Joro, the startup Sanchali Pal co-founded in 2018, began with a personal goal and experiment. She wanted to minimize her carbon footprint by changing the foods she consumed. While earning an MBA from HBS, she searched for an app that tracked food consumption and showed how food choices impacted climate change. Discovering that none existed, Pal formally embarked on an entrepreneurial journey. She collaborated with others committed to solving the problem and began to build a comprehensive technology platform. Today, Joro enables users to track and improve their carbon footprints on their smartphones and connect with a like-minded community. As CEO, she established Joro as a pioneering tech startup dedicated to making a social impact. In an informal conversation with Shikhar Ghosh, Pal discusses her unexpected path to entrepreneurship. She shares insights she gained during her journey to raise venture capital and talks about the daily realities of being CEO at a growing early-stage company. A transcript follows the video.
Sanchali Pal interviewed by Shikhar Ghosh on the founder’s journey, fundraising, and being CEO of an early-stage venture. October 28, 2019, Harvard Business School.
An Idea to Help Solve the Climate Crisis
Shikhar Ghosh: Today I’m talking to Sanchali Pal, who is an HBS class, MBA class of 2018 and she is the founder and CEO of Joro.
Sanchali Pal: Joro is a mobile app that helps people take action on climate change, starting with our own carbon footprints. We make it easy, fun, accessible for people to make sustainable choices that add up to big change when we make them together. We’re using your credit card statement as a first data input to estimate your carbon footprint. We can do that on an automated basis without a ton of manual input from a user.
Shikhar Ghosh: Your theory is that if a lot of people use this, you could actually change, make some dent in the pattern of global warming?
Sanchali Pal: Yes, exactly. When consumers change the way that they demand goods and services, companies and systems changed. For instance, Americans are eating 19% less meat over the last five years than we did previously, and we’re seeing that with a huge change in the amount of non-meat plant-based offerings. Joro is a tool to accelerate that demand and to surface it.
Shikhar Ghosh: If you reduce, for example, meat consumption how much of an impact does it have on global warming?
Sanchali Pal: I would say two numbers to make that clear. First is consumer demand is responsible for 60% of greenhouse gas emissions in the world. Consumer demand directly affects more than half of the emissions in the world, and if each person can improve our footprint by just 12%, so that’s a relatively achievable change for almost anyone regardless of their starting point. We can meet the Paris climate goals and keep global greenhouse gas emissions at the levels to maintain global warming at 1.5 degrees Celsius. It’s a significant lever for change.
Founding & Growing a Mission-Driven Startup
Shikhar Ghosh: What made you decide to start this venture rather than taking a secure job that still met your purpose goals?
Sanchali Pal: I didn’t anticipate that I would be starting my own company right after school, and Tesla seemed like it had a great mission. As I started thinking about the idea for Joro, part of what forced me to work on it was that I felt this was a type of product that didn’t exist in the world right now. It was a category of product tools to help people manage their carbon impact. We have those tools for our health. We have them for our fitness. We have them for how we manage our money, but something as important as climate, we don’t have good tools for managing it.
I see this huge open space and a need for tools to help individuals like us better manage our climate impacts, and it felt like there are so many smart people working at Tesla right now. If I don’t work there, the cars will still be made and the batteries will still be made, but if I don’t work on Joro, this product doesn’t yet exist, and I personally felt a significant need for this product in my own life. I was having trouble making these sustainability trade-offs and I knew other people who are having trouble making these decisions too.
I felt like if I don’t do this, then maybe this won’t exist in the way I think it should in the world. I had a pretty strong opinion about what this product needed to look like, and I wanted to be able to shape that.
Identifying the Right Problem, Testing Ideas & Raising Money
Shikhar Ghosh: If you move from the promise of this saying, ‘I can actually make an impact myself and have some control of the direction it takes’ to the practical reality of starting a company—with no money, with no customers, with really no technology, but an idea that then has to be tested and created—what has that journey been like for you? It’s been, was it a year and a half now?
Sanchali Pal: Yeah, about a year and a half. The journey started as an idea for a product that I wanted in my own life and I went looking for it in the real world. I tried lots of calculators online, carbon footprint tools; tried building my own Excel spreadsheet as a decision-making tool. I found them all to be frustrating or in some way deficient, and really not fun because so much about climate has been about guilt and shame, and so that was really the place that we started.
My first step was to develop the idea on my own and I went to spaces where I could apply the lean startup method for short periods of time. Thinking through the idea, coming up with a short design version of what it could look like—design only, no actual building—testing it with people, going back to the drawing board, rewriting it out.
I got to the point where I had an idea of what the tool could look like or what a solution might look like to this problem that I had defined. But I knew I couldn’t do it by myself and I needed to go talk to other people who knew about this—who had worked on data, who had worked on software development around carbon footprinting tools.
Sanchali Pal: Then once we got a little bit of initial grant money, we had the ability to actually build something and test it with users. We did a very small build. We basically invested three to four weeks of intensive development experience and work to build a very minimum viable product of the app. Tested that with about fifty to a hundred users over the course of several months, did really in-depth interviews to understand what was working, what wasn’t, and then started also understanding what could the business models be around this.
Only once we saw significant enough interest from the users, high enough engagement, and then significant enough paths to revenue that we felt like we’d gotten some customer research that there would be monetization on the other side of it, did we actually think about raising the money to build it.
The Fundraising Journey
Shikhar Ghosh: What was the process of raising money like? You’ve attended a number of classes and learned, first you do this, then you do that, then you get the money, then you form your board. What’s that actual journey been like?
Sanchali Pal: What I learned was that you can know the process, but you don’t know how to actually raise money. It’s really helpful to know something of the context of what is a VC? What are they looking for? What does the term sheet look like? What should be the ten slides in your deck? All those things are really valuable.
But there is absolutely, from my experience at least, no substitute for just going out and trying to raise money and failing, and then having to revise. No amount of reading can substitute for the actual experience of getting the feedback and having to go back to the drawing board again and re-explain yourself.
Learning from Investors’ Feedback
Shikhar Ghosh: Most of the time, that feedback is no?
Sanchali Pal: Yes, exactly. I think how I structured my initial ideas was we had a little grant money. We built out this MVP. I said, “Okay, great. We’re ready to go raise money.” I put together my ten-slide deck and I set up some meetings with investors. I had I think something like eight or nine meetings over the course of two weeks scheduled. Every single one of them said no, and I felt extremely disheartened after that. I thought I had done all my research and I would be ready, but after going through that process and hearing some of the same things from some people, I decided to change some of my deck, change how I was telling the story, put the team slide upfront, to have a stronger opinion about which monetization channel was going to come first.
Sanchali Pal: Some of these things you can only learn when you’re talking and getting real feedback, and then also kept hearing the need for more data on my users. Instead of just testing with what we initially tried was twenty users, we have to increase to fifty or a hundred users to start getting meaningful data about what was working. After we did that, we spent another couple of months doing that.
Then we went out to raise money again and by that time, I was a little bit more successful in raising from angel investors and then eventually from a VC. I think the advice, “first go to the people that you don’t think are going to invest, and then save the people that you really want for later” is great advice.
Observations on Investors’ Interest
Shikhar Ghosh: When you went and you got a bunch of advice from potential investors, some of that helped you improve the deck, but did it actually help you improve the business?
Sanchali Pal: I do think the one big takeaway I had from those early investor discussions was that it wasn’t good enough to say I have two different hypotheses on monetization and I will test them when I raised this money. I had to have already done some testing and have an initial sense of which one would I start with. I think that was not only to meet the investor’s requirements but also because I have limited time as a founder. If I don’t have already a sense of which monetization path is going to be the most successful, then I won’t be able to spend my own effort effectively, so that was useful.
Shikhar Ghosh: What were your observations about the investors, the kinds of questions they asked, the way they treated you, the whole process of being told no?
Investors’ Early Response Matters
Sanchali Pal: I found that—starting with the people who ended up saying “yes”—the people who ended up saying yes always said yes, maybe in the first meeting. I found people didn’t fundamentally change their mind on us. If they said, “I’m probably not interested in this in the first meeting,” none of those people ended up investing.
Shikhar Ghosh: Even though they took a second meeting?
Sanchali Pal: Even if they took a second meeting. For myself as an entrepreneur, I learned that it is hard for people to part with their money and if someone doesn’t have an initial reaction that maybe this could work, then they probably will never reach that. Now of the people who said maybe this would work, not all of them invested, but most of them did. I think that first observation of you have to find someone who has an interest, a belief, and for whom your story is resonating and if you don’t have those things, then nothing else is going to matter.
Personalizing Your Pitch Deck
Sanchali Pal: The other thing I observed about the investors is that walking in an investor through a deck slide by slide is rarely an effective way to have a meeting. They want you to tell them as a human, why are you working on this and why do you think it’s going to be big, why does it matter if I personally get involved. The deck is really a tool and ideally, you don’t let them walk through it by themselves because then they form their own opinions that may or may not be directly related to your story. Ideally, you also don’t walk through it slide by slide. Ideally, it’s simply a prop to tell your story, and I think learning that it’s not a presentation as much as a visual aid to storytelling was also really valuable.
Shikhar Ghosh: There’s a debate about whether at this stage of a company, investors are investing in the founder, the idea, or the market. What did you find?
Sanchali Pal: I think it’s primarily the founders.
Shikhar Ghosh: You have to establish that connection and they have to know who you are and why you do what you do?
Sanchali Pal: Ideally, you have the opportunity to set that before the first investment meeting. Ideally, you have the ability to go talk to that person about the idea you have before you go to them and ask for money because it really is about the founder I think. The person who ended up investing the largest check in our first round didn’t even look at our deck. Maybe later checked it, but just to be sure, but the initial phone call was just a phone call. Definitely, I think the founder’s first.
Sanchali Pal: The second I would say is the size of the market. Less the exact revenue path. Of course, you have to have an idea of how to monetize, but is this idea potentially large enough to create a billion-dollar business?
Demonstrating a Big Opportunity
Sanchali Pal: I learned also how to think about how ambitious to be when framing my idea to an investor.
Shikhar Ghosh: Given that you don’t know anything on day one, how do you get from nothing to a billion?
Sanchali Pal: I think that’s where a little bit of imagination comes in. Investors want to know that you have the confidence in yourself to try to build something that’s going to be the next unicorn or the next IPO company and even if you fail, you have that goal.
Shikhar Ghosh: Yeah. The worst thing is to aim low and miss.
Sanchali Pal: Exactly, and the worst thing you can do is be overly practical.
Shikhar Ghosh: At this stage, you don’t know very much, but at least you’re telling them what your dreams are and putting some paving behind it.
Sanchali Pal: I do think for business leaders like who have not traditionally been founders, that is a relatively large leap to have the confidence to say things that are not yet true. As a consultant previously, I was used to having the evidence to back up my claims, and I was very careful and cautious about my initial market sizing numbers. Only being able to show what I could prove from existing business models, but with Joro, we’re trying to build a market that doesn’t exist and it does require imagination.
Framing Your Story
Shikhar Ghosh: After the first few meetings, when you figure out that people are looking for really big outcomes or at least the potential of really big outcomes and yet you’re in square one, so you don’t know what it could be. How do you manage this process of promising something big or at least projecting something big, but knowing that you don’t really know the pathway to get there? What’s the line there between the ethical and responsible projection versus where you are today?
The Ethics of Emphasizing a Big Opportunity
Sanchali Pal: I think most investors that are experienced investors know that when they’re talking to early-stage founders and early-stage companies, they’re being sold a dream and a story, and the deck and the story that you as a founder can tell can be very explicit about that. You can say very clearly, “This is what I have achieved so far and this is what I have tested, these things are facts, and then here’s the ambition that I have or the dream that I’m trying to build, and that does not exist yet and I need your money to make that reality happen.”
I think making that clear distinction between what has happened and what will happen or what you want to make happen is very important and personally, I also tried to bridge that gap by creating both bottom-up and top-down projections.
Sanchali Pal: For myself, I would ground myself in real numbers from the bottom up. What does it really cost to hire someone? What does it really cost to have Amazon servers? What does it really cost to have a team of 20 people? And make sure that those assumptions are grounded in reality. Benchmark that against other companies that have built versus what’s the upside of what you can create, which is also part of the top-down of saying how big can this be and having that balance between realistic grounded cost assumptions, but also ambitious visionary top-line assumptions.
Shikhar Ghosh: So, we have 2% penetration and a developed market—that’s a gazillion users.
Sanchali Pal: Yeah. At this early stage, investors are really looking for the opportunity that you’re creating. If you can show the opportunity will be big and that you as a founder have a sense of reality and what it will take to get there, I think that’s the only way you can achieve balance.
How Risk Tolerance Shapes Your Story & How Others Respond to It
Shikhar Ghosh: What about the amount of capital it’ll take to get there?
Sanchali Pal: For the amount of capital it takes to get there, I think that depends on a founder’s risk preference. Definitely, there is a path where I could have raised $500,000 and built a certain company at a certain rate, and I could’ve raised $2 million and try to build a different company at a different rate. It has to do with a little bit of the style and the way in which you want to build the company.
For me, I thought about, “how much of the company am I willing to give away? How much do I think it will really take to get to prove something that’s a good enough product that I’ll be able to achieve a higher valuation? And what’s the amount of money I need to raise to not be constantly anxious and worrying about money?” By thinking about those points for me as an entrepreneur and for our business, which is a software mobile-based business, that was how I thought about how much money to raise.
Shikhar Ghosh: The same story that you’d tell investors—here’s the dream, here’s why it makes a difference—you need to tell to employees. Because they’ve got the same choice of saying, “do I want to risk the next five years of my life working on this, perhaps at lower salaries than I could get otherwise? Do you tell different stories to both or is it the same?
Sanchali Pal: I do think there is an element of the same story, the same thread that gets told to both parties, and that’s also the story I tell myself as a founder. When I think about whether or not this is worth my life, earning a much lower salary, the uncertainty that comes with being a founder and the pressure that comes with being a founder. I think, first and foremost, it comes down to “what change in the world are we trying to build and is that something I’m motivated to do? Is that something that I believe we’re uniquely positioned to do?”
Describing Investors as Part of Your Team
Sanchali Pal: And that is the story that you need to sell to the investors to say, “We’re the team to do this. This is the mission, this is the goal, and no one else can do it like we will.” Same with an employee, showing them that when they join this team, this team will be more capable of achieving that vision than they would without them and that they personally have an impact in doing that I think is a very important story for both the founder, the investor and for the employee.
Shikhar Ghosh: That’s an interesting twist because I’ve heard a lot of founders talk about “join us because what we are doing is so important” and what you’re adding to that is “join us because what we’re doing is so important, but you are really important in getting us there.”
Sanchali Pal: Yes and I think that is something if a founder has the ability to be a little bit choosy about their investors, that is also the story they should be telling to their investors, is that you are uniquely positioned to help us succeed and when we have success, that’s because of you, in some way, and same with the employee.
How Your Role as Founder-CEO Changes after Raising Capital
Shikhar Ghosh: After you raised your initial capital, you moved to San Francisco, you set up literally from scratch the initial team and started to execute against it. What does your day look like?
Sanchali Pal: It definitely is a big shift when you go from just one or two people alone in a garage or a basement working with basically no capital to having a little bit of capital and now a little space to build the product. My days have changed from being initially a lot of solo work, a lot of independent thinking, a lot of me meeting with investors or meeting with people to give me advice on how to build the company to now largely focused on building.
Sanchali Pal: Now I would say as the person who is primarily in charge of product management and the product roadmap, I spend probably 25% of my time on product, on developing new product feature ideas, building those out into what that opportunity could look like or that feature, testing it with users, and designing that and working on that process with our developers and with designers. I spend probably 25% to maybe even 50% of my time on hiring now that we have to build up our team and think about what’s next and how do we get to the next stage of growth. Then I spend a significant amount of my time also helping empower the other people on my team, so thinking about how do I set up the other people on my team for success and manage their workstreams.
Sanchali Pal: Now I don’t have to fundraise, and so I spend very little time talking to investors. Although I have a regular cadence of meetings and emails so I don’t have a big push later, when I raise money. But I would say most of my time is focused on product and team.
Testing & Iterating
Shikhar Ghosh: You’re creating a brand new customer-facing app, and so much of these apps depends upon really small things, small design changes the way you offer it, and so the two of us could create the same thing, but they’d be very different and have different success rates. How have you gone through the process of testing it and then changing it based on what you’ve learned?
Sanchali Pal: We’ve built a repetitive testing process now over several months that now we’re applying to every time we think about new features. To start with, the first thing that we do is we surface from user input. We do regular interactions with users, asking them about their experience of the product, and also what they would like to see in a tool that helps them manage the sustainability of their choices. From that, we pull out themes if multiple people are saying the same thing. For instance, we’d like a more tangible way of understanding our impact, then we start pulling out those themes.
Sanchali Pal: Once we get enough user feedback, so maybe four or five people saying the same thing, then structure an actual design sprint around that, which is a one or two week process where we flush out the problem, understand what different solutions could be, build out prototypes of initial solutions, like maybe just on paper or maybe on the computer. Then test those versions of the solution with users until we can narrow in on one solution that we think is the most likely to succeed. Then we build that out in a minimum viable way, and we’ve built it out into the product, and then we see how that does. If it seems like it’s doing well or we get some feedback on how it could do better, then we build a next version of that feature.
Sanchali Pal: It’s actually become almost a 4-week iteration cycle from having something surfaced from a user to actually building and implementing that for a user for the first time. We’re trying to make as much use of low fidelity testing as we can on pen and paper through designs and wireframes.
Shikhar Ghosh: Mm-hmm. Through this process, you get this continuous feedback, but the feedback is all what the user said and experienced coming back to you. You don’t inject your own perceptions about what’s a good product, what’s a good implementation event.
Sanchali Pal: I do think it’s impossible to avoid that in any way, especially because most of the people who work for our team are people who want to make more sustainable choices by the nature of what we’re trying to build. Often we see ourselves as users as well, but we try to treat ourselves just as N equals one and once we get N equals five, then we will prioritize it, and then we’ll test it with even higher numbers of people. We try not to allow our voices to be the ones that dominate.
CEO’s Emotional Rollercoaster
Shikhar Ghosh: When you get home in the evening, if you compare the internal dialogue you have with yourself about what you did that day and what you’re planning to do the next day, how is that different from when you worked in a bigger company?
Sanchali Pal: I think startups require founders and early employees to have the ability to structure their work. Otherwise, it can be overwhelming because there’s so much to do. Just like when I was a consultant, I have to spend time work planning and being really organized about what hypotheses I’m testing and what research I need to gather in order to deliver what’s next. I do think a lot of the consulting training did come in handy for that.
What’s different is that you have full ownership and full responsibility. I have to create good information flows for myself to make those decisions, and that means spending time every week talking to users and being really deliberate about making sure that the voices that are influencing my decision making are the ones that are ultimately going to be consuming the product.
Shikhar Ghosh: If you had to do a little chart of your emotional ups and downs at a company or a consulting firm, if it was like that, what does it feel like here?
Sanchali Pal: There are periods of time that are much more stressful than others. Making the decision to join the company or not, to start the company or not, or just figuring out if we’re going to be able to raise money or not, getting on the edge of not being able to raise money really high-stress levels. Now we’re in a period of continuous building. Every day there’s ups and downs because there’s no buffer between you and the company, but we’re also in a more comfortable period where we don’t have to stress about whether the company is going to exist tomorrow.
Establishing Personal Criteria for Measuring Success
Shikhar Ghosh: Something like 75% of companies that start up like you did, don’t make it through and if you imagine that you spend say three years trying to build this but it doesn’t work, then what will your criteria be to look back and say this was worth it or wasn’t worth it?
Sanchali Pal: First and foremost, I see this as just like any other professional experience and opportunity to gain skills. Even if Joro fails, I will have become an expert on climate change and the solutions that can be used to address it. I will have become a product manager, which I never was before and very skilled at managing an engineering team hopefully by the end of this process. I will have worked on building a new software product that’s consumer-facing and understanding consumer-facing business models. I think about a lot of the hard skills that I’m trying to gain and I try to give myself the space to grow professionally the same way that I would if I had a company that I was working for or my manager was doing that for me.
Sanchali Pal: I think about the skills I gained. I think about the relationships I’m building with my teammates, with my investors. One of the amazing things about startups is you get to meet people you’d never get to meet if you were working in a big company. Some of the investors I’ve gotten to pitch to, some of the experts I’ve gotten to speak with are incredible resources and relationships that I would never have built without Joro. Then when I think about longer term in my career, what impact do I want to have in the world. I do think that climate change is a problem that’s going to be here for a while, and I want to be a part of the solution and if that’s through Joro, great. If not, then it will be a stepping stone until the next solution.
Sanchali Pal: One of the big things that has stuck with me is that I have to be able to separate my myself from the company, and I can’t necessarily determine what path the company is going to take, but I can determine what path I’m going to take and what skills I’m going to gain are, and also the skills that my company’s going to gain the people on my team. I can try to make this a success in the ways that I can control, which is—what is my experience? what are my teammate’s experiences?—and we can do our best to control the outcome.
Getting Comfortable with Failure as Your Role Evolves
Shikhar Ghosh: When you look at what happens every day, do you feel like you’re achieving a lot or do you feel like every day, you’re not achieving as much as you could and you’re failing?
Sanchali Pal: I think on a daily basis, I generally feel like I’m failing and I feel that way because the role of founder requires you to do so many different things. One minute, I’m filing our tax returns in California. One minute, I’m negotiating our HR concerns. Another minute, I’m trying to manage a software product that I’ve never built before. It requires founders to wear many different hats and to try to do them as the only person in the company who’s doing them.
Sanchali Pal: For instance, I feel like I finally learned how to do something, I finally learned how to manage our payroll, then all of a sudden now I have to manage benefits and I have no clue how to do benefits or I think I know how to manage our product management two-week sprint process and then all of a sudden, we have all of these backend tasks that I have no understanding of what those backend tasks are, even once I’ve understood our front end tasks. Yeah, as a founder, I feel like I am constantly failing because the job evolves so quickly. I learned something and how to do something, and then I immediately have to do something completely different and become the best at that thing.
Sanchali Pal: I think part of what people say when I say to be a founder, you have to be comfortable with failure. Yes, you have to be comfortable with the end failure—the end outcome being failure of the company—but you also have to be comfortable with never being good enough.
Shikhar Ghosh: It feels like every day, each of the tasks, especially if you’re a perfectionist or you’re someone who’s used to setting really high standards, very often you’re just making do. You go in and you just figured out how to do the payroll system and do the minimum necessary to get that because you got something else that you’re working through, but at the end of that, you’ve learned an awful lot.
Sanchali Pal: Yeah, and I think that’s because entrepreneurship is all based on this concept of minimum viable, minimum-
Shikhar Ghosh: Everything.
Sanchali Pal: Everything, and I’ve never done anything minimum and most founders haven’t. Most founders have done everything to get to the point where they feel confident or visionary enough to build something new. They’re probably the best at something and to go from being the best at one thing to now doing a million things terribly is really hard, but it’s part of what’s required.