34] Omer: In, in those early days. What was the average contract value like typically for, for a new customer?

[00:39:40] Thejo: It, it, it's started off on average being, say in the 10 to 20 K range, but it, you know, the overall kind of range, range from 10 to 50 K, but the average was somewhere in the 10 to 20 k range overall.

[00:39:52] Right. But over time, obviously that's grown. In the initial days it reflected the maturity of the product. Right. And as we added more capabilities, as we were able to go after larger customers, more use cases, all that kind of stuff, that has kind of continued to grow over time.

[00:40:07] Omer: Right. So the first 15 or so customers that you got, got you.

[00:40:10] The first, you know, few hundred thousand in ARR, you've got the VP of sales that comes on, helps you get to the first million. What was the, the main growth channel? Was it just a lot of you know, outbound cold emailing. Is that the primarily way that you, you grew to the first million?

[00:40:29] Thejo: Oh, I, I think your go-to market strategy really depends on, you know, the segment you're targeting.

[00:40:35] I think the first thing I think you should not try to do, at least my opinion, I know some companies try to do it, is to try to be everything to everybody, right? Like, hey, I'm gonna, you know, send my product to a two person company, a 200 person company, a 2000 person company, and a 200,000 person company.

[00:40:49] I will be, I will serve everybody depending on, at least in our space, if it's deeply workflow oriented products, especially in, in the finance domain like I have, I cannot point to a single. Very successful business that has done that, like basically serving the needs of like every segment. So one thing I think you should typically do is pick a segment and, and you should also form an opinion.

[00:41:13] And that's what the early part of fund-led selling. And, and how, what is the value you're delivering? What is the willingness to pay? You know, some of these things come up where you will find out, and this is partly the reason why you should not invest a bunch of money and hide salespeople and try to scale that model until you have a fairly good idea of, Hey, what's my a CV gonna be?

[00:41:30] How much can I actually charge for this thing? So to get to a million dollars, can I charge a thousand dollars a year? And, and, you know, do I have to go acquire a thousand customers or can I charge like $10,000 and acquire a hundred customers? Or is it, can I just charge a hundred thousand dollars and get 10 customers?

[00:41:46] Because how you acquire 10 or a hundred or thousand customers, the strategies for that will differ. Wildly sometimes, right? And so the difference between what you're going to do to get 10 customers is so different than what you're gonna do to get a thousand customers. A thousand customers is likely product-led growth.

[00:42:02] It's likely kind of marketing driven and demand generation and things like that. Inbound mostly. But if it's 10 companies that you're trying to land, they're not gonna come and find your tiny company website somewhere and, and pay you a hundred thousand dollars. It has to be outbound. It's, you know, this is a whole other motion that you have to follow to build the pipeline and, and generate the demand for that.

[00:42:23] For us, we are somewhere in the middle, right? And so what we ended up doing was because getting to that first a hundred customers at least in my opinion, that's more, I was more focused on pro finding product market fit and the strength of product market fit than I was on answering questions about go-to-market fit, right?

[00:42:42] I think those are two different things, right? So do you have kind of a scalable go-to-market engine that you can put more money behind and scale? That answers the Go-to-market fit question. But the product market fit question is largely about are you solving a real problem? You know, and that whole, I know VCs like to ask the vitamin versus painkiller question, right?

[00:43:00] Are you a vitamin or a painkiller? Yes, A bit of a cliche, but yes, you wanna be a painkiller, especially in bad kind of macro environments and all that. You don't wanna be the vitamin that gets cut and, and you wanna be important after the business. So you're trying to figure out those things, right? So am I, you know, a, a painkiller?

[00:43:16] Am I, you know, a system of record? Am I seeing the right kind of adoption and usage? And, and when I ask questions like, Hey, if you just lost this tool tomorrow, like, you know, would you be really disappointed? And then, you know, the NPS like questions that you're trying to build, confidence, you know, around.

[00:43:32] Getting to the right answers there and intellectually honest answers. There was what I was focused on getting to those first hundred customers. And for us it was not trying to make it, you know, programmatic or scalable it was a lot more about just, you know, beg, borrow, steel, hustle. A lot of those customers came through the network, right?

[00:43:50] So my network, other employees, networks, investors, you know, network and, and you know, a bunch of customers came that way. Word of mouth. We also focused in the early days what, what we thought of as the give, give, get kind of model, right? Like, how do you give value first, right? And so you just don't want to reach out to somebody and say, Hey, buy this thing from me that I wanna sell to you, right?

[00:44:08] It's how do you just give value? And we did things like create a finance community. And today that Slack community has about 5,000 people in it, and it's kind of a no sale zone. And then people can come and connect to each other. And yes, they know it's an Airbase community and all that, but how do you give value, right?

[00:44:24] And then that's that kind of a community didn't exist for finance and accounting professionals. And, and we also started this you know, webinar interview series called Path to Becoming A CFO. Like this is another way to add value, where, you know, using my network and then investor networks, I.

[00:44:40] Interviewed CFOs from Salesforce and Twitter and, and Zendesk and HubSpot and Robinhood, and, and all of these well-known companies because that was value to our target audience because, you know, as a founder, I, you know, have consumed a lot of content of founders and CEOs and, and folks further along the journey from me, and I've learned from it, right?

[00:45:00] And so that's aspirational. I wanna build, you know, companies like them, and I wanna build a public company hopefully someday. And, and so I've kind of found that kind of stuff interesting. So my question was, okay, to my buyer, once you have an identified buyer, how can you create useful aspirational content?

[00:45:16] And, and for our buyer controllers and comp CFOs of smaller companies, you know, becoming a CFO for recognizable brand name public company was aspirational. And so their life stories, how they got there. And, and so that was kind of useful. And so that, you know. What allowed us to reach out to people just offering them value and to get the positive brand association going.

[00:45:40] So we did a stuff like that for the most part. Right. And, and so yeah, we had a, you know, a bunch of these experiments around paid kind of marketing and, and all that kind of stuff. But for the most part it was try a whole bunch of stuff largely focused on kind of providing value back to folks first.

[00:45:57] And, and you know, that included organizing dinners and, and as it turned out, at least back then controllers are not the persona that is, you know, invited to lots of dinners and networking events and all that kinda stuff. Right. And sales leaders and marketing leaders are bombarded with, with lots of asks and requests and invitations and things like that.

[00:46:16] But. The controller is not right. And so those kinds of things help. And we found that they really wanted to network and they wanted to kind of participate, you know, in some of these events and, and you know, they got value, especially if it was a useful, you know, discussion in a forum that you created.

[00:46:31] And so that allows us to kind of connect and talk about the problem we were solving and, and build relationships and stuff like that. And so I think all of these tactics helped us get to the kind of first a hundred plus customers. Right.

[00:46:43] Omer: Yeah. That's great. I wanna talk a little bit about competition.

[00:46:47] You, you get to the fir, you know, a hundred customers, so always probably, you know, get breaks you through the first million in a RR you feel like you, you've, you've valid, you, you know, you validated the idea. You've gone out and, and, and proven it in terms of, of generating sales and, and getting customers that you've got product market fit here.

[00:47:06] Great. And then I think there was at one point you realized. That this opportunity that you had discovered and started to build this business around, suddenly everybody was making a kind of, I guess, gold rush to get into spend management. Can you just help us understand like. What, what was that realization?

[00:47:31] How big of a problem was this?

[00:47:33] Thejo: Yeah, look, I, I think this is something that any valuable idea in a big market or a solution to a valuable problem in a big market, in some ways, you're gonna end up there, right? And, and you know it's gonna become competitive. You have to have some massive technology more to advantage or network effect or something like that, you know, strategic advantage.

[00:47:53] But let's be honest, in SaaS, there is no more or strategic advantage. The big thing you have is, you know, execution, right? And so that's how you win. And, and for the most part, in the early days. So what happened in our space was that, you know. I've always had this vision of spend management consolidation of all of the non-pay spending in one platform end-to-end kind of workflows and payments and all of that.

[00:48:16] You know, corporate cards was one small piece of it that was of initial wedge that we went into market where then we launched an AP automation product and we launched an expense management product. And earlier this year we launched you know, a guided procurement product as we've gone up market, that front-end collaboration problem of how decisions to spend money are made.

[00:48:33] You know, that's a whole new module and product that we've launched. And so we have kind of methodically gone after all of these areas over the years and, and of course. The, the improvements in financial kind of infrastructure, FinTech infrastructure, card issuing, and all of that, that has also led to the proliferation of corporate card companies.

[00:48:51] Like that was a whole thing for a while. Like, Hey, corporate card, like, I'm gonna compete with AMX and, and all of that, right? But very quickly, some of those companies realized that, oh, there's no business model here. There was a zero interest rate kind of period where money was dumped into a lot of these companies, even though they had like 15, 20% gross margin, revenue, those kinds of things.

[00:49:10] You know, growth was all that mattered. The quality of the revenue and and business model didn't really matter. And, you know, bunch of these companies raised huge amounts of money, but over time, as, as the pandemic hit, and then especially over the last, say 18 months as the recession started, all that some of those companies.

[00:49:27] Started to realize that, oh, shit, like this corporate card thing is not the long-term business kind of opportunity here. And, and you know, I would like to think that a bunch of them looked at us and went, wait, I think everybody has the right idea of how to think about this opportunity. The long-term sustainable business model.

[00:49:41] For example, we have always thought of ourselves as a SaaS business first that we charge subscription fees for. And then, you know, the FinTech element of it is an important enable, right? And so but a lot of other companies, their lending companies, the FinTech element is all there is and, and stuff like that, right?

[00:49:57] So, you know, if you look at that corporate card segment and then there's the whole travel companies that during the pandemic got a big scare and they decided that I need something else to sell to the offices, the CFO if something like this ever happens again, and where revenue falls to zero. And so they started coming into the spend management space because they were seeing clear traction and, and, you know, the, the solution to that problem was obviously resonating with the market. So they came in there, HRIS providers, you know, started launching their own spend management solution. So, you know, it's gotten noisy, right? And, and you know, a bunch of these companies have raised, you know, lots of money.

[00:50:34] And the funny thing, of course, is like a lot for a lot of these companies, if you look at where they were three or four years ago and where they are today, a number of things in from their messaging, their positioning, their business model and how they monetize. Increasingly it's looked more and more like Airbase, right?

[00:50:49] And so,

[00:50:50] Omer: I mean, that's a founder's worse nightmare that you are, you are happily going along building a business and then suddenly everybody wakes up and decides they want a piece of what you are, you know, the pie. And, and not only that, but you've got these, you know, very well funded. Competitors entering the space.

[00:51:11] So, so just break that down for us. Like how, how did you approach that?

[00:51:14] Thejo: The the value number one for Airbase has always been control your own destiny. Right. And so that goes back to my experience building my first company when I didn't do a very good job of that. And, and I spent, you know, more time than I wanted to on Sandhill Road with a begging board trying to raise money unsuccessfully and all that kinda stuff.

[00:51:30] And, and so as I was asking myself like. The kind of business I wanted to build, it was incredibly important to me that I control my own destiny. And I think we've done that. Like, you know, we, we, over the course of Airbase, you know, controlling our own destiny, being super frugal, the kind of culture we have as a company, you know, these things have all been, we haven't had to do a big layoff you know, in over the last 18, 24 months.

[00:51:52] Partly for that reason, right? It's, it's because we've been very, very careful about how we have historically deployed capital, the sustainability of our business model and, and those kinds of things. But it is also true that you have to live in an environment where a huge amount of excess capital is, is being kind of dumped in the market.

[00:52:11] And we are still, to a certain extent, living through that, where many of these companies have raised that, frankly, ridiculous, unsustainable. Unattainable valuations and, and but they also have raised a whole bunch of money. And so to live up to some of these valuations you know, they feel the pressure to grow into it and to grow at a faster rate.

[00:52:31] And so they spend that money, you know, very inefficiently. And then to kind of create that noise in the market that, and I know it doesn't make sense to go toe to toe with you know, some of that kind of inefficient spending. But the choice we have made in, in strategic areas is to reposition, refocus, you know, go a lot more focused on a particular segment of the market, as long as it's large enough.

[00:52:52] You know, the whole thing about don't try to be everything for everybody, but even in the initial segment that we targeted while I said that we tend to target on the a hundred to a. And a few thousand employees. Within that, we are increasingly more and more focused on the, you know, 500 to kind of a few thousand employee segment.

[00:53:10] And that's where a lot of investment, you know, continues to go. And, and so those are some of the things that you can do, that you can control, right? And yes, you might have to make some sacrifices along the way, and then that's the expectation you set with the board and every, you know, stakeholder, important stakeholder in the business that, you know, maybe we'll give up on growth.

[00:53:27] Partly that's the right thing to do in the macro environment. We were, you know, growing. Better than the T 2D three kind of pace that, that you look at for you know, SaaS companies, right? Triple, triple, double, double, double. We were doing, you know, much better than that, but at some point last year it became a lot more important to say, we have to control our own destiny.

[00:53:47] We want runway for a number of years. We don't wanna put ourselves in a position where you want or have to raise more money. So what, what gives growth gives, right? And so you're, you're okay with slowing down, you know, on the growth side and, and but sticking with the, the need to do something that is sustainable, that's what we have done, right?

[00:54:06] And so, but look, along the way, we've made mistakes too, right? Towards end of 2021, for example, while we had that discipline of we're gonna always charge for software and things like that, I was looking at the craziness of the market in, in, in 2021 of how, look, everything is free and I just make money from the interchange.

[00:54:24] And you know what? Investors in the market were actually buying this upside down business model. And there were companies that were raising between a few companies there raised billions of dollars. Right? And so our whole thinking at that point, at least my, and I should take kind of responsibility for that, is that, look, if this persists, it doesn't make sense, but if it persists, we're gonna get crushed at some point, right?

[00:54:45] But these companies is gonna raise so much money that we're just not even gonna be able to compete. So. We decided we are gonna launch our own free tier and, and kind of work on acquiring more of that card-based interchange revenue you know, low margin revenue that apparently was being valued at a hundred, 150 x.

[00:55:04] And, and we said, fine. Like if that's just the world's gone bonkers, but you know, let's just go do it too. And in hindsight, that was a mistake, right? And, and so I think we've spent the better part of last year unwinding that whole kind of experiment and, and so, you know, that was, like I said, in in many ways you know, a mistake.

[00:55:22] And I should have stuck to my intuition and, and gut feel that we are on the right path. And, and you know, like I said, a lot of those companies that everything was free. They're all doing a bait and switch now on their customers and saying, Hey, you now have to start paying for this promise product that I promised you for free, you know, forever.

[00:55:40] Guess what? I need to have a business model, so please pay me now. Right? And, and so you know, that whole thing is happening and, and all of that, so, which is all fine, but you know, it's just a different degree of inefficiency and, and unsustainable behavior in the market that we have to deal with.

[00:55:54] Now, if two years ago it was, I am, I don't even need a business model. Everything is free. Let's go. That was the business model. You know, now it is know I'm gonna ask you for money, but still an amount that is in no way sustain helps you build a sustainable business. Right? And so now we have to deal with that and, and so it'll evolve, right?

[00:56:12] And so the question is, you know, you've gotta, in many ways just survive through the process of madness goes back to the cockroach, right? Exactly. So be a cockroach. You have to survive through some of that inefficiency and, and continue to control your own destiny and not put yourself in a place where you just run out of money.

[00:56:30] And by the way, that has happened to a few folks in our space too, right? In that, you know, they could not continue to operate efficiently enough. They could try to do inefficient things and, and you know, I don't think some of those companies are gonna survive. And, and I'd like to think, you know, we are put ourselves in a good enough place that.

[00:56:50] We've been willing to make some hard trade-offs. And, and you know, in terms of expectation setting with the board and investors on what we are gonna give up to actually do what we think is the right thing long term. And I've been very happy and fortunate to have like a mature set of investors.

[00:57:05] And that's the other lesson is to really pick investors who you know. We don't give you the highest valuation, but we're actually gonna be good partners, you know, during the difficult kind of phases of building a company.

[00:57:17] Omer: All right. We should wrap up. Let's get onto the lightning round. I've got seven quick fire questions for you.

[00:57:24] Just try to answer 'em as quickly as you can. What's one of the best pieces of business advice you've received?

[00:57:29] Thejo: Look, there's a lot, but maybe the, the one that quickly comes to mind is what I mentioned upfront, which is just. Make sure you enjoy the thing that you're doing day in and day out.

[00:57:39] Otherwise, you know, building a company is a grind in, in its own way in a lot of ways. And if you don't like the thing you're doing, oh my God, that, that, that's like an order of magnitude was grind, right? So make sure you pick something that you would work on even if nobody paid you. Right.

[00:57:54] Omer: What book would you recommend to our audience and why?

[00:57:57] Thejo: There are lots of good books and, and I've gone through phases of the kinds of books I've read, but if you're an entrepreneur, if you just want to get this visceral feel of persistence and, and, and, you know, hard work over a long period of time, like, one of the books I read a couple, two, three years ago is a shoe dog by you know, the autobiography of the Nike founder.

[00:58:16] I just. I thought that was a really awesome book. But more lately, because I spent so many years just reading business books, I, I've been more on science fiction bender and, you know, the, the most recent book I can recommend that I liked that I just finished reading a couple of weeks ago is this book called the Last Day of Night.

[00:58:34] Right. And, and it's a story of Edison and Tesla and Westinghouse and that period in the late 18 hundreds where the light bulb was invented and there was this complication between AC and dc and which would kind of become this kind of, the default kind of mode of power distribution. And sounds a little nerdy, but it's a fun book.

[00:58:53] I, I, I can recommend it if you like historical fiction, right?

[00:58:56] Omer: Love it. Okay. What's one attribute or characteristic in your mind of a successful founder?

[00:59:01] Thejo: Persistence. You know, it's, it's, a lot of people think, look, absolutely there's luck involved in, in a lot of this right place, right time, luck, all that kind of stuff.

[00:59:10] But I think so much of it is about, you know, persistence and, and just being willing to grind through tough situations for long periods of time and having the stamina to do that. And I think at least in my view matters.

[00:59:26] Omer: What's your favorite personal productivity tool or habit?

[00:59:29] Thejo: I, I've honestly given up on a lot of these things.

[00:59:32] I used to be this inbox zero person for many years. Right now, let me look at my inbox. I have 5,300 emails. Whoa, whoa. So what, what, what I have ultimately landed at is, you know, I've gotten better asking myself what matters in life, right? Obviously Airbase work, you know, keeping my team unblocked, all that kinda stuff.

[00:59:53] I also have a five-year-old daughter and an 18 month old son. And, you know, my wife who's been wonderfully patient through all of my kind of you know, adventures. And so I tend to have clarity or my try to have clarity around what really matters and, you know, just ignore everything else.

[01:00:12] Omer: That's a good attitude. What's a new or crazy business I year you'd love to pursue if you had the time or what's an idea we can steal from your ideas notebook?

[01:00:21] Thejo: There, there are many, and, and I don't know how many of them are actually scalable, you know, businesses and but one of them, you know, there are a bunch related to how distributed remote teams work, right?

[01:00:33] I think in the process of building Airbase, I've kinda identified some of them. There are various takes on that. Like I've tried a bunch of them. I don't think they, they all get them right. I don't think there's any tool that's really taken off in terms of helping other than the Zoom and some tools like that to do basic stuff.

[01:00:51] But you know, I think that's a whole mine. You know, that is rich with possibilities that you know, at some point maybe I'll have the time to look into it, but also from a product development perspective, how do product managers, designers. UX writers, engineers all collaborate effectively, efficiently, you know, to, to build and ship a, a product.

[01:01:18] Clearly there are a number of products in the market, but I think there are opportunities to just do a better job there. Again, don't really know if that's a public company on its own, but it's broken. It's broken in lots of ways from, from my experience. Right.

[01:01:34] What's an interesting or fun fact about you that most people don't know?

[01:01:36] I think that somebody asked this question in the sales kickoff we had two weeks ago for our Q4, and my answer then was that I ride a motorcycle that's you know, 550 pounds and, and it's A-B-M-W-R 50 Gs. It's a lot of fun. It's one of those, my wife thinks it's, kinda one of those middle-aged crisis things.

[01:01:56] But I, I used to ride a motorbike back in India when I was growing up. It was just a mode of commuting, and hadn't done that for about 10, 12 years after I came to the US and recently started doing it again.

[01:02:08] Omer: Love it. And finally, what's one of your most important passions outside of your work?

[01:02:12] Thejo: You know, reading, I just, I've always enjoyed reading.

[01:02:15] I mean, I, I came from a family of academics and all that kinda stuff. Like growing up I had a library of 3000 books at home. So, might seem like a cop-out answer, but honestly, I. With Airbase and, and the kids and all of that. Like, I, I barely get time for anything else. So the time that I do get for myself, I try to kind of read, you know, because it's just fun.

[01:02:40] And like I said, I stopped reading business books you know, for a while now. I'm, I'm mostly for the last two, three years have almost exclusively just been reading, you know, good fiction of all sorts.

[01:02:50] Omer: Well, thank you so much for joining me. It's been a pleasure talking, and, and thank you for, you know, taking us back over the years and sharing, you know, your, both, your journey in terms of how you, you built this business, but also I think a ton of useful insights for many, many early stage founders who are probably going through a lot of those challenges today.

[01:03:10] So I think it was really helpful. How you broke down a lot of that, you know, those ideas and how to think about, you know, conventional wisdom and whether that's the right thing for you or not. So totally appreciate you doing that. If people wanna check out Airbase, they can go to and if folks wanna get in touch with you, what's the best way for them to do that?

[01:03:32] Thejo: You can find me on LinkedIn and please feel free to connect with me and tell me that you heard about me at Airbase on Homer's podcast and, and I'd be happy to connect and thank you so much for having me. My pleasure.

[01:03:44] Omer: I wish you and the team the best of success. Thank you. Cheers.

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The Show Notes