20VC $18BN Market Cap and $1BN in ARR in 8 Years; Samsara How to Find Product Market Fit Reliably How to Create a MultiProduct Company The Pros and Cons of Serial Entrepreneurship with Sanjit Biswas, Founder & CEO @ Samsara

In this episode of 20 VC with Harry Stebbings, Sanjit Biswas, CEO and founder of Samsara, details his journey from his early tech projects to scaling Samsara to a billion-dollar ARR. Biswas shares insights on achieving product-market fit, emphasizing the importance of customer-driven solutions and the "wow" factor that indicates a true problem-solver. He reflects on the lessons learned from his first company, Meraki, particularly the shift from a technology-first approach to a market-first strategy with Samsara. Biswas also discusses the significance of long-term planning and capital allocation, revealing a 70-20-10 R&D investment strategy that fosters innovation while maintaining existing products. Additionally, he touches on the challenges of transitioning from hands-on tasks to strategic leadership as a company scales. Throughout the conversation, Biswas underscores the importance of direct communication, listening to customer needs, and the transformative potential of AI in physical operations.

• Product market fit is a natural reaction to a solution that solves a big problem.
• Companies are willing to pay for solutions that solve their problems.
• Revenue growth is secondary to the impact and problem-solving growth.

"I think product market fit is something you don't want to force when they call someone else into their office or in from the hallway and say, hey, so and so, you need to see this, right? That's when you know you have something that's a true solution to a big problem. Companies pay to have their problem solved. And so when we talk about things like revenue and revenue growth, for me, it's actually impact and problem solving growth."

The quote emphasizes that true product market fit occurs when a product naturally excites users enough to share it with others. It suggests that solving a significant problem is a clear indicator of value, which is more important than mere revenue growth.

• Samsara scaled to $1 billion in ARR in just eight years.
• Sanjit Biswas, CEO and founder of Samsara, previously founded Meraki, which Cisco acquired for $1.2 billion.
• Meraki's sales doubled every year from inception, starting from Sanjit's PhD research.
• Sequoia Capital's Doug Leone provided question suggestions for the episode.

"And today we feature the most incredible company, a company that in just eight years has scaled to $1 billion in ARR, a public company and tens of thousands of customers. This is Samsara, and joined today by Samsara's CEO and founder, Sanjit Biswas. Before Samsara, Sanjit was the CEO and cofounder of Meraki, one of the most successful networking companies of the past decade. Sanjit grew Meraki from his PhD research into a complete enterprise networking portfolio, and their sales doubled every year from inception. And in 2012, Cisco acquired Meraki for $1.2 billion."

The quote provides background information on Samsara's rapid growth and its CEO Sanjit Biswas's previous success with Meraki, highlighting his track record of scaling businesses effectively.

• Sanjit's first tech project involved bringing his high school online during the early days of the web browser.
• The project was about making technology accessible and involved setting up email access via web browsers and bringing the high school newspaper online.
• It taught Sanjit about the diversity of people's interests and the potential of technology to impress and connect people.

"Yeah, it's funny. It's the kind of wayback machine test. So that's probably a 30 year old story at this point. We're talking like the early mid ninety s. And the project that I had was to try to bring my high school online. And this is like right at the beginning of the web browser. So I'm kind of dating myself here, but probably before you were born. But the World Wide Web was brand new and I thought it'd be cool to bring 1600 high school kids online and kind of see what happens."

The quote describes Sanjit's early experience in introducing technology to a broad audience, which gave him insights into how people interact with new technology and the impact it can have on a community.

• Sanjit relates early startup experiences to doing things that don't scale, such as manually entering names from a yearbook and installing antennas on roofs.
• These early "brute force" methods were necessary to build the platform and get projects off the ground.
• The transition from unscalable to scalable processes is a key challenge for growing companies.

"In retrospect, that project was a bit like a startup, right? Like we were trying to do something. We had very scarce resources, we had no money. It was just like spare parts in the computer lab kind of thing. And the brute force was one of the ingredients to that, which is like privacy questions like, are we allowed to give this kid list of names from the roster kind of thing. So I said, well, the yearbook is not private, I'll just use that. So it was just finding a way, I guess."

The quote reflects on the necessity of improvisation and manual effort in the early stages of a startup, which is often characterized by resource constraints and the need to find creative solutions.

• As companies grow, founders must transition from hands-on tasks to scalable processes.
• Sanjit describes the difficulty of giving up tasks he enjoys, like installing antennas or doing early sales.
• He emphasizes the importance of building the company for future scale and spending time on strategic activities like writing the five-year product roadmap.

"You're absolutely right. And at some point you need to stop because you're kind of getting in the way, you're slowing things down, in other words. So the hardest thing is giving something up that you love doing. Like I actually loved installing antennas in grad school, and I loved doing many of the early sales at Meraki and Samsara, and I still love spending time with customers. But again, sort of making it a scalable process is the key unlock at the next stage, which is how do you ten x and then ten x again."

This quote discusses the challenge of stepping back from hands-on tasks to focus on scaling the business. It highlights the need for founders to evolve their roles to enable further growth.

• Sanjit practices "rehiring himself" by writing a job description for the next year or two and assessing if his current activities match the company's needs.
• Listening to feedback from others is crucial to understand when to change one's approach.

"So I go through a process which I called rehiring myself, and it's a little bit like I actually write a job description of what do I think the job needs in the next year or the next couple of years. And I check does my time and sort of how I'm doing things match what the company needs from me and the organization needs for me. The other thing is people will tell you if you listen, right? They're very polite about it, but they might kind of give you a hint or two. And so you have to have these really big ears and listen."

The quote explains a self-reflective process Sanjit uses to ensure his role and actions align with the evolving needs of the company, emphasizing the value of feedback in this process.

• Sanjit's current role as CEO involves preparing Samsara for growth three to five years in the future.
• He balances customer engagement with the need to delegate operational activities to his team.

"Well, at this point, Samsara, the consensus numbers have us getting to over a billion in ARR. And so the current job description, in my opinion, is to be building the company not for today's scale, but actually for scale three to five years from now, which is more products, obviously, more customers, just a lot more building."

The quote outlines Sanjit's vision for his role as CEO, focusing on long-term growth and the strategic direction of the company while trusting his team to handle day-to-day operations.

• Transitioning from academic researcher to startup CEO was a significant challenge for Sanjit.
• He had no prior management experience and learned through trial and error and by listening to others.
• Sanjit approached the CEO role as leading a project and reverse-engineered goals to achieve success.

"That initial transition from project to startup to actually raising venture money, and that was a big transition because I'd never managed anyone before. I never went to a management training course, had no idea what I was doing. So it was a lot of trial and error and a lot of listening to make sure that what I was doing was useful to people."

The quote reflects on the steep learning curve Sanjit faced when he first became a CEO and how he adjusted by focusing on project management principles and actively seeking feedback.

• At Meraki, the company started with technology-first, which led to challenges in defining a clear business model.
• The financial crisis highlighted the importance of having a clear ROI and value proposition.
• At Samsara, Sanjit focused on market-first, identifying customer problems to solve in a scalable way.

"Now, the problem with free Wifi is there's no business model attached to it. And at the time, Wi Fi was still quite expensive. Like bandwidth was expensive, the hardware was expensive. And I do remember at Sequoia, a bunch of the partners were like, what's the business? And I would just explain the technology. And they said, well, that's not a business, right?"

The quote illustrates the lesson learned from Meraki's initial lack of a clear business model, emphasizing the need for a value proposition that aligns with market demands.

• Meraki needed venture capital to scale due to the cash requirements for manufacturing hardware and the need to pay competitive salaries for new hires.
• Venture capitalists approached Meraki after hearing about their innovative work.

"So we got to close to a million dollars in revenue. And by the way, with Meraki, there was a hardware component. So we were building these routers. And what that means is you need cash upfront to get the product manufactured. And so that was a big challenge, which is essentially having working capital for that."

The quote explains the practical reasons why Meraki decided to raise venture capital, highlighting the financial demands of scaling a hardware business.

• Sanjit Biswas discusses the tendency to become enamored with technology and trying to find applications for it, rather than focusing on market needs.
• Samsar, the company mentioned, serves physical operations like supply chains and factories.
• They attempted to create a camera for product inspection on assembly lines, called "machine vision," which did not fit their business model due to high customization and installation needs.
• The importance of having a "rinse and repeat" product that is truly plug-and-play is emphasized.
• Sanjit refers to past mistakes at Meraki, where they built networking products that did not take off, highlighting the difficulty of avoiding repeating similar mistakes.

"So for us, it was like AI and computer vision a couple of years ago, we thought it was going to be transformative, and it has been for our business. But we found ourselves in this kind of techie engineering habit of, we've got this cool new hammer over tool. This is like 2018, 2019, where can we apply it?"

This quote explains how the company became focused on technology (AI and computer vision) and looked for ways to apply it, which is indicative of a technology-first approach that did not align with their business model.

• Product market fit should not be forced; it is identified through customer interaction and feedback.
• Sanjit Biswas advises founders to look for the "wow" factor from customers or beta testers when presenting new ideas.
• He refers to an "allergy test" where multiple ideas are presented to gauge reactions.
• True product-market fit is indicated by strong customer interest and immediate requests for more information or demonstrations to others.
• Revenue is seen as a measure of problem-solving growth and impact rather than just financial gain.

"Well, I think product market fit is something you don't want to force. And the way that I've always kind of gone about it is just to get out there with customers, with beta testers, and listen for the wow."

Sanjit Biswas emphasizes the natural discovery of product-market fit through direct customer engagement and the importance of genuine customer reactions as an indicator of fit.

• Founders often use arbitrary metrics like user numbers to suggest product-market fit, which can be misleading.
• Sanjit Biswas suggests that a product being pulled by the market is an unmistakable sign of product-market fit.
• He believes that if customers are willing to pay for a product, it signifies its importance and impact in solving their problems.

"It's almost unmistakable. You'd have to be blind not to see it. I've had customers or beta testers call me the next day after going on site and they'll say, hey, was that thing for sale? Can we place an order for that?"

This quote illustrates the clear demand from customers when true product-market fit is achieved, as they actively seek to purchase the product.

• Samsar's first product was real-time GPS tracking, which led to customer requests for a compatible dash camera.
• The company listens to customer needs to determine when to expand their product line.
• Sanjit Biswas advises that the second product should ideally solve additional problems for the same customer base.
• The "concentric circles" approach is important, where solving multiple problems for the same customer is more efficient for sales and customer relations.

"What quickly happened is they loved the GPS tracking product. And then they started asking us, hey, is there a dash camera that you all recommend that works well with your system?"

This quote shows how customer feedback and requests directly influenced the decision to develop a second product that complements the first.

• Sanjit Biswas uses an 80/20 rule to decide when to develop a new feature or product based on customer feedback.
• If a significant majority of customers would benefit from a feature, it is considered for inclusion in the platform.
• For more niche requests, the company opts to partner with others instead of developing in-house.

"So if 80% of our customers would benefit from something, we want to bring it onto the platform."

This quote explains the company's strategy for deciding when to act on customer feedback and integrate new features into their product offering.

• Sanjit Biswas discusses the advantage of founder-led sales due to deep product knowledge.
• He describes the dynamic and interactive nature of sales conversations when founders are involved.
• Prospects appreciate speaking with someone who can shape the product's roadmap and solve their problems.

"It's a very sort of interactive conversation. And I actually think that on the other side of the table, the prospect loves that because here they have someone who can solve their problem, perhaps solve more problems for them, and really wants to partner."

The quote highlights the unique value of founder-led sales conversations, which can be more dynamic and tailored to solving customer problems.

• Sanjit Biswas emphasizes the importance of FaceTime with customers for high-bandwidth communication.
• He brings various team members on customer visits to provide them with real-world context.
• Photos and write-ups from customer visits are shared internally to give the team insight into customer operations and needs.

"Getting that FaceTime with the customer is so valuable. It's so high bandwidth."

This quote conveys the significance Sanjit places on direct, in-person customer interaction as a means of gaining valuable insights.

• Typical enterprise sales cycles at Samsar range from within a quarter for mid-market teams to six months to a year for major account teams.
• A direct sales force becomes more productive as they gain experience.
• Aligning the sales process with customer preferences has led to efficiency gains.

"Our mid market teams will close deals within a quarter, and that sales cycle is inside of 90 days."

This quote provides an example of the sales cycle duration for different teams within Samsar and illustrates the variability depending on the market segment.

• Sanjit Biswas prioritizes hiring salespeople based on their experience with similar deal sizes rather than industry expertise.
• The focus is on whether a candidate is accustomed to transactional or consultative selling.
• The ramp time for sales teams can vary, but typically it spans a couple of quarters.

"I would say the deal size tends to be where we focus a little bit more."

This quote reveals the company's hiring strategy for sales teams, emphasizing the importance of experience with certain deal sizes over industry-specific knowledge.

• Selling HR software, CRM, or similar products involves understanding the business value proposition.
• The process of selling based on business value is distinct from rapid deal-closing sales tactics.
• A meticulous approach to sales may be slower but is critical for certain types of business software.

"That takes longer. You could have been selling HR software or CRM. These are all kind of similar conversations because it's business value, but that's a different way of selling than just picking up the phone and closing deals really fast."

This quote highlights the difference between a value-driven sales approach and a transactional one, emphasizing the former's focus on understanding and delivering business value, which often requires a more prolonged sales cycle.

• Continuous growth in sales team capacity is essential to maintain direct contact with customers.
• The decision to hire more salespeople is not momentary but part of an ongoing process to build the team.

"It's been a continuous build for us, and it will continue to be."

Sanjit Biswas explains that the expansion of the sales team is a strategic and persistent effort rather than a sudden push, indicating a planned and sustainable approach to growth.

• A one-size-fits-all policy is challenging to implement; startups benefit from close physical proximity.
• Flexwork during the pandemic opened access to a broader talent pool, leading to an increase in talent quality.
• Being flexible in hiring locations can align better with customer time zones and increase the talent pool significantly.

"And what was fascinating is, I would say our talent quality went up, right, because now we were able to find that fantastic salesperson who wanted to live in Austin, right? Who didn't want to live in San Francisco."

Sanjit Biswas discusses how a flexible, hybrid workforce model allowed the company to tap into a higher quality talent pool by not restricting hiring to the Bay Area, which in turn improved their overall team strength.

• Hiring mistakes often occur when there's a mismatch between the candidate's experience and the company's stage.
• Another common error is moving too quickly in the hiring process without thorough reference checks.
• Team compatibility is a crucial factor that can be overlooked if the focus is solely on individual achievements.

"You want people that work well in a team, and that's something you find out via references, because the individual's achievements are what's on the resume, not the sort of credit history, I guess, of how they operate in an organization."

This quote emphasizes the importance of evaluating how well a potential hire works within a team, which can be gleaned from references rather than the resume, suggesting that collaborative skills are as important as individual accomplishments.

• Hard work, ambition, and the ability to work well in a team are highly valued.
• "Street smarts" or practical intelligence, especially in customer interactions, is more important than academic intelligence.
• The ideal candidate is well-rounded, with a balance of drive, ambition, and interpersonal skills.

"So I think we look for people that are kind of well rounded in that regard, but you want to make sure that they've got that drive, that ambition, the grit, the motor, whatever you want to call it."

Sanjit Biswas ranks the importance of various attributes in potential employees, prioritizing ambition and the ability to work in a team over raw intelligence, and highlighting the need for a well-rounded character.

• Certain roles may accommodate individuals who prefer working independently, such as technical architects.
• While individual brilliance is valued, the ability to collaborate with others remains a key consideration.
• The company culture and role requirements determine the acceptability of hiring non-team players.

"There are some personality types and some roles where it is a little bit more of kind of individual brilliance."

The quote acknowledges that some roles within a company might be well-suited for individuals who excel independently, though they must still be able to interact constructively with the rest of the team.

• The CEO's role includes making critical decisions on where the company invests its resources, particularly time and money.
• Effective capital allocation is crucial for a software company where most expenses are related to personnel.

"The CEO is the chief capital allocator of the company, and that's essentially where the company is spending its time."

Sanjit Biswas defines the CEO's role in terms of capital allocation, emphasizing the importance of strategic decision-making in resource investment for company growth and efficiency.

• Long-term planning is essential for sustainable growth and involves investing in current products and future innovations.
• A structured capital allocation strategy, such as the "70-20-10" rule for R&D, can facilitate balanced investment in core products and exploratory projects.

"We have a kind of 70-20-10 capital allocation strategy when it comes to R&D."

This quote reveals the company's strategic approach to R&D investment, allocating resources to ensure both the improvement of existing products and the development of future offerings.

• Taking calculated risks is essential for innovation and long-term success.
• Early investment in new products, even when not immediately lucrative, can lead to significant future revenue.
• The ability to assess and manage risk is a key aspect of successful capital allocation and product development.

"Maybe I'll answer the question in a little bit of a meta way, which is I'm glad we took risk, period."

Sanjit Biswas reflects on the importance of taking risks in product development, suggesting that the willingness to invest in uncertain projects can yield substantial rewards over time.

• Hindsight can reveal instances where risks should have been taken or avoided.
• The intensity and speed of a company's growth can be managed more effectively with experience from previous ventures.
• Second-time founders may have advantages in recognizing patterns and leveraging previous relationships for rapid scaling.

"So Semsara is about an eight year old business. You can see the numbers were public, so it's grown very fast."

The quote illustrates how past experiences and risks taken have contributed to the rapid growth of Semsara, highlighting the benefits of learning from previous entrepreneurial ventures.

• Serial founders may have a better understanding of the startup journey and be more prepared for the challenges.
• The decision to become a serial founder is influenced by the individual's willingness to re-engage with the startup environment.
• First-time founders can also be highly successful, and it is important not to discount their potential.

"So there probably are a bunch of second time founders who are maybe reluctant or unsure or want to do it in a sort of lighthearted way."

Sanjit Biswas acknowledges that while serial founders may have valuable experience, there is a diversity of attitudes and levels of commitment among them, and the success of first-time founders should not be underestimated.

• Even with a strategic approach, some product lines may not succeed as anticipated.
• Recognizing when to pivot or abandon a product is a challenging but necessary aspect of capital allocation.
• The cost of a failed product initiative is measured not just in financial terms but also in time and opportunity.

"We should have made that call a little bit earlier, but it was single digit millions. It's not like a huge downside."

Sanjit Biswas reflects on a specific capital allocation decision that did not pan out as hoped, emphasizing the importance of timely recognition and response to such situations.

• A significant financial event, such as selling a company, can alleviate personal financial worries and allow for a focus on impactful activities.
• Having financial security can enable entrepreneurs to invest in new ventures without the need for external seed funding.

"The liquidity from that sale took care of all of that. Right? I love books, by the way. I remember the biggest thing for me was not stressing about buying a hardcover book."

Sanjit Biswas shares how the sale of Meraki provided financial security and the freedom to focus on personal interests and new business opportunities without the stress of financial constraints.

• Revenue with a good gross margin allows for reinvestment into the company, promoting growth and sustainability.
• Large companies like Amazon and Microsoft have reinvested massive amounts of capital over time.
• Money is crucial for making more bets and building more products.
• Equity ownership in a company provides a share in the upside, which is a byproduct of building a substantial business.

"You get revenue, it has a gross margin. You can reinvest that back in the company."

This quote emphasizes the cycle of generating revenue, maintaining profitability, and reinvesting earnings to fuel further growth and innovation within a company.

• Sanjit Biswas experienced a transition from an engineering role to becoming a natural CEO.
• The realization of being categorized under General and Administrative (G&A) expenses rather than Research and Development (R&D) marked a milestone in his CEO journey.
• A CEO's role is not confined to a specific department but encompasses leading the entire business.

"There was a moment where I realized that my salary was allocated under GNA, not R&D."

Sanjit Biswas reflects on a pivotal moment where he recognized his role as CEO was broader than his engineering background, marking his transition into a leadership mindset.

• As Samsara enters a new phase of scale growth, Biswas acknowledges the need to focus on long-term strategy and time allocation.
• The challenge lies in balancing involvement in details with long-term planning.

"Am I spending enough time on the long term?"

This quote captures Biswas's self-reflection on his role as a leader, particularly his focus on future planning and strategic thinking.

• Biswas emphasizes spending quality time with children and engaging in activities that build problem-solving skills and creativity.
• He believes that certain qualities and abilities cannot be bought with money, which is important for children's development.
• Despite financial comfort, it's crucial to teach children values that foster a strong work ethic.

"We try to emphasize things like building things that you actually can't buy with money."

Sanjit Biswas discusses the importance of instilling values and skills in children that are independent of the family's wealth, focusing on effort and creativity.

• Building with a long-term perspective is advantageous compared to planning year by year.
• Startups often learn the importance of long-term building through experience, as seen with Facebook.

"If you can build for the long term, you're so much better off than you are building kind of a year at a time."

The quote reflects Biswas's belief in the benefits of a long-term approach to building a company, which can lead to more substantial outcomes compared to short-term planning.

• Large-scale AI infrastructure may favor well-capitalized companies capable of investing in data centers.
• AI applications are well-suited for startups due to their creativity and rapid feedback loops.
• The AI revolution is not an either/or scenario but a matter of where companies fit within the technology stack.

"AI infrastructure may be well suited for companies that can invest billions of dollars ahead of time in building big data centers."

This quote suggests that while large companies have an advantage in creating AI infrastructure, there is still significant opportunity for startups in the application of AI.

• Frontline workers will likely remain necessary for a long time, as some jobs are difficult to automate.
• AI may have a more significant impact on back office or white-collar jobs, leading to the creation of more fulfilling work.
• Historical transitions in labor due to automation have led to job shifts rather than outright eliminations.

"I think we're going to have frontline workers for a very long time because some of these jobs are difficult to automate."

Sanjit Biswas shares his view that frontline jobs will persist despite AI advancements, suggesting a transformation in the nature of work rather than a complete replacement.

• Biswas has witnessed the evolution of the internet, mobile technology, and now AI.
• AI is considered a huge and transformative wave in technology.

"This one feels huge."

Biswas expresses his perspective on the significance of AI in the current technological landscape, indicating its foundational impact on various industries.

• Biswas expresses interest in experiencing a day as the CEO of Nvidia, led by Jensen Huang.
• He is keen to understand Huang's approach to time management and investment strategies over the past 30 years.

"I would love to live in the shoes of Jensen from Nvidia just for a day."

This quote reveals Biswas's admiration for Nvidia's CEO and his curiosity about the leadership strategies that have contributed to the company's success.

• From Doug Leone, Biswas learned the importance of direct communication and straightforwardness.
• Mark Andreessen's "information diet," which includes current events and timeless classics, influenced Biswas's approach to information consumption.

"Doug is a very clear communicator. He's very straightforward."

Sanjit Biswas highlights the valuable lesson of clear and direct communication he learned from board member Doug Leone.

• Norway and China are leading in EV adoption, with government initiatives playing a significant role.
• The U.S. has slower EV adoption, with regional variations and challenges in transitioning heavy vehicles.

"So fastest adoption of evs would probably be China."

The quote underscores the rapid adoption of electric vehicles in certain countries, driven by policy and environmental concerns, with China being a notable example.

• Biswas was surprised by the time demands of being a public company CEO, particularly around earnings reporting.
• He had to find additional efficiency in his schedule to accommodate the new responsibilities.

"No one told me that I would need to do that, but I found it some way."

This quote reflects Biswas's realization of the increased time commitment required as a CEO of a public company and his proactive approach to managing it.

• The experience of being a parent has shifted Biswas's priorities, emphasizing the long-term aspect of raising children.
• Each child is unique, and parenting is akin to building a startup, requiring investment and relationship building.

"Your kids are like the ultimate startups."

Sanjit Biswas compares raising children to creating a startup, highlighting the long-term commitment and the unique development of each child.

• Biswas sees a long future for Samsara in solving a broad range of problems within physical operations.
• He envisions Samsara developing multiple applications on its platform and adapting to technological changes like autonomous vehicles and AI.
• Biswas is open to the possibility of remaining CEO or exploring new ventures in the future.

"We're talking about 40% of world's GDP. So there are a lot more problems for us to work on and solve."

The quote indicates Biswas's view of Samsara's potential to impact a significant portion of the global economy by addressing challenges in physical operations.