Shantanu Gangal

Co-founder & CEO, Prodigal Technologies

Shantanu Gangal is the Co-founder and CEO at Prodigal Technologies, a company bringing the power of AI and machine learning to lenders, creditors and collection agencies.

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Rohit Mittal: Hi. This is Rohit. I’m the co-founder and CEO of Stilt. And today we have Shantanu with us. Shantanu is originally from India and he did his bachelors at IIT Bombay in Computer Science then worked at Blackstone in private equity and then did MBA from Wharton. And after that went to FundBox as their head of data and analytics, spent almost three years there, two and a half to three years and now is a co-founder and CEO of a company called Prodigal Tech. And you started ProdigalProdigalProdigalpro Tech with, let me get it right, Saransh and Sangram. Both guys you knew from before. And you started in 2018 so about a year ago. And Prodigal Tech helps lenders, creditors and collection agencies be more compliant using AI and machine learning on code data.

Shantanu Gangal: Yes.

Rohit: Interesting. And you went through YC in summer of 2018 and now you are a VC backed company with a lot of employees and doing really well.

Shantanu: Yes. Thanks for having me.

Rohit: Yes, welcome. I’m excited for this conversation.

Shantanu: Likewise.

Rohit: So, let’s just start with your background in India. So, you went to IIT Bombay. Tell us some... How was your education? And how did you get to go about Computer Science and then move to Blackstone?

Shantanu: Yes. So that was a very interesting journey because I was a decent engineer, definitely not a great one. I couldn’t code to save my life but coding even back in 2006, 2007 was very different from coding...   

Rohit: So, you graduated in 2008.

Shantanu: No, I graduated in 2009 but basically starting out in 2004 to 2009 [inaudible 00:03:53] to the whole thing but that was not a thing. All around the coding was C++ Java and even Java was not how people think of the ongoing development today. One big change from then is the importance of user experience and design. And growing up, I just happen to go through some of my old project work and it’s shocking because no one, growing up we did not really pay all that much attention and clarity to user experience and design but that is one of the things we are really prioritizing right now. So, for me, life has come a full circle from moving away from company designs into big finance and now kind of bringing it back into technology and creating a very tech heavy product.

Rohit: And IIT Bombay is like supercomputer science heavy, really hard curriculum and there was no Cloud at the time. So, what was that experience like?

Shantanu: Very challenging, to say the least. I think a lot of our closed work was not even for starting different applications. It was like pilots, OS which is very critical to understand how the world is setup right now but then again, Cloud comes along, and a lot of those things are completely abstracted for a lot of developments like [inaudible 00:05:16] but we kind of... Our foundation was extremely thorough in that sense. But we have built... Nokia used to have those phones where you build like those really small [inaudible 00:05:30] apps. And I remember was like software Systems Labs project.

Rohit: And you did most of your computer science work in Java or C++?

Shantanu: So different projects actually we end up doing different things. IIT really does a good job on [inaudible 00:05:47] so the language was kind of.... You could pick your own choice of language. In this particular project, you had to work with Java, but a lot of my work was in CC++.

Rohit: Interesting. And you met Saransh and Sangram at IIT.

Shantanu: So Sangram and I, way, way back, we were the same batch at IIT Bombay. Safe to say, I made a good choice even back then working on all of the cool projects with him so I could kind of make sure he did the bulk of the coding. So yes, he’s someone I’ve known for several years. We were in the same hostel, same department and obviously the same batch.

Rohit: What was your hostel named?

Shantanu: Hostel three.

Rohit: Hostel three.

Shantanu: Yes. A very good hostel. I mean, we won a lot of championships during my stay there but all 

in all, I think the hostel life was extremely enriching.

Rohit: For people who don’t know, I think IIT has like hostel rivalry. They try to induce this so people try to compete more and try to do more things.

Shantanu: Yes. I think there’s a very healthy but a very severe hostel rivalry. A lot of the do-your-own culture comes from the hostel rivalries. Back again when I started at IIT in 2004, [inaudible 00:07:05] painting your own posters for hostel performances and stuff, which meant going to Grant Road or like Crawford Market, which is an Indian village where you can buy cloth in bulk and making posters and buying paint and designing those things. But essentially a lot of people, that is their full studios of experience. Obviously that culture really could [inaudible 00:07:34] starting out.

Rohit: Yes, like you have to do everything on your own. You have to do teamwork.

Shantanu: Everything yourself. You’re thinking about cost. You’re finding the cheapest deal in the market but more than anything, you’re willing to create something from nothing. So, we used to have a funny experience. We used to have this thing called HTTP, which was Hostel Three Time Pass. It was first but essentially for that first, we would essentially like steal bamboos from construction sites. Like tear them apart so we could put together some [inaudible 00:08:03] and just like get the show on the road

Rohit: Interesting. Very interesting. And you did that for five years. You graduated from IIT. And so, working as a software engineer, you go and work at Blackstone, in private equity. How did that come about?

Shantanu: So, coming out of IIT, I realized like I said, I could write code to save my life but very little. More than that, I really wanted to go out there and then figure out how business works and how does technology help business work. So, my first [inaudible 00:08:39] was BCG. I was there for a little under two years and then I moved to Blackstone but between being a consultant at BCG and a private equity investor at Blackstone, I came here [inaudible 00:08:50] experience understanding how decisions are made in fairly big corporations. Blackstone Investors is one of the largest corporations and you get to be in the boardroom with fairly senior decision makers and that is a great phenomenal experience for our equity group [inaudible 00:09:07].

Rohit: Got it. And when you were at Blackstone, you spent all of your time in evaluating big companies and what to invest. Any experiences from there that you can share that showed that basically opened your eyes to the big bad world?

Shantanu: I won’t say big bad world but definitely exposed like [inaudible 00:09:26] to the power of technology. One of the first investments I was a part of during Blackstone was this company called Fino Paytech. They do... Back then they did what was called as manual ATM or essentially, they had people who will go to the mobile phone in India and essentially hand out cash. Obviously in the business world, it’s far more technical than that. But it was an incredibly empowering business back in 2011. To get cash to villages and bring the on-bank people into like the banking population. And the kind of good flow had during my time at Blackstone when I was associate of the company was just phenomenal, the kind of response people had to that technology and the product really was eye opening when they took a very simple concept, blend into the real world with it and they saw explosive root. Fino is now much more [inaudible 00:10:27] bank in India but that was a really powerful inside view on how technology can affect the lives of the common people.

Rohit: Got it. You’re learning a different set of skills and now you’re like in a completely different environment.

Shantanu: Yes. I mean, it was a hard learning experience, to say the least. The first year also in BCG and the [inaudible 00:10:52] in Blackstone was an extremely steep experience. I would get knocked down by the people for the right reasons very often. The biggest example was if you would pull a lot of detail into slides that you’re presenting a class. And currently that would basically like tell them apart. At like 11PM at night and ask you to redo them.

Rohit: For the presentation tomorrow morning.

Shantanu: For the presentation tomorrow morning. And that was an incredibly humbling experience because you [inaudible 00:11:24] on high. You think like you’re on top of the world. And not just that, you also have done all the analysis and you think you know the business. You know you have the answer but you [inaudible 00:11:3] can wait. And this has happened to me like so many times that I cannot... It’s shameful almost that I wasn’t learning fast enough but the three or four times, I wasn’t [inaudible 00:11:49] BCG but BCG like improved my creating consistently to my stay at BCG and again at Blackstone. Then you realize that your answer is important but also very important that the user understands what you’re saying. And again, it’s a lesson that is very, very relevant in the start of context. You might have the best algorithm. You might have the best, even the product but if it’s not easy to use, the user doesn’t get how he’s going to use it, then he doesn’t see value from it. It is completely meticulous.

Rohit: Yes. Especially at Fino Tech.

Shantanu: Yes, absolutely.

Rohit: The regulations are pretty tough.

Shantanu: The regulations are very tough. Users have far less patience and they’re also at some level, they’re cagey about trying on new things because obviously it’s very close to their heart and say it’s an extremely personal thing, connections. The world that we live in, connections, it does an extremely personal even that I’ve gone into collections, how they missed their payment and you need to deal with it with care and humility at the same time so it’s easy for them to solve their problem.

Rohit: Even a single dollar can... A single dollar difference can make someone really mad because they...

Shantanu: It’s a principle fight.

Rohit: Yes.

Shantanu: It’s not about the dollar. It’s about the principle fight and I think you have to consistently earn their trust.

Rohit: So, you graduated from IIT. You went to BCG then Blackstone. And then after that you decided to come to Wharton?

Shantanu: Yes.

Rohit: Quick question. Why didn’t you decide to go to like the IIS and why did you decide to come to Wharton?

Shantanu: A lot of it incidentally was... Also, the Boston side of the story. My then girlfriend, now wife, she lived in D.C. around that time, so it was her either moving to India or me getting or figuring out a way to be closer to her. We are already at that point in a long-distance relationship working close to five years.

Rohit: That’s a pretty long time.

Shantanu: Yes. And both of our parents were a little bit like, [inaudible 00:13:57] There’s no in-between anymore. So that extend, I think the personal decision, like the personal, like wanting to be in the same country if not the same city kind of part of it but more than that I think that. So, I felt like I really wanted to gain a very global exposure to [inaudible 00:14:19]. This is 2013. Technology trends in India would at that point lacking compared to US. I think it has changed drastically in the last five or six years but back then I think, like the iPhone revolution was obviously very little tools in the US. iPhone was definitely a luxury item in India and Android had just started picking up.So, I think all those put together, I really wanted to gain more exposure and I drove the decision to try out to a global school. 

Rohit: Yes. And Wharton was in Pennsylvania. It’s very close to D.C.

Shantanu: Yes. Absolutely. I think I was like; I was away from them and my girlfriend was.

Rohit: Got it. So, kind of like you could have didn’t gone anywhere but the personal story led you to Wharton. Did you major...? So, was its general MBA or did you focus on like finance or something specific?

Shantanu: Great question. I had a change of heart through my Wharton experience. I mean, Wharton I was coming from a very deep investing background. I didn’t know any other world at that point. I knew the power of technology, but I always thought I would be in the investing, the technology of investing in modern companies. Coming into my Wharton, somewhere between my first year and second year, I then [inaudible 00:15:43] perfect lender. And that was an ever more eye opening.

Rohit: Which lender did you intern at?

Shantanu: That was ZestFinance.

Rohit: ZestFinance, yes. So ZestFinance has AI models.

Shantanu: AI models. Back then they did balance sheet lending as well. So, I split the summer between a hedge fund and ZestFinance. So again, I was like trying both the worlds. I love both worlds but the whole working at Zest was so eye opening that I really wanted to dig deeper into it. And even though my first year was more... Let me say 80% investing, 40% technology. Completely flipped on the other side on the second year where I did 80% technology and 40% investing. So, to answer your original question, I did graduate... I did double major in management and the second one was Finance.

Rohit: Got it. That’s pretty cool. I will take a break just to check if everything is good. Okay.

Rohit: So where we were, we were talking about Wharton. So, finance, you decided to do technology. Shantanu: Yeah.

Rohit: Cool, so you decided to do technology but what kind of subjects did you switch from that you were doing earlier?

Shantanu: So, in my first year I ended up doing a lot of derivatives, which is like financial derivatives, option pricing and stuff like that, still very statistical, but the same thing got a different flavor in the second year when I was doing a lot of automated marketing, spend planning and things like that. We also did a startup in our second year actually. It didn't go much, it didn't go anywhere, Sangram and I worked together on a startup, like social betting around cricket 2015 World Cup. It was not for money, there was no money involved, but it was more for social bragging rights.

Rohit: Right, so you did it on the side, as you – what was Sangram doing during that time?

Shantanu: So Sangram graduated from IIT Bombay, since then right till he joined us, he was at a hedge fund called Tower Research Capital, where he was a quaint, so he was writing code and making money, but he was in New York while I was in Philly, so that’s kind of pretty close by and we would essentially work the graveyard shift nights and weekends to build this sports betting, social sports betting kind of app.

Rohit: And how did you come about the idea of doing social sports betting?

Shantanu: It was a very natural thing because whenever you're meeting with friends, you always – like are kind of arguing with each other what you think the outcome of the match will be, and Sangram who was into a lot of high frequency trading, saw a very logical extension and we essentially created - the financially correct term for that would be contracts, and [inaudible 02:19] on the match and allowed people to trade on it, but again I think, where we were really trying to push the boundary was, how to make the user interface really, really simple. For Sangram again, coming from a very trading heavy background, he could look at numbers all day and he knew exactly what the numbers were spitting out, but we had to cater to a much more casual audience who is probably watching the match of TV, they're having a drink or two in their hand and they still need to enjoy this app and so we actually just had two different modes in the app, like one was like a super user mode and one was like a casual mode and we spent a lot of time thinking about user experience and design for this casual mode to make it appeal to the masses.

Rohit: And this was like – you just learnt things on your own in terms of design? Like there wasn’t any academic training?

Shantanu: I did not have any, my wife is a UX engineer by trade, so again – I could moonlight information, so she would obviously guide us, beyond that yeah, we were essentially doing a lot of trial and error.

Rohit: Got it and how long did you do it before you decided to either quit or were like this is not going to work?

Shantanu: So, it started out as a hobby project so we never really – it wasn’t – like all of us were doing it part time so to that extent it was always – it always remained a hobby project. We had a ton of very active users during the cricket 2015 World Cup, but coming out of the World Cup we basically essentially were thinking that do we want to take it into something serious or do we want to sunset it? And it eventually felt like it would be a natural sunset, so we closed it, the World Cup ended around the end of March 2015 and I started recruiting like literally like a week after that.

Rohit: Interesting, just one last thing about what an MBA is, how did you put together the money, the funds to go for MBA – cause a lot of people – an MBA in the US is really expensive, 150 – 200000$ total expense, how did you pull that off?

Shantanu: So, beg and borrow. Yeah beg and borrow, vandal - when I say steal, I mean steal for wheels, so all those three things. So, I obviously – my brother helped out – by the time I was married, my wife kind of pitched in for a bit, but bulk of it was borrowing. So, you get family to help out a bit here and there, but the bulk of it was borrowing. So, Wharton was tied up with the credit union, and we used to get – compared to the rest of the US population, extremely expensive loans, but its fine, you do what you need to do because –

Rohit: Yeah it enables you to finish –

Shantanu: Yeah absolutely, so even though it was expensive, it was definitely an enabler.

Rohit: Got it. So, you graduated from Wharton and now you're looking for jobs. So, take us through that experience, how did you finally decide to end up at FundBox?

Shantanu: Correct, so I did Zest, coming out of – my whole of second year I was very, very actively trying to understand the technology use of financial services landscape in the US particularly. So, I did a course called Prosper, I did an independent study for Lending Club and to that extent I was dabbling on the side. I volunteered at the Lended conference back in the day, so essentially, I was working a lot to understand what was happening in the industry, even while I was running my startup. And the startup also had aspects of trading, financial services but [inaudible 06:17] sunset my startup, I knew that I wanted to be part of this ecosystem that applied technology for financial services.

Rohit: And you also had to get a job because you had big loans.

Shantanu: I had to get a job, yeah absolutely. I can’t be unemployed in the US for immigration reasons and stuff like that, so I need to get a job to pay off my student loans because while you're in the MBA, obviously you get payment waver, like – you're payment deferral, but the moment you end your MBA your clock starts ticking on actual big cash out, so I needed to get a job, so I just hunkered down, [inaudible 06:54] stuff every month, say what was appealing to me in respect to business models, in respect to deals I wanted to work with, in respect to geography, and then started reaching out to people, basically just pounding the pavement. Spent a lot of time in New York just going up and down, flew out from Philly to SF a couple of times, spoke to a lot of people – yeah, and landed at FundBox.

Rohit: So, FundBox is in San Francisco, what about your wife around that time, did she also move around here or –

Shantanu: So, she was in DC around that time but we both kind of realized that SF for the broader bay area will be a good place where both of us would find exciting opportunities. So even though she remained back at DC, at my graduation the plan was that she would move out to SF bay area around right after, which she did. So, like 6 months after I moved out here, she moved to this company called Nutanix, which is also incidentally founded by an immigrant founder.

Rohit: Yeah, went IPO recently, last year or something like that.

Shantanu: 2017. Yeah, very good company. So, she joined them on Diwali 2015 incidentally, let’s say about 6 months after I moved out here.

Rohit: Got it and so now you are at FundBox and you started in the data and analytics department or how did you – cause your background is very computer science heavy and finance, so you have knowledge of both worlds, so you come at FundBox and you help them with what in data and analytics.

Shantanu: So, I was right at the junction of applying data for business decisions. It allowed me to leverage all my education in computer science and at the same time all my work experience in finance. Thankfully my manager at that time, also in a very similar background, his undergrad was in physics but he had spent a lot of time doing private equity. So, we kind of – I got to talk to him, I went with him, incidentally and it's one of the things a lot of people look down upon, I got my job thanks to a cold email. People think cold emails don’t work, but it was a cold email that I sent out saying this is me; this is what I do, I’m looking for a job. Obviously one thing led to another, they put me through the ringer, I had lots of interviews, but the seed was a cold email.

Rohit: But the cold email was sort of a good segway or is a part of what I always ask people, like how do you build the network. So, when you move here you don’t know a lot of people and if you want to work either in the tech industry or you want to start a company, it’s always a good idea to know people and how do you go about that? Obviously, you were at Wharton so you had a big network there but –

Shantanu: Yeah obviously, everything else being equal having a network helps. Everything else being equal a warm introduction helps, but a diffident or an impersonal introduction is probably weaker than a very personalized cold email, is what I believe. I think a lot of people have different views on that and different things to offer different people, but for me, I used to take a lot of time to – firstly I used to only reach out to companies that I actually saw myself working at, I would not reach out to everyone up and down the street just for the heck of it. So, I would do a lot of research upfront, then try to draft my message to make – actually the reasons I thought I was fit for them I used to try and put it into an email. I’d do a lot of work and so I didn’t have a lot of interviews but I did convert a lot of the ones that I did have. Just because I was trying to make a very genuine case and it was a case that I’ve already believed in, which was – I was reaching out to the company for first base, but yeah, it’s a chicken and egg. You don’t build a network until you have a network; someone needs to give you the first break.

Rohit: Do you remember any person who helped you connect to more people or someone who acted as your connector?

Shantanu: So, there were several, like I [inaudible 11:29] here were people – there were a lot of people who would go through my ID in Wharton who actually went out of the way to at least point me in the right direction and then you obviously threw out some aspirational shots. So, I got someone to introduce me to Gokul Rajaram who is like a big shot in the US tech space –

Rohit: So just as a side note, Gokul Rajaram is @Square or –

Shantanu: Yes, @Square Caviar.

Rohit: Square Caviar and he was also at Google very early on and built – also Facebook very early on and built their data and I think [inaudible 12:14] I know his name that he’s very popular in the valley –

Shantanu: Yeah I think the thing is that you just have to be super honest and super humble and the thing is, obviously coming off a grad school, just like coming off an undergrad, you think the world of yourself, and the real world literally doesn’t give two hoots about it or any amount of theoretical knowledge you pick up in school about the tech industry, really doesn’t matter in the day to day world, but just having that – just being open to learning, just being very open minded about the fact that you could actually be completely wrong, people will give you their ear and with cold emails as well as warm emails, you should be realistic about your success rate. I am really happy if one in four of my cold emails reply, I’m not saying you should spam anyone, but if you get one in four to reply, you should be happy with it. While people feel offended that three in four did not reply.

Rohit: Got it, and also people – I think unless you do it you don’t realize that people are willing to help if they think that you are honest about your approach and they think they can help you. A lot of times you think they can help but they actually can't, so they either don’t reply or just say no upfront and that actually saves your and their time.

Shantanu: It’s like a sales funnel, you have to modify your leads.

Rohit: So now you’re in B2B SaaS, you’re just using all the terms- - but that’s actually very true and that’s what I’ve found too. I’ve done a lot of cold emails that have worked out, a lot of LinkedIn messages that have worked out for me and there are people in various stages of their career who just wanted to pay it forward because someone else helped them and maybe when someone cold emails you, if you can help, you will definitely try to help them.

Shantanu: Yeah absolutely, you mentioned LinkedIn, I think a lot of people just shoot out LinkedIn requests and it’s not really clear why a person is reaching out, but literally if you take 10 seconds to write a note that connects the request, I’m almost 100% sure to accept that connection request, just because it seems like someone is putting the effort and now if you’ll write the note, you’ll make me the connection obvious, so it gives me a reason to say, okay, it looks like I cannot help you even. So even that’s a good no.

Rohit: Yeah, having a specific ask I have realized helps better than just a generic I just want to connect kind of thing.

Shantanu: Yes absolutely, LinkedIn has been extremely successful as a student, as a startup founder, just in terms of people responding. If you’re honest and open minded about them then you won’t say no.

Rohit: And another key thing we’ll talk about is I think respectful persistence or even if someone has said, it’s a no for now, its –

Shantanu: So that doesn’t come naturally to me, I’ll be honest. I think it’s a great skill. It doesn’t come naturally to me, I’m trying to pick it up but – no definitely means no for now, but yeah that’s a lesson for me, I should do that more.

Rohit: So, you came to FundBox and you spent three years, almost two and a half – three years at FundBox, how did the idea about Prodigal came to you? Was it also a hobby that you were doing with Sangram or was it something else?

Shantanu: So, I was at FundBox for like two and half years, and during my time I got to see a lot of vendors that are pitching to FundBox. FundBox is a balance sheet lender and I was thankfully privy to a lot of the conversations that were happening. One of the biggest theses I have had, since joined FundBox is – obviously innovation happens in ways. So, the first way of innovation happened within Fintech, Fin lending happened like in 2009 through 12 – 13, which was an innovation and origination. So lending club basically said, okay we’re not going to do anything indifferent, we’re going to source people differently. We’re going to source them through Facebook ads; we’re going to do some referral campaigns that’s obviously sourcing them. That became very obvious – wave two was like let’s say 2013 to 16 or 17, in which companies like FundBox which are really looking to innovate on underwriting. FundBox does a great job on using alternative data sources to underwrite. Similarly like a firm does it on the consumer side, there are several people that are innovating on the kind of data they use and the decisions they drive.

Rohit: Still just doing on the immigrant side.

Shantanu: Still just doing on the immigrant side, absolutely. So that was a wave – I’m sure you have founded around the same time right, and that got me thinking. So, wave one was okay – lets innovate origination. We are no longer doing just simple banner ads; we are going to do referrals, Facebook. Wave two was like we are going to innovate with different kinds of data, or different user- like look at people’s undergraduate degrees in India to give them loans in the US. I think there’s a lot of iteration thinking happening there. So, that got me thinking, okay what is wave three going to be like? So, if you think of a loan cycle, origination just like start of the funnel, start of the lifecycle. Underwriting is the next step and then servicing and connections just is what follows. And we are now seeing wave three of innovation in the lending eco system which is on services and collections and that’s what we basically started to solve through Prodigal.

Rohit: Got it and how did you convince your batch mates to join you?

Shantanu: Yeah that was tricky. In a sense that I obviously have seen how collection happens in the US and even places that are really – like really at the cutting edge of underwriting do collections in a very, very old school manner. It is still a lot of value for dollars, it is still a lot of bucketing and vintage analysis which doesn’t employ any kind of machine learning, which doesn’t do any kind of personalization to the borrower, and I saw a lot of these gaps and I took a lot of time to convey those gaps to my co-founders to get them to see the whole potential of this opportunity.

Rohit: Yeah because they’re not in this industry, Sangram is writing code for Tower Research and investing or doing something else and you have to really make a case on why should they leave their lucrative jobs at big companies –

Shantanu: And join, yeah absolutely. So, Tower Research again, they are in a slightly different area of fintech, they do trade but they are cutting edge and for Sangram to even see how bad – not bad just like how laggard some of these approaches are, took some time. And don’t get me wrong, in their tech backwards, but they’re defensive for a reason. It’s just that they need to be safe, the margins are thinner, they need to know something works, they cannot go ahead and shoot from the hip. So, there is a lot of good reason why some of the technology adoption has been slower, but I think the time had come to change. So, you originate someone by showing them Facebook ads, you do an extremely personalized underwriting and then you throw him into a bucket with millions of other people and try to do services and collections with the cookie cutter approach, just doesn’t make sense. So, you’re like – okay if your referral ad is personalized, if your underwriting is extremely personalized, it’s only a matter of time before your collection and services has to be extremely, extremely personalized. And, walking them through that argument, doing some – basically acting as borrowers and doing a lot of collections, because I was in student loans, I am still in student loans since my Wharton days, so it’s easy to tell them how bad the consumer experience at times can be. Took a while but I think they kind of came around to see the acoustics.

Rohit: Got it, that’s super interesting.

Shantanu: Did I end up talking a lot of my customers down, so I was just thinking -?

Rohit: We can redo if you felt like you want to redo and then –

Shantanu: Yeah because the customers might think he’s talking so much about tech backward –

Rohit: Yeah, I think those things become important especially because it’s not something they don’t know, it’s just that you shouldn’t be saying it, so I can go back to – so how did you convince Sangram and Saransh to join you? 

Shantanu: Was the wave one and wave two a part of it?

Rohit: Yeah. So you’ll have to start from the top cause I won’t be able to cut an answer and join a new one, so we can do another one like how did Prodigal come about and then you can discuss your experience and then I will ask you how did you get Sangram and Saransh. So, you are at FundBox for two and half three years, how did you – how did the idea for prodigal come about? 

Shantanu: Great question, so while at FundBox I was thankfully privy to a lot of the new kinds of vendors that are becoming the fund cow or balance sheet lender, so a lot of people came to FundBox and pitched really, really compelling solutions and one of the big areas that I saw that was missing was servicing and collections and that got me thinking- fintech on an innovation applying technology towards lending, kind of happens. Happened in waves - the first wave was in 2009 – 2013 where a lot of lenders innovated on origination. They went ahead with Facebook ads they did referral campaigns where they were acquiring different user classes or they were acquiring users differently. But the next wave came in underwriting where starting 2014 to 2017 a lot of innovations came in how did you use different kinds of data sources to underwrite customers?

So, FundBox does a great job in using different data sources to underwrite businesses. A firm does something like to a consumer, a state does something like that on immigrants and I thought- okay that’s great. Now we have a place where a user in on boarded through an extremely personalized referral campaign. He is underwritten using very, very personal data sources, but then he is thrown into a pool with millions of other users and clubbed by vintage and credit score and there is a cookie cutter approach to how servicing and collections are done. And I thought wave three, which started in 2018 of innovation and lending, would essentially focus heavily on services and collections. So wave one 2009 – 13 was origination and wave two was underwriting the data and wave three which just started out in 2018 would focus heavily on services and collections and that is why I moved out of FundBox and has this idea – I was spinning this idea with a lot of things that we had like – thought about tried tested at FundBox and I started Prodigal. 

Rohit: And how did you then – the major question is how did you convince your friends Saransh and Sangram to join? 

Shantanu: Yeah, it’s never easy because for them it’s an extremely personal decision, I mean Sangram is married, he has a house and so on so forth. 

Rohit: So, I think he’s in New York? 

Shantanu: By this time, he had moved from New York to Mumbai, but yeah, he has a house in Mumbai, all in all everyone needs to be super thoughtful about the kind of life choices they’re making, particularly coming from high frequency trading which is extremely cutting edge. I needed to show him the areas of improvement that exist in the servicing and collection world where we could come in and help deliver that kind of personal experience to borrowers and consumers. I had student loans, I still do have student loans from my time at Wharton, we literally had to pick up the phone, act as a borrower and make you see – like you can get extremely personalized food delivery options, you can get extremely personalized retail options, but your loan options are extremely limited and that’s irrespective of your payments history and so many other things. So, we actually had to get on a call, act as borrowers to see that there is a world of improvement that could happen and we were excited to be part of this wave three of innovation and it took a while, but I think eventually they came on.

Rohit: I definitely see this with our customers also and our experience also so a lot of our borrowers have loans back home, right, and they take a loan in the US to pay it off and sometimes we are just waiting for days for them to know the balance that they need to pay up, and I’m like, why is it not immediately available in your online portal and they’re like, oh we don’t have an online portal. We have to call them, we have to request and then they send something and all these things just make me think that this is so 1950’s the way the industry is operating, and that’s India so in the US people expect even faster – 

Shantanu: Yeah, user expectations are sky high and it’s only natural. I mean the kind of consumer rendition of technology that had happened across the board, people obviously have different standards and like – you will continue to get your loan statement in snail mail, I think there is some regulation – some of those things will never go away completely, but I think at the same time, users definitely expect a more personalized experience when they get a call from a collection agency or when they even are calling in, they expect that if Spotify knows your play list preference, they expect that your collection agency will at least know the payments you’ve made, they will treat you in conjunction with the kind of relationship you have with the bank and be respectful of it, and the kind of future potential opportunity that you could have from that relationship. However, that – a lot of the players are unable to offer that kind of a very personalized approach. 

Rohit: And also people are in a difficult spot because loans go into collection to any credit – like credit cards or whatever it is, go into collections only if someone is not able to pay and is in a difficult situation in life and if you hammer them even more and get mad at them and not offer them easier options to pay, in a manner that they want to pay, it becomes difficult for those people. You may lose them as customers forever. 

Shantanu: Forever and you should never hit a person that is down, the person will remember it for a long time. One of the biggest misconceptions people have is, borrowers don’t want to pay – it’s not like people don’t pay because they don’t want to pay, it’s like there is some local change in their life situation, either its local in time, they have a temporary loss in job, or there is a local weather event even that might mean that they actually are unable to meet the terms previously agreed upon and borrowers having the kind of flexibility to meet a borrower in his time of need with a solution that works for him or her is really, really powerful. In fact this is again an experience we had at FundBox, back in October 2015 there were a series of hurricanes in Texas and Florida and there were fires up in northern California where folks at FundBox – like FundBox really went out of their way to put those borrowers from their affected zones at ease and got me thinking that that should be the norm, because we know that something bad has happened, it’s not that anyone is cutting corners. It’s an act of nature, but we essentially look into [inaudible 29:19] to several people so that borrowers are not – are treated very respectfully and offered a solution that works for them. 

Rohit: Yeah makes total sense and we live it every day with our company. So you think of the idea, you make your case to Sangram and Saransh, how long did it take you to convince them to actually join you, I’m sure you were doing it on the side initially or – how long did it take you to convince them and then how did you finally actually start full time? 

Shantanu: So great question, I was brimming with energy about this idea, but actually didn’t do a lot of work on it while I was at FundBox. So, I moved out of FundBox, I knew I would do something, it took some time, I was chilled for a couple of weeks and then essentially, I think that's when I started putting the story together, the case together. It took them several months after that, again just like you said early, no never means a no, it just means not now, so I think things took time to come about, and by the time Sangram had quit his Tower job but was in some other work on the side, he needed to have a obviously very mutually agreeable exit from that as well. So, we worked through a lot of those things. So it took us a good 4 -5 months before they came onboard full time but I think the good thing was in that time we had gone and spoken to several people in the industry and while the specific way how you’d go about the problem it was still TBD, a lot of people resonated with the need for a much better state of the art – in the collection industry. 

Rohit: Got it, so one more person who is important in this story is your wife, what did she say when you quit your job and you said I have loans but I’m going to do a startup. 

Shantanu: Yeah funnily enough that was not the first time I did that because even during my Wharton time she was the one who was basically paying the bills and I was piling on the loans, but she was very supportive. I think it’s a great question, people don’t appreciate it as much, starting a biz is an extremely stressful and uncertain journey and unlike – it’s not like someone is breathing down your neck every day, but the weight of your own expectations and the gap between what you think the world should be and where it is can be massive and lead to a lot of burden on your shoulders. So, having a supportive spouse definitely goes a long way and I think Sarnika has just been phenomenal. We did do – when I quit FundBox last January we set out like milestones, literally like – 

Rohit: Yeah like investors, you have to hit your milestones otherwise you go back to your job. 

Shantanu: Yeah it was something like that, it sounds funny in retrospect but it was pretty much like that and I don’t mean like a product market fit but she was like – one of her thing was can you even convince two other people to work on this idea for you, basically can you put a team together? We were like can you get customers; can you get some validation of this being a paid point, can you get some initial seed funding or something like that. I think she basically – even though she was not stressed about it she helped me structure my thinking around it and not let me be delusional about trying to change the world without – divorced from reality. You should always want to change the world but you should not be divorced from reality, particularly in the B2B software kind of business. 

Rohit: So, her support and her being there also kept you on your toes and that you were making constant progress, because there is no one else who is keeping a check on you and its just – if it’s your spouse or someone else then you actually make progress faster. 

Shantanu: Absolutely and I think even today I think she kind of appreciates a lot of the nuances of the company and she’s able to offer a quip or two that actually is super helpful and again I don’t send out investor updates too often unfortunately but I do – with a similar frequency I do send out updates to my personal stake holders which is my wife, my immediate family, my parents, my brother, some relative and some well-wishers. Yeah so I’ve probably sent out like 3 -4 personal life updates, we don’t talk about the company specifically but just about where we’re going, what would – do things look – good, bad, ugly – to people who I’m very confident are well-wishers and I think that's a habit she’s kind of put me into, just writing emails to people who are on my personal board of directors, not the company’s board of directors, personal board of directors and she’s been super supportive and to complicate matters if I may use the word, we had a kid – 

Rohit: Yeah last year. Six months you kid is today, six months old. 

Shantanu: Yeah, he turned six months today yeah. 

Rohit: I remember you were super busy around that time and as a startup founder when we’re doing everything, adding a kid to that mix just makes it more difficult and you must be sleeping a lot less nowadays. 

Shantanu: Yeah, I think it is an added responsibility for sure – 

Rohit: Right and your wife is working full time so you both need to take care of your kid and share responsibilities equally. 

Shantanu: Yeah absolutely, I think – in fact if at all, I have a little more flexibility with my schedule so I move my schedule, even though I work longer hours I have more flexibility, so I try to help out as much as I can but obviously not as much as I would like. 

Rohit: Yeah makes total sense. So just to get the story going, you started Prodigal and then getting to YC, did you get in on the first try or did it take you a couple of times to get it? 

Shantanu: So we got in the first time with this idea, but if you remember Sangram and I had put together a sport betting – social sports betting app, so we had applied to YC backed, in fact that was one of the milestones to decide if we would continue with that idea and YC did not even give an interview call for that, but that’s fine. Even looking back, there were a dozen things that we were doing wrong back when we applied. So, this is my second time applying to YC but the first time with this idea and this company. 

Rohit: Right and by that time Sangram and Saransh were already on board and they – is Saransh in India or in the US? 

Shantanu: Saransh is currently in India yes, so is Sangram. 

Rohit: Okay and they both flew for the interview here. Anything that you remember from that time from getting that interview email to preparing for the interview, how did you go about that? 

Shantanu: So, our interview was on Monday afternoon so I think all of them came in a couple of days before and literally for the last couple of days we were locked in a room, throwing a lot of questions at each other. For one, it helped us clarify our thinking, and then obviously helped us prepare for the interview. We’re focused on the big picture items including what pain point are we really solving. Who in the lending eco system are we really looking to help out? Whose [inaudible 37:41] so we were really brainstorming about the business, not really looking to answer questions from the PG board or something – 

Rohit: Right. 

Shantanu: But anyways, jokes aside, we did that for the greater part of the day and then we essentially went into the interview thinking, yeah – we were very positive that this pain point will really get solved. We were completely in alignment about that, whether we get into YC or not, that’s anyone’s guess. 

Rohit: I mean – generally a good idea is to not think that you won’t get in, because your idea is either too small or you’re too early or something like that generally I think YC based on my experience looks more at the founders. 

Shantanu: Yeah and I think by then – this is may of 2018, I was kind of boarding these people with a lot of information for several, several weeks, several months actually, so I had a lot of conviction – in my head I had an unstructured but a fair idea of what is it that we’re going after. I couldn’t draw it on paper but I had a very strong internal feeling and I had to try to diffuse it to the rest of the team as well. 

Rohit: Do you remember who interviewed you? 

Shantanu: Yeah Adam, [inaudible 39:11] 

Rohit: Okay, Adam was also a part of our interview so that was fun. Cool, so you did the interview, you went through YC, anything that you remember during your time there? How being in YC there helped or changed what you were doing, cause there’s a very strong focus on growth when you’re there. 

Shantanu: Yeah, so I think – for sure. YC pushed us to do things that would have deprioritized. I mean YC has this mantra, make something people want, had we not gone to YC, left to us we would have just kept on focusing on the make something, not really double click on the what people want. So, during our time at YC, despite all the heavy focus on growth we did not look into taking any shortcut but we really wanted to understand what people want. And that again meant that we went into a couple of wrong directions, we got knocked down and that’s fine. I think we, firstly I think it kind of reaffirmed our – every time our specific approach failed it kind of only reaffirmed our conviction in the broader general problem and that was like a great learning experience and it also gave us a great opportunity to work with each other fairly very, at times at very close quarters. And then as we can kind of got shot but in our focus, we did get a lot of customers trying out parts of our product if not a whole product, because it’s like the proverbial Reid Hoffman thing - like you start building like an airplane while it’s crashing. We were kind of doing that, but again doing that was helpful because we were putting out some products in front of customers. We are getting feedback on it; we are trying to iterate on it. So that definitely compressed a lot of our timelines, what we would have otherwise taken like maybe 8 months, 9 months a year but it took three months of YC. 

Rohit: Right. That’s awesome and you get through the idea maze. 

Shantanu: Yes. 

Rohit: “Idea maze” to get to the right things faster. 

Shantanu: Absolutely, I think.

 Rohit: And – sorry, you were saying.

Shantanu: No, I think that’s exactly what I meant like we tried several things like we got slapped around, we got knocked down but every time we hit a dead-end. 

Rohit: Right. You know what’s not going to work and get to the right direction fast. 

Shantanu: I think collections again for historical and very correct reason in an extremely regulated space or like lending in general, it’s a very regulated space. So, which means that you cannot dream of an idea and then expect acceptance. You have to be open-minded about the state of the industry, and work with the people in the industry, I think. 

Rohit: Yeah. That makes total sense. So, I am going to check and three more things remaining. I am keeping an eye on the time. So, we have 10 more minutes and 3 more things remaining is now your – how all 3 of you work together, how you divide your responsibilities, your Visa status because like both of them are in India, so it’s just you; and then we will just like to ask for any advice for our other founders. Cool. So, you’ve come out of YC, you raised money and now you have a team. 

Shantanu: Yeah, we have a team, both are in India. Sangram is in India, [inaudible 42:44] and we also work with advisors and contractors who are distributed. 

Rohit: Got it. And how do you, like all 3 of you divide the work? So Sangram and

Saransh are in India and you are in the US, so I am assuming you have the most of the customer? 

Shantanu: I do. Yeah exactly. I think I do a lot of sales. I do a lot of sales. Sangram does like engineering end to end. We’ve since hired a couple of people to help on engineering and then Saransh kind of does marketing and customer support. And then one senior person kind of advice on product. So, I think that’s like the current set up but yeah, we are working across time zones and stuff. Thankfully my time at FundBox prepared me for it because FundBox also has a team at Tel Aviv, Israel but it doesn’t make it any easier. 

Rohit: Yeah and the time difference is day and night. 

Shantanu: Yes. 

Rohit: India is like twelve and a half hours. 

Shantanu: It is twelve and a half. So, I end up going to the office at 6 am in the morning. Basically, I think of it as like I work New York hours, we have our customers on the East coast as well. So, I work 9am EST which is 6 am Pacific till whatever, wherever work gets me. It also gives me a good overlap with the India team. 

Rohit: Got it. And so Saransh does technology and you are all this. Are you travelling a lot for the customers and how do you sort of balance it with having a kid and like breaking it up for -? 

Shantanu: Oh yeah, yeah. So again, knock on wood, but I think the kid has been a delight so far. It’s also very relaxing. So, I would recommend it to you. 

Rohit: That’s a good way of talking to me. We are trying to understand how you work with. 

Shantanu: Yeah, but jokes apart. I think I do travel a lot. My mom was also staying with us for a couple of months so that’s some support for my wife. After that I put the kid in daycare, but I do travel a lot. I do travel a lot to India as well. I am recruiting the India team, I want to make sure that we get the right cultural values to set in place on these, before we kind of do the team and we all get to work with each other. And it’s not like – we don’t work as like two different offices; we work as one team separated by distance; so, I do travel to India a fair bit. 

Rohit: Which is like once a month or its? 

Shantanu: Once every couple of months at least, and then I end up travelling to a lot of customers which are spread all over New York, Atlanta, a couple in Seattle. 

Rohit: And does India team come to the US like interacting with customers and such? 

Shantanu: So, they haven’t yet, but I think it’s definitely something we want to do. Again, B2B enterprise sales affords opportunity to kind of work with customers. A lot of our customers are actually very strong promoters of our product, so given a chance we would any day want to sit down and build a product they really want and you can only – I mean you can do it remotely but it’s really better if you just do it like sitting across the table. So, I do that a lot, like I am on the road talking to customers but it only makes sense, when you have Sangram out here talking to customers and so on and so forth.

Rohit: There is always this debate on whether the engineer should be very close to customers in the same time zone; there is a lot of idea exchange. Iteration is much faster if you have people close by, so how do you sort of balance people not being next to you versus in India? 

Shantanu: Yeah, Sangram stays up pretty late, so thanks to him. 

Rohit: His IIT days - 

Shantanu: Yeah yeah, but he is up till very late in the night. Which gives a good coverage particularly for our East coast customers. He – so almost like if even he is up till 1 am in the morning in India, that’s almost like 3:30 pm in East coast. So, we get that kind of coverage thankfully and that helps. 

Rohit: And it’s also what I have also – we have a few people in India and what I have also realized is that the trust with the person who is running India team it needs to be really high. You should be able to completely and blindly be able to trust that person. 

Shantanu: Yeah absolutely. Sangram is someone I have known for 15 years. So, to that extent we do share a lot of the same values, like we want to set very high bar on - like hiring, very soon hiring… 

Rohit: Right, like making sure everyone understands the processes and the values get transferred. 

Shantanu: But yeah, to that extent having someone like a co-founder who is heading the India office is definitely a big plus. And on the other side, on like customers – so we are actually added customers to some of our slack channels. So, we invited – 

Rohit: Oh, that’s interesting. 

So, to that extent yeah, they will just like ping us and it is a very free flowing conversation and they are like this isn’t working, that isn’t working. Please fix this. It’s a good, like how do customers push us to that extent is like a really good thing. Like Sangram staying up late, takes up a lot of those things. 

Rohit: Yeah, like having that co-founder trust and for people you know for 15 years is quite important especially in cross country times. 

Shantanu: And we have also, that’s one of the things that we have done like a start-up, like we have done a lot of course project together. So, we won’t be able to disagree on a lot of things I think we agree on a lot of the core principles. 

Rohit: Right. And disagreement is good; like there shouldn’t be 100% agreement otherwise you won’t improve. So, you are in the US and your wife is working but what type of Visa are you on because I think it’s also important for people to understand the Visa journey that you have to… 

Shantanu: Yeah, so I was on F1 when I was at Wharton and then I moved to H4 EAD. 

Rohit: Directly? You didn’t go through H1B? 

Shantanu: No, I mean – what to say, I mean like I should never buy a lottery ticket. I applied a couple of times while I was at FundBox for the H1 lottery. I did not get paid but then eventually I just moved to H4. My wife is on H1. 

Rohit: Got it. And I am sure, so she must have an eye on for, approved and waiting for a Green Card. So, during that time you can be on H4. 

Shantanu: Exactly. 

Rohit: So, on H4 you can do a company and it’s not a problem. 

Shantanu: So, if you have the employment authorization. 

Rohit: Okay. Yeah, so that’s the first one actually I have heard. So, I have heard people going from F1 to O1 and stuff like that, but I have not heard anyone doing a company on H4 which is quite interesting. 

Shantanu: Yeah. No, I mean it’s – it is a Visa status that gives you work permit if you are further along in the Green Card process. And yeah, I mean it allows me to start. 

Rohit: Was it ever an issue with the investors or anyone else? Did it come up? What type of Visa are you on? Are you even going to stay in the US or would you be able to do so if they give you millions of dollars and if you don’t have the Visa then you may have to go back to your own country?

Shantanu: It only came on one conversation and for totally under the reason that the investor did not invest in us. But typically, I think I always had a very high conviction about the idea. And we knew that if I wasn’t allowed to stay in the US, that’s fine, totally fine I would move back to India and you would hire a VP of sales to do the work I am doing. But like the story must kind of – the show must kind of go on. That was very clear to me. The other US incorporate company – but yeah, I would move back to India and not be employed in the US. 

Rohit: Yeah, this is what a lot of I guess US citizens – people who. 

Shantanu: They don’t appreciate. 

Rohit: Yeah, its additional dimension of risk. Like you can’t work 24 hours a day and we can reduce that rest. You know I am good. And you went through it, you applied for H1B twice and didn’t get it and that’s kind of disheartening. When I applied for my H1B I luckily got it but I had one in four chances when I applied for my H1BM. You know like it’s I had three in four chances of not getting it and if I didn’t, then it’d be difficult. 

Shantanu: It is. I mean it is definitely something a lot of people worry about. Or on the margin it stops them from exploring the best service. 

Rohit: Yeah, and like once they are employed in H1B jobs, then they have good job, the cost of them trying something new is just so high that it prevents them -. Otherwise I am 100% sure we will have like 5x the number of companies in the US if people on H1B could start companies. There is lot of talent out there that just can-do things. 

Shantanu: Yeah absolutely. I mean I don’t know enough to comment on each person policy but the matter of the fact is that we already employed or like worked heavily with several US citizens and it’s an opportunity. I think we are doing good work, so let’s see what at all life has in store. 

Rohit: Most of our employees are US citizens. 

Shantanu: Yeah, but I mean at every point I feel like once the idea got in my head, I knew Visa wasn’t going to be – won’t stop me from executing on it. 

Rohit: Yeah, that’s actually really great and hopefully it will continue because they bear tax on H4 and… 

Shantanu: Yeah there is a lot of noise around H4. We will figure it out. I think even now like it’s, and yeah, I mean we will always… 

Rohit: But if you are clear in your mind that the company must go on and the show must go on, it doesn’t matter. You will move back to India or you will do something else but your company will. 

Shantanu: Absolutely. Like we are based in the bay area, where we have more engineers in the bay area. The nearest customer is in Sacramento. Again, no customers in the bay area technically but basic thing is I don’t need to be in the bay. I am typically on the road for a couple of weeks in a quarter and just to do like business meetings. So, we will figure out I think if push comes to shove, how to do that. But if I move back to India and if we had like a VP of sales. 

Rohit: Cool. Now that’s super interesting for me to learn too. So now you are a few people and you have a few customers; everything is going well. 

Shantanu: Fingers crossed. 

Rohit: Fingers crossed. And seems like though – I started looking at the product, looked at the website because we do collections in sale. I mean we don’t do it personally but we have agencies and when we partner then we definitely see a lot can be improved and the collection industry itself needs to come into the 21st century and they will pretty soon. 

Shantanu: It’s like the third wave of innovation that it’s definitely going to improve house servicing when collection is done and just like put the consumer in focus. 

Rohit: Yeah absolutely agree. Is there – and so now you have gone through your Bachelors at IIT to MBA at Wharton, like doing the start-up and doing all these things, any key pieces of advice, any things that you learnt over this long and arduous journey of being a CEO and co-founder of a US based start-up that you can share with the audience. 

Shantanu: Absolutely. I think more, more, it’s not – I mean it is not a specific thing but it seems to be a lesson I don’t learn enough, like when I was at BCG, when I was a consultant at BCG, my clients did not care what my undergraduate student degree was. Then when I was looking for jobs after Wharton, most companies did not care that I went to Wharton. They really wanted to know what I would deliver on the ground and by extension I think like going into customer meetings you think that “oh, like I have these brilliant ideas and customer should care for it and reality is that they don’t unless it’s very clear to them what it does for them”. So, it is a lesson that keeps coming back to me in different shapes and forms and something I really, I guess fail to learn but it is still extremely important lesson and not an easy one to learn. So that’s something that I have tried to push myself out of my comfort zone. Like forget what I am offering but like listen really, really hard to what the needs are from across the table. 

Rohit: That’s super interesting. We try to push our ideas onto customers rather than listening to what their needs are and then building the product in that, and then pulling that thread essentially –if a customer tells you about the problem then the immediate reaction should be how can I solve this problem. 

Shantanu: Absolutely. 

Rohit: That’s super awesome and thanks for spending so much time with us from your busy schedule – I know you have to go back home and you have calls and you have the India team. So, I think I appreciate you coming and talking with us. 

Shantanu: Thanks for having me. It was lovely chatting with you. 

Rohit: Okay. Thank you. 

Shantanu: Thanks Rohit. Bye.

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