Weekend Ep. | Becoming the AI power grid for the world - E2E | S4 E3 | Destiny Avenged | Podcast

Transcript

[00:00:00] Karthik Reddy: With no qualifications, Jensen Huang or Sam Altman? 

[00:00:05] Srishti Baweja: AI is going to be the new electricity of the world. 

[00:00:07] Tarun Dua: What’s one AI trend you think is overhyped? 

[00:00:09] Srishti Baweja: It will replace human creativity. 

[00:00:11] Tarun Dua: The very first customer showed faith in India and in us and cut a check for and said that by this date, I need a server in India or you can return the check.

[00:00:20] Karthik Reddy: And any examples of funny prompts that you use with ChatGPT? 

[00:00:23] Srishti Baweja: Not for me, but like I once saw Sayesha, and she was asking ChatGPT to tell some gossip because she wants to make her life interesting. And then, it replied back with a very personal dumb art story. 

[00:00:33] Tarun Dua: India should not become a digital colony. We were literally designing our own server. We invented cloud before cloud was a word. 

[00:00:39] Karthik Reddy: Would you change anything about yourselves that would have taken the company on a different path?

Welcome to another episode of Season 4 of the Blume Podcast. This season’s theme being Destiny Avenged. Today, we are joined by Tarun and Srishti, the co-founders of E2E Networks, a Blume Fund I company. 

Scrappy builders and a married couple who set out in 2009 to challenge the hyperscalers with an audacious promise, 80% of the functionality at 40% of the cost. They did so by serving customers obsessively, staying capital efficient, and betting early on where the market was headed. 

They took the uncommon bet of going public early with an SME IPO in 2018, one that was oversubscribed over 70 times. Then, wrote the post IPO seesaw with grit to hit over a billion dollars in market cap at the peak. 

Today, they trade somewhere in the halfway market of that. Along the way, they kept reinventing. An India first cloud to self-serve, then a bold pivot to GPUs in 2018 with NVIDIA V100s, well before anyone heard of NVIDIA or the AI wave had crested. 

We’ll unpack the near misses, the hard winds, the IPO calculus, and how E2E is building India’s GPU cloud while guarding the scrappy DNA that got them here.

Season 4 of the Blume Podcast is in collaboration with IDFC FIRST Bank and Ultrahuman, one of Blume’s portfolio companies. Welcome to the podcast, Tarun and Srishti. 

I would love to go back to the beginnings, Tarun. I mean, that’s what this podcast has been about. We would love to get to know founder journeys, founder stories, the grit.

Did you think of this as a calling? Did you think of it as your destiny? That’s a theme this year. 

I know we were first introduced in 2010. I think E2E was born in 2009 and very audacious, right? There were already big, large, giant American hosting companies. 

[00:02:43] Tarun Dua: Not in 2009. 

[00:02:44] Karthik Reddy: Really? 

[00:02:45] Tarun Dua: 2009. You could either host in a data center in the US or you could try and tie up with some of the large ISPs in India to get some colo space. 

[00:02:54] Karthik Reddy: Like a NetMagic?

[00:02:56] Tarun Dua: NetMagic was, I think, yeah, it was present. 

[00:02:58] Karthik Reddy: Okay. 

[00:02:59] Tarun Dua: All the big data centers and ISPs were very expensive. They all wanted a contract for 3 years, 5 years from a small startup. 

[00:03:07] Karthik Reddy: So, If you go a step back and say, who is Tarun and of course, I’d love to ask Srishti as well, your better half, but who is Tarun Dua that he actually came up with this idea that this was all a market, this was a need. So, walk us through a little bit of your background on why this problem even arose in your head and why did you think E2E was a solution at that point? 

[00:03:29] Tarun Dua: So, a part of my journey was spent in the US. I think I might have spent 6 – 7 months, working in the valley through an outsourcing company. And over there, I went to a Linux user group meeting where a small startup, which used to call itself Flickr of videos, was presenting. That turned out to be YouTube. 

Now, nobody knows Flickr, but at that time, YouTube called itself like Flickr of videos. 

[00:03:57] Karthik Reddy: And Flickr was acquired by Yahoo.

[00:03:59] Tarun Dua: Flickr was acquired by Yahoo. So, YouTube was kind of like happened because there was enough compute available in the valley. There were enough providers in US who could give you like a dedicated server for a $100. No questions asked. You could take it, return it. 

It was completely contractless compared to India where we saw that only biggies could afford to have local servers and local content and faster delivery through, like having a lower latency to their audience. So, what I thought was that that’s a gap in the market. 

The big guys who are well-funded can afford to have local hosting. The small guys can’t afford that. And again, in the valley, the culture was that small guys will become big guys. So, that we thought was our entry point into the market where you could do dedicated servers and VPN servers and any kind of contractless compute in India. So, we started doing that. 

Our original idea was that like host the servers in Singapore. Then, the very first customer showed faith in India and in us, and cut a check for ₹30,000 and said that by this date, I need a server in India or you can return the check. 

[00:05:22] Karthik Reddy: Who was the first customer?

[00:05:24] Tarun Dua: So, that was an ex colleague. 

[00:05:25] Karthik Reddy: Okay. 

[00:05:26] Tarun Dua: They continued to remain a customer for a very, very long time. We still speak sometimes. So, the customer number one, like CRN number one, remained there for, I think, like 15 – 16 years of our existence. 

[00:05:37] Karthik Reddy: Lovely. 

[00:05:39] Tarun Dua: So, that was that. Basically, we started off. So, we had a couple of friends who were doing molarity, and they had tracked some deal with a local data center. So, we rode on top of their deal that you are already selling to these guys, and we negotiated a small contract where our costs were far in excess of the revenue that we were going to get from that ₹30,000 paycheck on a monthly basis. So, we were in business. 

Initially, we had a very small static website. We just listed the prices and had a contact number, like, call us and practically, for most part, it was me racking and stacking the servers in the DC and doing the customer support and also answering the sales calls. For a while, it was like that, until kind of like we… 

So, there was somebody who had a lot of servers in the US. They were looking for some other Tarun. So, it was a wrong number. This person called me, and I was like, no, I’m not that Tarun. Then, I reversed looked up on Google. Okay, who is this person? This person has a lot of web workloads, runs a lot of websites, has a team. So, I was like, called him back the next day morning.

And I was like, yeah, I wanted to talk to you. You spoke to me yesterday, but some other context. So, this guy was like a true startup guy. He said that, yeah, so come back tomorrow to meet me at our office and same day, he cut a check. So, he was like, okay, I’ll take your servers as long as you can deliver 99% uptime, we’ll do business with you.

And that became a customer that brought in their competitors. So, a competitor of theirs called and asked me why are their websites so fast? I was like, okay, one is we are hardworking people. We have fine-tuned their servers. We know Linux. We know Webscale. We know load balancing and all that stuff.

The other part is the servers are in India. So, they were like let us also try out. And that competitor again turned out to be someone who was very well-known in the startup community. 

[00:07:49] Karthik Reddy: Why aren’t you naming anyone? You can name people. 

[00:07:51] Tarun Dua: This was Amit Jain from CarDekho? 

[00:07:54] Karthik Reddy: Yeah. Okay. 

[00:07:56] Tarun Dua: Then, they became kind of like an inflection customer for us.

[00:07:59] Karthik Reddy: Yeah. 

[00:08:00] Tarun Dua: We again got called by Flipkart because CarDekho was our customer. And I think for the next 6 – 7 years, we never had any salespeople. Every year, we grew more than a 100%, and mostly, it was word of mouth in the startup and digital native space. In that era, we acquired customers. I think out of a 120 – 125 unicorns in India today, 15 of them were born in that era and most of them were born on E2E’s compute infrastructure. 

[00:08:31] Karthik Reddy: Amazing story that’s rarely been told in some sense. 

[00:08:34] Tarun Dua: Right 

[00:08:35] Karthik Reddy: And no. Before I come to you Srishti, I think while you joined the company, we joined the company before you. It is a rare case where we have the opportunity to bring one of our own portfolio companies. So, for the folks who don’t know in the audience, Tarun’s a Fund I Blume company, one of our very first checks. Srishti would know this, but I don’t know how much of the history you know. We pretty much borrowed money to invest in 2000.

[00:09:01] Srishti Baweja: So, I called up a friend and got the company incorporated. 

[00:09:04] Karthik Reddy: Okay. 

[00:09:04] Srishti Baweja: In 2009. 

[00:09:05] Karthik Reddy: Okay. Amazing. And so, you have been there from day one?

[00:09:08] Srishti Baweja: Yes. 

[00:09:09] Karthik Reddy: We got introduced through Freeman. It was a very interesting character. 

[00:09:13] Tarun Dua: Right.

[00:09:13] Karthik Reddy: He plays the sutradhar in this story.

[00:09:18] Tarun Dua: I think he got a 10,000x multiple or some crazy number like that. 

[00:09:24] Karthik Reddy: A few thousand x multiple. So, the story goes, and it is embarrassing, but I will disclose it in public. Freeman was running a incubator space and an accelerator space in Bangalore called Jaaga. And we were introduced to him, and we would find a bunch of startups in that space. 

In one of those conversations, he said you should evaluate Tarun. And I said who’s Tarun? He said I used to work with him in Pune. So, this is a good point to introduce ourselves into the picture. It is not very often that we have guests who are also our portfolio companies. We are waiting for more of our portfolio companies to become superstars like you guys, so that we can bring them to the show.

Blume obviously started the journey with you as well in 2010-11, probably one of the first checks we wrote.

Srishti I know you mentioned that you incorporated the company in 2009, but even before Blume…Blume was incorporated but we didn’t have a first close done. And we wanted to back Tarun, and we got introduced by Freeman, who’s quite the character. As Tarun just remarked. He is like a guy who’s made a few thousand x on this investment, unlike us who sold too early. But Freeman made the intro and said, we used to run into him Jaaga in Bangalore. 

For people in Bangalore, by the way, a little piece of history where the current Sabko and the Naru Noodle Bar exist is where the second Jaaga space existed. So, I don’t think you haven’t gone there in a while. So, Freeman moved from across the hockey stadium to there and then, left the country. 

But he used to have all these collection of young founders and actually even our current Sprinto founders, we first met there. So, a lot of history going back to that first meeting with Freeman.

And Freeman, I think it worked with you, and he said, Tarun’s trying to build something interesting. And cloud hosting has to take off in India. There are no native players, and you should meet him. That is how we met. 

And why did you ask us for such little money, by the way? What are we trying to build with such little money that you even asked us? 

[00:11:26] Tarun Dua: So, we had no clue. Basically, I think the question you asked was that what will make a difference for you to get to the next level? 

[00:11:35] Karthik Reddy: I still ask the same question mark. 

[00:11:37] Tarun Dua: I thought that money is enough. That’s a lot of money. I think we built 5 Lakh MRR or 6 Lakh MRR with just about ₹25 Lakh of my own money. What I thought was that if we could get another 25 Lakhs, something like that, we could probably double or triple it and that would prime us for a series A. 

[00:11:58] Karthik Reddy: It is not like we haven’t disclosed it. You have seen the Omega files. So, we disclosed everything that we did in Fund I.

[00:12:04] Tarun Dua: Sure. 

[00:12:04] Karthik Reddy: But maybe people haven’t seen the fine print. 

[00:12:06] Tarun Dua: Sure. 

[00:12:06] Karthik Reddy: Tarun’s round in grand total was ₹35 Lakh which people won’t even accept his salaries nowadays. And we played 28 of that and Freeman played 7. Full credit to him, 20% of the round. And it was at a royal ransom price of 2 crore post money.

This is embarrassing, but I have to admit that. That is how cheap you let us in and we are grateful for that. And that was the beginning of the journey. I do think you were profitable all through after that. 

[00:12:40] Tarun Dua: We were always cash profitable. We always made cash.

[00:12:43] Karthik Reddy: But tell me around the time, Amazon and AWS became a force. 

[00:12:47] Tarun Dua: They all started coming to India, I think around 2014 – 15. Initially, they all set up around Singapore. 

[00:12:54] Karthik Reddy: Okay. 

[00:12:54] Tarun Dua: And in India proper, I think they started coming out in another 2 – 3 years. 

[00:12:58] Karthik Reddy: So, your pitch used to be low latency. I remember that was a buzzword. Because you were the only guy in India who could offer this. 

[00:13:03] Tarun Dua: Right.

[00:13:04] Karthik Reddy: In some sense. 

[00:13:04] Tarun Dua: And who actually targeted digital natives, who didn’t want long contracts, who didn’t want to worry about how to deal with a large organization. They were like, pick up the phone. I need something, you deliver it and they pay you after a week, sometimes even after 6 months. But we were okay at that point of time. So, we trusted people and I think initially we never had any issues. 

[00:13:26] Karthik Reddy: And Srishti what prompted you to be just the supportive wife to saying, no, I think this is going to get big enough that I should also… the whole household should put everything that they have in terms of opportunity and risk into the venture.

[00:13:40] Srishti Baweja: So, I will take you back to my story. 

[00:13:42] Karthik Reddy: Yeah, please. 

[00:13:42] Srishti Baweja: I met Tarun in 2007. 

[00:13:44] Karthik Reddy: Yeah. 

[00:13:44] Srishti Baweja: And it was an arranged marriage set up, but it didn’t work out. And we partied our ways. 

[00:13:48] Tarun Dua: I told everyone we had a marriage. 

[00:13:52] Srishti Baweja: Then, in 2009 March, he contacted me again. We had Orkut at that time. He said, let’s meet up. And then both of us decided to get married. And he said, I’m going to do my stuff. 

[00:14:02] Karthik Reddy: Second time love. I mean you fell back in love. 

[00:14:04] Srishti Baweja: No, we just met and decided to get married. 

[00:14:07] Tarun Dua: Okay. 

[00:14:08] Karthik Reddy: Sure. 

[00:14:09] Srishti Baweja: So, 2009 June, we got married and he was sitting with one of his, the other partner at that time and he was writing code and my families had matched the horoscopes, like he told everyone that I had no income. It was like zero income. 

[00:14:25] Karthik Reddy: He said zero income. 

[00:14:26] Srishti Baweja: He said zero income. And my family said nahi horoscope match ho raha hai, kuch to kar he lega. So, that was the setup. And I called up a friend and got the company incorporated in August 2009. And see, I resisted joining E2E for a long time. My point of view was… 

[00:14:44] Karthik Reddy: And by training you are a CA. 

[00:14:47] Srishti Baweja: Yes. I was working. I started my career at PWC. Then, I was working with HPCL. And PWC was very, very hectic. And I thought I will join a PSU and my life will be all set, like 9 to 5 job. 

But then I think I was destining to do something else.

[00:15:05] Karthik Reddy: So, the decision to join Tarun full-time, that is where we were. 

[00:15:10] Srishti Baweja: He was after my life. He convinced me. Literally, we sat down and he convinced me every single day. My point of view was that we should have at least some stable source of salary. You are running a startup. I am working with HPCL, but then things started looking up in 2013 and then, I finally quit. 

[00:15:31] Karthik Reddy: Awesome. I remember Tarun you were still a relatively small company. I don’t know if you recall the trajectory. So as you said, when we met, I think you were exactly there, 4 – 5 lakhs a month kind of MRR.

[00:15:47] Tarun Dua: Right. 

[00:15:47] Karthik Reddy: In your head, if you can recall vaguely, what did that trajectory look like just for the viewers to understand how long this took for you to fulfill your destiny in some sense?

[00:15:59] Tarun Dua: So, we had a very small revenue base every year, I think. Every year, we would make it a couple of times. And we were like, yeah, we are growing so fast. We should definitely get funded. Then, it was very spray and pray-ish. We never had any great advisors in terms of what a VC is looking for and a lot of investors were scared off, one day all these big guys are going to come in and they are going to take away your compute business. 

So, I think that started happening in 2015 onwards. But then for first three years, we didn’t even feel the effects. So, mostly it was like our customers were happy with us. Nobody even looked out until the big guys, they could spend a lot more money than us on customer acquisition. And then, it became very, very clear that we are not really going to get funded by the VCs. 

Then, we started exploring other options of scaling up the business. I think that is where somewhere like in your office, we met someone who wanted to help small companies get onto the SME board. And we were like maybe this is something we can do. 

[00:17:04] Karthik Reddy: We will come to that is a different story. You need to inspire a lot more people to think in that fashion. So, we will come back to that.

But let us go back to the married couple relationship. I think there’s generally a broad… I have heard it so often that it is almost jarring that, married couples do not make great co-founders and you should not back companies, especially tech startups, where husband and wife are co-founders. In that sense, you tricked us because you were not the co-founder originally, and then you came back in. 

But jokes apart, over the next 10 years, you’ve evolved. You joined CFO. Now, you are CEO. How does that relationship work? What are the pros and cons of actually being a couple of who run the company?

[00:17:49] Srishti Baweja: Tarun is a very ambitious person. He is always soaring in the sky with his big ideas. And I think I am the one who has to bring him to the ground, show him the financial discipline, show him the strong financial numbers, and now, we are at a place where we trust each other so much.

And I think we have set a rhythm, like he has his own things to handle. I have my own things to handle. So, the separation of duties, it is like very, very clear for us. 

[00:18:18] Karthik Reddy: When it comes to your working style in office, you are like distinct and at home, you are chatting about work or is it become all one and the same?

[00:18:30] Srishti Baweja: I think the most biggest disadvantage is that work spills over. We only talk about two things, which is E2E and Sayesha. Sayesha, our daughter. 

[00:18:39] Karthik Reddy: Yeah. 

[00:18:39] Srishti Baweja: So, there is no separation of work and office now. 

[00:18:43] Karthik Reddy: Understood. 

[00:18:43] Tarun Dua: So, it has become a healthy obsession in some sense.

[00:18:46] Srishti Baweja: Yes. It has. 

[00:18:47] Tarun Dua: So, we decided that no more work today. So, no discussion on work. And then 10 minutes later, we are talking about work. Then sometimes we decide, no more discussion about Sayesha. She is away. Let us have our own conversations without work. 

[00:19:01] Karthik Reddy: How old is she now? 

[00:19:02] Srishti Baweja: She’s 13 now. So then, again, that also spills over. It is hard to maintain those boundaries. 

[00:19:11] Karthik Reddy: And again, for the viewers, the history goes back so much that, in the early days of Blume, I used to optimize my car rides from place to place and Tarun was a very good driver for me. So we used to… 

[00:19:26] Tarun Dua: I always used to get the airport ride meeting. 

[00:19:30] Karthik Reddy: And had this like dinky car and the backseat was loaded with stuff.

[00:19:34] Tarun Dua: Maruti Zen. 

[00:19:35] Karthik Reddy: So I did not know which one. I thought it was a Hyundai, but it is a Maruti Zen, and the backseat used to be always trash.

[00:19:41] Tarun Dua: That was actually Srishti’s car. 

[00:19:42] Karthik Reddy: He would take whatever was in the front seat, throw it in the back seat, and he said Karthik, this is your seat.

[00:19:45] Srishti Baweja: Yeah, we had a blue car, right? 

[00:19:47] Tarun Dua: Yeah. 

[00:19:47] Karthik Reddy: That was one. And then, I think even your kid was born during that phase. We have seen everything. We have seen the entire journey. Short of you coming for your wedding, we have seen everything around. 

[00:19:57] Tarun Dua: Freeman came to our wedding. 

[00:20:00] Karthik Reddy: Freeman came to your wedding. Fantastic. 

We never succeeded in convincing anyone that this was a venture backable model. Why do you think that was? And it is not both of us didn’t try. From Blume side we tried. We were the only investor for you till you went public and you obviously, it is your life and sweat and blood.

[00:20:20] Tarun Dua: I think in a way, we were so set in our ways of doing the business, where we took the decision that today we are chasing revenue, so we are chasing revenue. And I think the initial conversations were about but you guys are not doing any product. You don’t have a product roadmap.

We are like once we have the money, we will build a product roadmap. But are you guys capable of building the product? So, chicken and egg over there. You are hand to mouth in terms of what your customers are asking you for, plus the credit situation in India for startups at that point of time was not great.

So, nobody would lend you money. Nobody is giving you equity. So, whatever you are earning, you are reinvesting back into hardware. So, essentially at the end of the month, like usually, there is only enough OpEx money for maybe 2 – 3 months, I guess. 

[00:21:10] Srishti Baweja: Three months’ run rate. 

[00:21:10] Tarun Dua: Three months was Srishti’s discipline that, yeah, mostly you need to have three months of money in the bank at least. So, it was always that. 

Then, the unkindest cut was when someone asked that why haven’t you grown more? I was like, there is literally no way to have grown more than this. Because simply that, like everything. 

[00:21:32] Karthik Reddy: You are doubling with no cash, just with bootstrap. 

[00:21:35] Tarun Dua: Right. Because all the cash is going back into the infrastructure and hardware and you could have done nothing basically. There were no banks lending you money. Whatever they could have lent you, you took that. 

[00:21:46] Karthik Reddy: When did we get a debt breakthrough in the company? 

[00:21:50] Tarun Dua: I think SIDBI was the one who gave us the debt for the first time. 

[00:21:55] Srishti Baweja: That was a very small amount. 

[00:21:56] Tarun Dua: That was a small amount. I think it was like. 

[00:21:58] Srishti Baweja: 2 Cr, I think. 

[00:21:59] Tarun Dua: 2 Cr. But I think we remember signing some 150 documents. 

[00:22:02] Srishti Baweja: Endless number of documents. Yes. 

[00:22:04] Karthik Reddy: Basically gave up your life if anything went wrong. Yeah. 

[00:22:08] Srishti Baweja: And I think we got some from private banks also. 50 Lakhs, 50 Lakhs.

[00:22:11] Tarun Dua: Yeah, after SIDBI, then we syndicated some other loans. 

[00:22:14] Srishti Baweja: But so many documents were required. 

[00:22:16] Karthik Reddy: Yeah. No, but we always educate founders that if you truly, truly believe in your business and you need to get debt started somewhere. 

[00:22:22] Srishti Baweja: Yes. 

[00:22:23] Karthik Reddy: Especially in certain business models. And it is risky. It takes time. But if you don’t, the second guy never comes up.

[00:22:29] Tarun Dua: Right. 

[00:22:30] Karthik Reddy: The first chance that you get to establish a creditworthiness in the debt world, it is an important milestone. And you required it all through. In fact, you grew without any equity capital other than maybe one of the small round. 

[00:22:41] Tarun Dua: Initially, we grew without debt, without equity capital.

[00:22:43] Karthik Reddy: Correct. 

[00:22:43] Tarun Dua: Just on the basis of accrual. 

[00:22:45] Karthik Reddy: For about 3 – 4 years. Yeah. 

[00:22:45] Tarun Dua: And the small checks from Blume and myself. 

[00:22:47] Srishti Baweja: Till 2018, we had raised only 3 Crores. 

[00:22:51] Karthik Reddy: I remember. We will come to that. 

Let us maybe cut over to the IPO in a bit, but just the funding journey for those who don’t know this, E2E was pretty much Tarun going, begging, borrowing from his family and getting some money in and Blume going and scraping the bottom of its reserve battle and bringing some money in.

And to what Srishti said is correct, the grand total of 3 crores of equity across multiple infusions. 

[00:23:18] Srishti Baweja: Yes. 

[00:23:19] Karthik Reddy: Over a 7 – 8‑year period. But you had a lot of debt as you kept growing. 

[00:23:23] Tarun Dua: That was much later. So, we always had a reasonable amount of debt which we could service. 

[00:23:29] Karthik Reddy: And just to finish that trajectory timeline. In 2015, what scale would you have been?

[00:23:34] Tarun Dua: 2015, we might have been between 20 – 30 crores of annual revenue. 

[00:23:38] Karthik Reddy: No, I think that was closer to your IPO, you were at 35 crores.

[00:23:41] Srishti Baweja: 2017 – 18 was 35 Cr. 

[00:23:43] Karthik Reddy: Yeah. Which is the full revenue. 

[00:23:45] Tarun Dua: Right. Previous year was 30 crores. I think previous year was 15 crores. 

[00:23:49] Srishti Baweja: Yes. 

[00:23:49] Tarun Dua: 15 might have been like 10 – 15 crores or something. 

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Obviously, we have heard this, from our research, we know you well enough, so we know this about you. You are like the super disciplined CFO. You just said three months of cash has to be in the bank. We are not letting this company die. 

[00:25:01] Srishti Baweja: Yes. 

[00:25:01] Karthik Reddy: If you weren’t there, would you have killed the company? 

[00:25:05] Tarun Dua: Likely. 

[00:25:06] Srishti Baweja: Maybe. 

[00:25:07] Karthik Reddy: So, it also shows, it’s a very peculiar situation where, of course, he trusted you as his wife and as a co-founder. But, if you don’t have good money management… 

[00:25:18] Tarun Dua: I was really bad at numbers.

[00:25:20] Karthik Reddy: And if you are not good at money management, then you get in trouble a lot, even in a legitimately good business, right? 

[00:25:26] Tarun Dua: So, I was really surprised in the first year that we made a profit. So, it was like, we made a profit? How? I don’t see any money in the bank. 

[00:25:35] Srishti Baweja: First financial accounts were drawn by me on a piece of paper.

[00:25:38] Karthik Reddy: Awesome. In your life in those 6 – 7 years, did you feel you were really vulnerable and the business could be in trouble or you were missing payroll or how do you handle stress and how do you handle Tarun’s crazy dreams and balancing that out with fiscal discipline?

[00:25:55] Srishti Baweja: The most important part for me… So, I had a toddler at that time. And my team was sitting out of her bedroom in our Faridabad house. And I was like, shushing her all the time. Please don’t make noise. Bhaiya is working from the next room. And obviously she is a toddler. She will scream. That was a difficult part. 

[00:26:13] Karthik Reddy: Balancing work and life. 

[00:26:15] Srishti Baweja: Balancing work and motherhood. But I think we were never at a situation where we didn’t have the money to pay the salaries. 

[00:26:21] Karthik Reddy: Awesome. 

[00:26:22] Tarun Dua: Cash management was quite disciplined, but we had other challenges in our lives. I think in that era, we were using multiple ISPs and that used to be a very competitive business. The ISPs would pay other ISPs to cut fiber cables, and we would end up suffering over there. Like, okay, what happened? _____ dug the fiber cable, what happened? 

[00:26:51] Karthik Reddy: ISPs are internet service provider. 

[00:26:52] Tarun Dua: Internet service provider. 

[00:26:53] Srishti Baweja: Services going down. 

[00:26:54] Tarun Dua: Our business is like you are sitting in a data center. We are dependent on the ISPs. And somewhere or the other, like the infrastructure in India at first couple of years, that was not really great. I think by 2015 – 16 things started improving in terms of infra. I think 14 onwards, we started to get great up times and everything. 

Before that, it used to be that tonight like what has happened again, I would leave her alone at house and drive to the data center and see what happened?

[00:27:24] Karthik Reddy: I think that is something that we’ve consistently seen about Tarun Dua, right? You are obsessed about uptime, operational efficiency, getting into the tech, getting into the guts of the machine, obsessed about like customer reliability. 

How did you manage to build that culture? How did you balance that out with being a CEO in that sense, which is far more broad-based, even as someone like me has grown up in the firm, and I find it very difficult to balance all of this? 

[00:27:57] Tarun Dua: I think initial few years, because we had no cash and there was no visibility of cash coming from anywhere either as debt or equity, so we were very obsessed with managing the costs. 

Managing the costs meant that we were literally designing our own server, although we were not physically assembling them, but it was usually our server design. We would pick the processor. We would say that, okay, we are going to scale up this processor alone. So, don’t have multitude of things.

Any customer who came to us with a customer requirement, we would say, no. We were like, okay, we have built these servers. We can fit the solution for you in these servers only, but we are not going to buy any hardware which is non-standard. So, everything in software was open source or written by us.

Everything on servers was designed by us in a way that you could do a… So, we invented cloud before cloud was a word in the sense that everything was uniform. We treated our servers like cattle, not like individual named servers. And I think that just naturally happened because of the constraints.

So, I think constraints play a big role in what shapes you. 

[00:29:05] Karthik Reddy: Absolutely. And I think it is not a bad thing sometimes because it helps you build a better business. 

[00:29:10] Tarun Dua: Right. 

[00:29:10] Karthik Reddy: You are not reckless about building a business. 

Now just to summarize that part of the journey 2009 – 18 and 2018 was a inflection point because you got capital for the first time in spades, we will come to the IPO, would you think that there was anything you would have changed about that trajectory or would you change anything about yourselves that would have taken the company on a different path or you are very zen about that and said this is the best we could have done and we achieved everything we could have.

[00:29:43] Tarun Dua: Very, very hard to predict the past in the sense that it is unlikely anything would have changed because we were where we were and we were doing what needed to be done, and I think telling our story better would not really have helped. 

[00:30:01] Karthik Reddy: I think the most exciting, when VCs come and ask us or approach you, there is obviously a glimmer of hope. 

[00:30:12] Tarun Dua: Right. 

[00:30:13] Karthik Reddy: I think the most exciting one I have had in your journey was when Lee asked whether you should look at this seriously. 

[00:30:18] Tarun Dua: So, we had one tier one VC who would come in every year. Would look at us and say that, ​“Oh, you have grown 100% more.” 

[00:30:24] Karthik Reddy: Yeah. 

[00:30:25] Tarun Dua: They would assign an analyst. The analyst would not understand what we were doing, how we were doing, what were the drivers for the business, what were the value drivers.

Of course, we didn’t know all these things. We were like why is this guy asking all these questions? So, it’s like they may fund us. They may not fund us, but at least 40% of their portfolio is our customer. 

[00:30:43] Karthik Reddy: Yeah. 

[00:30:43] Tarun Dua: So, you can’t say no to that particular VC and say that we are not going to talk to you.

[00:30:48] Karthik Reddy: Interesting. Yeah. You take it to just keep the relationships going.

[00:30:51] Tarun Dua: Right. 

[00:30:52] Karthik Reddy: But, surprisingly, despite you saying that, and I feel in Lee’s case… Lee is, by the way, the man for the first 10 years who ran, Tiger Global in India. Obviously, claim to fame is Flipkart, Ola and many other companies.

But Lee too actually did the same thing. The difference is he pushed it to one of his anchor companies and asked them to do the evaluation of you. 

[00:31:16] Tarun Dua: Right.

[00:31:16] Karthik Reddy: And by then, I think in the top tier India for some reason looked down upon Indian providers and said, there is no way this can… I can build better than this. AWS is …

[00:31:25] Tarun Dua: The narrative had turned towards B2C, like almost completely. I think SaaS infrastructure. I don’t think, like nobody got funded. There was, I think, dry spell between… 

[00:31:35] Karthik Reddy: For about 3 – 4 years. Yeah. 

[00:31:37] Tarun Dua: 2013 – 2018, I think there was a complete dry spell for infra guys or SaaS guys, B2B guys to get funded.

[00:31:43] Karthik Reddy: No, I think, I have always given Lee the credit and that is why I said I drew the point where he did not take that final leap. If he is listening to this somewhere, sitting in addition capital in New York.

Because he surprisingly was one of the few investors, foreign or Indian, who had more courage than most people in the ecosystem to back what he thought could be a local player who can build as well as a global player. So, that is why Ola versus an Uber; Flipkart versus an Amazon.

And he said if I find phenomenal founders, I will love them to go compete. So, that’s why I said, I knew that trend line and I said, maybe it is gonna make E2E the AWS of India. But yeah, E2E had its own plans to be the E2E of India. But now we will do that. 

I think this lot happened in 2017 to pre-pandemic era. And it was happening very below the radar, and somehow people seemed to have missed that part of the journey and suddenly you come out of the blue like a white knight in 2023 – 24. But if you go back then, what changed? What changed in 2017 – 2019? 

[00:32:51] Tarun Dua: One was that I think for the first time there was money in the bank, and I think people in the team went a bit overboard in terms of that we can do a lot more. So, I think the operating philosophy of do less went somewhere off the track. So, that was when the costs had risen, and the revenues were not simply picking up. And then, I think at that point of time, we also had a very large customer who was doing almost 30%-35% of our revenue who got merged into another digital native.

And then, it was just remained getting repointed to their old infra and that went away one fine day basically. 

[00:33:33] Srishti Baweja: And we came back from 35 Cr to 25 Cr. 

[00:33:36] Tarun Dua: Yeah. Then, it was like a struggle for next two years or three years. And then COVID came, and then COVID was when everything digital was doing well. I think that was where the tailwinds for whatever skill sets we had developed on the GPU side really came to the fore for us. And that was long before OpenAI became the hit case. 

[00:33:59] Karthik Reddy: That’s right. 

[00:33:59] Tarun Dua: So, we were already doing a lot more GPUs than anyone else in India in that era during the COVID. And we were solving problems that even the hyperscalers in India were not solving for their customers. 

[00:34:10] Karthik Reddy: Now, I know you have taken advantage of this being public in many ways. But if you go back to 2017, I know we are also culprits, we kept pushing you to become the role model for the SMB IPO. 

Because you were probably the only company other than maybe Exotel in the entire portfolio who fit the requirement. 

[00:34:30] Srishti Baweja: Yes. 

[00:34:31] Tarun Dua: Right.

[00:34:31] Karthik Reddy: You were profitable for two to three years. There was no other company, leave alone our portfolio and a lot of the Indian venture ecosystem which would have qualified, right? At that point, behind our backs what were you saying? Why are these Blume guys doing this to us or why are they pushing us? 

[00:34:46] Tarun Dua: No, not really. So, for us it was like let’s do a small series A round. 

[00:34:50] Karthik Reddy: Yeah. But which was not happening, right? That is why we went this far. 

[00:34:53] Tarun Dua: Basically, we treated it as an alternative to a series A around. 

[00:34:56] Karthik Reddy: Correct. 

[00:34:59] Tarun Dua: Long after that I think many investors told me that people are threatening us that we’re going to do a SME IPO rather than take their round. 

[00:35:07] Karthik Reddy: Yeah. 

[00:35:08] Tarun Dua: So, I think we set that trend. 

[00:35:09] Karthik Reddy: That’s awesome. Srishti, you were saying something. 

[00:35:11] Srishti Baweja: I was saying that even the merchant banker, it was his first IPO. Obviously, it was our first. And then, we started in November, and we did the IPO in May. 

[00:35:20] Karthik Reddy: That’s right. 

[00:35:20] Srishti Baweja: The whole lot of, endless amount of documentation was required. 

[00:35:24] Tarun Dua: Yeah, mostly I would’ve given up. It was all Srishti. 

[00:35:27] Srishti Baweja: At one point, Tarun said let’s not do it. It’s like too hard. 

[00:35:29] Karthik Reddy: I think he said it every week, as far as I recall. That’s why I said it was a very reluctant IPO CEO. 

And then from, your lenses, what changed? As a CFO, of course, you were reporting to us, but there was no other investor on the cap table. Now, you are a public company CEO for what it’s worth. 

[00:35:49] Srishti Baweja: See for SME IPO, not much… 

[00:35:52] Karthik Reddy: It’s more liberal.

[00:35:52] Srishti Baweja: It’s more liberal 

[00:35:53] Karthik Reddy: Six months reporting… 

[00:35:54] Srishti Baweja: Six months numbers reporting. And not much pressure from the… or the quarterly pressure is not there.

[00:35:59] Karthik Reddy: Yeah. 

[00:36:00] Srishti Baweja: But once you move to the main board, which we did in 2022, quarter-on-quarter pressure of the numbers, endless investor calls quarter-on-quarter. Why has your revenue not increased? You said that in the earnings call, what happened? So, that pressure has always been there. 

[00:36:14] Karthik Reddy: And that’s continued even today.

[00:36:15] Srishti Baweja: That’s continued even today. 

[00:36:17] Karthik Reddy: Yeah, I know. I get calls even though Blume is not an investor. I said I’m not in the picture, why are you asking me? But even I get calls on E2E’s health. But tell me… crazy, interesting IPO. If I recall, what was it like? 

[00:36:38] Srishti Baweja: 70 times it was oversubscribed. 

[00:36:39] Karthik Reddy: Yeah. But the issue was about. 

[00:36:41] Srishti Baweja: Issue was 21.99. 

[00:36:44] Tarun Dua: Yeah. 

[00:36:44] Karthik Reddy: That included our secondary. 

[00:36:45] Tarun Dua: That included the secondary. So, the primary capital post the issue. 

[00:36:49] Karthik Reddy: So, I want to reveal some secrets to the audience today. 

[00:36:51] Tarun Dua: What was I think like 14 crore or something. 

[00:36:52] Srishti Baweja: 14 Cr we got in the bank account. 

[00:36:53] Karthik Reddy: Yeah. So, firstly it was a 21 crore plus IPO. Tarun made some of us sell our shares. Not in a forced way, but like in a kind gentle way. And the hack was, Tarun wanted to stay majority owner. Proper North Indian baniya founder. I want to be the owner, 51%. So, basically, he did the math and said if you sell this much, I can continue to be the owner.

[00:37:19] Srishti Baweja: One-third, yes. 

[00:37:19] Karthik Reddy: But, I think the bankers obviously went fairly aggressive on the pricing, which I think upset you. It upsets all founders. It’s like why is it so aggressive? I could have left a lot more money on the table. And that’s how I think it felt, right? 

[00:37:33] Srishti Baweja: Exactly. 

[00:37:34] Karthik Reddy: What is the indicator for that? You were saying it Srishti, but I cut you. How much were you oversubscribed by? 

[00:37:39] Srishti Baweja: We were oversubscribed by 70 times. 

[00:37:40] Karthik Reddy: 70 times. So, 70 into that 21. We are talking about 1500 crores of demand for that 21 crores, and of course, we can’t get a benefit of that. And the guys who got allocated made out like bandits. How much did the stock run up on?

[00:37:55] Srishti Baweja: It was stubby. The IPO price was 57. I think it went up to 85 on the first day. 

[00:37:59] Karthik Reddy: On the first day. Massive pop. And I got innumerable calls for the next month or two. How do we take a company’s SMB IPO? I said, most of them won’t qualify. They either don’t make money or the SMB market is so harsh that it won’t value your fancy valuations.

So, off the bat, this is a non-starter for most companies, which most people couldn’t make a sense of. And the people who wanted to take the lessons did, right? Like Infollion later took a leaf out of your page. Another Fund I company. 

[00:38:30] Srishti Baweja: Yes. 

[00:38:31] Karthik Reddy: And I think Gaurav said I want to learn and became a board member. 

[00:38:35] Tarun Dua: Right.

[00:38:36] Karthik Reddy: Learned and then he took it SMB IPO 4 – 5 years later. But, then, as you said, did it change the company’s culture in terms of saying, ​“Oh, we are flush with money?” Or is it just the setback from the customer who went away? 

[00:38:51] Tarun Dua: I think both things went hand in hand. 

[00:38:53] Karthik Reddy: Okay. 

[00:38:53] Tarun Dua: We were spending a lot more money than we were used to. So, there was, I think, some letting go of like now we can do this, now we can do that. And the second part is then we got hit with revenue loss and we were like, yeah, we will make it up. But then eventually it became like a very slow process. 

[00:39:13] Srishti Baweja: The frugality runs in our DNA. So, till date, I have never traveled business class. I can’t get muscle to pay three times the amount of money. 

[00:39:21] Tarun Dua: I sometimes cheaply get the free upgrades because sometimes the airline gives you coupons, but that’s about it. 

[00:39:28] Karthik Reddy: No, it shows in the culture of the firm. And what advice would you have from that experience on younger founders who think, first, like you are wary of going public. And, B, do you think it is a better mechanism sometimes than chasing private money from your experience? 

[00:39:49] Tarun Dua: I would say that there is a clean path of going public and doing everything clinically and cleanly. I think that is a recommended path. Don’t fall into the trap of making people happy. 

So, whether they’re happy or unhappy, ultimately it is the founder or the entrepreneur who has to run the business for what is best for the business. Not for the optics. So, I think that’s the main advice I have for people wanting to go public that don’t play optics. Work on your business as if you were private. 

[00:40:33] Srishti Baweja: I would like to add on that. 

[00:40:34] Karthik Reddy: Yes, of course, please. 

[00:40:35] Srishti Baweja: So, the IPO is never an exist for the founders. 

[00:40:38] Karthik Reddy: Yeah. Just a continuation of the journey.

[00:40:40] Srishti Baweja: Exactly. It’s a trust vote from the public and you have to build on that. 

[00:40:44] Karthik Reddy: Absolutely. Well said. And I know Srishti has accumulated and espoused a lot more wisdom than Tarun has. We have a book to show for it, which I will come to. 

Now, if you take a step back and look at… So, I can speak for myself and people would always wonder, when most of my friends who have now bought or E2E shareholders and I recommended it, they always say, why did you sell? 

And I can speak for myself and I was curious to know what your team and your organization thought of how the trajectory was. For 5 years, the stock really didn’t move much. 

[00:41:19] Tarun Dua: Right. 

[00:41:20] Karthik Reddy: We went public in 2018. We got super excited from those first few weeks.

Then, it just settled down. Your performance being reported every six months. Nobody knows what to make of this company. And the stocks just flat. And approximately. 

And then, we had two pressures. I think the fact that it was flat, we said we always… I mean it’s not like we were not in touch with Tarun. Tarun would say, I can’t say much. I’m now a public company. 

[00:41:45] Srishti Baweja: Right.

[00:41:46] Karthik Reddy: So, it was like, what just happened here? All our conversations have become like, very official. 

This is a good time to talk about IDFC FIRST Bank, our season partner. IDFC FIRST Bank has earned its reputation as one of India’s most startup-friendly banks through its FIRST Wings program, which provides dedicated mentorship and tailored financial solutions to help early-stage ventures scale effectively.

Coincidentally, many of Blume’s portfolio companies, much later stage, also partner with IDFC FIRST Bank for their banking and financial needs. If you are well-funded and scaling, they are great lending and banking partners, and our portfolio companies would attest to that. 

But apart from that, we always believed in whatever you spelt out as a vision, buying into the GPU story, which obviously reshaped the company. So, you have to talk about that, which is partly why you got the seat today, by the way. You are like the hot AI company. 

While we went through that phase, I think we just got worn out. If we had not been on cap table, we wouldn’t have. Then, the regulator was putting pressure on us to get the fund closed. And so the first time your stock popped and grew 3, 4, 5x, we said maybe the moment has come and we were drip selling. And then Tarun would say, what can I do? The market is not able to absorb 5 – 7% of the company that you own.

When it happened, we sold. And that was one of the biggest upside misses in Blume’s history and maybe it will stay that way for the next 15 years. Because basically I think we sold at somewhere close to 250 crore market cap and you have all of it, most of it. And you went to 9,000 at one point, and now, I think you are settled somewhere between 4,000 and 5,000. What happened? I don’t think you expected it. I don’t think we expected it. 

[00:43:36] Tarun Dua: Yeah. Nobody expected it. 

[00:43:38] Karthik Reddy: So, take that in two parts. Both of you can speak from both your perspectives. 

[00:43:42] Tarun Dua: Sure. 

[00:43:43] Karthik Reddy: What did you change between 2019 and 2021 that this happened? I know you alluded to GPUs, etc. Was the dramatic liftoff from Sam Altman’s announcement or unveiling of Open AI? 

[00:43:56] Tarun Dua: I think that was the second inflection point. The first inflection point was COVID, of course. 

[00:44:00] Karthik Reddy: So, go through those two points. 

[00:44:02] Tarun Dua: Sure. 

[00:44:02] Karthik Reddy: And then, we will come to the stock journey, which is…

[00:44:04] Tarun Dua: So, I think will come very early. GPU journey started for us in I think 2016 or 2017. 

[00:44:08] Karthik Reddy: Why didn’t you give a 2‑minute ready reckoner for the audience on what does this GPU world mean? 

[00:44:13] Tarun Dua: Sure. 

[00:44:13] Karthik Reddy: And what is the context of it in what we are seeing today? 

[00:44:15] Tarun Dua: Sure. 

[00:44:16] Karthik Reddy: Where AI is what most people speak about day in and day out. 

[00:44:19] Tarun Dua: I think I will speak to the old hats. 

[00:44:23] Karthik Reddy: Yeah. Explain it to my mother. 

[00:44:25] Tarun Dua: The people who read Slashdot. So, I think 20 – 25 years back, people on Slashdot were raving about how a GPU can either draw triangles or rectangles, I don’t remember which, and that involves like doing a lot of parallel math calculations. There were people who had started using GPUs for doing maths in parallel computations. I think that was the early trend of people catching onto desktop GPUs, using those very powerful processors to do a lot of things in parallel. 

So, I think that kept on being there and to NVIDIA’s credit, they caught onto that trend on that trend, owned that trend and fed into that by giving the liabilities to those people who had been doing those kind of experiments. And I think that has stood them in good stead. 

[00:45:20] Karthik Reddy: Yeah. 

[00:45:21] Tarun Dua: And for us, of course, there were people who were doing analytics, people who wanted to do their analytics stuff on GPUs, and we knew GPUs as the add-on for a desktop machine. They were like shall we put into the server?

And I think there was a lot of pain in terms of how to get those GPUs virtualized. And we succeeded in cracking those kind of problems. And we were making some amount of revenue. So, we had a concept called moonshots, where we said that we are going to do a WordPress as a service. We are going to do something on the GPUs. 

[00:46:00] Karthik Reddy: I remember. 

[00:46:01] Tarun Dua: We were also talking about how to run Tally on Linux. 

[00:46:04] Karthik Reddy: Yes. 

[00:46:05] Tarun Dua: To avoid the licensing costs. We had a very frugal mindset and we thought that, okay…

[00:46:09] Karthik Reddy: And the customers will also enjoy that. 

[00:46:10] Tarun Dua: Customers will also enjoy the cost cutting over there. Of course, none of those moonshots worked. 

Now for GPU, it was actually one of the Blume startups who came to us and said that look, this costs X amount on a hyperscaler and we feel that this is too expensive. We were like, yeah, this looks expensive because a typical GPU costs only like less than a $1000. So, nobody should be charging you $2,000 for a GPU per month. 

And that kind of opened our eyes that people are selling GPU. And we are not even aware of it. This is a moonshot we are missing. So, we said let’s go and invest some money into the GPUs. We bought I think 20 of them. These were enterprise GPUs. Each one of them costed about 6 Lakhs or 7 Lakhs. 

[00:46:57] Karthik Reddy: Oh wow. 

[00:46:58] Tarun Dua: And the desktop GPUs used to cost like, I think ₹50,000 – 60,000. 

[00:47:02] Karthik Reddy: Okay. 

[00:47:03] Tarun Dua: And then, suddenly, we had people from, NVIDIA knocking our doors and like who are these guys who are buying these 20 GPUs? Nobody has bought like that many enterprise GPUs in one shot. So, I think the sales guy and the distributor who sold those became a rockstar over there. And the NVIDIA team was like let us figure out E2E. 

And to their credit, I think they worked with us. We did a lot of things together. Not many successful, but I think the inflection came finally at the time of COVID. Next couple of years were a struggle on the GPU division. It was not a separate division or anything, but there was struggle in terms of how to fill up those GPUs. 

But then, we learned a lot because that was some expensive hardware we bought. So, we had to monetize it. So, with that respect that if an investment has to be made, it has to be made back. We had to learn GPUs because of that one, what do you call? The flying high kind of a decision that like Srishti said Tarun goes and flies high in the sky. He builds castles in the sky and then does something, and then, the whole team has to figure out how to make money out of this.

[00:48:16] Karthik Reddy: There’s a case where you said build and they will come and they did come. 

[00:48:20] Tarun Dua: Right. 

[00:48:20] Karthik Reddy: But you made it happen. But credit to yourself. 

[00:48:22] Tarun Dua: It happened. The times changed and the GPU started working. 

[00:48:25] Karthik Reddy: The revenue trajectory had not taken off that much before your stock trajectory took off, right? 

[00:48:32] Tarun Dua: I think they have been divergent trajectories where we are like we had done really well this quarter. The stock probably will shoot off like crazy.

And then nobody understands what these people are doing. And the stock actually falls. It’s like, what happened? We did so well this quarter. The stock has actually fallen. Does nobody understand our business? 

[00:48:57] Karthik Reddy: How has that journey been, Srishti? I can’t even imagine how it must be to see your stock hit upper circuit for like months at end. 

[00:49:05] Srishti Baweja: Just to give some perspectives. So, a GPU has 17,000 core. And a typical CPU has 300 to 400 core. So, that is the processing capacity. 

[00:49:13] Tarun Dua: Yeah. Two of the CPUs have 300 – 400.

[00:49:14] Srishti Baweja: That is the processing capacity of a GPU as compared to the CPU? 

[00:49:17] Karthik Reddy: Correct. 

[00:49:18] Srishti Baweja: So, for my personal part, I do not check the stock price daily. I check it like once or twice a week. 

[00:49:24] Karthik Reddy: Yeah. 

[00:49:24] Srishti Baweja: So, we keep on getting calls like price is increasing. What has happened? 

[00:49:29] Karthik Reddy: Yeah. You’re still answerable as CFO at that point at least? 

[00:49:32] Srishti Baweja: The standard answer, we can’t talk about it. 

[00:49:34] Karthik Reddy: Okay. 

[00:49:35] Srishti Baweja: We have nothing to say on that. But that was like, really, really overwhelming and surreal at the same time.

[00:49:42] Karthik Reddy: Yeah. 

[00:49:43] Srishti Baweja: That it went to 5,200−5,300. 

[00:49:45] Karthik Reddy: Yeah. 

[00:49:46] Srishti Baweja: And it was like… what just happened? 

[00:49:48] Karthik Reddy: Yeah. In fact, it is funny because I think Tarun is on that chat. We still have a Blume Fund I chat, and I had said something like, someday soon when your stock was going up, that Tarun will become our first publicly-listed billion-dollar company.

[00:50:03] Srishti Baweja: Yes. 

[00:50:03] Karthik Reddy: And it just didn’t stop. It went all the way and shot past the mark. I said, it’s already here. But I’m thinking also at a personal level, I know you guys don’t go to work every day and say, how much wealth have we created, etc. 

But how did this change employee morale and people’s self-worth or for all those years of hard work, did they feel like their destiny was also avenged in that? 

[00:50:28] Srishti Baweja: Exactly. So, for the ESOPs, it’s a different volume altogether. 

[00:50:33] Karthik Reddy: Yeah. 

[00:50:33] Srishti Baweja: If you’re listed. People in our company, they have made upwards of, if I can say that number, upwards of hundreds.…

[00:50:40] Tarun Dua: Multiple millionaires and multimillionaires.

[00:50:43] Karthik Reddy: Fantastic. No, it’s very fulfilling for you to see that happen.

[00:50:46] Srishti Baweja: It has helped us attract talent, retain talent, the ESOP part. It has been wonderful for the people. 

[00:50:52] Karthik Reddy: And what is the discussion at home when you saw your wealth grow 5% every day. 

[00:50:59] Srishti Baweja: The only discussion… 

[00:51:00] Tarun Dua: I think at one point of time, we stopped looking at it.

[00:51:03] Srishti Baweja: The only discussion I think, I keep on telling Tarun, is don’t tell Sayesha. She has to figure out her own part. Don’t tell, this is the paper money. 

[00:51:13] Karthik Reddy: Yeah. 

[00:51:13] Srishti Baweja: Like you don’t have to tell her like how much money do we… She keeps on asking us and very conservative about it. 

[00:51:18] Karthik Reddy: No, there was a phase where I remember we used to get boatload of calls. By then, we had sold. Why the hell did you sell? This thing is going up every day. And then I remember you came in because you thought now the company has hit a point where it’s a good time to bring in an institutional investor. 

[00:51:35] Srishti Baweja: Yes. 

[00:51:35] Karthik Reddy: Do a QIP. We were talking to bankers in our office. We were helping in whatever way we can. And a bunch of strategics were looking at you as well. But even that juncture, everybody missed the boat once more. If you think about it from the last round that, yeah, IPO round also qualifies, from that round to what, 3,000−4,000 crores, there was no institutional investor who participated, right? 

[00:52:00] Tarun Dua: Right.

[00:52:00] Karthik Reddy: Other than maybe a public market investor. What did they miss again at 1000 crore valuation Mark? I know a bunch of people could have gotten in. But what were they missing and what did you get right you think? And what have you got right now? What does E2E of the next 5 years look like?

[00:52:15] Tarun Dua: I think although we didn’t get the series A venture money, but I think we learned a lot from the venture ecosystem, especially from the Blume ecosystem. I think we were always true to our metrics that these are the metrics to grow. These are the metrics to track. What’s the North Star metric for everyone in the team.

I think that discipline doesn’t really show outside. Because a lot of these things are, like your internal metrics to track that how well you are doing in terms of… basically the progress you’re making. This is more qualitative performance. It doesn’t really reflect into revenues all the time.

I think looking from outside, the amount of information you have is what you publish. See mostly qualitative information gets discounted in India. That’s why there is no money for R&D. That’s why there is so little venture money. I used to think that every day we are seeing someone or the other getting funded. Then, when someone showed me the actual stats, it was like shocking that only 25% of the startups actually get seed money. Another 25% out of that get series A, another 25% out of that get to series B.

[00:53:35] Karthik Reddy: Yes. 

[00:53:36] Tarun Dua: And so on. 

[00:53:37] Karthik Reddy: And the funnel is very, very sharp. 

[00:53:38] Tarun Dua: The funnel is super sharp. 

[00:53:39] Karthik Reddy: So, many valleys of death before you emerge on the other side. 

[00:53:43] Tarun Dua: Right.

[00:53:43] Karthik Reddy: Unless you’re in control of your fate and turn profitable very soon, which is what you guys did. 

[00:53:49] Tarun Dua: So, I think like it’s in a way, like when you are already successful, when it has shown up in the numbers which you have published, then everyone realizes your story. But then when you are telling your story without the backing of numbers, it’s just another qualitative story or one amongst thousands or tens of thousands of entrepreneurs who is telling your story.

Very, very hard for people to judge whether you’re right or wrong. So, there is always an element of hit and miss. So for a typical institution, they get so many of these pitches. I think many of them would be successful. Many of them would be failure. So, I think there is an element of luck over there from both sides. 

[00:54:31] Karthik Reddy: No, absolutely. 

[00:54:31] Tarun Dua: Even for entrepreneurs, basically some of them could have become very successful, found no backing. And for institutions also, they could just have missed the bus with that particular entrepreneur who could become the next.

[00:54:43] Karthik Reddy: Absolutely. 

[00:54:44] Srishti Baweja: I feel we were even not telling our story, like we were not out there. When we were out there, that was August 2024. Then, we raised a 400 Cr round in September. 

[00:54:55] Karthik Reddy: I remember. 

Now, in that sequence, two things happened. You raised around after a very long time and you also have a new big investor in the form of a strategic L&T. So, since you touched upon it Srishti, what has that done? Of course, you have boatloads of cash reserves, you’ve built so frugally and for the first time, you have 400 crores in the bank. 

[00:55:18] Srishti Baweja: Yes. 

[00:55:19] Karthik Reddy: And then L&T also comes in infuses capital. So, rich balance sheet compared to all your first 13 years, 14 years, what has that done in terms of ambition for the company and what does the L&T thing mean, not again, qualitatively. I mean you can’t get into confidential stuff, but what does it mean for the trajectory of the company in your view? From what little? 

[00:55:43] Srishti Baweja: See for the first time we had so much money in the bank. 

[00:55:46] Karthik Reddy: Yeah. 

[00:55:47] Srishti Baweja: So, L&T was still figuring it out. It’s very early to say. They’re opening lots of doors for us and they’re guiding us. But like the actual synergy is yet to happen. 

[00:56:00] Karthik Reddy: So, hopefully a lot more to unlock 

[00:56:03] Srishti Baweja: Yes. 

[00:56:03] Karthik Reddy: As we go along. And on the math itself, as the business changed with this GPU focus and what AI is doing, what does E2E today look like which was very different from say, 4 – 5 years ago? And what is E2E 5 years from now look like compared to today?

[00:56:20] Tarun Dua: I think we have just started investing into the long-term future. That part of the journey has just started for us. So, I think for a long time it was like what you need today and tomorrow is what we were building for. 

I think people attribute vision after they see success. I think mostly it’s a post-facto story that entrepreneurs and their advisors and their marketing folks, they help them build. So, now today what we’re looking at is that… So, there is a global narrative today of sovereign AI and sovereignty. 

[00:57:00] Karthik Reddy: Yeah.

[00:57:00] Tarun Dua: Now, we happen to be in that space because of our constraints. We had to build all our software ourselves. We had to package the open source. So, today, there are three levels of sovereignty. 

One level is where your data is sitting in your country. 

[00:57:16] Karthik Reddy: Yes. 

[00:57:17] Tarun Dua: Second level is where data is sitting on hardware, which is owned by an Indian company, not subject to extraterritorial jurisdictions.

[00:57:25] Karthik Reddy: Yes. 

[00:57:26] Tarun Dua: Third level is where your software is also provided by an Indian company. Again, not subject to any kind of. 

[00:57:32] Srishti Baweja: Licensing. 

[00:57:33] Tarun Dua: Extraterritorial laws. 

[00:57:34] Karthik Reddy: Licensing and laws.

[00:57:35] Tarun Dua: And an ability to stymie you at the most inopportune moment. So, I think for us, basically what has changed is that we are looking at what is happening in the world and investing for the future in terms where we don’t just see that are we a cloud GPU company? Yes, we are. Are we a traditional cloud company which does everything that a normal hyperscaler is expected to do? Yes, we do. 

The third part is that we have also become like a software business today. Although there is no revenue to attribute to software, but we are building a lot of software with a view that a lot of people will eventually be able to use the software as the sovereign AI and sovereignty for the cloud takes off.

So, in a way from being a trend follower, now we are trying to set the trend today. So, let’s see how far we are successful in that. 

[00:58:33] Karthik Reddy: Clearly, it looks like you’re building for posterity in some sense. I mean whether you retain your current titles or not, you want this to become… And I know L&T has some part of the business, but where would you like to be…?

[00:58:48] Tarun Dua: Let me tie that into the story. 

[00:58:49] Karthik Reddy: Yeah. 

[00:58:49] Tarun Dua: So, L&T happened to be the very best partner for this vision. Why? Because 

[00:58:57] Karthik Reddy: Same thing. 

[00:58:57] Tarun Dua: This is not money coming from outside. 

[00:58:59] Karthik Reddy: Correct. 

[00:58:59] Tarun Dua: Indian company, Indian money to build and. 

[00:59:01] Karthik Reddy: Very forward-looking company, professionally run. Yeah. 

[00:59:04] Tarun Dua: Right. And build innovation in India. I think we could not have found a better partner than L&T. 

[00:59:11] Karthik Reddy: Therefore, if you had to stare down the 10-year tunnel, what do you think, you both dream of on the other side of it. 

[00:59:18] Srishti Baweja: See, I think AI is going to be the new electricity of the world. It will be so fundamental for every organization, every industry, every individual. And as E2E, we see ourselves as being the power grid of that. 

[00:59:31] Karthik Reddy: That’s a very good way to place it. And otherwise, from a mission cell, vision cell, as you said, now that you have the luxury of doing it, what does that look like inside of E2E today? What do you tell your team?

[00:59:44] Tarun Dua: We are not really a family run business. 

[00:59:47] Karthik Reddy: Of course.

[00:59:47] Tarun Dua: Although a lot of family is working in it, but we are not a family run business. We want to stay a professional company. So, at some point of time, maybe 10 years down the line, once we have… 

[01:00:00] Karthik Reddy: I know both of you are young. You can run it for 20 if you want.

[01:00:04] Tarun Dua: Yeah. Maybe 10, maybe 20. But eventually, it would be a fully professional setup where we would be able to sit back and say that we built something for India. We built something for every member of our team, no matter when they joined us, and hopefully, we made something for all of our investors, no matter when they came into E2E. So, I think that’s a broad part of how we think about our relationship with E2E today. 

[01:00:33] Karthik Reddy: That’s fantastic. But from a legacy… I mean, of course, all of these themes that we pick for Blume day and becomes a part of a T‑shirt and that’s why we picked you as a guest this season, always have the underdog element. People wrote you off in some sense and you said, screw you. I am going to actually build against the odds and deliver. 

[01:00:55] Tarun Dua: I think that was never the case. Mostly, we were like we have got a customer who has got a problem, let’s go and solve it. 

[01:01:02] Karthik Reddy: Fantastic. 

[01:01:02] Tarun Dua: We were never worried about that we have to. 

[01:01:05] Karthik Reddy: Prove anybody. 

[01:01:06] Tarun Dua: Prove something to anyone. 

[01:01:07] Karthik Reddy: Well said. My bad. So, here you’re motivated by solving the problem so deeply. We have arrived here and of course, that continues. But do you think of a legacy to leave behind in the sense that we build something special in this country? I know you have already articulated an India-first hardware, hosting, solutioning, and software company, which makes us proud of building a native like AI Company. 

[01:01:33] Tarun Dua: Right. I think that draws from what you have said many times that India should not become a digital colony. So, I think the fundamental elements of that is that if you look at the top 5,000 companies of India by market cap and look at amount of cash they generate, I think a lot of that cash goes into generating immediate returns rather than funding innovative startups.

Mostly, a lot of cash is sitting in the banks. I think that is something of a personal mission that if we can prove that we took Indian cash, build something with longevity around that and showed that yeah, don’t just sit with the cash in the banks. Invest in more Taruns. 

[01:02:20] Karthik Reddy: In a peculiar way, yeah.

[01:02:21] Tarun Dua: So, I’m not there yet, but like maybe. 

[01:02:23] Karthik Reddy: In a peculiar way, you’re a remarkable role model for that journey to be all Indian in some sense. 

[01:02:28] Tarun Dua: Right. 

[01:02:28] Srishti Baweja: Founders like us will get defunding then. 

[01:02:33] Karthik Reddy: Awesome. No, I have to give you the last word, Srishti. I must admit it’s not like we’ve interacted so much.

[01:02:42] Srishti Baweja: Yes, true. 

[01:02:42] Karthik Reddy: That I understand you at the core as much as I understand Tarun.

[01:02:45] Srishti Baweja: I was always sitting in the back and working. Tarun has been.

[01:02:49] Karthik Reddy: Quietly absorbing the strength behind man’s flight of fancy, literally sitting on the cloud. What prompted the book? Obviously, you took an effort of articulating a lot of things. Even before the book was out, I started seeing Srishti posts every week. 

And you clearly reflected a lot on this journey. What were you trying to say? Was it for yourself? Obviously, there’s always an audience that’s why you write a book, but what were you trying to achieve with it and what has the response been? I have gone through parts of it, but my opinion is one thing, but what has been the most heartfelt moments that have come out of the reward of writing this book? 

[01:03:36] Srishti Baweja: People have sent me messages saying that at least it has make them think about their mindset now. And it has changed their life. 

[01:03:46] Karthik Reddy: And you originally started writing it because? 

[01:03:49] Srishti Baweja: I will tell you why. 

[01:03:50] Karthik Reddy: Okay. 

[01:03:50] Srishti Baweja: So, I was living in a very pressure cooker environment. Everything seemed to sometimes falling, motherhood, startup, work, aging parents, and it seemed like I was living in a fight or fight response most of the time. And I started having some kind of physical ailments. Nothing like much, but like small, small ailments. 

And then, I started listening to podcasts, the spiritual podcasts, and the Mind Body Connection books. I read many of them. And then, I thought I think it is the stress that is causing all those physical ailments. 

Then, one day what I did was I did an experiment on me. I observed my thoughts and I realized that all of those were related to the past or the future. I was not living in the present moment. 

So, this book has been born out of that awakening. I have shared my experiences, many stories, anecdotes, office stories, personal stories, and it is a self-help book, but not a typical self-help book. I have tried to make it more relatable. 

[01:04:54] Tarun Dua: Both me and Sayesha used the book to beat her up. So, when she is saying something. 

[01:04:58] Srishti Baweja: You have written this in the book.

[01:05:00] Tarun Dua: Have you read that chapter in your book? 

[01:05:04] Karthik Reddy: Use it against her? 

[01:05:05] Tarun Dua: Yeah. To win an argument. 

[01:05:08] Karthik Reddy: So, before I let both of you go, we will do a fun rapid fire. I don’t have all of them memorized, so I’m gonna use my cheat sheet. Both of you can answer. One of you can answer. 

What is tougher to debug cloud architecture or a marital disagreement? 

[01:05:27] Srishti Baweja: Marital argument. 

[01:05:30] Karthik Reddy: How about you? 

[01:05:32] Tarun Dua: Same. 

[01:05:34] Karthik Reddy: What’s one AI trend you think is overhyped?

[01:05:38] Srishti Baweja: It will replace human creativity. It will not. 

[01:05:42] Karthik Reddy: How about you? 

[01:05:43] Tarun Dua: I think the same. So, basically humans will always be needed. 

[01:05:48] Karthik Reddy: With no qualifications, Jensen Huang or Sam Altman? 

[01:05:53] Tarun Dua: Jensen always. 

[01:05:54] Srishti Baweja: Jensen. 

[01:05:55] Karthik Reddy: Huge Jensen fans. And if Tarun and Srishti swapped CXO roles for a week, what’s most likely to break in the others’ department?

[01:06:04] Srishti Baweja: It’ll be chaos. 

[01:06:05] Tarun Dua: Everything. 

[01:06:08] Karthik Reddy: Fantastic. Clearly found you places in the org. What are your go to stress busters, long drive, chai break, debating tech with the team. Do you have different ones? Same ones. 

[01:06:22] Tarun Dua: I think when we have tea time together. 

[01:06:25] Srishti Baweja: I think that’s the best part of the day.

[01:06:27] Karthik Reddy: Okay. And you reset at that point. Super. 

What’s more nerve wracking, checking your share price or reacting to customer feedback?

[01:06:37] Tarun Dua: I think it is always the customer. Yeah. So mostly I don’t even check the share price. 

[01:06:42] Karthik Reddy: Yeah. It’s awesome. No, I think you could glean enough of that from the conversation. What is the most stressful part about customer feedback? That their business is down even for a minute. Is that? 

[01:06:54] Tarun Dua: No, I think basically… See in tech world, everyone gives their paradigm to the customer. So, basically you have to first understand the paradigm from which they are coming from. Sometimes you are able to solve for that paradigm. Sometimes you are not able to solve for that. Sometimes it just feels unfair that the customer is stuck, and there is no way to help the customer because of the choices that were made for the customer without their control. 

[01:07:28] Karthik Reddy: So, have you become ardent users of AI tools and what do you end up using every day?

[01:07:33] Srishti Baweja: I use ChatGPT a lot. 

[01:07:36] Karthik Reddy: Yeah. How about you, Tarun? 

[01:07:38] Tarun Dua: I’m trying to spend more time on our own playground. So, dogfooding of our own AI. 

[01:07:46] Karthik Reddy: Nice. And anything that is ready to play with in your.

[01:07:52] Tarun Dua: Oh, a lot. 

[01:07:53] Karthik Reddy: A lot. And usually for developers or even common users like us can use it? 

[01:07:57] Tarun Dua: No, even end users can use it, although the journey is harder for an end user, but typically the target is B2B. So, it’s not super easy to do for something an end user can do. 

[01:08:10] Karthik Reddy: Any examples of funny prompts that you use with ChatGPT? 

[01:08:13] Srishti Baweja: Not for me, but I once saw Sayesha. She was asking ChatGPT to tell some gossip.

[01:08:18] Karthik Reddy: Gossip. 

[01:08:19] Srishti Baweja: Because she wants to make her life interesting. And then it, replied back with a very personal dumb art story.

[01:08:27] Karthik Reddy: It has been a pleasure hosting both of you and I am glad we have multiple examples of what a success story in India looks like. I think you embody, break the myth that a wife and husband cannot be a great compliment professionally and play your roles in a company and see it to glory. And it is not 5 years, 10 years, it has been over a decade now. 

Second is I love this part about how everything about E2E strangely, it never hit me before, is very Indian. There’s almost like nobody else karmically could participate in it. It just grew as a desi company. And hopefully, it continues in that fashion.

It has been a fantastic ride. I continue to full disclosure be a personal shareholder. So, thanks for the ride and keep making money for whatever little amount I have allocated in E2E stock. I will be a happy shareholder for as long as you guys are running the show. 

Again, thanks for coming over and making this episode very special for us because, as I said we want you to be the first of many Blume public companies that we have on Blume podcast.

Amongst the special stories we bring, these are extra special. 

[01:09:49] Tarun Dua: You have been the only institutional investor till like 2018 into E2E till we went public. That makes it very special. 

[01:09:58] Karthik Reddy: In general, I think even if others join, we are happy to share. But it is extra special because there were so many firsts that you can’t recreate. And it was a remarkable journey and story, and I am hoping the audience enjoys it and we hopefully brought it to life so that a lot more people enjoy the story. Thanks again. 

[01:10:22] Srishti Baweja: Thank you. 

[01:10:22] Tarun Dua: Thank you. 

[01:10:23] Karthik Reddy: Today, I have to gift you. You have to exchange rings again in life. So, the Ultrahuman rings. Nothing better for a couple than to get two health and sleep monitoring rings. So, this is a sizing kit actually. It’s not the ring. So, you have to give the sizing here, the choice of color, what material you want, do you want it engraved with each other’s names. So, they do all this cool stuff. No, just add your name. 

[01:10:49] Srishti Baweja: Sure. 

[01:10:49] Karthik Reddy: It is not that crazy. But I hope you enjoy it. We are a proud shareholder, as you know, and growing crazy in the US. Again, another great story. If you can make a Indian consumer durable product go global, I think it will be one more example of what you would like to see in the world, Tarun. 

[01:11:06] Tarun Dua: Right. 

[01:11:06] Karthik Reddy: And, thanks for this, Srishti. I am going to get your autograph.

[01:11:11] Srishti Baweja: Thank you. 

[01:11:12] Karthik Reddy: And we have another author in the house, which is fantastic. More and more books getting written by Blume founders and Blumiers. Thank you for this again. 

[01:11:21] Srishti Baweja: Thank you. 

[01:11:22] Karthik Reddy: And we also have a goodie bag. So, we haven’t marked the bags, but you will know by your T‑shirt sizes who’s who. 

[01:11:28] Tarun Dua: They are both the same apart from the T‑shirt. 

[01:11:30] Karthik Reddy: Apart from the T‑shirt, they are both the same. Again, thank you for everything. 

[01:11:33] Tarun Dua: Cool. Thank you.