MasterStroke with Monica Enand & Sejal Pietrzak

Sunil Wadhwani: Revolutionizing Global Healthcare & Education with Purpose-Driven AI

• Sunil Wadhwani • Season 1 • Episode 31

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In this episode of MasterStroke, Sejal and Ned are joined by @Sunil Wadhwani, a tech entrepreneur and philanthropist whose journey from co-founding Mastech, Inc.  and IGate to leading a $4.5 billion acquisition by Capgemini is nothing short of remarkable. Sunil has not only built businesses but transformed industries. After navigating the ups and downs of tech and finance, he pivoted to creating lasting social change through AI-powered solutions in education and healthcare.

From his early beginnings in India to making his mark on the global stage, Sunil’s story is a testament to resilience, innovation, and purpose-driven leadership. In this episode, you will  get to hear how Sunil overcame challenges, took calculated risks, and built companies that didn’t just succeed but made a significant impact. His work in healthcare and education is groundbreaking, proving how technology can improve lives in underserved communities.

What’s even more compelling is his approach to leadership. Sunil isn’t just about profit; he’s about building systems that make a difference. His commitment to sustainable, purpose-driven ventures provides entrepreneurs and leaders with valuable lessons on navigating uncertainty and staying focused on what truly matters.



Georgianna Moreland - Creator, Executive Producer & Managing Editor;
Matt Stoker - Editor


Sunil Wadhwani:

This sounds a little strange. Be conservative in good times and be willing to be a little adventurous in tough times.

Georgianna Moreland:

This is Masterstroke with Monica Enand and Sejal Pietrzak, and welcome to our special guest host, Ned Renzi. Conversations with founders, CEOs and visionary leaders in technology and beyond.

Sejal Pietrzak:

Welcome everyone to our next edition of Masterstroke. We are really excited to have Sunil Wadwani here with us, and I'm going to ask our guest host, Ned, to introduce him.

Ned Renzi:

Great Thanks, Sejal. Sunil, great to see you. Sunil Wadhwani is an entrepreneur, investor and philanthropist. He's best known as the co-founder and CEO of MassTech, also iGate, both of which were multi-billion dollar public companies, and Igate was subsequently acquired for about $4 billion. Sunil is also a prolific angel investor and I'm proud to have made some co-investments with him, including Cvent. He was born in Delhi, india, graduated from IIT, madras, and he moved to the United States and earned a degree from Carnegie Mellon University. Sunil is presently the managing partner at SWAT Capital. He's also focused on several philanthropic initiatives, two of which are the Wadwani Initiative for Sustainable Healthcare and the Wadwani Institute for Artificial Intelligence. He currently resides in Pittsburgh, pennsylvania. Welcome, sunil. Thanks for joining us. I know I've known you for 20, pennsylvania. Welcome, sunil. Thanks for joining us. I know I've known you for 20, 25 years now, but I think you're new to Sejal and some of our audience. How about if we start, if you give us a quick version of your story?

Sunil Wadhwani:

Sure René thanks, and Sejal René thanks for inviting me. I'm really happy to be over here. So, as you said, ned, I was born in India, went to school over there, went to the IIT, as you said, the Indian Institute of Technology came here to Carnegie Mellon, got a master's degree and, while I was at CMU, great school, but one thing I decided was I didn't want to work for anyone else, that I wanted to work for myself clearly a defective gene back in those days and so I started my first company after CMU, which was a medical device company. Five years of blood, sweat and tears later, and all of my life savings in there, five years later, the company didn't survive, so I went through several weeks and months of some fairly intense questioning what had I done wrong, et cetera Extracted what I thought were some lessons, and then started a new company in a completely different field with a friend of mine, and this was in the field of information technology services, almost killed that company, also in the first couple of years, but we survived, and then we started growing very rapidly. So it took us two years to figure out our product, our service, you know, product market fit and so on.

Sunil Wadhwani:

Once we did that, though. We started growing very quickly. We went from zero to 10 million in about three years. We went from 10 million to 100 million in revenue in three more years. We got on multiple lists these 500 lists of the fastest growing companies. At about that time I took the company public and in the subsequent four years we grew from $100 million to $500 million in revenues by the year 2000,. We had a market cap of about $3 billion. Then, of course, the tech bubble burst and dragged all the tech companies down with it, including us. We went through another wrenching time, in fact at our peak Ned and Sejal is interesting in early 2000, our stock price was at $77 a share. Literally six or nine months later, with the tech downturn, we were under $2 a share from $77.

Sunil Wadhwani:

Oh my goodness Two bucks. That's like a 97% drop. I don't know of any other company that survives that kind of drop. I know several others at that time, companies like ours that went under. We slashed costs, we reduced headcount, we pivoted our strategy and so on. Long story short, we started growing again, revenues grew again, and so by about 10 years ago our revenues were over a billion dollars and we got an unsolicited offer for our company to be acquired by this big French company called Capgemini, and they paid us $4.5 billion. So that was a happy ending to that story to that story.

Ned Renzi:

Sunil is a friend and observer of your business success. I really admire what you've also done philanthropically, especially with your healthcare initiatives. Please tell us how and why you pick those initiatives when you grew up in India.

Sunil Wadhwani:

You're always surrounded by poverty. It's never that far away, and it always struck me that you know so much of life is random, and probably the most random thing in life but that affects our entire you know, course of our life is the family into which we happen to be born. And I was very fortunate, like many of my friends, being born into a good, middle-class family that also happened to speak English at home, et cetera, because of which I went to an English medium school and I did well. Because of that, I was able to get into IIT. Because of that, cmu and so on. And I could have been born a quarter mile away, literally a few hundred yards away from home, in a slum, and life would have been very different. I wouldn't have had all the choices I've had. So back in the 90s I started saying I've been very fortunate and I should be, you know, trying to help others who don't have quite the same good fortune that I've had.

Sunil Wadhwani:

I just got interested in healthcare because to me it's one of the two fundamental building blocks of development Healthcare and education is the other one, and healthcare was interesting to me and is interesting because it's a much more complex ecosystem. Any country you go to, there's so many moving parts. You know doctors, hospitals, regulators, nurses, you've got technology. It's a very complicated ecosystem and trying to make change in a highly regulated industry is very, very difficult. So I thought let me try and attack healthcare. I worked with other nonprofits in the healthcare space, but I finally got a little bit disappointed by their inability to scale up. So about 10 years ago I started my first nonprofit in the healthcare space in India called the Wish Foundation, and we try and transform primary health systems in low-income communities using technology and innovation. So at this stage we run over 1,500 clinics in low-income areas around India. We've treated over 35 million families with free healthcare since we got started. So that's going extremely well. And these models that we've developed for tech-driven urban healthcare, tech-driven rural healthcare, these models that we've adopted are now increasingly being used by governments around India. You know state governments and local municipal governments around India. So, for example, the whole Delhi, the healthcare program in the city of Delhi, with over 30 million people in the urban area. We have to design that system and launch it. The city of Mumbai, also with over 30 million people, two years back launched a very large urban health program. We have designed that program, we have launched it, etc. So, like that, we work in multiple places around India and now we are by next year, we'll be starting to work in Africa. So that's one.

Sunil Wadhwani:

Then about five years ago, ned, I had been serving on the board of trustees of Carnegie Mellon University for many years, so I was able to see up close. You know, cmu is one of the global leaders in artificial intelligence, so I could see up close kind of what was happening. And it always struck me that all of this great work in AI very powerful technology was being basically funded by commercial companies for commercial purposes. Right, nothing wrong with that, that's what companies do. But it just struck me that no one that I could see anywhere in the world was applying AI for social development. How do we improve lives of the bottom three, four billion people in the world in areas like education, health care, agriculture and so on, using the app? So I spoke to my brother, who is also a tech entrepreneur on the West Coast very successful, also a Carnegie Mellon grad and we decided why don't we jointly start a nonprofit institute of artificial intelligence in India? So Prime Minister Modi came to inaugurate that institute and we now have by far the largest group of people anywhere in the world working on AI for social development. We've got over 300 full-time artificial intelligence, machine learning experts, domain experts in these fields of education, healthcare and so on developing these applications. So just to give you then, beyond that, I started this year a school of AI at my alma mater, which is the Indian Institute of Technology, madras, to develop really a top-notch global level training and research program in AI. So that just got launched 90 days ago but we already have over 65 or 70 faculty members, we have over 300 students and hopefully within three or four years we'll be able to take our place alongside the CMUs and the MITs in terms of the quality of research and teaching that we do. So that's overall what we're doing.

Sunil Wadhwani:

But to give you just a quick sense of kind of the power of AI in these kinds of applications, so in my AI nonprofit, my AI foundation, we work very closely with government right, because government knows what the national priorities are and so on. So in India there's close to a billion people who rely on the public health system and they interact with their first step into the public health system if they have any issue of cough or cold, a snake bite, a broken bone, whatever. You go to a place called a health and wellness center and these are small, you know, like primary care clinics. They're headed by someone called a community health officer, or CHO, who is not a physician. Okay, this is a person from the community who's received training, but, again, who isn't a physician, and very often they struggle, you know, when lots of patients come in.

Sunil Wadhwani:

So middle of last year, the government of India asked us could we develop an AI-based app to help these 170,000 community health officers around India diagnose better what their patient's conditions are, come up with treatment plans and so on. So we came up with version one of this clinical decision support system a few months ago. It's still in pilot, but it's already being used for over 5 million consultations a month. Okay, close to 200,000 consultations a day. I don't know of any system anywhere in the world that's at that level of scale. And, like I said, it's still version one. Once we have it and it's in one language six months from now, once we have it available in multiple Indian languages, we voice, enable it, et cetera. The government is telling us this could be an absolute game changer and the World Health Organization is telling us in the global south, this could be a game changer because you know there's a shortage of good people at all of these places.

Georgianna Moreland:

That's saving a lot of lives.

Sunil Wadhwani:

That's exactly, exactly so. We've got 25 very powerful AI-based platforms we've developed on how to detect high-risk pregnancies early on and how to make the right intervention so that these babies are born without a problem and the mother doesn't have a problem. We have AI apps in the field of tuberculosis, which is today still by far the largest infectious disease killer in the world. Close to 2 million people a year die of tuberculosis, and the biggest challenge is just detecting tuberculosis. You know 4 million people a year around the world go undetected. These are the folks who develop major problems, who often die of the disease, and detecting TB is fairly cumbersome. So we've developed an AI-based system that can detect TB from the sound of a cough into a smartphone. Now think of how complex that technology is. Right, you or I could cough. There could be a thousand reasons for the cough, from dust in the air to a little viral infection, to whatever.

Ned Renzi:

And the error bar false positives, false negatives, on something like that.

Sunil Wadhwani:

So we are getting to a very high level of accuracy.

Ned Renzi:

That's incredible.

Sunil Wadhwani:

Yeah, and so this is now starting to be deployed. We had it in pilot, but now in the next few months it's going to start getting deployed in multiple states, in India, and again the World Health Organization is saying as soon as you have some scale in India, they want to take this throughout the global South because this could be used in.

Sunil Wadhwani:

Africa. So we have a range of solutions In education. As an example, india, like a lot of countries, has a very high school dropout rate, and it turns out that the reason people drop out from school very early on you know when they're 8, 10, 12 years old is lack of reading fluency. And if you're not comfortable reading in whatever language you're being educated in, you'll do poorly in all the subjects, and when you're doing poorly, you'll drop out, and then that affects you for the rest of your life. So we've come up with an AI-based platform for assessing the reading fluency of kids in their early grades in school.

Sunil Wadhwani:

And this is like a words per minute or accuracy All of the above Exactly Words per minute and we detect, we see which words the student fumbles with or isn't able to pronounce clearly. We detect patterns and then we go back and advise the teacher on a you know remedial program and so on. So it's highly customized, you know it's pupil by pupil etc. And the government in fact this got introduced in a few schools in the state of Gujarat in Western India last state.

Sunil Wadhwani:

The state government thought the results were powerful enough that they introduced it to all three million school kids in the state of Bishak Every single one is assessed on this tool, and now the federal government, the central government in India, is looking to introduce this to 10 to 15 states next year, so it'll be getting used by tens of millions of students, and then again the goal is to take it to Africa and elsewhere. So I use these only to show the power of AI. Now, these are nonprofit applications, but equally powerful commercial applications that are coming up.

Ned Renzi:

Well, it's not just the global South here. We could use that in the United States, In the United States.

Sunil Wadhwani:

I agree, I agree, I agree.

Sejal Pietrzak:

But you know, it goes to show that you know you truly have the true entrepreneurial spirit, because everything you're doing is very innovative and you're starting everything from scratch, which is phenomenal. But what I love is that it's really giving back to not only India but the world, the global economy, and it's really impacting so many people across so many different areas of really important needs. So thank you for everything you're doing, sunil, it's really amazing.

Sunil Wadhwani:

Not at all. I just feel very blessed to be able to do something like this. So thank you.

Ned Renzi:

Sunil, I want to take off on one thing you had mentioned about the healthcare initiatives and sort of for the global south, and I think you mentioned building an ecosystem. Yes, when I hear language like that, it's kind of foundational for me that it's going to be self-sustaining, almost from a capitalistic standpoint, and so at some point these things will stand on their own and not receive grant money. So how are you achieving that or how do you plan that transition?

Sunil Wadhwani:

So if you divide up everything I've said into two groups, groups, so one group is the pure non-profit initiative. So that's my public health foundation, it's my artificial intelligence foundation and it's my new school of artificial intelligence at iit madras, that's in one group and, like I said, I provide the core funding. But at least for my two non-profits that have been around a few years, they they um generate, like I said, three or four recs what I give them from other sources, so that to me provides, you know, long term stability. The second thing we've we I've told them to start looking at is as we start going international. So this coming year, in 2025, we'll be taking many of our AI solutions in healthcare and education to several countries in Africa. We're already in discussions with them.

Sunil Wadhwani:

I've told my nonprofits that what we're providing is a valuable service. If McKinsey or BCG or someone else were doing it, they would be charging for this. So I suggested to them that maybe, even though we're nonprofits, we should consider charging governments some kind of subsidized rate for the services we're providing. And then, of course, the balance of the funds keep coming from my foundation and from other folks, like I said, like Gates and so on, for my companies that entrepreneurial approach to social development. These, of course, are standalone companies. I provide the starting capital, I get these companies going, but then they go out and raise funding from other sources.

Sunil Wadhwani:

So, interestingly, these 15 or so companies that I've started in the last 18 months even though it's been a very tough fundraising environment globally US, india, everywhere they've raised over $200 million cumulatively from outside sources, from venture capital firms and so on. So that to me, is a sign that they are, you know, now under their own steam. I provided the startup capital, I put the teams together, gave the ideas, but now they're starting to walk and run on their own and many of them are now getting to the $5, $10, $20 million range in terms of revenues. Several of them have gone to the $100 million plus range in terms of valuation, and in the short space of two, three years. To me, those are pretty good metrics to wrap.

Ned Renzi:

Yeah, congratulations, that sounds fantastic.

Sejal Pietrzak:

Can I actually ask you? So? You've done this amazing shift. I have so many questions about your company and growing that to a billion dollars in revenue from essentially nothing and exiting at a very successful $4.5 billion of value, but I'll leave that. What I was going to ask you is so for those executives who are listening, who have, you know, maybe gotten to a point where they're exited companies or they're looking at the next stage in their careers, like you have done, and are now giving back well, you've got some for profit, but, you know, in a lot of what you're doing is giving back to make the world a better place. How do you recommend? They sort of think about transitioning. You know they're close to retirement not really because you know they're probably our age, you know, and they're not really, you know, ready to retire, but they want to stay relevant. Like you said, you're busy all the time and you have to be on your toes and they want to be engaged and help the next generations. What would you recommend? What is your advice?

Sunil Wadhwani:

So what I suggest is, first of all, it is super important to stay relevant, to continue having a sense of purpose about life. I'm at the stage where many of my friends have retired and they used to have very busy lives being physicians or senior corporate executives and so on, and suddenly you go from being very busy to suddenly having no challenge In many cases if you don't have any other interests, not having a sense of purpose in life, and that can be debilitating and I've seen, in fact, unfortunately, some of my friends go into cognitive decline because again here your brain is pumping at you know, full speed for like 40 years while you're working and then suddenly it stops one day and it doesn't have that much to do. So A keeping a sense of purpose is, I think, really important, not just staying busy for busy sake, but doing something that you feel adds some value and that's worth finding. And what I suggest to people who are, let's say, late in their careers or early in retirement but even if you're late in your career and I realize how busy things are don't wait until you're retired to start something. Try and develop some interests in your 50s, in your early 60s, and it could be anything. It could be education for young girls, it could be healthcare, it could be something technologically driven.

Sunil Wadhwani:

I have a very good friend of mine here, also an entrepreneur in Pittsburgh, who has started several successful technology companies and two or three years back, while running tech companies, he started a nonprofit initiative in Pittsburgh to provide math teaching and AI training for kids in inner city schools and he's working his organization is working in multiple schools, etc. So I use that as an example to show that how you can take your day-to-day interest. So this gentleman's interest is tech and entrepreneurship and so on, and now he's taken that passion of his and he's seeing how do I help young kids from lower income families, you know, develop these kinds of skills? So I mean, the US, for example, has over a million I think I read nonprofit organizations, so there's something there for everyone. And if someone wants to give back to their country of origin, there are fairly simple ways of finding kind of you know, good organizations in all these places. So I would encourage everyone, all of your listeners, to just think about that.

Sejal Pietrzak:

Yeah, that's great advice, Sunil.

Ned Renzi:

Good advice and perspective. I think there's. A Harvard professor wrote a book called From Strength to Strength. Yes, and it describes the process almost exactly like what you did, so I'm glad to walk it out, sunil.

Sunil Wadhwani:

In fact, speaking of Harvard books, of course there's the famous Harvard professor, clayton Christensen, and he wrote this wonderful book. Of course he had written about competition and you know, et cetera, but then I think maybe 10 or 15 years ago, he wrote a book called how Will you Measure your Life? Yes, and a very different book. It's not about business or anything. It's about the kind of subject we're talking about. You know, how will you measure what impact you had? And it's a slim book, thin book, very easy to read, and I found it very instructive. In fact, my son also read it and it had a big impact on him too.

Ned Renzi:

Yeah, now, speaking of kids, you know you and I have had some conversations over the years on, like how do you raise kids with the values that you cherish? You know, while you have achieved affluence and success, and I know it's worked well with your kids, and so maybe any advice for the parents out there who are trying to balance running companies, raising kids and raising them with the values you cherish?

Sunil Wadhwani:

Candidly, I don't think it's that tough. I mean, as parents, we all have values and good values we want to impart to our kids. So whether it's honesty or integrity, or hard work or compassion, you know, caring for the family, et cetera. So I think when all of our kids, when they see us behaving this way every day, they absorb the values. When they see us working hard every day we don't have to tell them to work hard, they can see us working hard that has an impact. When they see us living our lives with honesty and integrity, that has an impact on them. So I think, just number one staying grounded ourselves. And it doesn't matter how much money you have or don't have. We're all essentially the same human beings. We're all trying to do the right things in life and for our kids. So I think when the kids see that on a day-to-day basis, as they're growing up, they kind of grow up with the same values.

Sunil Wadhwani:

The issues I think occur when and I see this sometimes in the US, I see this sometimes in the US, I see this sometimes in other countries, you know, in the global south when you have families, let's say, that have become affluent, where you still have lots of poverty around you and where the family isn't really doing too much to help alleviate any of that poverty for anyone, then I think the kids start seeing a little bit of a dichotomy. They see the wonderful life that their family is living Also in some cases in the global south. Sometimes that money is made in a way that's not totally kosher. It's made based on you know, contacts someone has in government or some unethical things people do, etc. Kids see all of this stuff, yes, and if they see that dad or mom is making money in this underhanded way, they're very sharp in what's going on and they're trying to tell me about honesty, integrity et cetera. That's when you start having kind of an issue between the values that the parents talk about versus what they seem to live every day.

Ned Renzi:

Yes, you know we've jumped around quite a bit. You know, back at the beginning you've told this story of some tremendous ups and downs in your entrepreneurial career and sort of. You know, we're just coming out of this period, sort of post-COVID, where you know, a lot of the founders I work with only came into the market post 2009. Right, so everything's been up and to the right and it was their first recession. And now we're heading into a situation with, like, massive US debt, some global hot points and things like that. Any advice for our executives out there who are listening, one, just sort of how to run companies with all this uncertainty around you?

Sunil Wadhwani:

run companies with all this uncertainty around you? Sure, that's a great question. And I would add to the uncertainty, ned, not just this kind of increasing level of global disorder that we're sitting in, which isn't going away anytime soon, in my estimation, and in fact it may well get worse in the next two, three, four years. And, of course, we've had issues, as you said, in the US high debt, high level of political division and so on. On the good side, as you said, we've had a very buoyant economy that's been going for 16 years without a major recession. I don't recall ever seeing a stretch this long without a major downturn, so something may be coming up. And then, finally, there's all the changes in technology and specifically in AI, that are at the very, very, very early stages of having any impact, you know, in a large scale way in our daily lives or in our companies. It'll take three or four years more, but I think beyond that, we will see change starting to happen, the AI-driven change happening at a very rapid pace and, like I said, that's three, four years away, but then it'll really skyrocket, it'll really accelerate very quickly. So for, like you said, for a senior executive, how does one navigate at volatile times like this.

Sunil Wadhwani:

So, to me, the two or three lessons I try and keep in mind for myself and, like you said, I've been through a fair number of ups and downs and recessions and so on Number one good times are bad, but especially if you sense some bad times coming up, stay close to your most important customers Absolutely key. And that starts at the CEO level. You don't leave it to your folks in your sales group or anyone else. All the senior executives, but starting with the CEO, have to be in very close touch with their customers, and the reason is not just to protect your business Obviously you're doing that from competition but it's also to keep a very close handle on changing customer needs, and customer needs change very quickly nowadays. It's not like they're static. For five or ten years, you know. Within a couple of years you will see needs evolve. And, as important as that, talking to customers also gives you a very good heads up into what your competitors are up to. So it's a very good way to keep tabs on the competitive landscape, all of which is very important because, especially when companies are doing well, we sit back and we tend to pat ourselves on the back and say, oh look, life is doing great. That means my strategy is great, my execution is great and we lose sight of how quickly competitive differentiators can erode. We lose sight of how quickly competition can swoop in and make life tough for us. So number one is stay very close to competitors. Number two as I said, keep a very close handle on sorry. Number one stay very close to customers. Number two keep a very close tabs on the competitive landscape and what's happening.

Sunil Wadhwani:

Number three is this sounds a little strange be conservative in good times and be willing to be a little adventurous in tough times. What I mean by that is when you look at companies that get into trouble, like they get over-indebted or they do bad acquisitions, typically, you'll see typically that most of these decisions that got these companies into trouble, big or small, were decisions that were made in good times, when you know revenues were going great, profitability was going great, the marketplace outside is doing well and you tend to feel you're on top of the world and that's when the mistakes get made. You're flush with cash. You say, sure, interest rates are low, why don't I borrow, you know, a whole bunch of money to do this acquisition, forgetting that 70% of acquisitions don't work in real life, et cetera, et cetera. So that's why, during good times, I caution my people to be careful not to get carried away with all this stuff.

Sunil Wadhwani:

Conversely, when times are bad, to me, in some ways, management becomes easier. You know that you've got to cut down frivolous expenses, you've got to hunker down, you've got to stay very close to your customers, et cetera. But to me, those are also times to perhaps take some risks. So, as an example, an acquisition that you might have eyed a year ago you know, when times were great might have cost X Today because, let's say, a recession has started or interest rates have gone up. That value might be down by 30 or 40%. Well, that might be something to look at right now.

Sunil Wadhwani:

So when times are tough is when I tell my team let's get creative. Obviously, we're not going to just blow money up, but there are values. Now you know low valuations that we haven't seen for a while. Why don't we see what we can do with this? So just a little contrarian thinking, both in good times as well as in bad, with this. So just a little contrarian thinking, both in good times as well as in bad, but as a constant through all of it staying very close to customers, staying on top of what a competition is up to, making sure that your team is always motivated, no major gaps anywhere and this is a whole separate subject.

Sunil Wadhwani:

We don't have to go into it right now but, especially for any startup, you'll find that every three or four years, the senior management team needs to be starting with the CEO.

Sunil Wadhwani:

By the way, starting with the CEO, one needs to take a fresh look at okay, these people did well for us for the last three or four years.

Sunil Wadhwani:

Are they the right ones for the next three or four years?

Sunil Wadhwani:

Because the management that you need, especially at the CEO level in a brand-new startup, that's at the $2 million, $3 million level, it's kind of different from the leadership that you need at the $20 million level.

Sunil Wadhwani:

It's different from the leadership you need at the $100 million $200 million level. It's different from the leadership you need at the $100, $200 million level. It's different from the leadership you need at the billion plus level and a lot of, I would say the majority of CEOs aren't able to make all those transitions which, going back to something we said early in our conversation, to me that's the single biggest reason that startups don't scale, even the ones that we know. 70% of tech startups don't survive first of all, the first five years, but what I found is, even the ones that survive, that five years typically don't scale beyond 100 to 150 employees, and I found that to be kind of true, whether you're in the US or India or China or wherever, and the single most important reason for that, I think, is the inability of that founder CEO to scale up through these different levels of leadership.

Sejal Pietrzak:

No, you're exactly right, Sunil. We talked about that exact thing in a previous podcast about how there are different leadership needed at different stages of a company's existence. And you have to do it. You have to realize, as the investor or even as the executive, if you're there, that you do what you can do at the right stages, but you may not be the person for that next stage of business.

Sunil Wadhwani:

Absolutely, absolutely, exactly right.

Sejal Pietrzak:

I was going to ask you a little bit about the previous earlier, very early in this podcast, you talked about the fact that your first company failed completely. Then you joined, then you started the new company and then you lost 97% of your market share.

Sunil Wadhwani:

essentially, Market cap yes, seven percent of your market share, essentially market cap, yes, market cap.

Sejal Pietrzak:

And then you, you, you went back up with, with, uh, you know, suddenly making that company so successful, so ned. When you were going to ask about ups and downs, I thought that's what you were going to ask about on the personal side. How did you handle, um, the the ups and the downs? Um, on the personal side, the downs on the personal side, but also on the business side, what was it that kept that resilience and perseverance going when you lose 97% of your market cap? I mean, how do you do that?

Sunil Wadhwani:

That's a very good question. I'm not sure I have a clear answer, but I think what you do is number one. When things are down, I've learned first of all don't blame anyone else. You have to hold yourself accountable. This medical device company that, like I said, after five years, it just you know, we ran out of cash and the company closed up and whatever little life savings I'd had at that stage, you know, went down the tubes.

Sunil Wadhwani:

You know, I've looked at lots of obituaries of other startup companies that don't survive et cetera, and you know, and people ask the founder CEO, why did he run out of you know trouble? And what I've seen is there's always a tendency to blame some externality, like my venture capitalists wouldn't give me any more money, or customers didn't get the value of what they were trying to sell, or the market had a recession. To me, all of that is absolutely pointless and you have to look at yourself. So after my, after that company, my first company died. I took a hard look and I said what were the key mistakes that I made? And it wasn't easy and it took a while, because even when our second company got started, this IT services company, I repeated some of those same mistakes in the first year or two. No-transcript Most entrepreneurs really don't think that through well enough, and that was one of my cardinal mistakes.

Sunil Wadhwani:

In my medical device company we had a device that we patented that cut down the risk of infection following certain kinds of surgery. Okay, you know, hospital-acquired infection in those days, 30 years ago and even today, is a giant issue. Over 100,000 people even today die from hospital-acquired infections in the US every year. So I thought this is great. Doctors will love this medical device. It, you know, improves outcomes. Blah, blah, blah. No, no, no, not that easy Going out and selling to them, convincing them to change old habits and go for this new thing.

Sunil Wadhwani:

I hadn't even thought about hospital procurement systems and how tough those are to navigate, et cetera. So lesson number one that I learned, like I said, was you have to hear from your prospective customers that they feel what you have, your product or service, is compelling your prospective customers, that they feel what you have, your product or service, is compelling, and compelling enough that they will leave whatever they're doing currently. You know, and switch to yours. It's number one and number two how different are you relative to competition? And I'll tell you every, every business plan I read that is perhaps the weakest area a candid assessment of how you are versus competitors. I mean, every business plan will have that one slide showing four or five competitors and a grid and you know, check marks and of course, the only one with checks all the way to where is you?

Sunil Wadhwani:

know the entrepreneur's solution, but if you do an objective assessment, you suddenly realize, hey, no, there's 20 other companies out there with similar solutions. Ten of them have raised over $10 million from VCs in the last two years. Now, in that landscape, how will I survive? So that was lesson number one. Okay, how to be unique and compelling, how to differentiate.

Sunil Wadhwani:

Lesson number two to me is to have a business model that is both rapidly scalable and economically sustainable. So rapidly scalable is fairly obvious, right? How will you grow? So what's your sales model? You know. How will you make gross margins? What's your LTV, your log to value per customer? What's your customer acquisition cost? You know ratio of LTV to CAC. How will you generate profits? How will you grow those over time, et cetera.

Sunil Wadhwani:

That's the second big area. So the first one, again, was the product to service needs to be differentiated, compelling and unique. Second thing is your business model needs to be rapidly scalable and sustainable, and by sustainable I mean you have to get to break even, cash break even fairly quickly and after that you just see plowing the profits back into growth. It's not like you pull them up, but once you hit cash break-even, that's like a baby learning to breathe on its own Now. You're not dependent on anyone else. You can do this on your own. So that's the second big thing, and I find most business plans that I see are somewhat weak in that second area also in terms of thinking through the business model and how it can scale quickly.

Sunil Wadhwani:

And then the third thing, of course, is the team, and overall that's the most important. I've mentioned it last, but the quality of the founder-CEO more than anything else, and then, to a lesser extent, the key team below him or her, the next four or five key people, really makes all the difference in the world. Because very often you'd find in steps one and two, which is your differentiation and your business model. You think you have it figured out. When you actually start your business, raise some capital, start operating, and you find that some of your assumptions weren't quite right. So you've got to pivot.

Sunil Wadhwani:

Nothing wrong with pivoting, but it's only a really sharp founder CEO and an agile team which will figure out that a pivot is needed which will figure out based on customer feedback and what they're seeing with competition. Here's what we need to do differently than what we thought earlier, and that was my cardinal mistake. In my first company I could see having two or three years in that the product wasn't selling as well as I thought, doctors weren't lining up in spite of these infection control benefits, et cetera. Hospital procurement systems were still, you know, really impossible to navigate. But I kept plowing away with my original model because I said at some point this will break through, and you know, and then we'll start growing. And it never happened.

Sejal Pietrzak:

Well, maybe this advice can really help some of our listeners who are entrepreneurs. You know, assess does my business have these three big areas, and is this something that will allow me to avoid the downfalls? And if not, then I better pivot.

Sunil Wadhwani:

Yeah, correct, exactly yeah.

Sejal Pietrzak:

That's really great advice, Sunil.

Ned Renzi:

This has been an awesome conversation. I've appreciated, like all the advice, the perspective, the philanthropy. If you don't mind, I'm going to end on a lighter note. I think you have a hidden musical talent. You told me about a long time ago and I know it's sort of how you wash, dress or just enjoy yourself.

Sunil Wadhwani:

Maybe tell us a little bit about your musical talent, sure so I love music and I play drums with two bands in Pittsburgh, drums with two bands in Pittsburgh, and we played basically classic rock. So you know Rolling Stones and Eric Clapton and Stevie Ray Vaughan, jimi Hendrix, all of that kind of stuff. So it's just something that I enjoy doing. Like you say, it's great for de-stressing, and it started off back in IIT when I was there. I had no clue about music. I still cannot read or write music, it's all by ear. But IIT was just so academically tough, you know, so challenging.

Georgianna Moreland:

Didn't mean it enough.

Sunil Wadhwani:

I was talking with three friends one evening and they didn't have a clue about music. Neither did I, and I said let's just start a band. They said are you crazy? We don't have time. Blah, blah, blah. I didn't have time either, but I said let's just start a band. They said are you crazy? We don't have time. Blah, blah, blah. I didn't have time either. But I said no, let's just do it. None of us could play anything, so we just selected instruments. I selected lead guitar, someone selected drums, someone else selected bass, blah, blah, blah.

Ned Renzi:

It's one player gets all the girls right.

Sunil Wadhwani:

Yeah, that's right, exactly. So we started playing music by the doors and stones and this and that. And the good news was in Madras, at that time, when I was studying there, there were no bands playing Western music. So even though we sounded awful, we would get invited to parties at the US consulate or to play for some function.

Sunil Wadhwani:

No competition, absolutely, and at IIT we played a lot, so that's how we learned. I came to the US right after that and didn't play for 20-25 years and then somehow I picked up the drums, and the drums is what I play nowadays, but I love music of all time. I still play guitar, I play some keyboards, but drums is the thing. So maybe at some stage I don't know maybe we can form a band or something. You know a popular listener is in the world. What should we consider?

Ned Renzi:

it to something? Yeah, that'd be interesting. Well, certainly, when I'm back in Pittsburgh, if you're still playing, I'd love to come hear you. Absolutely, you're very welcome.

Georgianna Moreland:

Thank you for listening today. We would love for you to follow and subscribe. Monica and Sejo would love to hear from you. You can text us directly from the link in the show notes of this episode. You can also find us on the LinkedIn page at Masterstroke Podcast with Monica Enid and Sejo Petrzak. Until next time.