Practical Founders Podcast

#34: Sold his Tech Services Company to Invest in Big Vision for His BI Analytics Products – Gopal Krishnamurthy

Gopal Krishnamurthy was an early BI and data analytics expert working for a large company when he left to start a BI consulting company called Visual BI in 2010. Visual BI grew to over 300 employees serving enterprise customers as an evangelist to push emerging Data & Analytics trends with SAP HANA, SAP Lumira, SAP Analytics Cloud, Snowflake, DBT, and Microsoft Power BI. They also created several add-on products, which Gopal and his partner Jay retained when he sold the Visual BI consulting company in 2021 to Atos.

Gopal and Jay now lead the growing team in Lumel, the leading provider of add-on products for the massive Microsoft Power BI ecosystem which was carved out from Visual BI. Lumel gets continuous growth funding with the proceeds of the sale of the services business, but the company is on track to be profitable by end of 2023 with almost 200 employees in the US and India. Lumel products (InforiverValQ, and xViz) gaining momentum and adoption from numerous large enterprises worldwide, and their paying subscribers have crossed 2,000+ organizations already.

Gopal shares his transformational story of growing from technical employee to successful consulting company CEO to now product CEO. Gopal has been a pioneer in establishing the new software category of add-on solutions to existing BI platforms. He believes that in the coming years, customers will continue to gravitate towards consolidating and maximizing their cloud and BI investments vs. buying best-of-breed stand-alone software.

Best quote from Gopal:

“I’m very reluctant to raise VC funding because success for VCs is to invest X and realize 10X, and they would not be patient.

If you build a software company to actually make a lot of money fast for VCs, that’s different than building a software company that actually touches people on a daily basis. They are very different in terms of what success means, and how it impacts employees, customers, founders, and investors.

“So I have learned the hard way that patience is a big part of building a sustainable product. In a product business, to build a product that is very, very foundationally strong, you have to be patient.”

Edited transcript of Practical Founders Podcast episode with Gopal Krishnamurthy, founder and CEO of Lumel

Greg Head: And we’re live with Gopal Krishnamurthy of Lumel, based in Dallas these days. We haven’t met; I’m looking forward to our conversation today. Welcome to the Practical Founders Podcast, Gopal.

Gopal Krishnamurthy: My pleasure. Thank you for having me.

Greg: You’ve got a very interesting story. Another practical founder story of a tech services business that grew. Now you’ve got some product scaling out of it, but you’ve done it very differently. It’s really interesting. You had created your services company and you sold it. Now you’re onto your product company, Lumel.

Gopal: The Visual BI itself was founded in 2010, March 2010. I have spent my entire career in data and analytics back when the world was investing only in ERP and transaction systems. So, I passed out of college, I was trained only in anything related to data and analytics. and I spent it gaining experience. And it was boring; nobody was talking about it. And I started Visual BI when it was just taking off. That’s when people started. Data is the new oil. I started at the right time.

Greg: What year was that, roughly?

Gopal: 2010. March of 2010. March of 2010 is when I started Visual BI. I started a consulting company because I had expertise in SAP Technologies. Back then, people were either doing SAP or Oracle. The concept of visualization was just taking off. That’s when you see the Tableaus. And SAP had its own fledgling visualization products, so that’s why I named the company Visual BI because it was something that was taking off. I have expertise on data warehousing. I had at least…

Greg: And how did you have that expertise? I know you worked for some big companies.

Gopal: I worked full-time jobs. I’m an accidental entrepreneur. At that time I had three small children, so I just thought I could never travel, I could never take a consulting job. So I was just in a full-time job and…

Greg: Was that here in Dallas working for big companies? There are a lot of big companies here in Dallas.

Gopal: No, no, I was actually working in San Antonio, Valero Energy. You know, what people don’t know is Valero used to be one of the best employers to work for before, actually, Google. Google overtook them in 2007. So, they were always an early adopter of technology. Valero used to hire top talent for full-time jobs, and I was able to acquire skill sets because SAP acquired BusinessObjects in 2007. So, I had both the back-end data warehousing skill and then the front-end BusinessObject skill. SAP customers were trying to integrate SAP BW and SAP BusinessObjects. I had gotten myself very fascinated about… The executives loved the concept of dashboards. That’s when everybody was “dashboards, dashboards.” So I started Visual BI, and I said, “I’m never going to be able to compete with the Accenture and the Deloittes of the world, I’m just going to focus on building executive dashboards.” And that’s why the company was named Visual BI.

Greg: So was that still for large companies?

Gopal: Large enterprises.

Greg: Okay, but you didn’t say, “Accenture is for the big companies. I’m not going to do that.” You said, “I’m going to specialize for the big companies,” where your experience was.

Gopal: I built a niche. I got the opportunity to work with a lot of executives, interviewing them, okay, “What kind of dashboards do you want? What kind of metrics do you want? And then I built the data warehouse. And then I was very fortunate enough because the whole data space took off. So, Visual BI went from $0 to $10 million in less than four years. We were in the INC 500.

Greg: As a consulting services company.

Gopal: Yes. Fast. Very fast. SAP brought in new technology like in-memory technology, like HANA, SAP HANA. We invested early. We trained our employees on it. We created our own data labs because HANA appliance was very expensive. The in-memory appliances were expensive, but we invested in creating our own infrastructure so the employees could have access to the technology. It was more of passion. You know, I never thought, “Oh man, I’m making a lot of money. I should put them aside.” But rather, “How do we actually passionately serve the customers? How do we give the exposure to teach the new technologies to the employees?” That was what was driving me. And before you blinked, we were a $10 million business. In the first four years, we were heavily focused on the oil and gas industry.

Greg: Which you had come out of at Valero.

Gopal: Yes. So, we used to do a lot of business in Oklahoma City with Continental Resources, the American oil champion and Chesapeake Energy, Love’s Country Store. They were our early customers. But in 2014, October, the oil and gas really… I think it was one $140 a barrel and then it nosedived to $30.

Greg: Yes.

Gopal: We learned the hard lesson about diversifying your industry.

Greg: The verticals. Yes. Right. What happened there? Did you have to shrink the company?

Gopal: No. We stayed at $10 million in 2015, 2016, and 2017. Yes, we were flat, but we again bet on the next set of new evolving technologies. We reinvested all the proceeds, and we said, “We really need to grow the software side of our business.” That’s where we really started to focus on how do we… We can’t build an independent software being a self-funded company, so let’s start building on an add-on because Tableau and Click, they’re taking away market share from SAP. So that the SAP customers don’t leave the SAP ecosystem, we started building add-ons for BusinessObjects. So pretty much from the second year, 2011, we started building the add-ons, actually.

Gopal: So the software company was small, but then in 2014, we made an emphasis that we have to grow. If we have to diversify, what are we going to do? We had a niche in dashboards. By 2015, everybody was doing dashboards. So we made a conscious decision that we are going to invest and create a software category called add-ons. Because everybody knows about independent software, and SaaS companies, but the consulting business was already very profitable, highly profitable. So we made a decision to…

Greg: Can I ask you about that? Fast-growing consulting companies… I hear from a lot of fast-growing consulting companies. They struggle with the cash flow because they have to hire people to fulfill these big projects. And your BI technical people are very expensive, but you were growing fast so you chose to invest in products, invest in staff, invest in the infrastructure on your company. But you ended up being pretty profitable there, so that’s pretty exciting. Is it just because you can charge amazing rates?

Gopal: No, it’s more about operating discipline. I learned a lot of lessons very early on, what not to do in a business. Even though you get successful very early on, in the very first year, I saw other consulting companies, fast-growing companies, go belly up in a year or two. I said, “I’m not going to do those things.” For example, I had a discipline of not going for very high rates, but sticky rates. I call them sticky rates where the customer never… So you are almost working there like a full-time employee.

Gopal: I had a very good mix of onshore and offshore. I had the discipline to say, “I need to have a healthy margin. I need to create sustainable jobs.” I personally measured the success by the amount of jobs we created. And then it has to be a sustainable job. It’s not like, okay, you have a consulting business, you hire a lot of people and then there is a downturn and you lay off. That’s not the kind of business we wanted to do. So we said, “We want that sticky customers, sticky business.” And you had a good onsite offshore. We were never greedy about it. We had discipline. And guess what? Even in 2014, when the oil and gas recession happened, the customers themselves were not thinking about cutting. They would rather think about slowly cutting us, so they gave us a lot of breathing room because they knew.

Gopal: And I realized very fast, customers hesitate to hire a consultant because they feel like consultants come and go. So, I made a conscious effort to educate the customers that your employees may come and go, but we will always be there. And trust me, even today, even today, 12 years later, I can tell you we have outlasted lots of teams, lots of managers, lots of VPs. We are still in touch with the customers, we are still able to support them. Going back to the basics of sticky customers, sticky employees and sticky rates, it all boils down. You can charge a lot of money. Our philosophy was always about sustainable jobs, more long-standing business. So when the oil and gas collapsed, we had a lot of window. It took us three years. So 2015, 2016, 2017, we were flat, but if you look at our customer portfolio from 2014 to 2017, we were extremely well-diversified buy verticals. We switched our focus to horizontals and technology, but not any particular industry.

Greg: Was that difficult?

Gopal: The software helped us. They became the door openers. They became the door openers. I call them a door opener because every time a customer tries to do a project or a dashboard, they get stuck. So they had to buy our add-ons. That opened the door for, “Oh, I didn’t know you did software consulting.” So, I was able to get into a lot because up until 2017 we were all 100% SAP BI. SAP BI started doing very badly because Tableau and Power BI and Click were eating lunch. A new wave happened, and now we have to reinvent our way.

Gopal: I come from an SAP BI background. As a founder, I was very, very reluctant because my management team… I mean, I give a lot of credit to Chris Holliday. He used to run our consulting business. He used to be a technology evangelist also. He was managing our customer relationships. He kept telling me, “Gopal, I see customers moving away from SAP.” He kept basically chewing on my ears. I was married to SAP. We hit a point where our employee jobs were at risk, our employee skill set. You know, one of the things is you want to make sure your employees have a marketable skill because what you don’t want to do is even if you cut your employees, you don’t want to see them jobless because as a founder, it hurts.

Greg: They’re using old technology.

Gopal: Exactly. We made a conscious decision that we were going to invest into emerging cloud data warehouse technologies like Snowflake and BBD in 2018. We were going to invest in training our employees in cloud technologies, the cloud data warehouse. Chris basically said, “Let me run with it.” Because I was not mentally… I was still married to a SAP, to be very honest. And then I said, “Let’s hedge on the software side of it. I will start to focus on the Power BI. So we will shift all of our software around to the Power BI, and let’s move all of our IPs and assets.” And we made a conscious decision in 2018.

Gopal: Our consulting business also started growing because of that, because now we offered more options to the customers. I think we went to $14 million and then $17 million or $18 million. Every year we started growing. Then COVID hit. I never envisioned selling the business. In fact, I built a 20,000 square feet headquarters building in Plano. I started buying the land because I wanted to provide the best for our employees.

Greg: You’re a long-term guy.

Gopal: You know, everybody thinks differently. That’s just how I see the big picture and just keep moving ahead. We had a grand opening and we were all looking forward. And then Snowflake took off. All the cloud technologies took off. Because I was investing in software and also consulting at the same time, we hit a point where we had to invest heavily to grow the consulting because the demand was there. Because Snowflake was growing crazily. The cloud data warehouse technology was growing. But also, the cost to hire and employees was also shooting up during that COVID boom.

Greg: Even in India.

Gopal: Of course, exactly, everywhere. It became inevitable that Snowflake was bringing a lot of projects for us and other… Dbt was bringing a lot of projects for us, and I was also trying to grow the software business. My father passed away in October 2020 before the vaccines came. It was pretty rough, and it just suddenly dawned on me that what happened, something happened, because I was… All my net worth, all everything, what happens to the employees? Everything. You just get that little, that fear in you, right? I came back and I talked to Chris, and then Chris said, “Gopal, this is the right time. You should look at exiting.” Snowflake was also always interested in acquiring us. There was always interest, but we were thinking…

Greg: A service provider, to help them sell more product.

Gopal: Both our software, both our software and services. I was thinking maybe I will sell the software, but I was not really sure. But it made sense to part with consulting because we knew the consulting business would grow if somebody had a lot of sales and marketing muscle, because we had built an incredible company. So we thought we would sell to a public, large company that’s more European because we were only based in the U.S. So we had several offers, basically. We had several buyer interests, several…

Greg: Did you run a process there? Did you have M&A help and put together a deck?

Gopal: Yes. So basically, before I was even thinking I had at least 2 to 3 offers in hand. So then I said, “Let’s run through the process. Let’s do the due diligence.” But I was very clear. You know, you have two children. If only one of them is doing well and one of them is just starting to take off. So I was very clear I wanted to sell only the consulting. The consulting business was more mature. That was the right thing to do for the employees because in a larger organization, they get more growth opportunities. I would almost say our consulting business had software business-like margins. So it was a very attractive business, with a very good onshore offshore operating model, and a very good customer base.

Greg: Not just a project model consulting, more like an ongoing staffing, we’re going to integrate, we’re going to bed ourselves in your team and you will not be able to do dashboards without our team.

Gopal: Not just the dashboards. Actually, most of our revenue was coming on the data engineering side of it. So we used to build that data…

Greg: The lowest layer. Yes.

Gopal: Even though the company was called Visual BI, we were making most of the money on the data side, actually.

Greg: Well, they come for the graphs, but they need the data infrastructure to make it all work. Okay, great.

Gopal: They made a decision because we thought Atos was the right buyer. Atos, and Maven Wave, and we sold it.

Greg: And that’s a French company, or it’s European?

Gopal: Yes, a French company. But they had a cloud division called Maven Wave based out of Chicago, and they were going to integrate them with Maven Wave, which was more of a digital transformation, cloud digital transformation. It was a much larger firm based in the U.S., so it looked like the right fit. I was very clear I wanted to put more time and energy to pursue my vision of actually doing something meaningful to the data and analytics. Now, my mind has shifted to how do you grow your second child to its fullest potential?

Greg: We’ve covered a lot of ground. Let me ask a few questions about it here. You grew the services business, transitioned from vertical, and then you went to more analytics platforms and technologies in the data layers and went horizontal and you grew the business. How big was the business when you sold it to Atos? You said you got almost software-level mark gross margins in there. Did you get software-level multiples?

Gopal: I think in 2020 we were about around $18 million in revenues, basically. Operating net margin was 31% or 32%. That is net margin, not gross margin. Gross margin was closer to 50%. Were we happy with the acquisition value? Yes. I would say I think the timing was right.

Greg: Timing was right, for sure. It was very hot.

Gopal: The value was right, and we had several offers in the ballpark. Our employees didn’t have stock options, so I wanted to allocate a reasonable amount of money from the acquisition value and give it to the employees as a retention bonus and a kind of a merger. So basically, I wanted to pass the cash bonus to the employees. I think that was very important because some acquirers were not open to that because it increases their long-term cost. But Atos was open to it because then it gives them that much more stickiness with the employees. It also gave us a lot of cushion to fund our own software business.

Greg: So let’s go back to Visual BI. You were creating products out of there. Not just technology to help your services, but products that sell independently in the new marketplaces that were forming around BI platforms that were getting you in front of new customers to sell services. How big was that team when you spun it off and how much was the revenue? Was this still brand new, or was it already significant?

Gopal: I think at the time of acquisition… I don’t know off the top of my head, maybe around 310 or 320 employees combined. The consulting business, let’s say, had close to 200 employees and then about 120 on the software side of it.

Greg: Wow. So this is not like a little thing and three people over in the corner investing your own money.

Gopal: The consulting profits were getting constantly funneled. The problem was whatever we had built for the SAP platform, basically, we had to obsolete it almost. Because the SAP platform itself, SAP obsoleted it.

Greg: Oh, my goodness.

Gopal: So we suffered a lot of loss and pain, but we had the IP. I think our software revenues were only $2 million.

Greg: And you had close to a 100 people working on it.

Gopal: 220 people. So it was burning cash And I was funding from the software consulting business. That IP that we have always had multiple acquisition offers without any revenues, because they were… To give you an example, one of our softwares is ValQ. It won the Financial Modeling Innovation Award in 2012. It’s a very sophisticated, advanced value driver planning and simulation software. That software always had an acquisition offer, any time. So we knew the products and the IP always have a buyer out there. To me, the software, I don’t measure the success by the valuation or the revenue. How many people really use it on a daily basis? To me, that’s the measure of success and that’s what I’m still driven by. I have to make sure it reaches in the hands of thousands and millions of people so they make the productive use of it daily. That’s the measure of sense of accomplishment and measure of success.

Gopal: What has happened over the years is we learned a lot of lessons on why ValQ was loved by customers. So if you even look at ValQ today, we sold to SAP, customers loved it, but then we had to obsolete it because the platform SAP BusinessObjects Lumira was being kind of obsoleted. So we had to move to Power BI. Even within Power BI, even today, about 100 customers use ValQ productively in production. And big, big enterprise customers. But it’s like two users in a company. You can’t commercially be successful when two people in a company… But for high value. A lot of people look at it, but there is only two seats that are paying licenses.

Gopal: We learned a lot of lessons in studying behavior because you are always competing with Excel. You are always, “Okay, I can do this in Excel. I can do this in Excel.” So and over the last 12 years of doing consulting and doing… The customer always says first, “Oh, let me download Excel. You do a BI project, let me download Excel.”

Greg: So all this data, all this data warehouse, all this data engineering to get it ready, all these analytics and processing and all this visualization, they still just want to download it to Excel and native no-code UI.

Gopal: Yes, Excel is a great inspiration. Please don’t get me wrong. There isn’t any software that is as sticky, as productive, as usable as Excel is. But as a BI and data warehouse proponent, it hurts to see that the first action that somebody would do is do a report or do a chart or a visualization and look to download to Excel. But it is purpose built for analytics and planning and things. Because Excel was not built for analytics. Excel was built for data inputs.

Gopal: So, we slowly started building the building block. It started several years back. So, when we were discussing about how do we name our software company, we said, “In an ideal world, we want to take the world to a better next-generation analytics platform from Excel to Lumel.” So that’s where we paid money and we got the brand, actually.

Greg: Look at you, a technical guy doing the marketing thing, the brand story.

Gopal: Yeah. So we got the name, but today we don’t sell any products in the Lumel brand for a simple reason. If you say you want to really provide Excel-like productivity, you really have to. And maybe by this year…

Greg: A pretty high bar.

Gopal: Very high bar. And it is out of respect. I think, maybe by this year end or maybe the individual product… So we are building a visualization engine ground up that’s modern, no-code, multiple products, we are doing, basically, parallelly. Today, we have a very, very advanced modern visualization engine that’s very, very good for not just charting.

Greg: Which one is that? So you’ve got multiple products at Lumel. Is that Inforiver or xViz?

Gopal: Inforiver charts. So, Inforiver has two products: Inforiver Charts and Inforiver Matrix. The matrix is your Excel equivalent. Inforiver Charts, you can think of it as your PowerPoint equivalent. How do you tell data stories? Because the world is moving from visualization. And I explain why you need both. Because, if you go talk to any data professional or somebody who is very passionate about data, they will then ask the question, “What about charts and graphs?” Because Excel has its own charts and obviously everybody loves Tableau, but the world is moving from visualization to storytelling. And even if people do Excel, they take screenshots from Excel, put it into PowerPoint, and then do all these stories and build…

Greg: A narrative.

Gopal: So we had to do that. So today we have a very good visualization engine, storytelling engine, which is the Inforiver Charts. The Inforiver Matrix is your Excel equivalent where you can do everything you can do in a table. You can input data faster than Excel. So we came up with our own number formatting. We studied what people do and automated as much as we can, automated the variance analysis, automated all the formula engine, automated the number formatting. A lot of things we studied on how can we give more productivity than what Excel can do? We worked the last two years closely with a lot of enterprise customers. We have really matured and perfected the product.

Gopal: The ValQ, the last two years… We haven’t done the relaunching. We are looking at relaunching it in Q2. We have completely modernized ValQ to no-code automation, the same concept. We think ValQ’s really, really ready for where it is a very sophisticated planning and simulation engine. What I envision is to put them all together under a Lumel app, where a customer could connect to any data data source and they could do any use case seamlessly, basically.

Gopal: Today, if you look at the market, I want to do a reporting, “Oh, go buy and use this tool.” If you want to do visualization, “Go buy, use this tool.” If you want to do planning and forecasting, “Go buy this tool.” So, the market has created fragmentation and data silos in every organization. Every company uses 4 to 5 different BI software. And what happens? You create data silos. And what are these data warehouse vendors are preaching? “We eliminate data silos”, but guess what all the data tools are doing, they are creating data silos.

Greg: A new data silo.

Gopal: Yes. So what we are envisioning is that we could provide an integrated view of the data irrespective of the use case. I think we are a lot closer to the vision.

Greg: And how big is your team that’s working on all of these sophisticated products?

Gopal: Close to 180 employees.

Greg: A hundred and eighty. You’re a practical, frugal founder here. Are you profitable or are you investing your own prize money?

Gopal: Investment; we are self-funding it. We are not profitable. We will definitely be profitable in 2023. So, we will definitely be cash flow positive in this year, but we should have been profitable at the end of 2022. I’m very disappointed. I have learned to accept that things may take longer, but they will eventually go.

Greg: To software development.

Gopal: Yes, right. Personally, I’m very, very happy where we are today and I’m very confident that by the end of this year we will be cash flow positive, profitable. And that’s probably when we will go bold and figure out how to get our products into the hands of as many people as possible.

Greg: So you’re kind of working on it, getting proofing and retooling some of your products and testing things and rebuilding.

Gopal: So if you take a look at it, the Inforiver product line has already over 500 paying subscribers. Forget about the free customers, we have already paying subscribers.

Greg: These are large companies, right?

Gopal: Yes, they already have. Now, I don’t have a lot of seats. That’s a problem because customers need that much time to digest it and see this new concept. I’m very confident that it will pick up because we are also learning from all these customers what the gaps are and we are closing them.

Greg: Right? Let me ask you a few questions, Gopal, about Lumel. And that’s lumel.com. And you have multiple products in there. So I can kind of see, now that I’m talking to you, you have a whole bunch of products you’re working on and they all have different names and you click on it goes to a different website. I can kind of see the portfolio approach, right? It’s not just one big platform, one big bet, right? There’s different ways you can get started. People can download and play with it for free. Are these add-ons that work with all the platforms or are you now graduating to be your own platform?

Gopal: That’s a good question. Today, we are in the Power BI marketplace.

Greg: These tools work with Power BI, everything works with, and you’re playing on the biggest BI platform these days, Microsoft Power BI.

Gopal: I think the market is consolidating with three hyperscalers, which is your Microsoft Azure, AWS and Google Cloud. Even the data warehouse. If you think about Snowflake, they are available in all the three hyperscale cloud platforms. Databricks is also available in all the three. So the market is consolidating. A customer is consolidating their data in one of these three cloud platforms. We will be available in all the three cloud platforms.

Gopal: Consumption app, data app. We want to be the face of data. We don’t care about Snowflake, we don’t care about Databricks, we don’t care about BigQuery. You give me the data, we present the best picture for you, best story for you, or the best insight. We want to be the face of the data. The space that we are planning on is we create an application or an app that will eliminate application silos. So you get an integrated view of your business use cases.

Greg: So that’s a really big, big vision here. And you know, you go to the website, you’ve got these point solutions that work today and work with Power BI and so forth. You’ve got a big vision to change the way end users at big companies use BI. Not just simple dashboard apps that they can look at, but to change the way they use data.

Gopal: You make a good point, but here is the thing that people don’t understand. Pretty much every organization is familiar with our company; they are using pieces of our software already. So we are already in every company in some form, shape, or deal.

Greg: Of the big companies.

Gopal: Exactly.

Greg: Big, global companies. We’re already there. You snuck in the back door with your add-on products that work with and solve real problems.

Gopal: So they see the value. So they see the value. It’s not going to be a foreign concept. They see the value. That’s why they are continuously… So that’s what they want. Here’s the thing. That’s what they want. They don’t want another BI tool. This is what they want. They have a business problem and they want a solution.

Greg: You have an interesting brand architecture. You have a bunch of products that go into the far marketplaces and get used. And when somebody buys Inforiver, do they know it’s a Lumel product and then come to Lumen and see what other products do you have? Or is it a standalone product brand that doesn’t have much leverage?

Gopal: Today, it is consciously… They buy the product. There is no association with the Lumel. The Lumel brand is somewhat reserved for our future app that we don’t have, the consolidated app. Today, when you buy Inforiver you buy the Inforiver charts separately. It is one product if you buy them. So, what today the customers are buying are the building blocks, basically.

Greg: What they can use today and get value from. Gopal, a lot of product companies, when they get started, especially with the DNA of service business behind them, they fund it through services. And in BI and this very complicated data world, there’s always services in there. Your team at Lumel with all these products, is it really download and self-serve or do you actually offer services and integrate? Are you funding and growing a little bit with services at your new product company?

Gopal: No. Today, we don’t have… Mainly because we really believe in no-code. We really want to build for the casual user, not for…

Greg: So you’re actually creating the discipline. We’re not going to jump in and code it for you.

Gopal: We’re trying to provide a little bit of help, but we are not trying to get into the habit of getting addicted to the services revenue.

Greg: You funded this yourself. How does that feel to write checks into the business versus raising funding? Because I’m sure you’re successful. You’ve got a vision, a clear vision, you’ve got traction. It’s a very hot space, cloud, analytics, data, all that. You could raise funding. How does it feel to write checks into the business and not raise funding?

Gopal: So, I’m very fortunate to be able to say that we have enough money from the sale of the services business to fund it for another year or two or something. This business is going to be profitable. So this business is not going to need more funding. The premium we got by timing the sale is giving us this luxury. Now, I don’t think so. I have one little regret. If I have to do it again, I will do it. If I have to do it for one more year in 2024, we will do it.

Greg: But you also say, “I’ve got this product company with a very big vision. It could be a very, very big company and I’m going to get it to profitability this year and I won’t need money.” Do you ever envision raising money for this product company once you get the new platform organized and the brand and get going?

Gopal: At some point, at some point. We have to scale very fast. I don’t know if it is late 2023 or middle of 2024. We have to scale very, very fast. So, it will be a profitable company generating a lot of cash, but I probably will… I’m being realistic. More than the funding I need a lot of mental horsepower, or the pros to scale it to all the countries and all the platforms, all that. So, there is a point for a different reason. People take funding for a different reason. I probably will, rather than say funding, I will probably partner for a different reason to scale massively.

Greg: And there’s an expertise to the scale game and there’s a network of relationships, partners and building out a global leadership team. It’s a lot different.

Gopal: I’m open to it. The reason is I’m somewhat pragmatic. I don’t have anything like, “I have to be the CEO. I have to run the company.” I don’t have any of that. To me, success means the product is getting used, reaches millions of users, our employees feel the sense of accomplishment. That’s what we need to see.

Greg: Actually change what people do in the world and create value there and everything else will follow from that. You know, you saw it in the product world with… We haven’t heard from SAP, but Microsoft and Salesforce and others have laid off employees. Their stock took a hit. And there are funded companies that took too much funding and are taking a hit on the way down. You didn’t do any of that. Are you acquiring talent from some of these layoffs right now? You know, because it’s just opportunistic. You’re a stable, growing company and people do want to get off the roller coaster.

Gopal: So, we have stepped up our hiring for 2023. The hiring is happening in India quite a bit. Hopefully, in the second half of this year, we hope to step up hiring in the U.S. and maybe start going to campuses. I don’t want to hire expensive resources until we are profitable because to me I only hire when I know I have created a sustainable job. So morally, I can’t just hire for the sake of hiring just because…

Greg: That’s very practical.

Gopal: Yeah, exactly.

Greg: So you’ve got an office here in Dallas and then you have offices in India and you have some other offices. Just walk us briefly through how you organize where are the teams and how many people are in all of these offices for your product company, Lumel.

Gopal: So, we are headquartered in the U.S. Our U.S. has probably nine or ten employees. We are disproportionately… Because with the acquisition, most of my management team went with Atos from the consulting. Now, we made a conscious decision, because we are going to be self-funding, we made all the hires in India. So the India team today is closer to one 170 or 180 employees in India.

Greg: And were are they in India?

Gopal: We are based in Chennai, but we have gone to remote, full remote.

Greg: So they’re all over India.

Gopal: For the last year, we are more open to hiring all over India. We are getting closer to 200 employees. If I have to make a guess, probably by 2023, my hope is to increase the U.S. Talent, double the U.S. talent by the end of this year, and then start actually consciously looking to create opportunities for our employees who contribute in India, who have a lot of knowledge to move over to the U.S. so they can, by the time we step up the hiring, they are able to bring a lot of knowledge that they already have by serving the company there. I think by the end of this year we would look a lot different. I wouldn’t be shocked if we are at 300 employees by the end of this year.

Greg: And profitable.

Gopal: And profitable.

Greg: So if you have 8 to 10 employees here in the States and most folks are in India, it kind of says you don’t have local enterprise sales people and consulting and customer success. This is a pretty product led growth for big companies and sophisticated technology, right? So, you have a vision to make this almost self-serve, generally speaking. Is that what I’m hearing?

Gopal: You hit it on the nail. I made it a point that until the business becomes profitable, I will take the pain to do it myself, to learn from the customer, because there is no point in hiring sales and marketing people and put them through the pain when there could be an issue somewhere else on the product side or on something. So I am personally spending a lot of time directly with the customer, actually the emotion of selling. Even though I’ve been doing business for 12 years, I have learned a lot in the 2 years.

Greg: Oh my goodness. But you’re not doing all the selling. Customers can go to the marketplace. Pay for it and not talk to you.

Gopal: So, I act as a free sales person. I shouldn’t say I’m the salesperson. So I try to go to all the customers’ meetings, especially most of the customers. I try to go as much as possible. You learn from their perspective. So I spent the last two years directly interacting with a lot of the customers because there is no point in selling a product when the product is not ready. Maybe it has a gap. It should sell itself. So when the product sells itself, then you want to load up on the customer success team. I think sales is dead in my opinion. Customers like to buy.

Greg: Even the big, sophisticated companies, you’re saying? They don’t want to talk to a big fancy salesperson making $1 million a year. They don’t want to have a big, long contracting game. They don’t want to have all this heavy stuff. They’ve done all of that. They just want to buy and use something and get something done.

Gopal: Pretty much the culture, if you look at the last 2 to 3 years, any individual, they feel like they are buying something. Just think about it. You buy anything, you review an online review. You like to try it yourself. You like to read about it yourself before you make any decision to even talk to somebody. You want to embrace that. How do you create a feeling that the customer is actually buying something?

Greg: That’s amazing. You’ve made a lot of transformation in your world and with you, Gopal, in the last 12 or 13 years since you started your Visual BI. Being an SAP sophisticated consultant to diversifying across products to going from expensive services to no touch products, a services company to a product company, living through the lifecycle of all of that. What is the hardest lesson you’ve had to learn? The biggest change you’ve had to say I was this, but I’m this now, and it was the hardest for you to get over?

Gopal: It’s a lot of questions.

Greg: Yeah.

Gopal: As an entrepreneur, you have to be bold, you have to take some risks. But I’ve got to tell you, the biggest learning for me is you have to be patient. The last two years has taught me a lot of things about how it doesn’t matter if you are a risk taker, it doesn’t matter if you are bold, it doesn’t matter if you are ambitious, it doesn’t matter if you are smart. You have to be patient because there is no point in being impatient with your employees. Your product has to mature and become usable. Every day, the patience is killing me. I’ve got to tell you that.

Greg: As practical as you are, you have a big vision. You want to get on with it. But that’s a healthy discipline because you could have been impatient and raised money and said, “We’re going to be here in a year,” and it would have been very wasteful. We see a lot of that. Because your product is not ready, the market is not ready.

Gopal: You wouldn’t believe me. In my own household, my wife and my kids… At least once a month, I hear this thing, “Just ship the damn product and…”

Greg: Ah, just ship it. Let’s go. Right.

Gopal: I said, “No, no, no, no, no. I don’t think it’s ready. We have a few more things.” So, we have held off marketing. We have actively been selling and getting customers that come and do all that, but we haven’t really invested a lot into marketing and sales. Primarily because, let’s say today, if I had 10,000 customers, then I have to worry about regression and I can’t make some transformative changes to my product. I have to be respectful.

Greg: You can’t move very fast.

Gopal: I can’t move. So I made a conscious decision. Make sure this product can serve millions of users maybe 10 years from now. So you need a very good, large foundation. That’s the thing. A lot of times people build a minimum viable product and then go get… But the market actually wants a best possible product. So the concept of MVP is dead.

Greg: I mean, you’re shipping useful things and your MVP is a useful thing already that your customers pay for. And you’re patiently iterating on that until you have something worth investing in, faster that will pay off.

Gopal: The customer has to get the value before the first minute is over. Because if I am an app, within one minute I’ve got to get the value. So let’s say you go to an iPhone and you buy an app. You want to see the value. You buy any app, within the one minute you’ve got to feel like you are using it and you are getting the value. So that is what we are striving for. What the post-COVID software boom has done is so many, many software companies have come and they all thought they’ll build an MVP, hire a bunch of sales and marketing people. I think the customers are tired of MVPs. They want to get a product and get an immediate value.

Greg: So this is an interesting thing. You could go faster, wave your hands. You’ve got real products that are working for real people. You’re evolving your solution so you can invest in it wisely when it will pay back for you. If you overinvested right now, it wouldn’t pay back in the same way; it’s a little early. So that’s patient and bold playing against each other, and there’s timing for that.

Gopal: Why I’m very reluctant to add funding is because, the VCs, to them success is, “I invested X. If I have realized 10X…” They don’t have to be patient. They don’t have to be patient. Your own personal vision. Now, if this was my first rodeo, this is, “Okay, I want to have some money in the bank. Maybe the visions will align.” But if you build a software company to actually make a lot of money, that’s different. This is you want to build a software company that actually touches people on a daily basis. They are two different things.

Gopal: So, I have learned it the hard way. Patience is a big part of building a sustainable product. Just like I said in the services business, you need sustainable customers, sustainable employees that can serve you for years and years together. That’s the hallmark of a successful consulting business because if you have a lot of churn in a lot of consulting businesses, you can’t build a sustainable business. But on the product business, to build a product that is very, very foundationally strong, you have to be patient.

Gopal: I don’t think anybody talks about it. I could have shipped my product, gone wild with one use case. What would have happened is the product would have been commercially successful. I probably will get 10,000 customers. It would get “X” valuation, but that’s it. Maybe I would have to sell to somebody. It may make “X” dollars, “Y” dollars. The VC is happy, I’m happy, my employees may be happy. The sense of accomplishment, you would live with this thing, or it never reached its full potential.

Greg: Yeah. A lot of people say, “You’re not thinking big enough. You should raise VC funding.” But you made the argument that VC funding makes you think smaller and shorter than what you’re thinking.

Gopal: Yes and no. Yes and no. Part of my problem is also that I have multiple products. So for example, somebody is interested in buying our charting engine. Somebody is interested in buying our matrix. Somebody is interested in buying our ValQ. There has always been investment interest and buying interest. If I get into the wrong VC for each product, I don’t think VC has the BI exposure, the expertise to think collectively and think big. So they may think, “Okay, let me take my ValQ, go take it to Oracle or some big player that needs a modern and sell the parts to that.” So it’s a big distraction.

Gopal: I have been very fortunate. I have had incredible employees. I’m able to casually build because we have a unified vision. But they don’t think, “Okay, this product, that product.” So, I’m trying to build a culture. We are all one company. We want to make each of the children, each product as children, we want to make them reach the full potential and then we will bring them together.

Gopal: At some time, if you think about it, 2018, 2019, 2020, ValQ was in full investment mode. 2017, ValQ was in full investment mode. Then we shifted focus heavily to Inforiver then Inforiver Charts. So, the peak development, peak investment kind of goes through kind of the wave. We are back to full investment mode in ValQ. But you need a group of employees who understand this. So it’s a very, very, very, very difficult balancing act, and I’ve been very fortunate.

Greg: Multiple products. Yes, and the life cycle.

Gopal: We have consciously tried how the Inforiver Charts can help Inforiver Matrix. The Matrix can help ValQ. How ValQ can embed these things, how they all… It is kind of a sibling relationship we are creating, so then they become one big house.

Greg: It’s a different way of doing it. Mostly you create one thing and then you create another, and then there’s the relation and then all of a sudden you go from a one focused product company to a portfolio. But you’re kind of building a portfolio into a unified…

Gopal: It’s very difficult for our own employees to comprehend it. How would an external VC comprehend it? To me, you asked all the important questions, because everybody asks me, “Okay, why don’t you raise a lot of money? Why don’t you do that?” It’s going to give us more headache in the short term. Maybe there is a time, but that’s the thought process behind all this.

Greg: It’s an amazing story. Growing the technical, BI experts, starting a consulting company, having passion for product, living through all these transitions and transformations and events and ending up with a serious product company. Gopal, what is your big vision for this here? In five or ten years, what do you want to have happen in the world with your customers, with your software company Lumel?

Gopal: We want to be where people feel like they go to a job… Today, people open up Excel pretty much in the first 10 or 15 minutes in each part of their day-to-day productivity, day to day, and we want to be part of that. Now, it could take five years, it could take… But, if I can get millions of users and feel that we have contributed something to a better way of visualizing data, a better way of doing analytics then just what people do, I’m fairly confident we will be successful. But I just want the scale of the millions of users, touching the people on a daily basis.

Greg: That’s one of the benefits of a product company versus a service company. You can create a very successful services company, but the impact in the world, you can feel it with your customers, but it’s not wide and large, right? You’re saying, “I can affect millions of users.” I mean, you could probably feel a dent in the effectiveness of those companies. If you have millions of users… If you took Excel out of the world right now, the stock market would go down, something like that. And so when you have millions of users, you’re making a big impact in the world.

Gopal: Absolutely. And I like to say that the software companies and the technology is really moving the world in the right place. I mean, I’m just amazed at how fast this technology is moving us. It’s pushing us to innovate.

Greg: Yes. Very exciting. Well, Gopal, thanks for sharing your story of Visual BI and your new product company, Lumel, and your big vision and what’s going on and your own challenges. I really appreciate it. I know Practical Founders will appreciate hearing another version of the services to scalable product company journey.

Gopal: Thanks, Greg, for having me. And it was actually… I enjoyed it. The way you ask and some of the things, it made me actually think. And in fact, I don’t mind even playing it to my kids because a lot of times my kids ask me, “What are you thinking?”

Greg: It’s very exciting what you’re doing, and you’re doing it right here from Dallas. Now you’ve got your little team and everybody working from home all over the world. So, thanks for being on the Practical Founders Podcast, Gopal.

Gopal: Thank you, Greg.

In this episode, Gopal explains:

  • How he grew a fast-growing consulting services business called Visual BI by serving large companies in the US using SAP software
  • Why they started to build add-on products for the SAP Business Objects ecosystem, then invested in cloud-based add-on products for Microsoft PowerBI 
  • How they sold their consulting business to Atos in 2021 and kept their products to start Lumel
  • How they are transitioning from a portfolio of point solution products to a family of integrated solutions for large enterprises
  • Why Gopal doesn’t think VC investment makes sense for Lumel even as they grow faster with marketing efforts, despite his big and bold vision that wouldn’t be a good fit for “get big fast” VCs

Lumel Company Facts

  • Founded: Lumel was officially created in 2021 when they sold the consulting services part of the business to focus on their products
  • Description:  Lumel is currently the largest provider of business intelligence and analytics add-on products in the Microsoft Power BI ecosystem
  • Number of Employees: 180 employees, 10 in the US and 170 in India
  • Funding: Self-funded by the founder from proceeds from selling Visual BI, their BI and analytics consulting services business in 2021 
  • Acquisition: Lumel is an independent, self-funded software company, but they sold their services business in 2021 to Altos
  • HQ Location:  Plano, Texas (Dallas area)

Links

 

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Greg Head recorded this on episode on February 24, 2023 for the Practical Founders Podcast see all of the episodes.

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