September 28, 2022
President of Pearmill, ex-Head of Product at Taplytics, ex-Head of Mobile at Frank & Oak. YC fellow.
Hear Deepak's story, what his fast-track approach is to growth as a YC backed startup, and how he built his muscle for solving his toughest organizational problems.
More highlights include:
[00:00:00] Deepak Chhugani: Your investors are not gonna build your company for you. So don't expect that. And people who expect too much of their investors are perpetually unhappy. And are the people you always hear complaining about stuff. They didn't fund me for this reason. They didn't help me with that. Like your job is to make the company successful no matter what, and investors are not gonna do that for you.
[00:00:16] You want cheerleaders, you're building a community, you're trying to will something impossible into the world. So I have always had the approach of adding people to the cap table as teammates that add value in some way while keeping low expectations, So I will always find a way if someone wants to put in 10 million, put in nine, gimme a million dollars, and I'll split that up with 20 people. Each of them will add something to our company that I might not need it on a day to day basis, but they're there to call on. And by the way, they build extremely good long term relationships, if you know how to handle it.
[00:00:46] Nima Gardideh: Hello friends. It's me, Nima Gardideh, avid rock climber, startup founder, and yes, podcast host. I wanted to start off this episode by highlighting a few reviews that came in recently. There's one from @Jenna$tone that says,” This podcast has quickly become one of my favorite listens. The host, Nima engages the top notch guests, thought provoking, insightful conversations. I always walk away with a new idea and invaluable marketing and growth tactics.” And there's one from @Skylight37 saying, “Love the idea of having two different perspectives intakes on various topics, and what makes it stand out more in the little insightful details during the podcast that makes understanding a certain topic more crucial.”
[00:01:36] Thank you for submitting those reviews, @Jenna$tone and @Skylight37. Extremely meaningful to know that people are actually enjoying these podcasts, and knowing that it's not just me who enjoys doing them. Show some love and give us a rating and review on Apple Podcasts or Spotify, and tell us what you love most about our show.
[00:01:58] All right. This week's guest is Deepak Chhugani, the founder of Nuvocargo, a freight forwarding marketplace. Focusing on the LATAM corridor.
[00:02:12] I met Deepak years ago through Y Combinator. We were both struggling to figure out what sort of company to build and we were part of an amazing group of founders meeting up every two weeks to introspect on our process. He's been a close friend and confidant ever since. You may have heard part of Deepak's story, how after his first company, The Lobby didn't pan out, he returned all the money he received from investors because in his mind it was the right thing to do, but that's only part of his story.
[00:02:43] Deepak shares who his main influence was in starting Nuvocargo, why he chose to go the YC route, how he solves the complexity of running a B2B marketplace, and his belief that organizational design is flawed by design. Deepak was super open about his startup journey. I learned so much more about him. After this interview, I hope you learn a few things too. He starts by sharing how it all began.
[00:03:10] Deepak Chhugani: My parents are from India. So born and raised, both of them grew up their whole lives there. And my dad and his late twenties, early thirties, all of his cousins, they were trying to make it in the world.
[00:03:20] They were trying to find success in business and the opportunity back then, if you were, kind of a young Asian man at that time was to, you could basically find manufacturers in Asia and help them find customers in countries all over the world. So it's really interesting. His generation of cousins.
[00:03:38] He has cousins in Africa, in Europe, in Panama, and all sorts of random places where they all just moved and became kind of Asian connection for local retailers. And so my dad did that a little bit in Panama and then found an opportunity to start his company doing business in Ecuador. And so basically for 35 years, he built a small business, which has since shut down.
[00:03:56] But a business that basically was helping your, if you're a local school supply store retailer, and you need a connection in China or India to buy your supplies and, and connect with manufacturers, and then help you with the logistics of moving the goods from that origin to where you were, he would help you with a lot of those logistics and even help you with things around working capital and, and financing and more.
[00:04:19] So I grew up in Ecuador my whole life from zero to like age 17 until I went to college. My parents were like good Indian parents, pretty obsessed. My kids should go to the us for college. We were never able to, my dad actually had a year where he tried to do his masters in North Carolina, living with family, but he was like working 16 hours a day and studying and driving around and he left cuz it wasn't working and it was a little bit too difficult.
[00:04:43] Just from a financial standpoint and not having enough time to actually be a student. So they had this visceral feeling and dream, my kids are gonna study in the US. So his whole priority was not around superfluous things with the money that he made. It was like, I'm just gonna save up.
[00:04:59] So my kids can go to the US. And I went to the American school in Guayaquil. That's where I grew up and the environment was what I just mentioned. It was, even though everyone locally was going to these Roman Catholic schools, very weird. If you were in the international school, it was very weird and antisocial that had different calendars than everyone else, but it was all about the best possible education, like a good Indian family.
[00:05:22] And then I was able to come to the US in 2010 for college in a small school called Bentley, a business school, right on the outskirts of Boston, lots of Latin Americans there. So it felt like home, amazing academic environment, got to meet a bunch of people and then, I'm happy to go deeper if you want.
[00:05:38] Nima Gardideh: And so these, did you call them American schools or just language schools?
[00:05:42] Deepak Chhugani: No, no, like, like an American school, like my school was part of what's called SAC, like an accreditation of American schools in, I think in South America or maybe everywhere. My school was the one where everyone would go and study for the SAT if you wanted to go to the US in that city. But it was just a very weird school from a social standpoint is kind of the point.
[00:06:00] Nima Gardideh: Yeah. Yeah. We had some of those in Iran. I didn't go to them, but, yeah, basically English speaking classes and like base and you're doing like, what, what were you doing? IB or…?
[00:06:12] Deepak Chhugani: IB was more British. We were doing AP like the US system and there were some British and German schools and they were doing IB. Ours was the only American one that had a different calendar and did AP. And like I said, helped you with the SAT and stuff.
[00:06:27] Nima Gardideh: Was that from the beginning? Like from what, which school? Primary school onwards you were in these types of…?
[00:06:33] Deepak Chhugani: Basically from K to 12 and then nursery was another school, but that was like the only American school. And my parents, there was actually a time when I was 15, where all of my friends were changing to these like Catholic schools because the social life was better. And we always felt like the weird kids throughout the whole city.
[00:06:48] And my parents are very proud of this. I don't think there's many times where you can say to your parents, Hey, this one decision that like the thing you didn't let me do was a very good decision. I made their life miserable for two years. Cause all of my best childhood friends were changing to these schools.
[00:07:02] And they said, I'm not letting you, I'm not letting you. And I actually thanked them for that today. That's the, that's one thing that probably, yeah, I really am grateful to them for it. Whereas all the other stuff they didn't let me do. I probably still, as a kid was like, you should have let me.
[00:07:16] Nima Gardideh: Yeah. It's an interesting thing of like the standard of, I, it's interesting because you grew up in an Eastern culture because your parents were from the east. And I grew up in the same culture of like the American standard, like everyone's goal was to eventually make it to America and I think there's this a friend of mine who's also in America recently, like tweeted on her 30th birthday or something that she gets to be in this country.
[00:07:42] And you, no one understands unless you're from the other parts of the world. How important this achievement is of like being a citizen of America. I'm not a citizen, which she is now. It is quite interesting.
[00:07:54] Deepak Chhugani: But by the way, on that, yeah. Like for me, something people are always focused on the startup world. Like, how much money did you raise? How big is your team? And, and whatever. For me, one of the biggest and happiest moments was getting my green card because I had gone through like six visas and like impossible processes.
[00:08:12] My wife who was then my girlfriend also had to leave the country. So yeah, not only is it like the dream, it's also really hard as an immigrant to live here. So I totally empathize.
[00:08:22] Nima Gardideh: Yeah. Then there's like an interesting thought I have always had of, there is like probably some form of investment strategy of just investing in the immigrants that were able to figure out the visa stuff to be here. Cause you, you it's, it's not easy. They don't make it easy for startup founders to get visas in this country.
[00:08:38] Deepak Chhugani: It's super difficult. And I think it's a very bad move. Like it's draining a lot of great talent. One of our investors, one way ventures in Boston, their whole thesis is around immigrant entrepreneurs and they help them with the visa stuff. And even they'll tell you, it's just a nightmare.
[00:08:51] Nima Gardideh: Oh my God. Yeah. I mean, I dealt with it. We're three founders, all immigrants and it's quite a lot of work and it's very stressful. Every year we have to renew these things and, yeah. It's interesting. So your whole life was kind of like preplanned that you're gonna study in America. And you, so you said you went to Boston.
[00:09:08] Deepak Chhugani: Yeah. I went to a small business school called Bentley university in Waltham, Massachusetts, which is like a 15 minute drive. Downtown Boston. So very near this incredible academic environment with Harvard and MIT and again, this school's beautiful greenery. Yeah. It was awesome. It was the, one of the, yeah just transformed my life just being there.
[00:09:29] Nima Gardideh: So why business, why were you gravitating towards that?
[00:09:32] Deepak Chhugani: I mean, I think maybe it's how I grew up. Like my Dad had done well as a business person, and I couldn't really find an interest. Like I was a good student. I was grade skipped from sixth to eighth grade. So I was like the canonical good Indian kid until eighth grade. And then I started rebelling and being a bad student.
[00:09:49] And I had teachers who would say Deepak is a horrible student, but I think he's gonna do well in business. And I had this stereotype that I was just gonna be a business guy, I guess. Yeah. I mean, going back, I would've loved to have been pushed in the direction to learn some harder skill, like computer science or something like that.
[00:10:06] But, at the time it just felt like business and I didn't really study business. I felt, I don't wanna study business as a major, I'd rather do something tangential to that. So it ended up being economics and finance which to me is kind of business, but not really, if it's not like it's not a degree in business, it's economics and finance and…
[00:10:23] Nima Gardideh: Those skills are actually, in my opinion, more useful than business school. If you wanna start a company, it's probably. better. If you were doing business school and you wanna be a middle manager somewhere and run existing companies. But if you wanna start from scratch, like just knowing how to build a spreadsheet for a budget, takes you a long way.
[00:10:42] Deepak Chhugani: Yeah, exactly. A hundred percent.
[00:10:43] Nima Gardideh: Yeah. So, you started a business in undergrad. Did you do masters or anything like that or you just went to the work force?
[00:10:49] Deepak Chhugani: No, I didn't, but that's an interesting topic with my family because I, so I went to school 2010 to 2014, 2014 to about 2016. I was in investment banking at BOA at Merrill Lynch. That was like a big deal for my parents, cuz it was like the shiny corporate job. Also most kids from my school Bentley, they don't get those jobs, investment banking, cuz it's all like Ivy league.
[00:11:11] So that was like a whole mission and a nice accomplishment. And then a lot of people who you're with in banking, they'll do a couple more years and then they'll go to business school. And for me that was like, oh, this is my chance to finally. The American dream for my parents wasn't about money.
[00:11:24] It was like, well, maybe you'll do your master's at Harvard or Stanford or something. So that was always very present when I quit that job. And I took a little sabbatical. One of the, one of the things I did was take the GMAT, cuz I thought, Hey, I'll try a startup. And if it doesn't work, maybe my hedge will be business school.
[00:11:40] And, and that since expired and I don't think I'm ever gonna do it anymore, but I did not do my master's, but it was a topic that kept coming up for many, many years.
[00:11:48] Nima Gardideh: So your parents would literally talk to you about, Hey, are you gonna think about doing your masters? Like what are you doing with your life?
[00:11:53] Deepak Chhugani: Yeah, totally,
[00:11:54] Nima Gardideh: Yeah, I mean, this is interesting, like it's like a classic thing, right? Like I'm from Iran. Right. And my parents, they never finished a single degree until much later my mother started getting her degrees in her forties.
[00:12:07] So their dream was that we get degrees, and their first child, which was me, I dropped out of my undergrad. And they didn’t love that. So they kept asking me to start again, but my, fortunately my brother finished his undergrad at least. So that’s one of us that did it. But that, it's an interesting sort of pressure that is put on, at least our generation.
[00:12:30] I assume you're not gonna do the same with your kids, if you ever have them and when you have them. But it's an interesting thing that at that point, that was like that was the definition of prestige and importance of success in life.
[00:12:42] Deepak Chhugani: I don't know how you think about this, but I actually really do understand where they're coming from even now in the startup world. Right? Like for me, I was very lucky to get into YC, which is kind of, we met through, through that community and then there's other startup communities that you learn a lot.
[00:12:57] And then as you spend a few years in the startup world and you meet many, many successful founders or investors, there are some patterns where people ended up going to a lot of the same schools and learned a lot of the same tricks and networks. So I actually, I have a lot of empathy for the immigrant parents who are like, It will really change your life to get into one of these schools.
[00:13:18] I think many people, including like, it would be my interest to say it doesn't matter. Cause I didn't go to one of those schools, but I actually do think that if you have the privilege to attend one of them, it does, it can bend the trajectory of your life. Like if you look at our executive team or our board, like the amount of Stanford, MIT, Harvard grads is just off the charts and it's not because we screen for that.
[00:13:38] It's because we're looking for people with certain experience that have seen certain things or been in certain environments and, and they are in, in some ways centers of excellence that attract people. Like I'm sure there's a lot of db people that don't know anything in those schools, just like in any community.
[00:13:51] But on average, they expose you to knowledge and insights. And I would say secrets about the world. That's what my first startup idea was about. Actually it was about like democratizing some of those insights cuz getting the Ivy League job in banking, where I started from that was really weird. And it came through all these.
[00:14:07] Unstructured coffee chats and learning the secrets and the insights. So I have a lot of empathy for that, but I also, to your point, I don't think I would pressure my kids. I would actually tell them to learn the things that matter and try to find creative ways to get that information maybe without the degree or through the degree, whatever, whatever you're able to do without being miserable. Right. Cause I think a lot of people also make themselves miserable if they don't go to one of those schools, which is also not good
[00:14:30] Nima Gardideh: Yeah. And I think there's an interesting debate to have. I think, when people ask me if they should do YC, is the argent I give them is that you're buying a network more than anything else.
[00:14:42] Deepak Chhugani: And legitimacy, right.
[00:14:44] Nima Gardideh: Yeah totally. And there is, there's a definitely cache I've seen, we started investing in funds this past year. And a lot of the decks I see are like, Hey, we're only gonna do Stanford and Harvard grads. It's literally a strategy and a common one. [Laughs] And, so I definitely see it still to this day. I, the thing I think I personally don't value prestige that much, I care about like building things and like, I think you can learn how to build stuff better outside of academia.
[00:15:18] So it really depends on what you're trying to do. Like some of the best people we work with in my company are like in their early twenties and they, even, some of them dropped outta high school even, just because they're good makers and they found their passion and are gonna be, I think, the top of their field one day
[00:15:34] Deepak Chhugani: Yeah. And, I totally agree with you, by the way. I think that it's not even what you learn in the classroom, in these places, it's the environment and the networks, right? Like, I would argue you Nima you didn't go run to these schools, but you're at the top of your game. You've spoken with very smart people.
[00:15:48] You have exposure. To some of the best insights in the world, like in the world of performance marketing or startups. And so someone who gets to work with you gets access to that. I think it's just, I think what I, what I believe is that the odds of you getting exposed to the best of the best in any field do go up.
[00:16:04] If you find the centers of excellence, it's not that you won't find them. If you're just Googling them on your own, it's just, you might make it much harder on yourself or have to rely a lot more on your ability to figure it out. Whereas if you're in these centers of excellence, it might just be grab a coffee with your professor who built 10 companies or whatever, right.
[00:16:21] Go to the center where they built 10, of the state of the art robotics advances or the story of Bill Gates, where he was next to computers, because he was in this fancy boarding school where there weren't computers elsewhere in the world. Right. I think that's what I find very interesting is the centers of excellence, I think can, can shape the trajectory of your life in a way that if you're outside of them, it's just harder.
[00:16:44] Nima Gardideh: Yeah, I think I agree. Agree with that. That part of me wants to believe that if you are an outlier, you'll just. Get out of like, those things won't matter. Right. But lots of the outliers that are currently running the biggest companies in the world for sure. Came from those privileges.
[00:17:03] So it's definitely a thing. I think maybe Steve Jobs was one of the only ones that didn't come out, but he still went to like a decent school and yeah. And he was like, grew, he grew up in it. Yeah. So it yeah, it's an interesting area. So you went, so why investment banking and I'm glad you stopped there, but like what two years, why did you get to go there to begin with, was it just the, I want to do this job that everyone thinks is the best thing to do?
[00:17:30] Deepak Chhugani: No, that's on point. I don't know how many people admit this on podcast. It was probably purely out of insecurity intrigue of like, why is this the shiny thing that even the Harvard kids, it was, I will never forget. It was the first time in my life where I went to the final round interviews and everyone had their reses printed out and it was all these kids.
[00:17:48] And they were all from Ivy League schools and I got the job and they didn't. And so it was almost like, it felt almost like irresponsible not to take it and see what this was about or I was given this unique opportunity that other people went to these amazing schools that I never got into. But I think that's what it boils down to.
[00:18:05] It's this shiny thing, investment banking, it's amazing. It's where everyone starts their career. You would, I would devour these fors where they're like, well, if you wanna be a hedge fund manager, like this guy you saw on CNBC, they started in investment banking if you want to be in private equity. And so I thought it was. In hindsight, which hindsight is 2020. I saw it as like my first foray to trying to be in a true center of excellence, which it felt like at the time that I could access. But then I always had reservations because I knew it was like really stupid that they made you pull all nighters and work a hundred hours for PowerPoint and Excel.
[00:18:38] And so even four months in, I was like, I'm probably gonna quit this job at some point. But I held out, I waited till the first year bonus, then I didn't get the visa. They said, we'll send you to Mexico. I said, well, in Mexico, I'll be a second year. So I'll have more skills and we'll make another bonus and wait.
[00:18:53] And then even when I got to Mexico, I got like three weeks off and I started in a weekend. I'm like, I have to quit this crap. I just don't, I don't wanna do it, but I do think that's what it was Nima. It was like my version of like, this is my center of excellence that I can have access to the stamp. And to be honest, it has helped when I would raise the first money or get into YC and be like, oh, this guy seems like he works hard.
[00:19:14] Not because he went to Bentley, like, let's be real. It was, he was an investment banker, like this guy. Went through two years of hell. We knew people that literally would go to investment banking in the army and they would say investment banking was worse because you didn't sleep. You had to function with, with no sleep.
[00:19:28] And so that's what it gave me, even though I really didn't love how it felt at the time. It was like, again, credibility that this is a hard worker and he could, he could access a center of excellence, like an area where everyone is smart or went to the best centers of excellence. But I, but I knew even four months in that I wasn't gonna be there forever.
[00:19:48] I was just trying to find a way out that didn't make me feel like someone who's gonna have a black mark on their resume. If, if I'm being candid.
[00:19:55] Nima Gardideh: Yeah. And that makes a lot of sense. I think the, I remember starting my first company out of, well, I dropped outta college and started a company and that, and it failed and. Immediately like helped another company get off the ground. And, and I quit that like a few months in cuz I felt like the founders were unethical.
[00:20:11] And I remember thinking this resume problem kept like creeping up in my mind. I was like, maybe I'm not an entrepreneur. That means I have to go out in the world and get jobs. And like, if they see I'm just hopping around every few months, it's very scary. And so like building this, this base and foundation of people trusting that you can get stuff done, was a mentor of mine that gave me this phrase, was he, he said, I think you just have to show people that you can ship cuz I was engineer and product manager.
[00:20:40] And you can't do that in like three, four months anywhere. So, it was an interesting sort of advice that aligns with what you're talking about here.
[00:20:50] Deepak Chhugani: And even in, I feel like in product and engineering, you can just show like an art or you can show what you're made of, or if you're like a quant analyst, you have the best algorithms. I genuinely think that in investment banking, there is no way to differentiate. You just stay up longer than the next guy.
[00:21:05] You build a slide, 5% prettier than the next person. And. It just felt like a race to the bottom of just like destroying your health and not doing anything unique. So I just wanted to quit after I realized that after a few months.
[00:21:18] Nima Gardideh: That's interesting. Did you ever like, was there a network you acquired there that was helpful?
[00:21:23] Deepak Chhugani: If I can be honest for what I'm doing today. No, I mean, the only cool validating thing is when my former bosses have been recently inviting us back now to talk about transactions we could do with Nuvocargo, which is surreal to me. [Laughs] So I think it was useful that they see me as an alum of Bank of America and Merrill Lynch.
[00:21:41] And I know where they're coming from, and I know the work that they do. And maybe if Nuvocargo starts buying up companies, the network of M and A bankers and raising debt and equity, maybe, but candidly for starting up in the startup world, not really. And, and all the things I just told you, you probably get them anyway, when you start becoming a later stage founder, without you trying, like they, people will come to you and tell you, like, Hey, we're looking to help startups in this and this way, right.
[00:22:04] Nima Gardideh: Yeah. Makes sense. But I think the worth ethic part is super useful of like going in and like knowing what it's like to grind. Cuz yeah, I think if you haven't done that and you're starting a startup, you don't know what your limits are and then having done it without the existence or crisis of this company could die gives you this.
[00:22:25] Like learning of like, okay, I know I can grind at this level and continuously do it for a long time. That's an interesting thing to have learned.
[00:22:31] Deepak Chhugani: And there's many other learnings related to that. Like one, one thing we'll tell people is like you, as an analyst in banking, you're sending emails with attachments and specific AEs to CEOs and CFOs of multi billion dollar companies. And you're trying to send things to your managing directors, cuz the teams are small.
[00:22:51] So you learn how to speak in a professional way with people that are much more senior than you. I think a lot of those skills continue to help to this day. But aside from that and work. It doesn't really help you with startups to be honest right? [Laughs]
[00:23:04] Nima Gardideh: And so why, so you quit and then decided is this, like, at this point you knew you were gonna start a company.
[00:23:11] Deepak Chhugani: Yes and no. Right. What I said is I wanna take a little sabbatical. I don't know anything. I keep reading so much about startups, but I can only look at this stuff at like one or 2:00 AM. When I'm half asleep, after work, even weekends, you would work. It's like an insane job. They would be like protected Saturdays and you'd still be in the office on Saturdays.
[00:23:25] So I knew that there was no way I was gonna learn enough to make good decisions. And so I quit. I said, I had some savings from banking. That's one of the benefits you get like a bonus at the end of your first year or whatever. And I took a little sabbatical where I was reading a lot about startups.
[00:23:41] I was studying for the GMAT, like I said, and my goal was like, at the end of the sabbatical quote, unquote, I'm gonna pick an idea and I'm gonna get started. And so that's what I did at the end of like 2016 picked one idea in the, or in early 2017, I can't remember picked an idea that was kind of like a.
[00:23:57] Mentorship legacy thing for old people that three months later morphed into The Lobby, which is like a mentorship thing to get jobs in banking. But I did know that I wanted to start something. And this is one thing that YC always tells you not to do. Like don't force picking an idea. And now in like a month, I'm giving a talk with them about, Hey, you're the only one who we know who forced picked an idea and it worked. So can we talk about it?
[00:24:19] Nima Gardideh: Yeah, I definitely wanna get into that because I also do. I think that is like one advice you can take. It's not the only advice and actually generally into your approach. I have a couple friends running decently strong businesses in that area and I guess like, probably for just disclosure reasons, I'm an investor in Deepak, for the listeners.
[00:24:41] So tell me, yeah, so you started this, The Lobby. I remember you launching on Bookface. This is like the internal YC thing. And, then I didn't really hear about you until you came into our, the YC therapy group. Right. So can we, can you just tell people what this, this thing is that we have?
[00:25:00] Deepak Chhugani: So, the way I would describe it, I mean, again, people are not open about this stuff. I think one of the hardest parts of being a founder is managing your own psychology. And one of the ways that I've done that, and I think Nima has done that as well, is by finding support groups where you can freely talk about your issues with other founders. And so Nima and I have been part of a group for, I think more than three years now, where we meet, we try to meet every two weeks or three weeks. Just a group of founders where they just talk about problems. Cuz, as a founder you're selling absolutely everyone all the time. You can't talk about this stuff with your team, with your board.
[00:25:35] And so I think it's been a really powerful outlet and community for me as I pivoted and as my wife got deported and as we picked the new company and got it off the ground and all that. So I'm very grateful to you Nima specifically into the group that we have.
[00:25:48] Nima Gardideh: Yeah. I mean,and ditto, I think I've learned a ton from you and, and you come up in, like, we have these things called meta days, which are like effectively our board meetings. Cuz we don't have a board. We don't have investors and stuff and I think some of the things you say, like I end up writing them down, I'm like, oh yeah, Deepak said this, like how could we talk about this?
[00:26:06] Can you, so, and just so we can like get an understanding, you, what did you learn from The Lobby? I don't wanna focus too much on it because like, it was like a thing you ran for a while. You had, you found a co-founder for that or? No, it was like a solo thing?
[00:26:20] Deepak Chhugani: The Lobby, I was a single non-tech founder. That's why I say changed my life at YC. Jared Friedman, actually, who I'm doing the event with in Mexico City, in our offices. He funded me as a single non-tech founder with an idea that every YC partner except him hated and knew probably wouldn't work, cuz they funded six iterations of that idea.
[00:26:38] But basically what The Lobby was, was a marketplace where anyone who wanted to get a job inside one of the coveted banks or tech companies, if they didn't have a network, to help you prepare for interviews or make sure you knew what interviews would be like or prepare your rese, you could spend 50 or a hundred bucks on, , on a, on a paid coaching call with someone who had been inside those companies and they would do mock interviews, review your resume.
[00:27:04] And I, and we kind of productized that into an online marketplace and got into YC with that raised about a million, 1.2 million for that. And then six months after YC pivoted, cuz I realized it was a very bad idea.
[00:27:16] Nima Gardideh: So you got, but you built the thing out. I remember there was like some form of product. So you found engineers, you built the thing out.
[00:27:21] Deepak Chhugani: I'm very proud of what we built. Actually, it worked. It was fully automated. It was this extremely manual process of like, getting people to book and, and schedule and reschedule calls. And we automated all of that with the engineers that I work with. And that was an incredible experience for me doing product, which I didn't really know how to do product right.
[00:27:39] Nima Gardideh: Yeah. And I think that's like the number one important thing is like, going back to that advice I got when I was young is just shipping is so important and it's so hard to ship when there is like, you are the main product manager, so you have to come up with everything and, and figure out what has to be built.
[00:27:56] And, that's like a very hard skill. And it's like the first one you have to learn as a founder, I think. And so when you decided to pivot you, I remember you returned some of the money or like you, yeah. Just give us like a, give me a, yeah. What did you like? That, first of all, that's like very nice of you.
[00:28:13] And, I would expect the same from like any founder I invest in to just say, Hey, I've learned that this is not gonna work. And I don't think I have enough money for the next thing. So here's your money back. How did that go?
[00:28:24] Deepak Chhugani: I mean, I was like 24, 25. I was, I was a nervous wreck with it. So I think in hindsight it was handled well, but it was really the hardest thing for me at the time, but it was basically finish YC winter of 2018 raised 1.2 million. We close out like in April, May, and then six months later when I realized it wasn't really working and scaling, I decided I'm gonna change course radically.
[00:28:44] And we still had, because we had been so frugal or I had been so frugal, I wanna say 70% of the money in the bank. So high hundreds of thousands with very low burn. So we could have kept going for a while, but I came to the conclusion that, Hey, this is gonna be a waste of time and it's gonna be a waste of my shot, where I'm a single non-tech founder.
[00:29:02] I have YC on the cap table. I'm young. I have a lot of energy. Like I'm not gonna, if I see it's not gonna work, why would I trick myself? So I made a couple of radical decisions. The first one was to bring the burn down, let go of our team. We were about eight people, including one engineer who actually waited a few months and came back with us.
[00:29:16] He's still at Nuvocargo today. his name is Muhammad, a huge shout out to Muhammad. He's incredible for that loyalty and sticking with us. And then it took me two months to pick the new idea. And that's where I went through this whole methodic process that YC wouldn't approve of.
[00:29:32] But I think now they might say that it works in the event we're gonna do next month. And then when I picked the idea, I started telling some of the angels, cause again, we couldn't raise from any funds. They hated the idea. It was from 41 angels, 1.2 million. And so I started calling all of them, which is probably a mistake, cuz I was so desperate for their approval to make sure everything was okay.
[00:29:54] And I started getting mixed reactions where many of them were like, Hey, we backed you. It's fine. And then others were being very negative. So I got some advice and made the decision to offer them the 70% back. Anyone could take it if they wanted to. But I was obviously lobbying on the sides of like, Hey, I want the ones who are being loyal to me to stay because I have this big idea and I think it's gonna be huge.
[00:30:13] And then many of them left, but most of them stayed actually. And then some of them tripled down with nothing with just like, Hey, I believe you for making this decision, which is insane to me till this day.
[00:30:22] Nima Gardideh: That's awesome.
[00:30:23] Deepak Chhugani: Which is like the magic of Silicon Valley.
[00:30:24] Nima Gardideh: Yeah, those are the good angels. They get it. I love it. So, and then you had this, can you snapshot. I remember, so this is like around the time I met you where you were going through this process of like, Hey, I want to start a better business. , and you had all these different ideas, like how did you hone down on this one? And were you writing tests? Were you just doing like the top down analysis of like big markets? Where can I make money? Like how were we doing it?
[00:30:52] Deepak Chhugani: Yeah. So, yeah, I've talked about this publicly a bunch, so it might be repetitive for other people who've heard, but very simply I came into the process thinking, Hey, I was given bad advice where the advice of everyone in Silicon Valley was the only way to pick an idea is you gotta solve your own problems.
[00:31:11] And the only problems you have as a mid twenties, urban millennial, who worked at like a bank for two years is the same ideas that everyone's been trying to. In the early 20 teens delivery, how to get a job, some other obscure thing that you are dealing with, but maybe doesn't apply to the rest of the world.
[00:31:28] So once I realized that I, that there were a lot of companies in my YC batch that were successful, that didn't pick their ideas that way. I said, Hey, I think I should choose something where I have more of an edge as a founder, and is much more blue ocean, and is more interesting. And so for me, that was something at the intersection of logistics and Latin America.
[00:31:45] And so did more top down research and ended up picking what Nuvocargo was because I saw the success of companies all over the world doing something similar. And I said, someone is going to do this in my region and at the intersection of the US and Latin America. I think I'm one of the, I don't know, few people in the world.
[00:32:00] It was really well suited for this specific idea. And so I think that part was top down. And then what was bottoms up was the rest of the execution after that, which is when I had learned from YC, like pick something, talk to your customers, launch something, grow every week. But, the problem was I did all that with my previous idea.
[00:32:16] And then when I picked up and looked back. I've been doing all this advice, but there wasn't a good business model. There wasn't a big enough market. So I said, I'm not making that mistake again. I'm gonna pick something with a great market, great business model, and then I'll do all the other stuff I learned from YC, which is not to be like an MBA student.
[00:32:30] Be much more micro-interviewed. Your customers find creative ways to do a lot with very few resources grow every week, pick a specific metric. Right. And so I think this was a more blended approach between what I had seen work and all the YC advice, which a lot obviously has a lot of truth to it. But I think you have to be careful enough to follow that stuff, blindly. When you're, I don't know, a founder like me who just had like a business background, right.
[00:32:54] Nima Gardideh: Yeah. And I think like when you read it, I've been reading like maybe, well, at least PG stuff, but then why see stuff since I was like 17 or something like that. And, it's almost like the Bible of startups, which as problematic like is. I think it's a fair comparison where they're looked at as dogmatic truths about the world.
[00:33:15] Yeah. It's not true. It's just one way of looking at the world and, and it's not the only way. So, the way I would describe it, like the category of building you're doing is, there's two areas. One is like, just, Hey, identify problems and see if you can build something. The other one I like, and I think it's, maybe you, we disagree with the categorization is fast follows, in a slightly different segment of a market, right?
[00:33:42] So like there are other players in a space you think there is like two or three things they're doing poorly and they haven't addressed this part of the market. And that part of the market is still a multi-billion dollar business to build.
[00:33:55] Deepak Chhugani: Yeah. I think that's a fair description again. I wouldn't call it fast falls because as you learn about the intricacies of applying X for Y and another geography, you realize it's extremely different in a hundred different ways. But I think the overall concept of something that can. This actually happens to me a lot as YC founders will reach out, cuz I wrote a post about how I pivoted and now I have like a hundred data points of YC founders, pivoting.
[00:34:19] And now when people reach out to me and ask me, Hey, I need to pick a new idea. I will almost not listen to anything. I'll just ask with a simple question. Are you in this to do something you're passionate about? Or are you trying to build a successful venture backed company? Because for me, those are two different things.
[00:34:34] There's a lot of people, including people, you and I know that really want to be building for a specific segment and a customer segment and they're passionate about it, but the odds of you finding like a problem naturally, and then that can also be a business that gets to a hundred million ARR in five years and can be venture backable. You're just making it really hard for yourself. And so I think if you want to build a business that can be venture backable, you do have to look at examples where the incumbents are very large or startups have got into that scale in a compressed amount of time and then figure out what's your innovative spin.
[00:35:04] Like that is an approach to startups. That for me is like is a hundred X less. Popular to talk about, but is talked about when I would grab coffee chats with experienced YC partners with fourth time founders of how they pick their ideas. So I know this is how it's done, but no one likes to talk about it because it's less poetic than, and then I couldn't pay my rent and, and I figured this thing out and, and boom, now we're worth a hundred billion dollars, right. Which happens like one time…
[00:35:30] Nima Gardideh: One out of like a thousand. Yeah. Yeah, totally. And it, there is a poetic version of it for me actually, is that, Hey, I am like building the economy here instead of trying to like change the game, which is, I think admirable. And I think plenty of people should do it. I want to get a bunch of people around me rich and build like value in this system. And I think that's interesting and I can focus on that for like five to 10 years.
[00:35:56] Deepak Chhugani: I mean, we're creating hundreds of jobs in Latin America, bringing Silicon Valley best practices. The industry is like the backbone of global trade, which is the thing that connected humans for thousands of years. Right. It's just, you're picking something that makes sense. And then you're just focusing all your efforts on execution instead of choosing something where even if you solve every existential startup problem, it's still might not work because you didn't think through the business model.
[00:36:20] So it's just an approach. I'm not saying it's the approach and it probably doesn't work for most people, but I think people should talk about different approaches to picking ideas, cuz they all wanna obsess over the YC gospel approach. And I think even…
[00:36:31] Nima Gardideh: Yeah, I think that they're waking up to it cuz they've missed on enough of these, they're not attracting the founders that like, look at that advice and say, that's just bad advice. I'm gonna build something different. Right. So you started Nuvocargo and you decided to find a co-founder for this one.So why did you do that and how did you find him?
[00:36:51] Deepak Chhugani: So I had always been trying to find a co-founder. One little known fact about me is, when I was alone with my sabbatical and looking for ideas and then started with The Lobby, I was going to a WeWork alone every day and setting my schedule. So that's a pretty lonely life. And all the advice online was like, including the YC gospel, you need a tech co-founder.
[00:37:10] I agree with that advice, but it's really hard to attract someone that you think is incredible. Why would they join a 24, 25 year old with no credentials with a little bit of money? Like that's really hard. So what I had done during The Lobby was build a network of potential CTOs, add them to my monthly update and show them how we were making progress and hustling.
[00:37:28] And one of them was Sam Blackman. Who's now my co-founder and our CTO. And he was the Head of Engineering at common. One of his direct reports almost joined me into YC as a co-founder. So building my network of potential. Engineers and CTOs. And then when I decided to pivot it, coincided that Sam was like, look, I really liked you.
[00:37:47] I didn't like your other idea. Let's grab a whiskey and see if we built something together. So when I pivoted, he was kind of there and open and finally in the head space of maybe this sounds interesting. And then as I went through the idea, MAs, we would look at some ideas together. And then finally I decided on this idea and convinced him to join, like in month two or three, I think it was March, April, 2019 when we started the whole thing.
[00:38:09] Nima Gardideh: Yeah. And it was super early. So he came on from the beginning. So I definitely want you to tell this story cuz I thought that was like the most interesting thing of like how hard it is in the space you're in. So, I think you're like an ops heavy tech enabled business. Right. And that like, we're very comfortable calling both of our business tech enabled services businesses.
[00:38:29] And how did you need to, I remember something around the licensing that was very hard. Like, I guess also like just tell everyone what is Nuvocargo, what's the problem. Do you guys solve and how did you have to get into it in terms of licensing?
[00:38:42] Deepak Chhugani: Yeah. So Nuvocargo is very simply, so for those who don't know, every product in physical product in the room you're sitting in, or I'm sitting in Nima, whether it's your AirPods, your t-shirts, your laptop, your glass that I'm having water from, like absolutely every product around this goes through supply chains.
[00:38:59] And what does supply chain mean? It's a jargony way of saying like the process of manufacturing, the goods in the country that they're made all the way from them getting delivered to your house as a consumer, right? Like all of that can be considered part of the supply chain and businesses that make these products have supply chains.
[00:39:16] And so what we do at Nuvocargo is there's a part of the supply chain, which is the process of moving the goods from the country where they're manufactured from. To the country where they're going to be distributed or sold. And that process of moving a truckload of goods from Mexico to the US or the US to Mexico, which can have 14, 15 different stakeholders, has different currencies and languages.
[00:39:37] You have to find the trucks, you have to tap into a transportation network. There's all sorts of complexities. We are aiming to digitize and make more modern, that age, old process. And we do it with a business model called freight forwarding and there's tens of thousands or hundreds of thousands of freight forwarders in the world.
[00:39:53] The biggest are worth 5 to 50 billion publicly traded with 2% to 4% market share. And they were founded hundreds of years ago. So we're reinventing that business model with software, with venture capital and with a modern startup mindset. And we focus specifically on goods that move over the road between Mexico and the US to start, which is the world's biggest trade lane. It's bigger than US, China, where Flexport has built like an $8 billion business. And many other companies that many people here might know of. Right. So that's what we do.
[00:40:22] Nima Gardideh: And as the thinking that you're gonna aggregate some of these existing players, like why would a, I, I guess there's like 10 or 15 stakeholders, so that's a lot of stakeholders to begin with. Like who are you helping now? And like, I assume you wanna be helping all of those people with tech, but who are you helping right now?
[00:40:40] Deepak Chhugani: The nice thing is you don't have to start by helping everyone. You have to start by helping the person who makes the purchasing decision for the transportation, which is the shipper. So let's give you a simple example. Let's say it's a tequila or mezcal brand in New York that makes their tequila mezcal in Mexico.
[00:40:55] And so they're the ones that need to get their goods from the distillery delivered to their warehouse here in New York. Now for that process, they would probably need to hire seven to 15 different companies depending on the complexity of their supply chain. So you go to them and tell them, Hey, I can help you with this.
[00:41:11] And then B2B marketplace on the back end is helping coordinate a lot of those services first, externally, and then our roadmap is really to bring a lot of those things in house and do it ourselves. Whether it's the licenses to import an export, to file with the government, we can now do that ourselves, whether it's finding you the truck on the Mexican side, the US side, we can do that now as well.
[00:41:30] And then there's other, like if you need to procure insurance for the goods or something like that over time, Nuvocargo was bringing all of those in house. So you can just deal with us. And that will give you structured data on your shipments end to end that you typically would, would not have it would live on emails and faxes and phone calls, and then use that data to understand your supply chain and have really robust insights on what's going on. So you can find ways to have more efficient routes, safer for your trucks, lower cost, et cetera.
[00:41:56] Nima Gardideh: Yeah, I love it. So I would go from like, dealing with something like five to 10 people or 10 to dealing with one.
[00:42:03] Deepak Chhugani: Or today with us, it's like three, but it will be one over time. Like that's the thesis, right?
[00:42:07] Nima Gardideh: That seems like a very big improvement. Like I would take that deal, if I were to shop so okay. That, that makes sense. And then there's like technology involved there and there's all these optimizations you can do because there's technology.
[00:42:21] Deepak Chhugani: Yeah. It's really communications, right? It's communications. It's integrating where's my truck? Instead of chasing them down, we have a GPS integration. You can look at it on our platform. Where's this docent of what my goods are worth or so they can get across the border. We have that because we're integrated, we've procured that paperwork or we've created it because we have the right licensing in house to do that ourselves, et cetera, et cetera, cetera, until it just becomes much more smooth and efficient, right?
[00:42:43] Nima Gardideh: Yeah. And how, what did you have to do to get started? Cuz you can't just go and do this stuff. You can't just ship stuff, right?
[00:42:49] Deepak Chhugani: Yeah. You can't. Good question. So all I knew when we started is we wanted to do this business model for trade between the United States and Latin America. That's my background, right. And I was lucky that in maybe a month, one or two, I had gone to a conference in Vegas. The first logistics tech conference ever for the most important logistics publication.
[00:43:09] And it felt like it felt so old school. That was what made me excited. I was like, wow, there's so much opportunity here. But also that's why it's so complex. And someone there I met said, Hey, cause I would go around telling people, Hey, I'm, I'm backed by YC. I have like hundreds of thousands in the bank and I wanna build something.
[00:43:24] I wanna build this. And so people found it really intriguing and refreshing. I was 25 or 26 or whatever. And one person I met there, his name is Graham Parker. Who's the founder of another company said, Hey, I have someone in Mexico that you should meet. And I think they would sell you if you're willing to pay a little bit of money.
[00:43:40] They're freight forwarder with all these licenses that other companies we know take years and years to get. Right. And so I actually did two things. One I went down to visit so I could shadow and actually understand what people do, cuz that was the YC muscle of like seeing the customer pain point, seeing the processes I could, I could do none of that from afar.
[00:43:56] So I would visit freight forwarders in New York and this, and then when I heard about this one, I just flew down there and then I built such a good relationship with the owner of that company. His name is Josh Wolf. He has another extremely successful financial services business in the logistics world.
[00:44:09] He ended up being like, Hey, I believe in you, give me, I wanna be an equity investor, so I'll sell you the company for no cash. And let's build this thing. So he was extremely reasonable and he was incredible and that really jumped us off. And when that happened, Sam, my co-founder heard that.
[00:44:25] And he is like, okay, that sounds like a really big deal. And we have money and then investors heard about that. And then this moment that I feel like you need to get startup schooling just came together in 60 days where we had licenses, we had revenue, we had the employee running that company, and then we started getting more investment. And then I had my technical co-founder and that's just like a classic example of how moment compounds after like a lot of months and years of talking with the tech co-founders and learning about this and that really got us started. And that was about April, May 2019. That company was doing ocean and air shipments actually.
[00:45:00] And that's not, we decided we didn't wanna do that. So we had to spend three months learning and actually decide to shut down all the revenue, which was very small. And then in August or September, we started moving the first trucks between the US and Mexico. But now we had someone who knew how to do this. We had licenses, we learned a bit more and we already had some customers that we could learn from. And then we just did the YC thing, pick a number, grow it every month and just, and just hustle until it's a big company,
[00:45:25] Nima Gardideh: So is the license, they allow you to just ship anything. That's not yours across the board. That's kind of what the license ticket, What is that? what do you, what is it that you need exactly?
[00:45:35] Deepak Chhugani: There's multiple licenses. So I just didn't wanna get into the jargon, but I'll smarize it with. One license is for you to legally import the goods into the US. That's you filing a paper with filing an entry with customs and board of patrol saying, Hey, this is a truck of tequila, and they're believing you because you have this certification that requires an FBI background check, like Flexport publicly says it took them three years to get this.
[00:45:58] That's why we knew it was a big deal to get that license. And then the other two or three licenses are more like, Hey, you are certified to be freight forwarder by the federal maritime commission for ocean or the federal motor carrier safety association. And then associated with that is all this like insurance bonds you need to have.
[00:46:14] So they had done a lot of that work in this LLC that we acquired and it came with one person who's also still at Nuvocargo. Her name is Christina Rodriguez, who I was just shadowing like a maniac so I could understand absolutely everything she did every day. And then I understood what freight forwarding really was.
[00:46:28] Nima Gardideh: Yeah, that's lovely. That's like the best studying you can do is just be in it. Right. And I this is one of those other paths of potentially starting companies is just go work in that industry that you think there is something in.
[00:46:42] Deepak Chhugani: A hundred percent.
[00:46:43] Nima Gardideh: You just like happen to like acquire one of those companies where you could learn all of it from which is one wonderful.
[00:46:47] Deepak Chhugani: It was like a good shortcut. Yeah. it was a good, short cause I was clueless. Like just to be clear, I'm also very honest. I did not. Yes. My Dad had a small logistics business, but I was completely clueless about what we were trying to do. I just knew it could be large and I had some building blocks culturally.
[00:47:01] And so I was on a race to, let's say, make my learning curve as steep as possible and learn really, really fast. Right. Cause that was my hypothesis. If founders, if it took me 18 months in The Lobby to be considered an expert in recruiting, which I don't, I didn't consider myself but enough that I could be knowledgeable. Interesting insights. I said, I'll take I'll bite the bullet for nine to 18 months and just be the dumbest person in the room, but then I will know enough and then I can spend the next decade just building this thing into something much bigger than what The Lobby could have ever been. Right.
[00:47:30] Nima Gardideh: And so your fundraise again was the same entity?
[00:47:33] Deepak Chhugani: Same entity.
[00:47:34] Nima Gardideh: Which is super nice of you, I think. And, I'm sure there's a lot of thought. I remember actually there was a lot of thought went behind it when you were deciding that, Hey, I have this idea now. But I, yeah. Tell me why, I guess like you didn't just shut down and, and start from
[00:47:47] Deepak Chhugani: Yeah, it wasn't so altruistic. So I was a single ManTech founder. We had raised that, what I considered a very high valuation, $8 million, like a million bucks. So it was very low dilution.
[00:47:57] Nima Gardideh: At the time that was very good.
[00:47:59] Deepak Chhugani: That was very good. Right. And, then I gave money back. So that removed more dilution. So I said, if I started again, am I gonna have a cap table, this good, where I have YC most of the equity?
[00:48:09] I don't think so. I would probably just raise at a lower price. So it wasn't that altruistic. It was like, Hey, I was so obsessed with YC. I'm like, I want to be a successful YC company since they gave me a shot. And I think it's a better cap table than I could build. If I started from scratch, cuz I had no credentials.
[00:48:23] I was like a guy who tried an idea for 18 months or 12 months. And it didn't really work. So for me it wasn't that altruistic. It was like, Hey, this is a good excuse. And then I don't have to do all the legal work. I already have money in the bank. People know what I'm doing, we just get to work. Right. So it was actually I think a very practical choice.
[00:48:38] And then my co-founder came and got a bunch of equity and then we started hiring people and raising money and then it just became like a normal cap table. I would say where it wasn't like those companies where you've raised a ton of money and diluted like crazy. And then it makes more sense to shut down. Right. It was actually a better deal, I think, to keep going.
[00:48:54] Nima Gardideh: Yeah. It's almost like, how people do these search entities where they're like raised a bunch of money and like, I'm gonna go find the companies because you were a solo founder and you didn't, you stopped fast enough. It feels like. That's kind of like the start was, oh yeah. I just searched for a very good idea. And now we're scaling it.
[00:49:11] Deepak Chhugani: Yeah, totally.
[00:49:12] Nima Gardideh: What do you call it? The search funds. Yeah.
[00:49:15] Deepak Chhugani: It’s a MBA thing. I have a lot of friends doing them. now, actually. Yeah.
[00:49:19] Nima Gardideh: That’s classic. So yeah. One of the things that I feel like you're extremely good at, and this comes up like every time we have one of these therapy groups is that you're a very good fundraiser. And I think it's part of the muscle you have to build to do VC or venture backed businesses. The first one, there's all this moment. You went through it, you got this license, you have a co-founder. I think you raised some money right around then again, to like…
[00:49:48] Deepak Chhugani: We raise a little bit of angel money. We were gonna do a bigger one that fell apart. That was a big learning. And then nine months later raised the big round. Sorry, a seed round. And then we raised like two or three more since then more proper rounds.
[00:49:59] Nima Gardideh: And then, but by this time you raised the seed, you had metrics to look at, right. You were building and you were scaling, which is wonderful. And I assume you recommend that it's just to show traction, it's much easier to raise that weight than anything else, but, is there a way, is there a version of this thing that you said no, like keep going and do like the R&D process before you raise your next round? Or would you say get to numbers as soon as possible?
[00:50:21] Deepak Chhugani: Good question. I don't know how to recommend it in the general sense. I can just illustrate to your listeners, like my state of mind, I was in a desperate state of mind. I was like one of the columns in picking my ideas was time to revenue because I was like, I am not gonna be a zombie startup founder. Like that was my obsession. I don't know if that's healthy or not. So for me it was so that's why buying the company was so interesting. Cuz we got to revenue and then, and then it was already more revenue than I had ever gotten in, in The Lobby was like tens of thousands of gross revenue per month and then realizing, and I think you just have to know what the core metric is for your company.
[00:50:58] When you're doing one of these tech enabled companies. At the end of the day, it is like GMV or transactions. If it was, if I was building superhan or something like that, then I would obviously build it differently. I would think about how do I be in beta and, and build a product that's incredible for two years.
[00:51:12] But at that time, I'm like, what are businesses that I could be well suited for something that starts making money quite quickly? And I know I'm on the right track and then I can let the software kind of catch up. And so for me, that was the north start. It was like, I'm gonna launch something, I'm gonna get the metric.
[00:51:25] And then I'm gonna take this one metric rally, the entire company around just growing it 20, 30, 40, 50% per month. And we just did that for five months. We grew on average 70% per month. And then we raise our seed round, which to your point, I'm laughing as you asked the question, cause I'm like, yeah, you're right. In the past two years, everyone's just been raising seed rounds with nothing. Right. Just…
[00:51:42] Nima Gardideh: Oh, my God.
[00:51:43] Deepak Chhugani: And I never did that. I just didn't think that was a thing you did back in 2019 or 2020.
[00:51:47] Nima Gardideh: Yeah, and I think it's always happened to some degree, but it was the worst. It had been, I think, the last couple years. And, as someone that like helps companies and now I, and invest in them, I think the correction in the market is probably fair. That's happening right now. And, but I think you're immune to it cuz you have numbers to back up what you're saying, which is what, which is wonderful.
[00:52:08] So, you did the services essentially from the beginning, the software start creeping in. And you have to build both a services business and a high like execution, excellent software company. So how do you, how do you do that? What do you, where do you put your own resources or like your mindset?
[00:52:31] Deepak Chhugani: It's very, very difficult. It's very, very difficult. Yeah. It's extremely difficult. And I, and I don't wanna sugar coat it. That's why, when we, we joke internally, like, aren't you guys worried about the competition? I'm like, no, it's, no, I'm not good luck! [Laughs] It's a business with a lot of complexity for three reasons.
[00:52:51] Number one, because of what you just said, you have to build a freight forwarder and a software company. Number two, because it's a B2B marketplace. So you have marketplace dynamics on matching supply and demand on both sides of the border. And nber three, it's online to offline. There's a way to do this. That's relatively offline that customers are used to.
[00:53:10] And so you have to map out those data inputs, make it more online. And so at this point we've been, we move the first, like I said, us, Mexico trucks late 2019. So we've been at this for two and a half years. And I would say that the first year in change probably was just about honing in on the right roadmap and getting the right people around the table because we were so under resourced, right.
[00:53:31] Our head of product and I, who came from Dropbox, grew up on the border. She's incredible. She joined us in the summer of 2020. So I'd been at it for like nine or 12 months, took her a few months to really understand the complexities of the business. And then we really started feeling like we were executing.
[00:53:45] We were still a seed company then. Right. So I think. It's very difficult, but it's gonna be a very powerful mode for us at scale, because we are very focused on this one trade lane, this mode of transportation and mapping out all the permutations of northbound southbound shipments and understanding that was difficult. I think what I would say is you need to grow the core business fast enough to raise enough capital that you could fuel the core business and invest in product and engineering. And also when you're a marketplace, you have to build liquidity where your margins can be really tight early on until you start getting scaled. That's why I think we've crossed some of the most existential and difficult parts of the business now, and now it, now it feels really good because we have a lot of capital and yada yada,
[00:54:25] Nima Gardideh: Yeah. there's two questions I have, but before we get into it, can you just define market marketplace liquidity real quick for everybody?
[00:54:31] Deepak Chhugani: Yeah. So for me, marketplace liquidity is let's say you go on amazon.com and you wanna find a lacrosse ball. I needed to buy one, cause something in my back was screwed up and you don't find lacrosse balls. That means that Amazon doesn't have liquidity in the marketplace from buyers and sellers. Right?
[00:54:46] There's not enough. Buyers. So there's no sellers for lacrosse balls and I'm a buyer, but there's no sellers, so there's no liquidity. So in our case, that means that we needed to have enough supply and demand from people who wanna move goods from and trucking companies that wanna move it for you. And we're still building that. It's gonna take us a while, cause it's such a big market, but we do have liquidity now on certain lanes in certain regions between the US and Mexico. And so building that out from zero is the classic marketplace issue, chicken and egg problem, which takes a while and, and is expensive to solve right.
[00:55:15] Nima Gardideh: Yeah. And I, and I, that might, what was gonna be my second question is like, how subdivided is your liquidity market? Like you have to like lots of different regions and sounds like routes. Are those the only two dimensions or are there like many more.
[00:55:27] Deepak Chhugani: There's, so the nice thing about geographically is 40% of us Mexico trade concentrates on one border crossing, which is Laredoo, Texas or Laredo. If you want the hispanic pronunciation or the American one. [Laughs] And so we started there and then there's six or seven routes to and from Laredo from Mexico. So that actually concentrated things and made it a little bit easier. And we just made a lot of decisions to be focused. We said no to other border crossings. We said no to other equipment types. We said no to other countries. Whereas other startups in the space just expanded everywhere and , maybe their strategy will work.
[00:56:00] I think that introduces way too much complexity and product overhead. We'll see. I think time will tell. And so then when you have the geographic dimension, then you have to choose equipment types. Like, will you move refrigerated goods drive in goods? So we only move today, 53 foot drive in full truckloads between the US and Mexico crossing through Laredo. So getting to that level of specificity has taken us a while, but that's like 80% of the stuff or 90% of the stuff that crosses through that border crossing. So it's a very, very big market. It’s 10 million truckloads a year, but getting to that level of specificity has been painful and difficult. And now I think we're really good at that and we need to get much better at it. But that's, those were the dimensions, right?
[00:56:41] Nima Gardideh: Yeah. And I think it makes a lot of sense when you're trying to master a process, you have to like simplify it as much as possible first, and then you can introduce, and first of all, you get to get good at mastering processes. That's the first thing you have to learn as an organization. Right.
[00:56:54] So the other question I had for you is around this like software slash services thing. Walk me through the org design. Like, are the software teams embedded in the ops teams? Are they separate? And there is like a product management organization that talks to them and thinks to them as the users, like, how do you work?
[00:57:11] Deepak Chhugani: Yeah. So we've interviewed probably the best companies in the world at this. And I can tell you that no one seems to feel like they have the right answer. They all say that every org design is by design flaw flawed, and there's some trade offs. What we've landed on today is we have a business equation.
[00:57:30] Basically we learn, Hey, when businesses are complex, the best thing you can do. And we learned this, so the YC growth program as well, which we did last year, map out the levers that grow your business. And so we mapped out a business equation where there's demand there's supply, then there's marketplace dynamics, and then there's kind of operations that wraps it all together.
[00:57:48] So those four things, and those are the main functions. And then everything else, whether it's product finance, legal, these things are kind of supporting and servicing those functions. And so, that's how we've built it. So product is kind of embedded in each function, but they are, they have a vision and a roadmap of how things need to be. And they're building products in verticals, one for the demand side, one for the supply side, one for the marketplace side. And that's what we've landed on today. And we'll see if that changes in the future.
[00:58:14] Nima Gardideh: Product people and the engineers are literally part of, like, let's say the supply team or the demand team?
[00:58:19] Deepak Chhugani: No, they're implanted, if you wanna think of it that way. And they have a roadmap for those teams, but their career paths and everything are still with our Head of Product, because that's what they want. But they're like our LA and our product manager for carrier, she lives and breathes only products for the supply side of the marketplace, and will collaborate with those teams and study their actions and interview those customers and has a roadmap for them. Right. If that makes sense.
[00:58:44] Nima Gardideh: These customers are both like internal ops people you have and then external people that you work with. Yeah. That makes a lot of sense. Yeah, I think that's like a tough problem that you're solving there. And, that wisdom you just mentioned of like org designs are flawed by design or by their nature and there's trade offs.
[00:59:01] I think that seems to be the reality. Every time you speak to a founder, who's trying to design these things. And, do you feel like you will change it over time? Like it sounded like the answer is yes, but maybe you're not seeing it right now.
[00:59:13] Deepak Chhugani: I mean, I just don't think I'm arrogant enough to know that I know more than a lot of people who have done this before. And the more we've interviewed people, whether it's that scaled flex board or convoy or other complex B2B marketplaces, org designs happen all the time. And I think it's because even if something feels like it works well at this scale, if you grow fast enough, which we've been lucky to always grow pretty fast. You will have to evolve it to the new level of scale or the new learnings, or maybe your product roadmap is doing so well that it automated some big thing that broke a bunch of old processes that you had.
[00:59:45] So I would imagine it has to change, but I don't know if it changes. I hope it won't change too much because those reorgs, this is something we learn also by interviewing all these execs that we're trying to get to hire us from big companies, the amount of time, these bigger companies that we respect spend just like reorging and changing stuff and not really building is insane. So I, my personal mission is to try to find a way for us to do that as little as we need to, right?
[01:00:11] Nima Gardideh: Has that happened yet at all, where you've had to like redesign the org to some extent?
[01:00:15] Deepak Chhugani: Yeah. It already happened once. I would say one big way and then one other small way that didn't really. Yeah.
[01:00:19] Nima Gardideh: How did that go? What did you learn?
[01:00:22] Deepak Chhugani: I think one thing I learned, which is maybe funny about humans, other people might look at it cynically is, people will always find a way to game the system if that makes sense. So I'll give you an example. We have to get, we have sales people basically on both sides of the marketplace, bringing the demand on the supply and you have to pay them commissions. And the way you set up the incentives for are they optimizing for top line? Are they optimizing for margin? Are they optimizing for new customers? Like absolute number of customers or revenue, like all these things, as well as you think them through.
[01:00:49] People will find a way to game them so that they find the one edge case, which you didn't want them to do. Isn't good for the business, but is good for them individually. That will happen. And so I think being really thoughtful about incentives in org design is really important. And then also being thoughtful about feedback loops, because I think right now we're going through a process where it feels like some teams are too siloed and now we have to make sure that they have the right voices in the room to move faster.
[01:01:15] So I think those are the types of trade offs you're always making is around, is it too siloed? Is it too jumbled together? So you can't break things down. Do you have the right incentives so that every single person knows if I move this nber this week, I am contributing to the growth of the business. So I think it's a lot of learnings around getting those things right. And that is really hard.
[01:01:33] Nima Gardideh: Yeah, I mean, this, this resonates with me a lot where there was like, there's been stories I've heard of people like working at Facebook and Google and like squeezing out every perk that is possible. And I used to think, well, that's just something that happens to like very big companies. Why would it happen in like a startup of like 40 people?
[01:01:51] And then you start putting at perks and then you'll see people like maximizing everything. , and, and you're like, okay, well, I, I understand now. And it's, it's like a, it's like a han scale problem to some extent, but also it's just, when you give people games, they wanna win at the game. No matter what, even if they care about the collective, to some extent and altruistic, they will still think individually.
[01:02:14] Deepak Chhugani: Yeah. I don't know if in Pearmill you feel this way. The other learning for me is I consider myself kind of a warm leader, like I get along with people, I really care about them. And, obviously hold the performance bar really high, but I've always known most people at the company we went from, I think last year, early last year, 25 people to now 180 in like 16 months or something like that.
[01:02:39] There's just people that have joined and left already that I have never met now. And that's insane. And so you also learn that the reason you have to design these things for the right incentives is because it's not just gonna be like the early stage feel where everyone knows each other. It is gonna be at some point, if you're trying, if you're in it to build a big business, you're gonna build something that out scales you and your time and the amount of things you can catch, which just has to be well thought out from a nber of different perspectives so that it works well at a 10X, 3X, 5X bigger scale, right?
[01:03:07] Nima Gardideh: And so how do you, yeah, I guess walk me through that. So I completely agree, obviously with that. And how do you, how do you, how do you do it, where let's say you want to invest in a new process or new incentive? Like how do you battle test it before it goes out?
[01:03:19] Deepak Chhugani: I'm really bad at this, so I don't even wanna pretend like I know what I'm doing here. I mean, we've talked about this in our therapy group. I feel like some founders have strengths. Others have weaknesses. Mine is most definitely. My weakness is most definitely around great ops process and ops excellence and accountability.
[01:03:33] And I'm trying to hire, and I have been hiring for that to compliment me on our leadership team. What I see our leaders do, which come from like Uber and Amazon and Kaba and these massively complex operational businesses at scale is they're just very good at going from, I see the problem diagnose it.
[01:03:50] They'll actually build up some visual way for us to understand the problems. And because they have some battles, cars of how they've built their ops teams, they already have, they already have learnings of, Hey, if you do it this way, people are gonna game it this way and that way and this way, and then they'll launch it and then they'll cont, and then they'll make sure it's also budget.
[01:04:08] To build in measurements. So you can see things that you can correct right after you launch it. But I do think this is not the type of thing where you can launch something and change it in three months because people will get mad. Like we've had salespeople get quite angry that we've had to change commission structures five times, right?
[01:04:23] That's not, that's not. So I think you have to be nimble and iterative, but understand that when you're doing it in org design, you're doing it with real humans and their jobs and what they thought they needed to succeed. Like I'll give you an example. We had a salesperson who was gonna close a customer that moved refrigerated freight, and we had just decided as a leadership team, Hey, we're accommodating all these crazy options for refrigerated freight.
[01:04:47] And last month we moved like two versus a thousand of non refrigerators. So let's remove it. And the sales person was like, wow, I had worked so hard on this customer. You guys took it away from me. And so we know that there's a real human cost when we make changes. So you have to be careful, but also I think you have to make those decisions. So I think balancing that, , is not my strength, but I think we've hired leaders that are very, very good at.
[01:05:08] Nima Gardideh: And do you, like, I assume there is like a bunch of communication. You do try to get them to understand why you ended up making the decision to begin with. Right. It's not like you're gonna cut it out.
[01:05:16] Deepak Chhugani: Yes, but, but but this is the issue. Yeah. When you're really hyper scaling, you think you address six issues like that and then three more pop up that you forgot about or didn't know. And so you just have to build the muscle of, Hey, when people bring it to you really explain it to them. And, again, I think we have our strength as a company is our culture and, and people understand that things are being done thoughtfully and with good intention, but it is going to happen if you're moving fast enough. Otherwise you're probably moving very slow, right? Like you're gonna have problems with these things.
[01:05:45] Nima Gardideh: You're almost spending too much time and worrying about the repercussions of things as opposed to getting shit done.
[01:05:50] Deepak Chhugani: You just, can't, it's much better to spend time thinking intrinsically about what is the right move for the company, with the information I have and then executing on it. I think you can get good at mitigating some of the downsides of that. As long as the people that you work with know that you're doing it in service of the company being better overall, because that's what everyone wants if they work at a startup,
[01:06:09] Nima Gardideh: I'm gonna ask you more of an unknown question. I, cuz I don't know what you do here. Do you, so you just mentioned around how like you're generally like a super positive and nice guy, which I can attest to. Right. At the same time, this is like a somewhat of ruthless industry in that there's like very small amounts of margins, which shit that like means like just, you cannot make that many mistakes. And also the cherry on top of that is the scale you just talked about, you went from like 60 something to 180 something in less than two years, how do you make sure you're not disconnected from the people still, like, are these now just flow charts in your head? And, you're just dealing with your main VPs. Are you talking to people? Like, what are you doing?
[01:07:01] Deepak Chhugani: Yeah, so it is very difficult, but I could be wrong. I never like to make bold statements cuz there's probably someone at Nuvocargo who may disagree given their own personal experience. But the feedback that I consistently get is that I'm very nice, almost too nice. So maybe it's something I need to work in the other direction and I think I've built certain habits and systems inside our company as CEO, where my voice is heard and felt by people and people can reach out to me if there's something specific. But at some point you have to realize that if the CEO is the person who solves all these people problems, something is very wrong with your company, right.
[01:07:34] Because you're not having the right management and the right leadership and your managers aren't good people managers. So I'll tell you some things I do, but the, by far, the highest leverage thing is hiring people that have value similar to yours that think the way you do about building a great place to work. So that you don't have to worry.
[01:07:52] I actually think my leaders are better than me at people management. So it's a waste of time for me to try to interject and try to show my presence in things where I know they've got it right. And I will mostly interject when I feel like that's not. For whatever team or something that's going on. And I think that scales way better.
[01:08:07] But to answer your question, there's a bunch of things that I do to make my message as CEO or presence felt. So, one thing that we took for one of our investors, David Vélez is the CEO of Newbank. We asked him like, why is everyone raving about new bank's culture, right? Why is everyone saying it's so great, it's thousands of people.
[01:08:22] And he gave me some examples, but he said, it's really about speaking with your actions. So one thing he still does to this day, which I've now basically with his blessing copied is a monthly presentation for all of our new hires, where I will personally walk everyone through the values and the culture and examples of what it means to live our values and what it doesn't.
[01:08:42] And I give them the space to ask me questions, to push back. And that way, the first time we actually get to speak, cuz I don't get to speak with everyone in the interview process anymore is about this thing. That's about the culture and how I expect people to behave and what the culture is like here. , and what it means to be a bad culture fit and a good culture fit.
[01:08:58] And that's good. The other one is there's all hands every two weeks and I'm the one speaking a lot of the time so people can hear me. And so building in, I think feedback loops like that. I also was in every interview until we were about 120 people. And so people learned how I interview people would be listening in, we have scorecards when you interview people like what's a good culture fit and what's not. And so I think it's enough of like wrote repetitive work of hiring and culture that now the leaders below you understanding. And it's not just me, by the way, we define the culture with our leaders. So coming together and realizing this is what this company's about in terms of culture and values.
[01:09:31] And then how do we scale that with systems with, with interview processes, with, , et cetera. And then I think that's the only thing that can endure. And that's why big companies do these things that we find fluffy, like values and strategy and mission. And I think I've really learned how valuable those things are now that we're getting to a point where I just can't talk with most people. Right.
[01:09:49] Nima Gardideh: Yeah, I mean, I find it like extremely valuable and I remember being young and an employee and working in places that had those things written and there was like a distinct difference between the ones that walk to walk and just talk to talk. So, you can also see that there, like someone has grabbed it as a task and they've done it versus like, oh no, no, this is like how we're going to scale this culture.
[01:10:12] So. We're going to build it into the essence of what it's like to be here. Are those like biweekly things, the only mass communication you're doing to, to the team or, , are you like writing? Are, are you mostly like, is it video audio? Like how are you talking to your team?
[01:10:30] Deepak Chhugani: Yeah. I mean, in terms of like scheduled touchpoint, the biweekly, all hands, the monthly culture sessions, obviously in the main slack channel, we have a bot with my face, spitting out the updates on revenue a few times per day. so people can, because I used to do that manually. So we scale that. So, people see my face like a robotic Terminator thing [laughs] where with the revenue updates to make sure we're on track to hit our goals.
[01:10:53] So there's little touch points here and there like that. There's been times where I don't know, there was a time a few months ago where I felt like people were too stressed about this massive migration. I recorded myself on a loom and told everyone how I saw all these things in six different areas of the company that I thought were.
[01:11:07] It's hard, but that's the hard work, right? I think you have some schedule some are more ad hoc, but just feeling a pulse for the company and the organization is I think the hardest part as you grow and in this remote environment that we are even the Nuvocargo has a strong in-office component. It still has a lot of people remote.
[01:11:23] We're not all in the same city. So there's a lot of work there that we're always doing to try to make sure people feel the culture and feel the presence of their leaders.
[01:11:32] Nima Gardideh: I think that the vibe setting is the way I would put it is like way harder and remote. Like I write a weekly email that I also record myself speaking in audio format. So I have like, basically a weekly podcast on my whole team and I call the weekly pulse, just like you just use the word pulse. Right.
[01:11:53] It's like the equivalent of like a standup you would do, in like a normal office setting, but we're out of like seven time zones. So the standup doesn't work. Right. yeah. I feel you. I think it's hard. I don't know if there's a standard model. You can copy like the standup in an engineering team or anything like that. It's it's a tough one.
[01:12:11] Deepak Chhugani: I mean, we, this is what this was this type of question you're asking was literally what we talked about for 12 weeks in the YC growth program. And again, the conclusion was there's no right answer. There's things that a lot of CEOs do, you can learn from. So like the weekly email was one, we saw a lot of CEOs that YC growth talks about other tactics amongst your leadership team.
[01:12:31] What I heard from the Nubank founder, I mean, I think I candidly think one of the jobs of a CEO that's scaling the company is to find as much of those data points as you can, and then pick the ones that are that work and that feel authentic to your company's culture and leadership style. But I think that's my biggest learning. There isn't a perfect way to do any of this. And anyone who tells you there is probably three months away from everything breaking and then realizing that it doesn't work. [Laughs]
[01:12:57] Nima Gardideh: Yeah. I have like two more questions for you. So one is around this thing that you just mentioned, which is like, oh, your job is to go out there and like find all the potential permutations of, of solutions. Like, and you're quite talented at that. Can you walk me through, how do you do it when you're like, Hey, let's say random problem. Like, Hey, we have a cash flow liquidity problem where we're putting our money up here and it has to come back and I have to solve this problem. I have no idea how to solve this problem. I'm gonna have to find a solution. What do you do?
[01:13:27] Deepak Chhugani: Yeah. I mean, this, this really goes back to like The Lobby and everything about like how I got into YC and how I got a job in banking. I think I've just developed this addiction to the fact that this problem that I'm losing sleep over and being extremely inefficient over someone out in the world or 20 people or 50 people in the world have already thought about for a year.
[01:13:47] They tried 20 things that didn't work and then figured out the one that did. So why would I spend my time, especially in startups where every month is so valuable. If you're trying to move at hyper growth, you just don't have that time. Right? That's my belief. It could be wrong again. I'm not saying we're not gospel here.
[01:14:03] I like different perspectives. So for absolutely everything we've done, where there's an unsolvable problem, including some I have right now, I am consistently using my network to find someone who has solved that problem in a close enough way that I can learn some of the core tenants, then maybe hear three or four people and their solutions.
[01:14:22] And then I will compile that and then make a decision. And I often find that that is, and I have examples that this month, like our head of people was talking about introducing cash bonuses. And I texted seven CEOs who are angels and realized that they instituted that when they were a thousand people, not 200 people. And I said, this is too early stage. We're not doing it. And that, and I could only do that with conviction, because I got data points from people in similar situations, the cashflow liquidity, one you talked about, we actually had something like that in Nuvocargo and logistics companies have working capital issues.
[01:14:52] So we were able to find out, don't know, three CPA firms through investors that help specifically logistics companies, get them on the phone with your head of finance, ask them your questions. And more often than not, if how to ask the right questions, and you're speaking with the right people, you will get clever solutions to your problems. Or at least this happened to me with org design. When I was doing YC growth, you'll speak with five people, realize no one knows what the hell they're doing. And then you just pick the one that feels most logical to you but at least you tried right.
[01:15:19] Nima Gardideh: All the examples you gave was like getting intros from your investors. So it sounds like you're using your investment network quite well. Is that the only path you're going through or you're like cold emailing people?
[01:15:30] Deepak Chhugani: No. I mean all, all the cold emailing people, actually the investor thing is just recent because now we have a big investor network. We've raised a bunch of money that was not true a year or two ago when I was figuring all this stuff out. I think you have to be clever in finding the right introductions.
[01:15:46] So I'm trying to think of one example. I can't remember who connected me to this guy who was head of sales at a very big trucking tech startup. And I was just starting and I realized that I couldn't get on the phone with customers. I was selling them and I sounded clueless. So we found an arrangement with his startup, where he needed to help with something.
[01:16:01] And I said, well, pay you whatever thousand dollars a month. And he flew down to Mexico City with me and he ran interviews for all of our sales people. And he hired our first five sales people, 50 times faster than I would've been comfortable with because he had done this with hundreds of people. Right.
[01:16:14] And I will do things like our board meetings. We have someone who attends, who has scaled US and Mexico. Cross border brokers, the old school weight, two hundreds of millions from zero, because I found him that this guy's perfect and we gave him equity and we started paying him hourly and he comes to our board meetings so that I don't feel like our board meetings are full of VCs who know nothing about logistics, right.
[01:16:33] And me who also has not scaled this before. And so I'll just consistently do this in every aspect of my life. And I think, it's a huge shortcut in a hundred different ways. Right.
[01:16:42] Nima Gardideh: Yeah, I would say, this is one of your magic points that I've definitely copied over the years, where, yeah, I think there was someone who was asking me in turn. Like I think our chief of staff is like, how did you figure this out? I'm like, oh, I just called 30 people to figure it out, it was like the most Deepak thing ever.
[01:17:00] And so, and then, so I guess the last part is just the investment apparatus. Like I know you wanted some brand names at some point that were specific to your industry and things like that. Like has, is that helpful? Would you recommend it? Is money just money? Does it matter?
[01:17:18] Deepak Chhugani: So here, I've learned a lot from Eric and Kareem at Ramp who I know well, the founders of Ramp, the credit card company, if you guys don't.
[01:17:26] I think what I've learned, I've learned two things that are, could be contradictory. One is your investors are not gonna build your company for you. So don't expect that. And people who expect too much of their investors are perpetually unhappy. And are the people you always hear complaining about stuff. They didn't fund me for this reason. They didn't help me with that. Like your job is to make the company successful no matter what, and investors are not gonna do that for you.
[01:17:48] That being true. One thing that I found, and I learned a lot of this from Eric and Kareem and maybe it's cuz I started with 41 angels in The Lobby. And then I saw how Eric and Kareem raised from, even though they could, they were raising from the most blue chip funds. They made space for like a hundred angels in their seed round.
[01:18:01] You want cheerleaders, you're building a community, you're trying to will something impossible into the world. So I have always had the approach of adding people to the cap table as teammates that add value in some way while keeping low expectations, which is my first point. Right? So our seed round was led by NFX and LVP.
[01:18:19] Why not? Because I thought they were gonna make the company, but Hey, NFX is, first of all. I love James Currier, incredible, still an incredible invaluable CEO coach and mentor. So that was 99% of the reason, but they have a good brand: they're Silicon Valley, they know marketplaces. Then all VP knows Mexico.
[01:18:34] Then we raised from QED who knows the FinTech stuff. Then we raised from all these Mexican businessmen and families that can help us locally. We raised from whatever, is a passive investor, big, deep pockets. We've always thought of constructing the cap table and then angel investors like David vees from Newbank, who I can call and text with little questions.
[01:18:52] So I will always find a way if someone wants to put in 10 million, put in nine, gimme a million dollars, and I'll split that up with 20 people. Each of them will add something to our company that I might not need it on a day-to-day basis, but they're there to call on. And by the way, they build extremely good long term relationships, if you know how to handle it.
[01:19:08] So that's how I think about it. And I learned that from Eric and Kareem, and then just from examples myself, where I can't believe I got this crazy help. Like there's one investor put $20K in our last round. And he personally has been, he has personally closed two execs for us, like. What if I would've given that $20K to a VC it's like insane, right.
[01:19:25] Or, whatever, got on us customers. Or so I've just, I have, I think we have 200 people on our cap table, maybe more through indirect SPVs. And I know there's some risk of leakage and probably people that I don't want have some of our information, but I think the benefits outweigh the cons every day of the week.
[01:19:43] Nima Gardideh: Yeah. And it's the leakage problem is interesting. I mean, the SPV is like, is a non problem cuz you're not gonna get anything. So that's easy. Right. I, yeah, I guess I personally think, first of all, like I think Kareem and Eric at Ramp have been clearly very thoughtful. I, this is the part where I think I'm like seeing more of, because capital became so cheap over the last couple of years, people were able to be a lot more thoughtful than before. Like, I think you could in 2017 or 18, if you were fundraising, you would just grab it out of like maybe two or three options you had in 2019, 2020, it was 40 options. And you're like, well, maybe I could have all of them. And I think, I frequently in that 1 million chunk that you talk about, right?
[01:20:28] Cuz my check sizes are small and founders are like, Hey, we think you're gonna be helpful when you grow and things like that. , but then the VCs do want to take that over. So it quite, at least two or three deals I was in last year, I couldn't put as much as I wanted because they're like, well the VC push back.
[01:20:45] We wanted 2 million that now we have 1 million allocation. I wanna fit more people. Can you do like half the amount of your, you, you said you would. , and so it, it is becoming so competitive that the VCs want that 1 million, , which is like not much and like a series A but I can see that being very helpful, especially if, I think it sounds like you're not, you're good at finessing it and keeping and maintaining all these relationships in a way that is useful to you.
[01:21:09] Deepak Chhugani: Yeah, you have to be good at like, I have a lot of founders that I have angel invested in and they'll ask me for an example of my investor update. And then I laugh, cuz I'll get 10 updates with the same call out where I say, please, it's in a very nice way. I say, Hey guys, there's a lot of you.
[01:21:24] Please leave me alone. That's not what the wording is, but it's kind of like, Hey, we can build a relationship, but people have to respect. I'm not gonna hop on calls. I'm not gonna, , there's a lot of email. Like we sent out an update yesterday. So many people reaching out with insights. There's someone who I didn't even know, sold a company to Zenga for like a billion dollars and another person who was at Facebook when they were 700 people.
[01:21:43] And I said, I need help with this org design issue. And people will respond. Sometimes they won't do anything cause I don't have expectations. But then I'm pleasantly surprised at this team that we have. But to your point, I think you have to be good at finessing. You have to be good at saying no, I was really bad at this.
[01:21:57] Like our seed round was very, very oversubscribed, which sounds like a champagne problem. And it is, but it's also super painful to tell people who said, I'll back you before others. Tell them no. When they said yes to you first, and you take someone with a better brand name, whatever things that everyone understands, why you would do them.
[01:22:14] And so getting good at saying no and convincing people why it's okay to have a smaller check and for the VC to get less that's I think, I think it is what you're saying. It's in a environment of abundance or when you have a CEO that's good at managing those relationships and those dynamics, you don't have to be like at the end of the day, the most important thing is making a successful product in a company. These are things that help that's it. Right.
[01:22:35] Nima Gardideh: Well, thank you so much for being on here. It was super fun to get to know the details of the story a little bit more. I appreciate you spending your time and hope to see you around.
[01:22:45] Deepak Chhugani: Thanks for having me Nima.
[01:22:46] Nima Gardideh: I'm betting that Nuvocargo continues along a hyper-growth journey with Deepak at the helm. If you're not following our show, tap that follow or subscribe button to get every episode as soon as it's released. Thanks for listening and until next time.
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