Sunnyvale, CA

How This Startup Built a $2B Business With 7 Co-Founders

Richard Fang

This Sunnyvale Californian startup has been shining a light in the BI space

I was sitting in a startup program that I had signed up for, surrounded by bright individuals in the class.

Our mentors were standing ahead of the cohort, asking if we had any questions in our very first lesson. A hand went up and asked a simple question about the optimal amount of co-founders a startup should have.

The mentors gave a small chuckle at the question, and eventually, one answered that he thought two or three would usually be the optimal amount for startups.

We often hear of entrepreneur ‘guidelines’ written by some of the most seasoned startup veterans from Reid Hoffman to Paul Graham. These are rules that, if startups follow, give them the highest chance of success, especially in such competitive markets today.

One golden rule that many still proclaim (including Y-Combinator) is that, optimally, having more than one cofounder increases your chance for success.

After all, many successful startups built today began with two-three co-founders from Microsoft, Airbnb, Uber, and more. However, even successful startups like Amazon, eBay, and Craigslist were launched by a solo founder. Average founding team size by region

In fact, it is much rarer to find a unicorn startup (above a billion-dollar valuation) that is founded with more than five co-founders. As seen from the map above, most unicorns have an average founding team of around two co-founders.

Even with this in mind, Ajeet Singh knew he needed more than the average to make his company a success.

Thoughtspot — The unicorn with seven co-founders

Ajeet Singh is not a new name in the valley. If you’ve worked within cloud, you’ve probably heard of his name.

As one of the co-founders of Nutanix, the startup that created hyperconverged infrastructure, he has a whole heap of tech experience under his belt. He was even the guy who launched the Oracle Database to the Amazon EC2 cloud decades ago.

In 2012, he decided to launch a startup called Thoughtspot with his fellow co-founder and CTO Amit Prakash. Having been exposed to the business analytics space from his time in Oracle and Aster Data (one of the first big data companies), he already knew there was a huge untapped market opportunity.

From business insights to data warehousing, he saw the potential of a market amounting to over a trillion dollars. One of the last startups that managed to make a dent in the BI space was Tableau, which launched in 2003, and Salesforce has since acquired it.

Since then, this space has been tricky to tackle, and Thoughtspot was to go directly after it. Their plan was to offer an end-to-end solution focused on exploring and analyzing business analytics.

One of its focuses is empowering non-technical individuals to conduct their own data analysis searches and build their own reports and dashboards. This has been one of Tableau's limiting caveats, a tool that required extensive technical knowledge around SQL usage.

His goal wasn’t just to help companies visualize the data but also to help scale with it.

So why did Thoughtspot choose to start with seven co-founders?

Well, we understand now that Thoughtspot was going after a space that many BI companies have failed to cut through. After all, companies seem to still default back to Tableau and tools like Microsoft’s Power BI.

Since raising $248 million in 2019, the company is now worth close to a $2 billion valuation. It has also proved its business model works with revenues hitting just above $100 million at the end of 2019.

With all of this success, one of the most interesting facts that surround the startup is that it started with seven co-founders. This might raise a question of why such a seasoned veteran in the entrepreneur space would need another 6 co-founders to kickstart its analytics venture.

One of the first facts we need to understand is that Singh values the team above everything else. In fact, he lists out that building his team is the number one priority over everything else when launching a company.

This means that even if there were a trillion-dollar opportunity present (which there was), he would rather look for a perfect team than go after the problem first.

Unfortunately for Singh, tackling BI has many different angles to consider.

Not only do you need machine learning experts but search infrastructure, business intelligence, cluster management, and more. All of these moving parts require individuals with expert knowledge in one respective area.

After all, it would be impossible to find someone with the knowledge to launch an enterprise company, let alone with all the technical skills to build a successful BI product with all the bells and whistles.

Singh referenced in an interview that he was “rebuilding perhaps five companies, five products” into one.

The second problem was the cost of hiring these people.

Technical people are expensive to hire. In fact, Singh himself estimated that these people are making $1 million to $2 million a year. This is especially the case for technical people with unique knowledge in the business analytics and search analysis space.

Additionally, although Singh and Prakash had already started working on the idea and exploring the market opportunity, they didn’t have a working product in the market (it took them actually close to a year before they even began working on it).

They needed a drawcard

To sum it up, they had a bold idea and needed to convince engineers making millions to join an unproven venture.

Logically, this looked like an impossible task ahead.

Even if they managed to raise an early-round, they would not be able to match the salaries of these technical gifted experts. Singh decided that to help incentivize top talent to join his new venture, he would need to offer company ownership and a co-founder title.

He knew he had to offer a grand vision and a reason for these people to quit their comfort jobs and into something more unknown.

This would actually become enough of a drawcard, and over the period of seven-eight months, he would interview 50–60 to find the right candidates for his startup.

After half a year of idea brainstorming and interviewing, he landed himself a team of seven co-founders.

“A large cofounding team can be a problem,” says Singh. “But we know when to defer to each other, and when we do disagree, we do it with respect.” — Singh

What is even more amazing are the backgrounds of these co-founders. This ranged from companies like Google, Oracle, Microsoft, and other tech companies.

To date, Thoughtspot is the youngest leader within Gartner’s BI Platforms Magic Quadrant and grows faster than Tableau even after its acquisition by Salesforce.

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Editor at CornerTech and Marketing @richardfliu on Twitter


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