Achieving Product-Market Fit That Allows You to Build Billion Dollar Unicorns: Gaurav Dhillon, Founder of Informatica and SnapLogic (Part 5)

Sramana Mitra: The story is very different for a Dave Duffield starting Workday or a Gaurav Dhillon starting SnapLogic, because most of the people who are starting companies without that kind of track record do not have the options that you have. They have to figure out some way to navigate that early cash issue.

Gaurav Dhillon: You’re very kind to include me in the same breath as Dave. Dave is on his third company. I’m only on my second. You’ll recall he did this in the mainframe with Tesseract. Every two years, there’s a change in the compute platform.

But you’re right. I do have the advantage of having had a phenomenal outcome for my employees and investors at Informatica. Conversely, there’s also the install base of integration, some of which are products that were built by yours truly in 1992 that are still up and running. For example, at SnapLogic, we have to do a much better job in terms of product attributes for the cloud to win over the very same customers. In a sense, to upgrade them to the new logo.

Sramana Mitra: I guess the issue that we are dealing with a lot of these new entrepreneurs is that they cannot access cash that easily that a serial entrepreneur with a track record can. Part of what’s going on in the industry is there are a lot of serial entrepreneurs right now.

Gaurav Dhillon: We’re aging as an industry, aren’t we?

Sramana Mitra: We’re aging as an industry and there’s a lot of experience in this industry. Let’s get back to a couple of other things at Informatica. You said you raised about $13.5 million total. That was mostly customer funding. Did I get that correct?

Gaurav Dhillon: That’s correct.

Sramana Mitra: $13.5 million all the way to IPO?

Gaurav Dhillon: That’s right. The second round was Nesamoney. I really lucked out in meeting one of the finest investors in high-tech early in the life of Informatica.

Sramana Mitra: How long did it take you to go from founding Informatica to going public?

Gaurav Dhillon: We were finding product market fit till we got venture capital. They wouldn’t have done it if they didn’t feel we had it. The fact that we had a pretty epic product that we had bootstrapped was huge inducement for the capital. We were public in early 1999. I would say about four years.

Sramana Mitra: What kind of revenue level did you go public at?

Gaurav Dhillon: We were $60 million going on $120 million. We were almost break-even at that time.

Sramana Mitra: Is there anything else that you want to discuss about Informatica before we move on to SnapLogic?

Gaurav Dhillon: The caution I would have is we learn some things in hindsight. What happens is there is too much an emphasis on earnings per share and not enough on maintaining product excellence. If I reflect back, I feel that there was potential opportunity for myself and the founding team to do what other entrepreneurs now more commonly do—to do the right thing for the company rather than short-term thinking.

Sramana Mitra: Right now, what’s happening in the industry is a lot of founders who do have negotiating leverage are keeping control of voting shares more often.

Gaurav Dhillon: Right. I think this is because of the nature of capital of Wall Street. It used to be long-only funds. Now, it’s a combination of long-short and some long-only. The complexion of public investing has changed quite dramatically into a much more higher frequency trading. These are things I didn’t know.

At that time, it wasn’t clear that Wall Street was going to morph into this higher-frequency trading. That’s all I would say. If you don’t do it right, there’s pressure in short-term versus long-term when you go through technology bubbles.

Sramana Mitra: At what point of the Informatica evolution did you leave?

Gaurav Dhillon: It was a 12-year run. We had just opened in Japan. There were certain things going on. It was more about trying to squeeze out more earnings. I left in July of 2004.

Sramana Mitra: Is that when Sohaib came on?

Gaurav Dhillon: That’s right. He was on the board and it made sense for him to step into the role.

Sramana Mitra: What did you do right after that?

Gaurav Dhillon: I took a year out completely. I lived in Argentina for a while.

Sramana Mitra: Why Argentina?

Gaurav Dhillon: It was hotter there and winter here. I like the southern part. I backpacked in Chile sometime around 2000. That was my year off before coming back to the Valley as an investor.

Sramana Mitra: You invested in companies for a while after that?

Gaurav Dhillon: I did and also pro bono board work. If you have luck and timing, you could get drawn to investing. I feel inclined to help people who are doing the same thing you have done.

Sramana Mitra: How long did that last?

Gaurav Dhillon: About a year or two. I had a couple of other investments I made. I pursued some online stuff. It was unfortunate that in 2008 we had to morph that into something very different. SnapLogic is an idea that came out of a board meeting that I was in with some entrepreneurs. It’s an education for me to learn about the business Internet, as I used to call it. My team makes fun of me, “That’s what we call the cloud today.” The consumer Internet already happened, but the business Internet had not happened yet. Salesforce was starting to be public and big but there was nothing else. A lot of the current SaaS properties were all built in the 2005 to 2007 time frame. Now, there is this next iteration of the web towards business computing platforms. That’s when the idea of SnapLogic came out.

Sramana Mitra: What was the idea?

Gaurav Dhillon: In the early ’90s, people went from mainframes to client server. It was so clear to me that people are going to go from client server to the cloud and it’s going to happen in a hybrid way. It’s going to happen in a way where you have a combination of what is on-premise and what is on the cloud. Furthermore, that this is going to have implications on the data side of the equation as well. The long-term trend was very clear to me when I came up with the idea. I recruited some people and put in seed capital to the company. I brought in an engineering team to build out SnapLogic.

Sramana Mitra: At that point, who was running SnapLogic?

Gaurav Dhillon: We just had an engineering person. There was a friend of mine who had built companies and he was VP of Products for a while. He was CEO for about six months but we were looking to get that product market fit. It seemed that we weren’t able to break through and learn from that immersion what that will be. For much of the stuff that we have today around containerization, the core technology had been built in a very nice way but we were really not able to find the product market fit with it yet. That’s when it became clear that either we bring in a business CEO or perhaps I jump in. I jumped in. This was about late 2009, early 2010.

This segment is part 5 in the series : Achieving Product-Market Fit That Allows You to Build Billion Dollar Unicorns: Gaurav Dhillon, Founder of Informatica and SnapLogic
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