How to Scale Open Source Software

India’s developer community, currently the second largest globally, is projected to surpass the US by 2027. In 2023, 3.5 million Indian developers joined the GitHub community, bringing the total to 13.2 million. The widespread adoption of open-source technologies among the Indian developer community is notable, with 85% of the country’s internet running on open-source software (OSS). However, the community’s contributions to building such software remain limited. Companies like Postman, Hasura, AppSmith, and Signoz are trailblazers in open-source innovation, and the time is right for entrepreneurs to embrace this model. Despite the potential, a common challenge we have observed among Indian entrepreneurs building OSS products is scaling open-source communities. In this article, we are sharing our learnings from founder conversations that will help entrepreneurs build and scale OSS communities.

Mechanics of open source network effects

Today’s developer tool entrepreneurs recognize the value of cultivating open-source communities around their products. With this approach, they drive product adoption, gather user feedback, and improve their products. Consequently, a new product-led go-to-market strategy has emerged, characterized by the creation and growth of open-source networks. 

An open-source network is characterized by 3 contributors within the network

  1. The project creator is the entity that wants to kickstart an open-source network around a centralized vision. Usually, this is the startup that wants to increase the adoption of its products via an open-source community. The main role of the creator is to write the first lines of code, set an overarching vision for the project, and make efforts to get contributors and users onto the platform. Creators are usually a few in number.
  2. Contributors are developers who add to the codebase of the project and expand its scope and performance. The incentive for them to spend their time and contribute is rarely monetary. Usually, it is the belief in the creator’s vision, the willingness to learn and apply new technologies, and the drive to improve the project for self-usage that drives contributors to improve the codebase. 
  3. Users are individuals who utilize the open-source code in their products according to the scope defined by the creator, which can include both commercial and non-monetary applications. Users are essential in promoting the widespread adoption and application of the open-source project.

To understand the dynamics of an open-source network, let’s examine a minimal viable setup consisting of a creator, a contributor, and a user. These three roles must be mutually beneficial and provide incentives to sustain the network:

  • The creator sets the project vision and mission, which invites the contributor to add to the project codebase. A contributor enhances the codebase, making it more attractive for creators to invite additional contributors and users. 
  • Once the open-source code becomes usable, a user applies it to their products. In return, the contributor benefits from the growing community and the product feedback provided by a user, helping improve the codebase. 
  • A user may also contribute to the project’s reputation by writing reviews, making it easier for creators to attract more contributors and users. Creators might offer personalized support to users to further strengthen the network..

As an open-source network grows and attracts more contributors and users, its potential for success increases. A crucial turning point occurs when super-users join the platform, as they act as both contributors and users. Super-users contribute to the codebase, use it in their products, and improve it, ultimately enhancing the overall value of the open-source repository. Once a substantial number of super-users are involved, the creators can shift their focus from expanding the network to capturing monetary value, by providing personalized support to these superusers.

Strategies for scaling open source networks

We’ll now discuss what are the best practices followed in scaling and launching open source software. There are 4 critical steps involved in scaling an open source network, namely, launching an OSS project, building a community, scaling it, and finally monetizing the product.

Launching an OSS Project

Documentation + Open Source License + Base Code

There’s a lot of effort that has to be put in before you actually launch your open source project. The more prepared you are for the launch, the lower the barriers would be for building your open source community. 

At this step, there is only one entity, that is the creator of the project, within the network. It’s critical to define the project goals and the target audience, similar to what you would do when you build your pitch deck for a startup. This creator’s vision has to be documented as your first entry to the README file, which is the dedicated document for anyone who wants to learn about the project. While the vision is what the project has to look like in a span of several years, there always has to be a starting point, which in this case, would be a functional base code contributed by the creator, that solves for atleast one use case contributing to the overall vision. Given that the code is will be pushed into production, the README file has to be expanded to included the software’s installation instructions and usage examples. 

The creator now has to choose the open-source license and establish community guidelines for the project, to define how the community’s code can be altered, managed and utilized. There are several types of licenses which projects can choose from, depending how they want to use the source code in their projects (derivative code). Several open-source stalwarts, including Apache, Mozilla, and GNU, have launched different versions of these licenses. 

The last step involves choosing  a hosting platform for the code and the documentation, consisting of the README and other file. Github is the most popular hosting platform for open source projects. WIth all this, the creator would now be ready to launch their open-source project.

Building the community

While scaling network effects, starting it is often considered the most difficult step. Given the cold start problem of starting a network, there’s no right answer for how do you do so. Fortunately, for open-source networks, this allows you to be extremely creative in getting your first contributor and users. 

It’s important to create awareness about your project in advance of the official launch date. This involves having an effective and consistent content strategy: blog posts, tutorials, or video demonstrations showing the software’s capabilities and use cases. But just creating content is not enough. It must be directed toward’s the ‘ideal developer profile’ of the project -individuals who possess both interest in the project’s domain and the necessary technical skills to contribute.. E.g. For an open-source LLM for biological modeling, the ideal developer profile would be researchers within biotechnology labs at universities, skilled in bioinformatics. For example, if the project is an open-source Large Language Model (LLM) for biological modeling, the ideal developer profile might be university-based biotechnology researchers with expertise in bioinformatics. 

Open-source events serve as valuable platforms for connecting with skilled and experienced developers in the field. Given the global nature of open-source networks, attending these events can significantly contribute to finding initial collaborators for specific projects. Notable Asia-focused events include Open Source India (OSI), fossAsia, ReactIndia, Angular India, and PyCon India.

Once a suitable number of developers have joined the network, it’s crucial to open it up to end-users. Building a strong reputation on platforms such as ProductHunt, HackerNews, and Reddit can help attract the initial wave of users to the network. By engaging with these communities, you can effectively showcase your open-source project and drive user adoption.

The metric for success in this step becomes achieving the milestone of a 1000 stars on GitHub., which indicates that the community is flourishing with a strong feedback.

Scaling the Community

As the open-source network gains momentum, it’s essential to maintain balance and engagement among contributors and users to prevent potential collapse. Creators must establish clear practices and institutionalize processes to ensure consistency and project identity. Some key steps to achieve this:

  • Hire community managers: Managers will help bring together the growing community of contributors and users, facilitating effective communication and collaboration.
  • Evolve and refine documentation: As the network expands, the documentation should become even clearer, providing comprehensive guidelines for new developers.
  • Optimize creator-developer communication: Creators often use platforms like Slack or Discord to interact with contributors and community managers. These channels enable efficient communication and help resolve doubts quickly.
  • Provide ample resources for newcomers: A successful open-source network should offer enough resources for new developers to get started while maintaining a balanced interaction between creators and community members.

As the center of the network shifts from the creators to the contributors, it is important to create consistent incentive structures for developers. Typically, this involves establishing a mentorship program between experienced developers and new developers. There are certain formal programs like the Google Summer of Code, which empowers experienced developers within an open source community to mentor and share the project’s culture with the next generation of developers joining the community. Other modes of recognizing and appreciating high-performing contributors includes contributor badges, shoutouts on social media, or even leadership roles within the project.

By offering mentorship and recognition, creators can ensure a supportive environment that nurtures growth and attracts talented developers to the open-source network. This helps maintain the network’s long-term success and relevance within the development community.

Monetizing the OSS Project

There are several ways to explore monetization while staying true to the open-source spirit:

  1. Open Core Model involved offer a free, open-source core version. Additional functionalities can be added for a fee. This model applied to both business and consumer end users.
  2. Donations and Sponsorships set up on platforms like Patreon, Open Collective, or GitHub Sponsors help the creators accept donations from individuals and organizations who value your project.
  3. Paid Services such as professional training, consulting, or custom development work related to your software become a source of revenue for these projects. 
  4. Freemium Model provides a limited free version of your software with the option to upgrade to a paid version that removes limitations.

Understanding an open-source project’s monetization strategy involves considering three essential aspects:

  1. Community’s needs and expectations to ensure that the approach doesn’t introduce barriers that may distance the contributors core users. 
  2. Project’s maturity to ensure that its foundation, community engagement, and demonstrated value are at their maximum
  3. Long-term sustainability for development, maintenance, and user support.

Conclusion

Building and scaling open-source networks is a journey that requires strategic planning, dedication, and continuous engagement with your community. By understanding the roles of creators, contributors, and users, you can foster a collaborative environment that enables growth and innovation. To ensure sustained success, create clear practices, incentivize developers, and tailor your monetization strategy to your project’s needs. By leveraging the power of open-source networks and communities, developers can now establish a bottom-up, product led growth strategy for adoption of their products. At Venture Highway, we are big believers in open-source as a catalyst for innovation and global adoption. We look forward to meeting entrepreneurs building such products and utilzing the open-source growth motion to their full potential.

OTPless – Authenticating Digital Users

We invested in OTPless almost a year ago, backing their vision to enable the authentication of digital users. Fast forward 1 year, they have built a full stack authentication platform enabling businesses to seamlessly incorporate multiple authentication workflows in their existing mobile/web applications to authenticate their user’s digital identity (mobile or email). They have expanded beyond India to multiple countries. 

Let’s deep dive to understand the problem statement, solution, and the journey ahead.

Problem Statement

Imagine you’re a B2C gaming platform. You have a new user on your platform trying to sign up. While signing up, the new user faces an OTP challenge (say OTP does not arrive), the user will drop off due to a bad user experience, and you lose the opportunity to convert the lead to a customer. Imagine this happening to 20% of your users landing on your page. Now, that’s a lot!

And this is not limited to just gaming, every company offering Signup/Signin functionality needs to verify a user’s identity every time they log into their app or website. 

A user’s mobile number has become his / her digital identity on the internet in today’s world. Similar to how a person needs a passport (Physical identity) to travel to multiple countries, users need a digital identity (mobile number) to use specific mobile/web applications in the digital world. Also, similar to how immigration is the authentication layer for physical identity, OTP-based verification is the authentication layer for mobile number verification (digital identity)

Authentication of users is a “Must-have” step that companies cannot do away with. However, any friction at this point can lead to losing a lead who has landed on the site or downloaded the app and is present on the home screen. Hence the right balance of authentication and user experience needs to be ensured.

OTPs come with various challenges for businesses & users. These include:

  • Challenges for Business:
    • Broken Outbound SMS – The current SMS infrastructure cannot support rising SMS traffic. On an average, 40% of SMS fail. During peak hours, the success rates are even worse. OTPs are time sensitive and has to reliable.
    • Significant Development Efforts – Need a team to build and monitor consistently given the fast-paced developments in technology.
    • Less Secure – SMS OTPs are relatively easy to hack. Rs. 1,500 Cr lost in 2021 due to OTP Phishing frauds in India alone.
    • High cost of SMS – SMS cost of $120k vs. WhatsApp cost of $40k for 10M authentications.
    • Lower conversion – High friction on Login/Sign-up leads to users dropping off
  • Challenges for users:
    • Remembering multiple passwords: Multiple B2C applications have their unique password requirements.
    • Cumbersome password reset – Many steps in the reset process increases friction.
    • Time-bound sessions – Limited time to enter OTP and delayed receipt of OTPs by users.
    • Additional friction with 2FA – Almost all large platforms & banks require their users to validate their mobile number as an additional factor of authentication, adding an additional step in their onboarding or transaction journey.

While there are many companies like Google, Meta, Twitter, Okta that provide a suite of tools to enable businesses to authenticate their users, they are limited to email-based authorization. 

SMS-based OTPs were first used to authenticate mobile numbers in the 1980s, and since then, no significant shift has been made in this workflow. While efforts have been made to make the flow of OTPs smoother, no new alternative for authenticating mobile numbers has been developed.

OTPless is looking to disrupt this and reimagine the authentication of Mobile Numbers.

Solution & Value Proposition

OTPless started by building a simple ‘WhatsApp Sign-in API’, which could be integrated into a business’s mobile/web app flow as an alternative authentication modality to enable authentication of mobile numbers. It was an authentication protocol to authenticate a user using WhatsApp. 

Factoring in feedback from various customers & users, they have now expanded to become a full-stack identity and access management suite for businesses to provide multiple authentication methods to their end users like Sign in with Google, Facebook, Twitter, Slack, Github, Line, Viber etc. Moreover, the platform offers much-needed functionalities like user management and session management.

The platform is fully customizable, highly scalable and caters to businesses of all sizes, whether they have 10k monthly authentications or 10M. OTPless can be integrated in minutes with your Shopify store, WordPress Site, Android or iOS App. The SDKs/APIs are available for all platforms.

Merchant Onboarding Journey

User Sign-up / Login Flow on OTPless powered Application:

‘Login via WhatsApp’ ensures a seamless experience for end users through:

  • Smooth Sign-up / Login – Two-tap login for users via WhatsApp
  • Removes Re-Authentication – Once a user logs on to any OTPless-powered application once, for any future sign-up / login, the user shall be automatically authenticated without the need to go through the same steps unless the user changes the device.
  • Improved Security – End-to-end encryption of WhatsApp improves security.

OTPless has received a High Degree of Customer Love from its merchants & their users:

  • Across our conversations with Merchants and their end users, the product has been loved, whether it’s their simple onboarding or frictionless experience for their end users.
  • For Users – The product delivers a strong value proposition in terms of high user satisfaction.
  • For Businesses – Ease of integration and exhaustive developer-friendly documentation make integrating OTPless a minute’s job, saving time, effort and cost in development.

Large Market Opportunity

  • Authentication is a large TAM globally – There are 60 bn first-time sign-ups on mobile apps annually across the globe. Repeated logins are 3 – 4X of this. Assuming a cost of $0.01 per authentication (across modalities & geographies), TAM for just Sign-up / Login is $2.4Bn
  • Adjacent use cases provide an opportunity to expand the TAM – Besides Login / Sign-up use cases, multiple use cases are present, which have the potential to add significantly to the TAM like Checkout, payments, workforce authentication, etc.

High Pedigree Founding Team

FounderExperience
Bhavik Koladiya
Exp: Ex-BharatPe Founder (7 Years)
Tanmay Sagar
Exp: Ex-BharatPe founding team, IIT-Delhi (6 Years)
Satyam Nathani
Exp: Ex-BharatPe founding team, IIT-Delhi (6 Years)

Bhavik is a proven founder who has demonstrated his execution ability, having built BharatPe from ground 0 along with his other co-founders. At BharatPe, he scaled the company to a 550+ member team, indicating his ability to drive innovation and attract / retain high talent. He also brings an extensive network of founders / banks / investors / regulators that he built during BharatPe.

Tanmay & Satyam were part of the founding team at BharatPe, where they worked on multiple 0 – 1 initiatives. Tanmay handles all things business, and Satyam handles all things Tech at OTPless.

Traction & Journey Ahead

Within the first year of inception, OTPless has authenticated over 15mn+ users across 4,000+ websites and apps in 15+ countries. With the rapid adoption of this innovative authentication method, OTPless is poised to grow and capture a significant market share in the global authentication industry.

The next phase of growth rests upon 3 key pillars – (i) Expansion to Indian enterprise customers, (ii) expansion to adjacent use cases like payments, and checkouts, and (iii) international expansion – acquiring international customers. 

Code to Cognition: Overview & Trends in Artificial Intelligence

Artificial Intelligence stands at the precipice of a new era, poised to redefine our interaction with technology and catalyze an unprecedented wave of innovation and creative potential.

With the development of foundational models in AI, coupled with the abundance of data, entrepreneurs can now redefine and reshape product experiences across the entire technology spectrum.

India, with its dynamic startup ecosystem, cultural diversity, and extensive operational scale, positions Indian entrepreneurs to build AI solutions that resonate globally while also addressing the nuanced needs of the local market.

Our report provides a comprehensive exploration of AI’s core principles, the evolving landscape of AI products, its transformative potential across industries, and the pivotal themes that Indian entrepreneurs must navigate.

Creative Capital: Transforming Content into Currency

Creators have become central to online media and entertainment 200M+ content creators and brands spending USD 30B+ on creator marketing globally. 

Creators confront three significant challenges: producing content efficiently and generating sustainable income. 

In this article, we will focus on these three critical aspects: creation, distribution, and monetization. We also highlight the growing need for specialized third-party tools in each area.

In our exploration, we observe that distribution is well-managed by giants such as Meta’s suite of platforms, Twitter and LinkedIn. However, there are clear gaps in original content production and novel monetization strategies. Newsletters, in this context, emerge as a powerful solution. They address both distribution and monetization, proving invaluable to creators.

We also touch upon other essential tools in delivery and community management. Though not primary distribution channels, they play a vital role in increasing the value provided by other full-stack solutions, proving indispensable to creators in the grand scheme.

As we unpack these dynamics, we aim to spotlight the untapped potential for content creators looking to thrive in today’s digital renaissance.

As creators evolve, they embrace a multitude of roles

With the profession of a full-time creator becoming a sustainable income avenue, the workflow of a creator has become complex, with critical decisions taken that affect the output generated. These decisions can be divided into the following processes:

  1. Creating engaging content: Content is the primary product of a creator. Building the right content is the most important task a creator pursues that eventually affects the output performance. The key parameters that a creator has to consider while creating content include
    • Mode of content – text (short/long), images, audio, video (short-form/ long-form)
    • Core content of the output
    • Professional editing of the content
  1. Delivering content and building an audience: After content is created, the next step is posting the output and attracting an audience. The key parameters to consider in this step include
    • Platform of core audience – Meta, LinkedIn, Twitter, YouTube, Twitch, TikTok, etc.
    • Time of delivery – when is the core target of a post most active
    • Mode of delivery – email, newsletter, post, tweet
  1. Monetizing on output performance: Capitalizing on the buzz created by the post helps a creator build a steady source of income. Parameters to consider while making monetization decisions include
    • Medium of monetization – commerce, donations, premium content, courses, NFTs, community access
    • Modes of payment – payment gateways, cryptocurrencies and NFTs, etc.
  1. Output feedback and analytics: After an output content has served its purpose, it is important to analyze the performance and extract learnings for future posts. Parameters to consider while analyzing feedback from the audience include
    • Key metrics to be traced
    • Visualization of feedback data
    • Specific insights to be derived

Creators are adapting tools tailored to meet their diverse needs

Let’s look at the types of tools used across the four steps in the value chain.

Content Creation

Text and video are the two most popular kinds of content on the internet. There are different tools used to create both of these forms of content.

Textual Content

Types of tools used to create textual content 

Key insights 

  1. ChatGPT and corresponding derivatives like Jasper and Copy.ai enjoy the most popularity with informative and casual content such as LinkedIn posts, blogs, and articles, Instagram captions, etc.
  2. Twitter is the platform where specialized content is required. Given the constrained nature, making differentiated content is difficult but essential.
  3. Specialized tools are mostly unfunded. The reason for this has to be confirmed using the creator survey. Our hypothesis is that the payment propensity for text-based short-form content is not significant. 

Video Content

Types of tools used to create video content

Key Insights

  1. Highly advanced tools like RunwayML are a bit complicated for creators to use, given that the organization is research-focused. The high-quality output provided by Runway provides an opportunity to build a tool for creators that implement it.
  2. The AI for video development space provides significant value to various industries, and hence, there are several heavily funded players in this domain.
  3. Invideo and Pictory are the ones that specialize in YouTube video generation, which is primarily in the long form. Wisecut is useful for creating short-form videos. There is no one-size-fits-all solution in the market today.

Content Delivery and Community Management

Types of companies providing social media management to creators

Types of tools used for blogging, email marketing and newsletters

Key Insights

  1. Scheduling tools are a critical part of the tool stack of creators since the timing of a post and reshare is a sensitive parameter. There are funded companies created just on scheduling as a use case.
  2. Membership and community management acts as a natural extension and ACV expander for content creation tools or monetization tools. The standalone value extracted may not be significant.
  3. Newsletters and blogs have become a pivotal mode of communication between a creator/brand and its audience. There are several tools to choose from to create the right one-to-many interaction page.
  4. Key purpose of newsletters is to distribute premium content to high-intent content creators and followers and enable monetization on a captive audience.

Monetization

Tools used for monetization and monetary management

Key Insights

  1. Creator commerce platforms have been successful in attracting and serving a large number of creators. Creators have control over the GMV and the products they promote.
  2. Other modes of payment have been ineffective in creating a steady source of income. Audiences would prefer paying for products and merchandise over crowdfunding and courses.
  3. Finance management tools for creators are gaining significant popularity, and startups in this space have recently raised early-stage funding. 

Feedback and Analytics

Most Creator CRM, Audience Management, and Analytics tools are extensions of the other three categories. These tools act as features that extend ACVs.

Opportunity for startups to build content production & monetization tools

In conclusion, while the creator economy is burgeoning, it’s clear that the most significant opportunities for growth and innovation lie in the realms of content production and monetization. 

Tools that enable creators to craft and distribute original, engaging content at a faster pace, as well as those that open up new revenue streams, are poised to define the future of this industry. Newsletters have emerged as a potent force, adept at addressing both distribution and monetization challenges, and are a testament to the potential of specialized tools in this space. 

Other tools that focus on delivery and community management may not be primary channels, but they are crucial in enhancing the value of comprehensive creator platforms. 

The path forward for creators is one of leveraging these tools to not only meet their fundamental needs but also to expand their creative and financial horizons in the ever-evolving digital ecosystem.

If you’re an entrepreneur building creator tools for content monetization and production, we’d love to hear from you. Reach out to Aviral or Parth.

Investing in Kintsugi

In a landmark case related to taxation, on June 21, 2018, the United States Supreme Court ruled in favour of the state in South Dakota v. Wayfair Inc., overruling a longstanding physical presence rule (local nexus) and creating what came to be known as economic nexus which allowed states to require remote sellers to collect and remit sales tax. 

While this led to the widespread & rapid adoption of economic nexus laws by tax-dependent states, for sales taxpayers, it significantly amplified the complexity of an already complicated sales tax regime due to the lack of uniformity in economic nexus thresholds.

To put this in perspective, sales tax collection in the US in 2022 was north of $570B and a failure to comply with sales tax laws can attract penalties ranging from 10-25% of the tax amount depending on the State. That is a $100B problem statement to solve in the US alone & this is where Kintsugi comes in. They are leveraging advancements in AI to build a full-stack sales tax automation platform which can effectively track nexus, accurately predict sales tax liabilities across states, and fully automate the process of sales tax registration, filing & remittance. 

Sales tax compliance in the US can only be solved by automation

Sales tax is a critical source of revenue for state and local governments in the United States, funding essential services and infrastructure. However, the web of sales tax regulations can be intricate, causing confusion and challenges for businesses operating across state lines. The challenges in sales tax compliance are:

Large Volume of rules/regulations

US Sales Tax is levied by US State, County, City and within each city by each jurisdiction. Thus, Sales tax rates vary between streets and are determined by the exact street address. The US has 50 states, 3,100 counties and ~110k cities, each with the authority to levy their own sales tax rate/regulations. For Example: If you purchase an iPhone and have shipping for Zip Code 94305 (Palo Alto) and 94205 (Menlo Park) – you will notice a different tax amount, even though they are just 3 miles apart.

Applicability and dynamicity of tax regulations

The taxability of goods and services also varies across states. E-commerce commissions are taxable in 46 out of 50 states, whereas software sales are taxable in 22 out of 50 states. Some states exempt groceries, and some don’t. Additionally, sales tax laws are always changing. A Senate bill can go in tomorrow, and people could vote, and the law could change, making it impossible for companies to track all the changes. Tracking in a few jurisdictions is fine, but imagine tracking 110k regulations across 10k jurisdictions. Phew!

Tracking local nexus

Businesses must file sales tax returns in every state where they have a physical presence. Post-COVID, with remote working, local nexus also gets established unintentionally in all places where team members work remotely. This increases sales tax compliance even though no business activity/transaction exists.

Tracking economic nexus is very complex

On June 21, 2018, the United States Supreme Court ruled in favour of the state in South Dakota v. Wayfair, Inc., which overruled a longstanding physical presence rule, allowing states to require remote sellers to collect and remit sales tax. This meant if a seller had a physical presence in New York and sold to a consumer in San Francisco (where there is no physical presence of the seller), the seller would still have to collect taxes in both New York and San Francisco and remit to respective governments. With the economic nexus, the complexity increases exponentially – businesses need to track new jurisdictions where they might have sales tax compliance, ensure appropriate tax rates are levied on invoicing in each jurisdiction of the economic nexus and file returns in each of those states.

Cumbersome filing procedure & high cost of non-compliance

Sales tax portals are confusing and outdated. Most don’t have two-factor authentication or single sign-on (SSO). For a business to keep track of all the portals’ credentials, the sales tax deadlines and the changing laws is very cumbersome. The cost of non-compliance is high. 10% of tax due + 1% for each month’s delay, capped at 30% of the tax due.

Kintsugi aims to solve compliance by building a full stack ‘predictive’ sales tax platform

Kintsugi is building a global sales tax compliance tool that enables businesses to automate US sales tax compliance. Kintsugi sits at the origination/source of the transaction (like billing systems):

  • verifies each transaction through its real-time database of rules from 110k+ jurisdictions, 
  • tracks local nexus / economic nexus on a real-time basis, 
  • identifies appropriate tax rates for invoicing and 
  • during month-end helps with one-click remittance and filing of sales tax returns in each applicable state.

In addition, Kintsugi has also built an LLM which is trained across all Sales Tax regulations across 110k+ jurisdictions. This acts as a 24/7 support tool for tax professionals and finance teams.

With its 10-minute onboarding, seamless workflows and real-time support via LLM, Kintsugi is already becoming a go-to product for sales tax compliance for companies of all sizes in the US.

We believe this is an exceptional team solving a large global problem at an inflection point

We are proud to partner with Pujun, Barkin and Jeff at Kintsugi as we believe this is an exceptional team in terms of talent, experience & purpose. 

  • Pujun brings strong AI/ML experience, having worked on indexing/ranking of Facebook stories and many ML research projects for Google/Meta. He also worked at Stanford AI Labs alongside Andrej Karpathy. Pujun completed his undergrad from Georgia, MS from Stanford and dropped out of the MBA at Harvard. 
  • Barkin brings product manager skills and domain knowledge, having built similar products previously at Earnest Research. He also brings a strong finance background, having spent over 5 years at Credit Suisse & Goldman Sachs, and is currently pursuing the CPA program in the US. Barkin is a graduate of Elec & Comp Science from Yale and is an MBA from MIT Sloan.
  • Jeff has spent over a decade working in technology, software engineering & data engineering. He brings a wealth of experience as an Engineering Manager at Atlassian and ex Co-founder/CTO at MonetizeNow. Jeff holds a BS in computer science from the University of Montana. 

What we really like about this team is that they strongly complement each other and bring significant talent/experience in all three aspects of tech, product and business development skills. We also believe that their energy is infectious, their vision is grand and their execution capabilities are exceptional. 

We also highlight some of the other areas that really excited us about this opportunity:

Complex & dynamic problem with a large addressable market 

The state-by-state variability, nexus determination, taxability of goods and services, economic nexus laws, filing and reporting requirements, and evolving legislation collectively create a maze that businesses must navigate to ensure compliance. 

We estimate a Serviceable Addressable Market (SAM) of c.$3-5B by 2028E, considering only the US E-commerce & SaaS businesses as ideal customers for Kintsugi. We also believe this is a truly horizontal product as the problem is sector-agnostic & global and has the potential to create a larger outcome.

Demonstrated success in the category & limited competition provide a large opportunity for a new player

There are few players in the category – long-standing tools like Avalara or more recently built tools like Anrok. This allows a new player an opportunity to reimagine sales tax compliance to make it more seamless, predictive and automated.

Avalara – Currently at ~$750M ARR. IPO’ed in 2018, reached a market cap of $19bn and was later acquired by Vista Equity Partners for $8.4 Bn in 2022. This demonstrates that the market opportunity is large.

TaxJar – Acquired by Stripe in Apr 2021. Currently available only for Stripe customers. Had raised $60M at $180M valuation from Insight Partners. They were at a scale of $40M approx during the fundraise.

Anrok – Raised $20M from Sequoia. Close competitor. Focused on SaaS. Need for new players to incorporate the new dynamism of economic nexus and other shortcomings of existing tools

Strong execution focus and high-quality early traction

In under 6 months, the founders have achieved strong outcomes: they have single-handedly built a robust, soon-to-be SOC2-compliant, product and have set in motion key GTM strategies/partnerships like marketplace listing, tax consultant partnerships, direct outreach and state partnerships.

In a short span of time, they have gained 25 paying customers, including a large enterprise client and have built a very strong sales pipeline driven largely by strong inbounds. 

If you are also dealing with the complexities of sales tax and are keen to simplify sales tax compliance so that you can focus on building & growing, try out Kintsugi or reach out to pujun@trykintsugi.com to learn more!

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Investing in EzDubs

“Wie geht es dir?”

“I am good”

“Was ist dein Plan für heute?”

“I plan to read more about EzDubs!”

We’re pretty sure you put parts of this into Google Translate. But what if you could talk fluently, in real-time, to a German, in German?

That is the audacious goal of EzDubs.

We met Paddy, Amrut and Kareem, expecting them to have an asynchronous dubbing solution. As we tested the product, we uploaded one of our videos into EzDubs. We got our output in 10! 10 seconds, not minutes!

The latency of EzDubs was exceptionally low. In a market where latency is easily as high as 10 minutes, EzDubs had created “wow”. The founders’ deep experience building and researching in AI/ML for a collective 30 years showed. The trio had worked at Cisco, doing their masters  in audio and speech machine learning from Columbia University.

The team saw a big opportunity in creating real-time translation. They identified a new underlying wave due to the creation of LLMs and exponentially increasing computational power. Real-time translation would now be possible, as easily as an app on your device. EzDubs was targeting a huge opportunity.

Translation services is a $45B market globally. Most translation services involve a human in the loop. The reason is accuracy and the need to preserve emotion, tone and rhythm. Known as prosody, the preservation of prosody through a machine is hard. Dubbing services charge as high as $500/hour, taking days due to this difficulty.

Imagine the unlock if you could do this in 1/5th the cost in a few seconds. EzDubs saw the power of low latency almost instantly. 

EzDubs launched their tool for free via a Twitter bot to test their hypothesis. To say that it grew explosively is an understatement.The bot initially found pockets of fervent users like Indian football fans wanting to hear Messi’s world cup interviews in Hindi, and within a few months, it had grown to 100k followers, becoming one of the fastest growing AI bots on Twitter . Much larger, well-funded text-to-speech tools existed, yet people signed up for their dubbing service without a penny spent on marketing. Large enterprises found EzDubs thoroughly impressed with the output.

A flood of generative AI tools has emerged alongside EzDubs, doing audio, image, marketing or code. But many are essentially a UX layer built on top of a large language model. EzDubs, on the other hand, is building its audio model from scratch for real time sub-sentence translationa far more complex and ambitious approach. This will truly revolutionize how we communicate with each other in a multilingual environment.

Despite the love for their early product, the team believes they are just getting started. Paddy, Amrut, and Kareem’s conviction in an audacious goal, product thinking and technical horsepower made a compelling case for us.

Wir freuen uns über die Partnerschaft mit EzDubs.

Bits, Bytes, & Barriers: A Start-up’s Blueprint to Stand Out in Digital Defense

The current state of technology worldwide has made cybersecurity solutions a necessity over the past decade rather than a mere optional value addition. This necessity applies to not just larger organizations managing trust for millions of users but also small startups storing personally identifiable information of their user base.

Technology shifts, such as the internet, the smartphone, cloud computing, and now AI, have led to an increasing span of cyber attacks across different cyber assets. At the same time, these shifts provide opportunities for tech entrepreneurs to push the limit and build groundbreaking security solutions. To understand the upcoming trends in enterprise cybersecurity software, let us first look at how the industry evolved. 

The cybersecurity industry is almost half a century in the making

The commercial cybersecurity industry has been growing rapidly for almost half a century and shows no sign of slowing down. At the helm of the ARPANET, a predecessor of the Internet, the “Creeper” was the earliest rendition of a computer virus, operating independently of human control. Thankfully, the “Reaper”, the earliest version of an anti-malware program created by the inventor of the email, eliminated the Creeper.

While both B2C and B2B cybersecurity software were blooming during the 80s, the most powerful security systems were in the hands of the government, responsible for protecting both the software and hardware of the emerging enterprises of the 20th century.

The internet, the cloud, and the smartphone are the three tectonic shifts that forever changed the face of entrepreneurship around cybersecurity. The rising access of the general public to the internet after its onset in the 90s paved the way for cyber attackers to penetrate systems that seemed a distant dream before. With government systems unable to cope with the rising frequency of attacks, entrepreneurs coming out from the recently established big techs found an opportunity to create an industry.

Bottom-up thinking led to the creation of consumer-grade antivirus and antimalware software. However, this approach of creating single-dimensional products for both consumers and enterprises proved detrimental. Cyber attackers evolved, and their tech evolved with them. No matter how antivirus software was updated, attackers always seemed to be one step ahead.

Inefficiencies in on-premise models laid the foundation for cloud computing in the early 2000s. The digitization of businesses created the need for shared computational resources and reduced complexities.

While legacy antivirus players profited, some nifty technocrats noted the need to ringfence enterprise systems. One such company, Palo Alto Networks, launched a highly intelligent “enterprise firewall” as their first product. Riding the wave of cloud computing, it became a catalyst for migrating legacy on-prem infrastructure to cloud platforms, providing trust and security for digital assets. Today, Palo Alto Networks is the largest cybersecurity company in the world.

When smartphones became popular amidst the world’s largest recession, the interactions between end-users and enterprise applications on the cloud became mainstream. Companies needed a way to open the doors of potential customers onto their applications without compromising security. This paved the way for Okta, an identity and access management company, to build products enabling security between the application and the user, such as single sign-on and multi-factor authentication.

Constant innovation and the creation of large companies in this field have made cybersecurity a playground for the next generation of entrepreneurs.

Security has become a must-have for all organizations

Over the past decade, the importance of security has evolved from being a less emphasized requirement to becoming a crucial priority for both enterprises and organizations. This shift has been propelled by several factors, including the widespread adoption of external software and applications, the growing volume of data usage within enterprise and mid-market companies, and the digital transformation of the employee lifecycle. As a result, cyber-attacks and data breaches are no longer just technology concerns but also significant business risks.

Furthermore, regulatory constraints and increased awareness among end consumers have heightened the demand for more effective cybersecurity solutions and products. Cybersecurity startups have experienced a substantial surge, with numerous entrepreneurs launching innovative solutions. Investors have recognized the potential in this sector, making enterprise security SaaS a prominent focus for investment.

Security holds varying levels of importance for different roles within an organization. The following summarises how diverse user personas approach and view different products in this context.

Going downward in the organizational hierarchy of security personnel, from CISOs to data engineers, translates to decreasing contract values. The go-to-market strategy also transitions from a pure-play sales-based approach driven by an executive network to a product-led open-source approach, building credibility around a nifty product.

Consequentially, an expanding market drives further innovation in this space 

Security in the digital realm is of utmost importance for specific industries, while it lurks as an implicit necessity for others. These sectors encompass a wide spectrum, including banking and financial services, information technology, manufacturing, healthcare, retail, government, telecommunications, media, entertainment, energy, utilities, and defence.

Enterprise cybersecurity software’s Total Addressable Market (TAM) quantifies organisations’ cumulative investment within these prioritized verticals to fortify their digital defenses.

By adopting a top-down approach, one can gauge the TAM to be approximately USD 350 billion, representing a colossal and steadily expanding opportunity for enterprises.

Intriguingly, the cybersecurity market is far from homogenous; instead, it is highly fragmented, with a substantial portion of cybersecurity resources allocated towards in-house product development or the engagement of external experts.

Surprisingly, the collective revenues generated by the top 8 cybersecurity firms merely scratch the surface of the global cybersecurity spending pie. Given the vastness and fragmentation of this market landscape, cybersecurity presents an alluring domain for entrepreneurs seeking to embark on new ventures and craft innovative solutions.

Nonetheless, considering that cybersecurity revolves around a singular objective with numerous avenues of approach, it becomes an arduous challenge for emerging companies to carve out a distinct competitive advantage or a clear path to success within this industry.

Cybersecurity entrepreneurs have to be creative to capitalize on this opportunity

After evaluating over 100 cybersecurity startups in India and the US, we’ve realised that the only way a new startup can capture the cybersecurity market significantly and differentiate itself is via moats that catalyse trust with security teams. There are four such moats:

Cross-sell motion

Established cybersecurity stalwarts initiated their journey by crafting a select few products, gradually amassing an initial clientele of enterprises. Over time, they expanded their product portfolio, strategically offering new solutions to their existing client base, bolstering their Average Contract Value (ACV).

The allure of a comprehensive, all-encompassing cybersecurity solution lies in its ability to create customer loyalty, shifting an organization’s focus away from security concerns and towards other revenue-generating endeavours.

Many startups in this domain have embraced a similar trajectory, leveraging this approach to achieve substantial growth and significantly elevate the barriers to client switching. Notable examples include companies like Palo Alto Networks and Fortinet. Conversely, a few well-established enterprises like Akamai have augmented their ACV by incorporating cybersecurity offerings into their pre-existing suite of synergistic services, such as content delivery and cloud operations.

Since many of these comprehensive solutions have already attained a full-stack status, the landscape has become increasingly challenging for newer startups seeking to replicate this level of diversity and scale.

Distribution and Domain Expertise

Another prevalent approach to achieving scalability entails developing case studies within specialized domains, building a reputation for domain-specific expertise, and securing additional clients within that niche. A notable illustration of this strategy is exemplified by Leidos, a comprehensive engineering platform that has cultivated a deep well of knowledge and proficiency in specific sectors, such as defence. Leidos collaborates closely with defence firms and government entities to safeguard their digital assets.

Similarly, many versatile cybersecurity solutions have meticulously crafted robust security offerings tailored to the unique demands of critical verticals, including fintech, healthcare, and retail. This has restricted the manoeuvring space for emerging startups aspiring to scale through this method, as the landscape in these domains is already well-saturated with established expertise and solutions.

Ease of Use

Given the inherently technical nature of cybersecurity products, their utilization often proves challenging for individuals lacking specialized cybersecurity training. This creates a notable opportunity for startups offering products and tools with ease of use, straightforward deployment, and comprehensibility.

One striking example of this competitive advantage can be found in Okta, a company that honed its focus on a specific category – identity and access management (IAM) – and developed products renowned for their user-friendliness. This strategic emphasis on usability propelled Okta to attain widespread adoption within the IAM sector.

Similar arguments hold for companies like Drata and Vanta in Governance, Risk Management, and Compliance (GRC) products. These firms have elevated their Average Contract Value (ACV) by delivering an exceptional user experience by automating compliance processes for standards like SOC2, ISO27001, HIPAA, etc. Their success is underpinned by a commitment to simplicity and usability, setting them apart in the competitive landscape.

Integrations

Another pivotal factor that contributed to Okta’s success was its extensive array of integrations with SaaS applications. By offering organizations the ability to bolster security on widely used enterprise applications seamlessly, Okta enhanced user experiences and established a compelling acquisition incentive.

In a landscape where the utilization of SaaS applications continues to surge, the prospect of offering such integrations emerges as a potent mechanism for newer companies to attract and retain customers, potentially becoming a synergistic driver for their growth and success.

AI will increase the efficacy of identity protection and cloud security software

The objective of bad actors in cybersecurity has shifted from spreading malware and breaking systems to entering systems in stealth and getting access. Over 70% of adversary activity was identified as malware-free in 2022 compared to 40% in 2019, indicating a move beyond malware to get initial access and persist.

Access brokerage has taken off over the last two years. All these are indications of increasing interest and propensity for identity attacks. Identity and Access Management continues to remain a top priority for organizations. While tools in this space have undergone significant and rapid technology transitions, Artificial Intelligence is the key to creating foolproof privilege access and identity management systems. 

With the ability to find patterns in data quickly and efficiently, AI will enable accurate and real-time detection of threats with much fewer false positives. AI-based security tools serve as an opportunity for upcoming entrepreneurs to redefine legacy cybersecurity tools by building smarter tools capable of making adaptive decisions to eliminate live and new threats based on threat data collected over the last two decades.

AI can significantly improve identity protection with the ability to model the digital behavior and intent of every employee within an organization as well as every customer of a company. Penetration testing becomes robust, and strategic decision-making by CISOs becomes much more informed with AI-driven simulations of social engineering attacks. With data and cloud becoming the most critical digital assets in an AI-first world, startups building unique data and cloud security solutions have great potential to scale globally.


The persona of founders building cybersecurity tools has also been changing consistently. Unlike at the beginning of the millennium, when cybersecurity tools could be built only by industry veterans who had strong relationships with clients, understood the space, and had access to enormous datasets, the coming decade presents an opportunity for young and highly talented entrepreneurs to leave their mark in the security industry.

While enterprise sales will remain the preferred go-to-market strategy for most experienced founders, the increasing acceptance of open-source security software will allow product-led growth for security tools built by founders right out of college and build credibility. Trust is key within the cybersecurity ecosystem, and an open-source strategy allows you to create that trust with strong evangelizers in the tech community and without any prior experience to show your credibility.