Episode 417: From Nine Rejections to Two IPOs

Corey KupferBabu Sivadasan is a serial entrepreneur with deep experience building and scaling public companies backed by a strong engineering foundation. Prior to joining Jiffy AI, he co-founded Envestnet and stamps.com, helping shape category-defining platforms in financial services and commerce. As an active angel investor and mentor, Babu supports startups across Silicon Valley and India. He's passionate about driving digital innovation and applying technology to solve complex business problems at scale. Babu, welcome to the podcast. You are listening to the DealQuest Podcast, a dealmaking podcast and M&A podcast, and I'm Corey Kupfer.

Babu SivadasanThank you for having me, Corey.

Corey KupferWell, so listen, obviously those are some great companies. People generally, I'm sure, have heard of stamps.com. I remember that company. And then certainly, no question, a lot of our listeners who are in the wealth management space know Envestnet. For the many financial advisors and RIA owners who listen, this one fits right into what this financial advisor podcast and RIA podcast is all about. But before we go into all that and your experience and what you're doing currently with Jiffy AI, I want to take you back to when you were a little kid growing up, maybe eight, ten, twelve years old. What did you want to be? 'Cause I'm guessing a serial entrepreneur and tech person might not have been it, but you tell me.

Babu SivadasanNo, not in my wildest imagination. Actually I explored many things. I had a passion for engineering back then, a curiosity towards building stuff, and always tried to build little things at home. I was always fascinated by that. But as I was growing up, I thought, OK, becoming a physician may not be a bad idea. I explored that a little bit, but my passion was still building stuff, so it gave way to the engineering profession.

Corey KupferLove it. Love it. So one other question looking back, what was your first deal of any type? Whether it was early in your career or something when you were younger, whatever you consider a deal, the first one you ever did.

Babu SivadasanFirst deal would be getting a job, somebody taking a chance on you. I had a lot of difficulty landing my first job. For whatever reason I used to be a pretty good student, and the struggle to land my first job after graduation, I think I was rejected by nine firms before I landed my first gig. And so landing that was my last opportunity straight out of college, and I kind of aced it. So that was probably the best deal. I still remember that.

Corey KupferWell, considering what you've accomplished since then, it's kind of amazing looking back that you had that kind of trouble. So let's talk a little bit about the journey, right? 'Cause the two that I mentioned in the bio are phenomenally interesting and successful rides, companies that raised capital, things like that. So tell me a little bit about that journey of being involved with funded companies. Capital raising is a core topic here, and founders of every kind bring it up on this capital raising podcast.

Babu SivadasanYeah, so because of the difficulties I had landing my first gig, by the time I actually got my first job I had developed some deep conviction that, OK, this is happening to you because you're not meant to take a job. Instead, figure out a way to create jobs, and create a job for yourself first, and then along with that, if you can, influence and be impactful to a lot of other people. That was the passion. So by the time I actually started working, that deep conviction that you're meant to do something else was deeply in there. So I explored a bunch of things, a bunch of ideas, various things. And as soon as I came to the US, I started exploring many ideas. None of them actually worked out. Then I got an opportunity to work together with my mentor at that time, one of the other co-founders with stamps.com, and we had a team of six people actually. So it was a side project. We worked on a patent application. Pretty much the idea was you can take any piece of software and make it a subscription product. So that was the original thesis, and looking for applications for that IP, we landed on the stamps.com idea as part of that journey. Initially, yeah.

Corey KupferBut what year was that?

Babu SivadasanIt was '95. We started working, actually '96, we started working on the ideas and things like that. Initially we struggled quite a bit, and then out of nowhere became a public company. It was one of those, we were at the right place at the right time, I guess.

Corey KupferWell, I appreciate when people are humble, and obviously timing does make a difference. But trust me, we all know it's much more than right place, right time, because there are plenty of people who were in that time as well, in tech, and they didn't have the success that you did. So the reason I asked, I wanted to make clear the timeline on it, was because nowadays, if you're in the entrepreneurial world, if you're in the tech world, the idea of subscription has become pretty ubiquitous, and the understanding of recurring revenue and the value of that and how it builds enterprise value. That matters in M&A transactions too, because recurring revenue has a direct effect on deal value. But listen, I was around well into my career in the nineties, and that was a newer conversation back then. Yes, the general concept of recurring revenue being better than transactional revenue has always been sort of around. But when I count up the joke of how many subscriptions we all have now, right? That wasn't the case back then, right?

Babu SivadasanYeah, that wasn't the case back then. But if you look at companies like Microsoft at that time, they were kind of doing a subscription business by forcing you to upgrade every year. In fact, when we got that patent on taking any piece of software and converting that into a subscription software, basically we altered the software with usage-based metering. As long as you paid, the software would work. The moment you stopped paying, it would stop. That was the idea. And then we thought the software industry would embrace that. We were trying to solve the problem of accessibility. In those days, 300 bucks to buy office software, or 350 at that time or something like that. We thought in 1999 or 999, whatever that is, would have been much more accessible to a broader set of people.

So most of the software companies at that time, when we pitched to some software companies, they countered. They would say, we are already a subscription business, because we are selling you upfront for 350 bucks and then every year we are forcing you to upgrade for another 200 bucks or whatever that is. You're asking us to take a cut, is how they felt. We pitched to a number of firms at that time and didn't come away with anything to show for it.

Corey KupferWow. It's really interesting, because for me there's a lot in there. Pitching a new model to entrenched players is a negotiation in itself, and that kind of story comes up often on this negotiation podcast. One of the things, I just saw some video online, I know what it was, it was a Simon Sinek little clip of an interview, and he was talking about these various industries where it wasn't the people within the industry that disrupted the industry, it was the people from outside the industry, right? It was Apple. Apple wasn't a music industry company, but they obviously disrupted music totally, right? You gave us several other examples I won't go into. That's just an example where the usual entrenched players, if their model's working for them, there's resistance to something new. This is exactly why strategic deals and partnerships with outsiders can be so powerful.

I remember in the nineties as well, I was doing some deals in the health club industry, right? And back then the health club industry would be almost similar, it was parallel. They'd lock you in for a year, and then in some states where you're allowed they'd have automatic renewal after a year. Some states they'd have to resell you and resign you, right? And then I think it was Equinox and New York Sports, I'm trying to remember if it was, one of those players came in and switched their model to this monthly recurring, and part of it came in also because technology was coming in where you could just bill people, hit their credit card on a recurring basis. But the difference was there was some resistance there as well, because they said, wait a second, you're going to let people cancel on thirty days notice? We have them locked in for a year. And what the industry learned was that actually their retention rates went up significantly, even though people could cancel every month as opposed to every year, because they didn't have to resell. It wasn't a big ticket every year. It was a recurring thing. And especially in the gym industry, they had the advantage that somebody's got to admit to themselves they're not going to go to the gym anymore and take an active step to cancel, as opposed to having to re-up, right? So it's a similar conversation. And I think obviously it's proven itself out by how many subscription models we have. And I'm going to out myself here. I believe I've been paying for two Hulu accounts for several years and I keep saying I've got to double check that, because I think my wife signed up for one, I always signed up for one. Whatever it is per month, and there's always a priority thing, and I think I'm still doing that.

Babu SivadasanYeah, and how many times do we sign up for something that is free for seven days and then they hit you with a subscription, you don't even realize. We all, human beings by nature, we are lazy people. So these things go on forever. And nowadays there are software products that will track these subscriptions if you upload or sign in with your credit card accounts and things like that. I think putting it on the credit card is the biggest problem. It just gets automatically charged and you never realize.

Corey KupferWell, we'll get back to deals in a moment. But I am pattering myself, literally two hours ago I signed up for ESPN Plus because I'm a Knicks fan and I wanted to watch the Knicks playoff games, and then they did hit me with another month. And I just realized, next season's over, I don't think I'm going to use it for a while. So I actually didn't cancel it. I actually did cancel it. So OK.

Babu SivadasanYeah, exactly. Same thing with the World Cup. After next week, unless you're really, really fanatic about soccer, you don't need that subscription.

Corey KupferSo let's talk a little bit more about, staying on the stamps.com journey for a while. In terms of capital raising and things you had to do, 'cause we mentioned that it went on to become a public company, talk to me a little bit more about that journey on the deal side, the fundraising side, or whatever else you needed to do to get it to that point. Understanding how deal structuring and fundraising actually work is useful for anyone doing M&A deals.

Babu SivadasanYeah, so at that time I was more focused on technology, so my partner pretty much did a lot of the work in terms of fundraising and things like that. But it was tough. None of us had built a company. We thought we had some good ideas, but it's always tough, and we struggled to raise money. We were invited to participate in the program with the Postal Service. We were the only one with a software-based solution at that time. Everybody else had a hardware dongle that you download postage to, whereas we had a unique software-based model, which is a derivation of our patent application. That was the idea. But it was tough early on. We'd never raised money. Personally, I would not even know how to talk to an investor. I can speak technology, but I would not ask for money. So anyway, we raised a couple million dollars. We were desperate at some point, but then never looked back. Again, as I mentioned earlier, being at the right place at the right time.

And so we started the company with the name Stamp Master, but then dot-com was going off well, so we changed the name to stamps.com at that time. I was more focused on trying to build the technology, like the e-commerce, putting money on the cloud. And I remember buying a PC and installing all the software and then taking it. I've always lived in the Palo Alto area, so my partners were in LA. I put it on a piece of computer that I bought the day before and we were trying to do a demonstration. And then I realized, it's not that I didn't have the... I bought the computer but threw away the container and things like that. And so I put it in my suitcase. By the time I got there, landed in Burbank, it was fully damaged. The computer was OK, but I could get my software app. So my partners were waiting to see the demo and so I could manage the demo, but it was those kind of funny things that you do. But we had good technology, so we had a good team. And we had demonstrated the product, and one thing led to another. As I mentioned earlier, right place at the right time. We were selected and then a lot of money chased us and we became a public company in no time.

Corey KupferSo many companies in that area, it's very classic to have at least one tech founder, right? And like you said, your partner focused on the business side, raising the capital. And obviously I've seen many situations where non-tech folks have great ideas and they come out, and especially in the VC and PE world, a lot of times they'll say, yeah, we're hiring people with technology. One of the questions I'll ask is, do you have a tech founder, somebody who really knows, who's vested, who's a partner? Because it's hard for non-tech founders, no matter how smart business people they are, to just outsource that. Without a tech founder, the companies are a lot less likely to get funded. That investor perspective comes up a lot on this private equity podcast.

Babu SivadasanYeah, one of the things, as part of pitching to anybody at that time, you're asking for a million dollars, how are you going to spend it? What computers are you going to buy? How are you going to put it up? In those days, Exodus was one of those hosting providers, so everybody had an Exodus account and you had to figure out how to host it yourself. These days you rarely do that. In those days you had to buy the machines, install them, and then take it to a place like XLS Communications at that time and run the software there. I remember being in the data center, that feeling, the conditions there, because if you don't plan properly you're installing, you're doing all those things inside the data center, and it's not fun to be inside the data center for too long.

Corey KupferI've got to keep that place cold. All right, great. So listen, you have this journey. It's amazing to think, you have trouble getting a job, you decide you've got to create it and figure it out on your own, you go through that classic startup journey, challenges, and many, many companies, you got through those and ended up a public company. I think people who are less informed don't understand the tiny percentage of companies that actually successfully go all the way through that journey to IPO and become public. Many companies fail, or even the ones that don't fail, maybe they do OK and they continue to operate or they get acquired. But everybody, especially in tech, the goal is the IPO, but the percentage of companies that really get there is so small. Whether the exit is an IPO or a sale, it is a regular topic on this business exit podcast.

Babu SivadasanYeah, absolutely. Success rates are pretty low, right? Less than 5%. Yeah. I didn't expect it to go well. You try many things and sometimes you get lucky. So one thing I did as soon as I came to the US was... because I didn't want to leave my hometown. I grew up in a beautiful place called Kerala, in the southern tip. Have you been to Kerala?

Corey KupferI haven't been to Kerala. I've been to India, but not to Kerala, but I've heard amazing things. It's supposed to be phenomenal.

Babu SivadasanYeah, it's a beautiful place, and I thought I'd never leave. But I resented the fact that I had to leave, looking for a job. As soon as I came here I started doing some consulting gigs and things like that. At one point I worked on three jobs simultaneously. And the first thing I did, the very next month I came to the US, I set up a small team in my hometown in Kerala. So I had that going as well. We were experimenting with a lot of ideas and things like that. But all my salary went to fund the team, because that's the only thing you have, time, if we can apply it. So I was able to do that, and we were able to experiment with a lot of good technology ideas. A lot of them didn't make it, but you still try.

Corey KupferAnd listen, the people who are either born entrepreneurs or situational entrepreneurs or whatever it is, I think that's the biggest difference. I don't know an entrepreneur who said, even if their first idea hit, which is usually not the case, there's always challenges along the journey. It's never straight up and to the right. So well, great. So all right, then did you go directly from stamps.com to the Envestnet opportunity, or was it something in between? How did you exit stamps.com, like what happened with that?

Babu SivadasanYeah, so right around the time stamps.com was going public, a small founding team, we decided to try our luck on another idea, which was taking the same technology and applying that to video distribution or audio distribution and things like that. And I thought, OK, this was a great idea, you have conviction. But we were way too early. We had the capital, we were all flush with a little bit of cash, so we said, OK, we're not going to raise money, we're going to fund it ourselves. And so we worked on it for a year and a half. But just when we were getting all this technology ready, the dot-com industry crashed, so we couldn't. And our idea at that time was the Netflix on-demand type, a streaming service, again a subscription product, where you can browse a catalog and watch a movie after you come home. But we were way too early to actually execute that.

Corey KupferSo was this before, wasn't Mark Cuban at Broadcast.com, right? Pretty early, right?

Babu SivadasanYeah, they were more like a directory of services, broadcasting, streaming channels and things like that. They had the software to create the early versions of podcasts and things like that. What we were trying to do was get licensed movies, and that's why I refer to Netflix on demand. Back in the days, Netflix had just started and they were shipping DVDs. We used to joke, what are these guys doing shipping DVDs when they should be streaming? But obviously a lot of smart people there figured, OK, you've got to wait five, six years. Back in the 90s, a DVD player was one cool innovation, so a lot of people were buying DVDs, and renting it didn't seem like, OK, go to a portal and say you want these three movies and get those DVDs shipped. People were OK with waiting, but we thought...

Corey KupferEspecially because they were the innovation on Blockbuster, where their big thing was no late fees, right? They just wouldn't ship you new DVDs until you returned the old ones. And you didn't have to go out to the store like with Blockbuster. I remember that. And I also remember when Netflix did move to streaming, there was all this pushback from some of the people who were afraid they were going to get rid of the DVDs. And they overlapped for a while, right? You could still get the DVD shipped. But it's so funny, because some people were like, no, no, no, I don't want to lose the DVD.

Babu SivadasanYeah, exactly. And so we were all pretty disappointed. I didn't do much. We couldn't pull it off. I was looking for another idea to work on. Wealth management was accidental. A friend of ours got me connected to a couple of other people who were trying to work on a similar... well, actually they were exploring... my partner at that time, a gentleman by the name Siva Suresh, and Karen McHugh and Suresh Kulajal. We had a team of four. So we were trying to figure out how to take wealth management to the cloud at that time. And especially my other partners were from the wealth management industry, so they were looking for somebody who could build the technology and things like that. So it was a nice combination. Again, as usual, you struggle early on. And then in 2004 we merged with a competitor of ours at that time, a company founded by Jared Bergman. And the combination worked great. We had very complementary skills. We had a strong operating infrastructure and technology, and Jared had built very phenomenal boots on the ground working with advisors. So the combination was very, very powerful.

Corey KupferAnd that's another great thing. One of the things that I often talk about, there's a talk that I do pretty frequently called There's a Deal for That, right? The concept is any business frustration, challenge, or issue, there's a deal for that. Doesn't mean you should do it, but often I'll ask people, they say, we have a great technology, we're having trouble getting distribution for it, or we want to get into this particular industry but we don't have the connections, and I'll always say, OK, well, who does, and what kind of deal can you do with them? Is it a merger, is it a business partnership, is it a strategic alliance, is it a distribution deal, is it a JV, a joint venture of some sort? There's a million ways you can do it. Joint ventures are a frequent topic on this joint venture podcast. Choosing the right M&A deal structure is a core part of any M&A strategy. And so many people try to, whether it's access to an industry, they try to get in there organically. And I'm not saying that sometimes people are successful, but obviously, this concept of saying, hey, we built this, we understand the tech side of it, we built this strong thing, and then we have these other guys who are already in the wealth management space, really know it, and bringing that together. I just think there are so many, obviously there are a lot of people who do that, but there are a lot of people for whom there's an opportunity to do that and they don't. For companies that want growth through acquisitions, a thoughtful M&A approach can open doors that building organically cannot. So obviously that powerful combination, as you said already, was very powerful coming together, right?

Babu SivadasanYeah, we could see one plus one being three. If you see the bigger vision and keep your egos aside and try to work together, sometimes you're going to take care, you're not going to be running the show, right? But still be OK with it. And we had a very powerful combination. And then there was another team that came together from Silicon Valley called Oberon at that time, very, very smart people, and we all got along very well. The success of Envestnet came from, a lot of it was, and I'll give credit to Jack, Jack Perkins. I don't know if you have ever met him. He was a phenomenal leader. I was very fortunate to be his partner. We did a lot of things together, including building a building in my hometown, Lekrash. We scaled and things like that.

Corey KupferLove it. Love it. And listen, you said one plus one equals three. In Envestnet's case, one plus one didn't only equal three, it equaled thirty or three hundred or three thousand million, the way it ended up growing. That willingness to set egos aside is central to M&A negotiation, and it is a theme on this mergers and acquisitions podcast. We do a lot in wealth management, as you know, and we have plenty of listeners who are outside the industry, but we have plenty who are in. For those who don't, just give us a quick thing on what Envestnet was and what it did.

Babu SivadasanYeah, Envestnet was all about giving advisors the freedom. If you're part of a wirehouse, obviously you have a lot of technology, but you don't control your destiny, right? You build a book of business, but it's not yours. So a lot of advisors have become independent, and the RIA movement was really taking off. They don't have the ability to invest millions of dollars to build the technology and things like that, which they take for granted when you're part of a larger organization. So I still remember back in the '99 early days, I visited some advisor's office and it was stacks and stacks of paper. They had stacks of paper all over the place because they would print reports. Anything you do, you do a lot of reconciliation work, so you print a lot of paper. I was like, if there's one thing I could do to eliminate all this paper, that's good for the environment. So much paper being wasted. But you print a lot.

And in those days, there was a lot of desktop software. You do risk profiling, you'll have a desktop tool. Asset allocation, you'll have yet another tool. Then product research, you'll have another tool. These were all disconnected. Portfolio management, performance calculation, these were all completely disconnected tools. So I thought there was an opportunity. Again, background on the cloud and things like that, I thought there was an opportunity to create a cloud version of the same thing and deeply integrate all these tools. So you can enable the advisor to have that first interaction with the prospect and go through that journey and help them manage that journey. So help them with their planning process, help them with the investment management process, then ongoing management of accounts, reporting, performance measurement, portfolio accounting, et cetera. And then finally, how do you communicate all that, report all that. So we had this notion of plan, invest, manage, and learn, like in our report, continuum, right? And then we had solutions, we had built capability for all of that, so that an advisor could just subscribe and then pretty much manage their practice. The only thing you needed was a custodian, and we were integrated into the custodians and made that whole process work.

Corey KupferListen, as somebody who's been around in this industry, the first advisor that I helped, you would now call it a breakaway, back then I didn't even have that terminology. It was late nineties, and it was a guy who was leaving U.S. Trust. I barely knew the industry. It was a guy who came to me and said, hey, Corey, can you look at my agreements? I want to leave U.S. Trust. I want to start my own wealth management firm. I want to be able to take my clients. Can I do that? Can I not do that? What are the restrictions? Can you help me set up my new entity? And little did I know that that was like the start of what would become hundreds and hundreds and hundreds of advisor transitions, not to mention how the industry's evolved. That is where a lot of my M&A experience in this space comes from. And one of the things that's allowed for that and fueled the independent advisor movement, and again, some of my listeners have lived this, eventually it has gotten to the point where there was no money in the space at all and now there's all kinds of private equity coming in, and we did twenty something M&A deals in the space last year. Those recent M&A transactions are a good snapshot of how much wealth management M&A and RIA mergers and acquisitions activity there is, and private equity has made equity M&A a real force in the M&A space.

But a lot of what allowed that was this ecosystem that built up, including technology. Because listen, in the old days, and somewhat rightfully so at some point, and then they kept making this argument after it was not true anymore, the wirehouses and everybody was like, we have the best technology and we have the best access to research and basically these little guys can't compete with us, right? And there was a time when there was some truth in that, and like I said, then there was a time where I don't think it was true anymore, but they were still trying to tout it, and I think they've maybe given up a little bit on that, because the technology infrastructure, the consulting, even the custodial offerings and the ecosystem all around it has built up so much that I would argue it's not only competitive, but in many, many cases it's even better than what's available at the wirehouses and other big players these days. That maturity is part of why RIA M&A has grown, and it shows up in the deal volume we have seen in this space.

Babu SivadasanYeah, no, especially there's so much innovation that has happened. There are so many software players that do one little thing really well, to the extent that I think there are too many right now. You look at one of these maps and there'll be 300 players, everybody doing little things. So I'm sure we'll find the right balance. Too many vendors are also bad. Too few is bad too, because there won't be any innovation. It goes to the other end, then comes back.

Corey KupferRight. And that's sort of the usual pendulum swing, right? All right, so quickly, just give us a little bit about what the Envestnet journey was in terms of where it went, an exit. Mergers and company acquisitions often play a big role in how companies like that grow, and managing acquisitions well is a regular topic on this business acquisition podcast. And then I definitely want to get to what you're doing now with Jiffy AI.

Babu SivadasanYeah, so at the start we came together and then we experienced, about 2005 to 2009, a tremendous amount of growth. I was fortunate to be part of that. When I started in the wealth management business, I made a commitment to myself that, hey, stamps.com didn't really... it didn't feel like you earned anything, you've got to work hard. I subscribed to that idea. I said, I'm going to spend 20 years. It's just one number that came to my head. I wanted to commit to a longer time frame. When John and I got together, that was a commitment I made to him. I'll be here for another 15 years. I wanted to see... and he was like, hey, I haven't thought about it that long. But it was fascinating. I had the phenomenal opportunity to be with so many entrepreneurs. If you look at advisors, they're very entrepreneurial. They're all trying to build a business from the ground up. They care for those investors that they serve in those communities, especially a lot of advisors in these communities that nobody wants to go to. I had a phenomenal opportunity to be with a lot of them when they were starting over, and being there for them, and a lot of friendships built over the years. So that was great. So obviously the company went on, and we tried to go public around 2008 time frame, and with the credit crisis, all of a sudden, OK, kill that. So we had to readjust, and in 2010 we went public. It was great. And I did a lot of roles, led engineering, led product for a while.

We had assembled a lot of entrepreneurs because we did a lot of transactions along the way. So we had a lot of talent come through. It was all of us trying to get along with each other and making things work, but it was a phenomenal journey. While that was going on, I did officially retire from the company on my 20th year anniversary as I had planned.

But in 2012, I have had some background in AI. I built, as part of my college project, one of the things that we had done was to create a neural model for pattern recognition and anything broadly around recognizing patterns. We worked with the Indian Space Agency at that time on a project that was to detect if there is a fault in the circuit using neural techniques. So that was the idea. I was fascinated by it. We had no idea. We were just kids. But when we actually put that model together and it was working, we had like a one-liner from a Scientific American journal. There was an article that somebody talked about, there is this thing called neural networks, which is trying to mimic the brain. A mathematical model could actually be an equivalent. So they were trying to model the neurons and how the neurons connect with each other and how the signals get amplified because of the connections. Each connection will have a certain amount of amplification of the signal, which is the equivalent of what mathematical models do with a series of layers of inputs and weights associated with each of it. And it's a mathematical calculation.

Corey KupferFor people that don't understand, not that I understand this, but what I do understand is the way a lot of the large language models work and all this stuff is that everything gets translated into a number, and those numbers get weighted, right? To oversimplify the underlying technology, that is what happens. So for those of you who are maybe listening who are younger, AI didn't start when ChatGPT came out, right? It's been around for a long time. And the fundamental thing that underlies it, this sort of technology that Babu was talking about, where you take language and you translate that into numbers and you weight them, that is, as I understand it, and again I am far from a technologist, the fundamental technology that underlies all of these large language models and the things that are becoming commercially available now. That's fundamentally what underlies that technology. Is that right?

Babu SivadasanThat's exactly right. You can mathematically represent any combination, any fact, with a series of these connections and weights associated with it. And mathematical formulas, as you learn, what's happening is you're adjusting these weights so that for multiple combinations this formula will work and provide an outcome. The transformer architectures, obviously, what has happened recently with the generative AI models and things like that, are a slightly different, very different architecture actually. What we were doing back in the days would be predicting. When I say predicting, there are predictive models, but these are neural deep learning models. Given a series of inputs, you train it and you tell it, this is the output that you expect for that series of inputs. You train enough and then you give a combination that you have never trained, and it can accurately predict, just like humans would do. When we are babies, we were trained, you are shown an apple, you are shown a different kind of apple, and somewhere along the way any kind of apple that you haven't seen before, you know it is an apple, right? That is the concept.

But the generative AI models are very powerful and fascinating, so fascinating that you could think and generate or create content and create anything. That is the most fascinating part. So going back to my Envestnet days back in 2012, I thought... Back in the days, straight out of college, I was fascinated by AI. But nobody was talking AI for the next 15 years or so, because the internet was really taking off. Every kind of commerce was happening on the internet, so nobody had time to do experimental technology like AI at that time. Then around 2000 and the next 10 years, what has happened is there's this explosion of data, and AI works on data. You need large amounts of data. So I thought in 2012, time for AI has come. So internally within the company I talked about, how about we do something, but then the technology was still too early for commercial applications. By around 2017 I was really convinced. Anyway I was going to retire, so I thought, OK, I'll take this full time.

The idea was, I firmly believed even back in my college days, I hated actually sitting there and writing programs myself, even though I'm a computer engineer. I felt like it's not natural to write assembly language and programming languages. It's a way of training ourselves to be more adapting to the machines rather than machines adapting to us. So I was convinced that one day natural language based software creation would be a reality. We applied for some patents in that area, and now we actually have patents on using natural language to build and deploy software and things like that. I wanted to take that full time. So that was the journey. I raised some capital. I retired from Envestnet, then raised some capital and started to pursue that journey. So we are an AI firm. We are bringing AI ability to create and deploy applications.

What happens is every twenty years a new technology comes along. We were in the mainframe era for twenty, twenty-five years, whatever that is, and then came client-server, which had its run for a long time. And then you had this massively scalable web infrastructure that had its course of the next twenty years. That was the technology that I built at Envestnet, it was in that era. And now is the time where everything is getting rebuilt using AI. AI becoming the fundamental brain behind every piece of software. So that's what we do.

The proliferation of technology has had a different impact. Now, once again, your source of truth is scattered across multiple applications. Your financial planning application has one third of the truth. Your custodians have a certain amount of the truth. Your CRM systems have a certain amount of the truth. And there are a lot of other special purpose tools that you use. So your customer's data is scattered across seven or eight different kinds of technology. Even if they talk to each other, you need to have a normalized view of that world. So we started focusing on that. We built a data warehouse that brings all these capabilities, all this data from various applications together. And then that allows you to make inferences and create experiences. So what we really do in a nutshell is unify the data and then let that data create superior experiences between an advisor and the client or advisor and the home office.

Those experiences, because people do expect... investors, there were times when I got into the wealth business, advisors and clients meet typically once a year and it's like a long-term thing. You have trust. But these days, consumers and investors are savvy. They are used to phenomenal tools and everyday tools. Every application that you use is really phenomenal. So that expectation is there, but our industry hasn't caught up to that expectation yet. So that transformation is happening. So we power a lot of that, phenomenal onboarding experience. How do you have a phenomenal first impression with your client? As an advisor, it's great that you get them started. And sometimes there used to be a time where an account setup used to take 30 days and the clients were OK with it. But these days the expectation is, in about 30 seconds, if you decide to commit, you want to see that come through in a short period of time. So those things our industry is still struggling with. So we solve for those kinds of problems where you can have a meaningful conversation with the client or a prospect. And typically those conversations lead to five to seven accounts, because at the end of the day, wealth is all about your goals and aspirations and how you want to lead your financial life, and the advisors are the coaches toward that. So you end up setting up a number of accounts, and even today firms will send, if you're opening seven accounts, seven documents and signature requests will come. So we solve for those kinds of problems.

Create a singular seamless experience where one e-signature request comes in listing all of the accounts, and if multiple parties are part of the accounts, you separate them out so each party gets exactly what they are supposed to sign, and getting through all that and enabling the advisor to create their own branded experience. That's what is possible with AI today. And we enable them to have their clients or prospects have that great first impression about the advisor, OK, we are with the right party, with the right kind of technology, as our coach for life, because these relationships are pretty much a 20-30 year long relationship, no other industry has that. An advisor is a trusted friend, it's like a family member. So the clients deserve a lot more and we enable that. That was something that we were more focused on at Envestnet. I was more focused on trying to make sure that you can rebalance the portfolios, you can trade, you can generate alpha through investment management, execution and functionality, and not necessarily about the client experience. And then what happens is with AI, a lot of these experiences can be created on the fly. So even things, for the first time, actually an advisor can have a conversation looking at the client in their eyes and have that face-to-face conversation. You have a face-to-face meeting, but most of the time you're like this and you're writing notes. So you're having that really honest, genuine conversation and looking at each other in the eyes, and at the same time every bit of that discussion is captured and followed through. And that's where technology is right now. And then we bring a lot of that capability in the front office side, taking those actions and following through in an automated fashion all the way. And then connecting with the custodians, firms like my previous firm, Envestnet, trying to make sure those get executed the right way. And that's what we do.

Corey KupferI love it. I love it. I've got to tell you, we're definitely longer than usual because it's just been too fascinating, but that's fine. It's interesting, even for me, and this is so rudimentary, even using an AI recorder on meetings, that is nothing compared to what you're doing, but even that has changed my whole life, because I'm not looking down and taking notes. In terms of my team and follow up, the AI captures, but I even do a quick thing at the end, next action items, and even my time entry. On a billable time entry, I do it after the client gets off, before the recording stops, and then I am done. My team takes it, they update the project management system, they update my time, and I don't have to remember to do stuff, they don't have to read my handwriting. So even that has been a game changer. And then when you're talking about obviously doing much more robust things, like you're talking about, I mean, listen, as a law firm we're looking at all the AI integrations that we're going to be doing that are going to make the client experience better. That includes the M&A work we do, because the M&A business runs on client relationships. So I totally get it. Last question on your current company, and then we've got to close out with my final two questions. So what stage are you at? You mentioned you raised some capital, outside financing, where are you at in the journey, and do you have a vision on where you want to go with this company? You have to disclose anything you don't want to. You're very unique in that you've already been involved in two companies that have IPO'd, but most people haven't been involved in one. So any final thoughts on that before I ask you my final two questions?

Babu SivadasanSo what we do, creating the foundational software that can create these kinds of experiences on the fly, AI powered, that takes a lot of capital. So we are a Series B funded company. We have raised about $61 million so far, adequately capitalized. We are executing on our vision. We put in a lot of hard work over the last four or five years in terms of building phenomenal technology. Now it's time to capitalize on it. Obviously I think we can create another very, very successful, iconic company. And just going through that journey, we'll see how time will tell.

Corey KupferLove it. Babu, people want to find out more about Jiffy AI and you, where do they go?

Babu Sivadasanwww.jiffy.ai. Very easy. You'll get an answer in a Jiffy.

Corey KupferThere we go. I love it. Well, listen folks, we have a lot of folks in the industry who listen to this podcast. We have listeners across the M&A industry and the wealth management space, and if you are searching for the best M&A podcasts, I hope this one earns a spot on your list. The use cases of the product and the experience sound amazing. And obviously, one of the things when we're evaluating all these AIs is, you want to talk about too many options out there, it's crazy, and I'm getting contacted all the time about which ones to use, and whatever. And listen, I'm certainly going to be much more inclined, if I were an advisor, to go with somebody who has already had the unbelievable success that you've had, Babu, including with another company that was very significant in the space. Helping people think through choices like that is part of the strategic advisory work I do, and the same track record question applies to any M&A firm or M&A team choosing AI tools, and to anyone giving M&A advice. So definitely, folks, you want to reach out and check out what Babu is doing and his team at Jiffy AI. Babu, my final question on the podcast is about my highest value in life, which is freedom. And for me that means everything from freedom around the world for people from oppression to why I've been an entrepreneur for decades and haven't had a boss. What does freedom mean to you, and how does it impact your life and business?

Babu SivadasanFreedom, I'm not a big company person. Freedom is all about pursuing, enabling you to pursue your happiness, whatever gives you that happiness, the opportunity to do something. In a place where those opportunities, if you identify something, nothing comes in the way of your pursuit of that opportunity. And to me, frankly, it's always about job creation. So I look at any opportunity and I look at how many jobs it creates, and I take a lot of satisfaction from that. And so obviously AI is working the other way. You wouldn't need as many people to do the work with AI. But I'm sure as human beings we'll figure out ways to carry everybody along that successful path. And it's a good thing that a lot of things that were not possible in the past, now all of a sudden, everything that we thought were impossible will be a possibility over the next few years. So you only look forward to that world.

Corey KupferLove it. Love it. Babu Sivadasan, thanks for being such a great guest on the DealQuest Podcast. And to everyone listening, if you have ever wondered how to be a guest on a podcast, or how to get on a podcast as a guest, DealQuest is a business podcast looking for guests with real deal stories. You can apply at beaguestondealquest.com. Whether you want to be an M&A podcast guest or be a guest on a dealmaking podcast, the podcast guest application is right there on the site.

Babu SivadasanThank you so much, Corey. Great being on the show.