Mohan Markandaier is a serial entrepreneur with multiple successful exits. He co-founded Pulse Voice in 1996 which was acquired by Enghouse in 2009. Leveraging the financial freedom and over a decade worth of operator experience, Mohan co-founded Good New Ventures to help promising companies accelerate their growth with both money and mentorship.
Tell us about how the idea for Pulse Voice came to be, how the founding team came together and how you grew the company before it got acquired.
The four founders are long-time friends (all engineers, all Tamil) working in the Telecom industry. From our work experience, we realized that building voice applications on existing platforms were extremely complex and very expensive. We decided to build a platform based on a PC and Windows operating system that enabled developers to easily build and deploy voice applications from a user friendly graphical interface that significantly reduced the total cost of ownership for our customers. We started building our platform in our basement in 1996, designing them specifically to one of our customer’s requirements and got our first installation in Europe. As conservative engineers, we bootstrapped the company to grow organically based on cash flow and managed to be profitable every year. Sometimes I wonder if we had raised outside capital and invested heavily, would we have grown faster and become a leader in our space. On the other hand, our organic growth allowed us to survive and even thrive during the dot com bust in the year 2000 and the financial downturn of 2008. At the time of our acquisition by Enghouse in 2009, we had customers in 40 countries and also happen to be the best year financially since we founded the company.
How did the acquisition by Enghouse come to be? Also, tell us what the experience of getting acquired looks like briefly.
Three years prior to our acquisition, we realized the need to bring on external advisors and mentors to help us to scale our company. We established an advisory board with accomplished senior executives from our industry. These executives brought extensive outside perspective that not only helped us triple our revenue but also enabled us to explore new opportunities for growth. We contemplated raising capital to grow the company ourselves, or alternatively merge with another company and become a more dominant player in the industry. As luck would have it, the Chairman of our advisory board ran into someone at the airport, in the washroom of all places, and that conversation led to us having a meeting with the CEO of Enghouse with the rest being history. The process of being acquired was certainly exciting but involved some anxiety as well. The partners and I were excited, as this is something we had planned for the company sometime in the future and it was becoming a reality. The anxiety was predominantly around how the integration would work – who would stay with the company and who would be moving on. Overall, the decision was the right one and we were able to celebrate the achievement and have no regrets.
What made you decide to sell the company (Pulse Voice) that you had been building with close friends for over a decade instead of continuing to try to grow the company?
Each of the four partners intrinsically had different strengths that we brought to the table. We also had very different personalities. Together, we had agreed to a unified commitment to identified goals and a willingness to work together to achieving them without compromising our friendship. Certainly, we had our share of healthy debates and arguments during strategy sessions, nevertheless we focused on ensuring open communication among us and all decisions were made in the best interest of the company. Having worked together for more than a decade, an opportunity was presented to us that not only afforded us financial freedom but also provided an avenue to explore other possible ventures based on our individual aspirations. After the exit of Pulse Voice, the four of us continued to work together in other business endeavours and remain good friends to this day. Looking back, we all agree that the first exit paved the way forward for all of us to explore different paths and opportunities, each would agree that we are extremely happy with our choices and our lives as a result.
In recent years, there’s been a glamorization in the start-up world around raising money and growth at any costs, how do you feel about this?
I am a strong believer in start-ups and in entrepreneurship as I believe it leads to innovation that pushes boundaries of the status quo. Taking big bold risks supported by vision and investing heavily both emotionally and financially in an environment where there is a high rate of failure, takes true courage and resilience. I may be biased but entrepreneurs of start-ups need as much support as possible as what they are endeavoring to do, is an extremely difficult thing to accomplish. With respect to raising capital, measuring the success of a company on how much capital they have raised is an incorrect barometer. Instead the focus should be on how effectively the company is solving a problem in a specific market and how well they are addressing the needs of their customers to attain market dominance in that space. In order to accomplish this fairly quickly, start-ups need capital at various stages. Capital from investors can be extremely valuable for product development, validate product market fit, and increase market share, all of which requires companies to continue to invest cash during these stages and it is the nature of any start-up.
How did Good New Ventures start and how do you differentiate yourself in the marketplace where companies (especially the good ones) have the leverage because getting money is not a problem for them?
Having been an entrepreneur for years with some successes as well as many failures, I always wanted to work closely with entrepreneurs by investing capital and providing mentorship wherever possible. I joined a not-for-profit Angel group out of Markham called York Angel Investors with the goal of meeting other like-minded Angel Investors to leverage their expertise and share the risk of making investments. This is where the Good News Ventures (GNV) partners met – at that time, all 3 partners combined had invested in many start-ups as Angel investors with few successful exits. Since we were all doing investing full time, we thought we should get together and start a fund. GNV fund was more of an evolution for us – where we can leverage our capital along with outside investors’ capital to invest larger funds in pre-seed and seed stage high growth tech companies predominantly based in Canada. We believe our key differentiator comes from our operator backgrounds with experience in starting a company from scratch and successfully exiting. With an entrepreneur focussed mindset, we support our companies, championing and cheerleading them so that they can increase their chances of success during the high risk stages. We leverage our Next Level Program where our network of partners help our founders network and establish connections, discuss strategies and receive guidance in dealing with specific challenges.