Conrad Labs is a product-focused company based in Lahore, working with early-stage startups in North America to bring their ideas to life. They provide the engineering talent and product dev experience needed to develop high-tech products, and often hold equity while working with these emerging companies.
What does Conrad Labs do?
Abbas: Conrad Labs is a niche company, comprised of high caliber engineers divided into purposeful teams, servicing funded startups in the United States. We hand-pick engineers and match them with the startups we work with, as per the particular skills and technical needs they require, after which they work together to develop great products. You could say that Conrad Labs is the McKinsey of startups, as we work end-to-end in the product cycle.
However, we are not a services company, and we do not work on a cash-only model. Depending on the startups business model, implementation of the idea, where they are in their life cycle, we invest back into the company. There are a lot of times cash-strapped startups can only pay a certain amount but require 2x of what that can get them, so we hedge our risks by requesting both cash and equity. That is both our business model as well as our biggest differentiator.
Tell us more about your cash-and-equity business model, and how you work with these startups.
Abbas: The things is – when you raise money as a startup, and this depends on where you are in your life cycle, you probably cannot see beyond a year. A year is a long time for a startup, as a myriad of things can happen. You can go live and become hugely successful, or go belly-up.
We usually sign a yearlong R&D engagement, which is more encompassing than regular service contracts, and provide more blanket/end-to-end coverage in terms of the functions our engineers carry out. In most cases, we are the entire engineering team for the startup, and usually follow one of two models of handling product development.
The first is when we entrench ourselves into the product team abroad, who has made considerable progress in figuring out the specifications of the product and the technical talent they need. On our end, we hire most of the people from Pakistan to work with them, but usually hire UX engineers from the US to work with closer proximity to the product team. The second model is more involving, and we are given the entire product to manage, develop and test, from scratch. The entire lineup, from back-end, front-end, UX, UI has to be figured out. We push ourselves to fish out prototypes and mock-ups, iterate as per the feedback received, and remain in charge of the entire product cycle. I would not say one model is superior over the other, as we have had good and bad experiences with both.
We are flexible in how reimbursement is structured. There is the obvious safety net that is cash in working with a startup. Conrad Labs focuses on both equity and cash. That means we are betting on a successful product or acquisition. Sometime, we even give up getting paid in cash completely! The one thing we are not flexible in is the requirement that our engineers be treated as full-time employees of the company we work with. We participate in company events and web-seminars, have full access to the entire team, and constantly innovate on the product from our side. It is as opposite to the typical outsourcing model as it can get. Conrad has actively turned down contracts because we would not treated as regular employees of the company.
How Conrad Labs come to life?
Abbas: My background has been in the startup world ever since I graduated from the University of Texas with degrees in Computer Science and Mathematics. I joined my first company, SMART Technology, in 1996 and have worked in only startups since then, except for the three years spent in a services company right before launching Conrad. In 2009, there was a chance for me to move back to Austin and go back to school. Around that time I was talking to a few of my old engineering friends, and they had a very interesting idea for a company and had just closed a respectable seed round. They convinced me to join the company and create a team in Austin. However, I convinced them to let me lead the team in Pakistan, because of lower costs and the network I had established here. As we progressed, I realized that the cash-and-equity model was scalable for other startups, and decided to adopt it to become Conrad Labs.
What were some of the early problems you faced?
Abbas: The very first challenge we faced, and this was specific to us being working on a cash-and-equity model with US companies, was the legal aspect. Where would you incorporate the company? What legal firm would you hire? How would payroll be run? How would money enter Pakistan? Interestingly, these issues were perceived to be more challenging than they were, and were resolved quickly. It is not so a problem as our procedures are simplified, and paperwork can be covered by someone else.
Administrative questions follow. Infrastructure like Internet, back-ups for back-ups for both power and Internet have to be set up, as you have to set up a proper and well thought-out office space. You cannot answer those without a dedicated administrator, which I hired very early on, along with a Principal Engineer.
The next step is getting software. We were riding the cloud/SaaS era so we adopted those services instead of getting subscriptions and licenses for software.
The major issue was a lack of mentorship and advice back then. There were not many startups here, and you could not go to someone like, say Khurram Zafar, for advice. I had to figure out what to do on my own. Things have completely changed as the ecosystem has both matured and evolved over the last 5 years.
What is Conrad Lab’s biggest challenge currently?
Abbas: Our present challenge is scaling and growing our operations, and it has both been so ever since we launched. We need skilled engineers on our teams to be able to function end-to-end, adapt to changing conditions and solve problems continuously.
So, a lot of the time, we turn down good contracts or refer it to someone else because we have not found the right people to work on that extra work.
It is a fine line. It is not that we want to scale really badly, and it is also not that we do not want to grow. Conrad does not grow more than 10-15% a year. We like it that way. We know the kind of caliber we have, like the culture we have and do not want to bloat just for the sake of working on more projects. Picking projects is also a very selective process, which is true of the technical industry in Pakistan, and especially true for us. If we turn down work because it is not in our interests, you will find 15-20 people in equally good companies who have the time and manpower to take on that extra project.
Luckily, the opposite, attrition, has never been a problem. Only 1 person has left in the last 5 years! People stick around and are happy with their work as long as you challenge them and keep them comfortable with the culture you have cultivated; it really is about finding the right person for the job and the right fit for the company.
Also, we do not scale as much because finding the right project can take a while as well. We have long lead times, from 3 to 6 months, from starting to talk to somebody to closing the deal. It is a big decision for both parties. We are investing time, energy, and money in some cases, while they trust the core of their startup, their product, with us. Not only that, it does not work out sometimes because you can actually go live in 3 months as a startup. I like to engage people at a very early stage when they have ideas, help them in the process, and talk to them when they are raising money rather than when they have raised it. So I have enough lead-time to build a team for them.
So what is the environment over here?
Abbas: Conrad Labs is not my company. It is not anyone’s company. Every person brings their own personality and habits, adding to the culture of the company. It is a mix of very different kinds of folks over here. Everyone has their own timings, and we do not ask everyone to have the same timings. Teams themselves decided what their timings should be. Some come late and leave at midnight, locking the office with their own sets of keys.
Everyone has equal voting rights, whether he or she is the Principal Engineer or an office boy. If something is not right in the company, we sit and find solutions as a company. Management is not done behind closed doors, and no one is immune. I am held accountable if I do not deliver on my tasks. That happens a lot actually!
We put a lot of emphasis on creativity. Walking around the office, you will see a lot of puzzles, games, toys and extra-curricular activities. There is a collaborative fund for events, outdoor activities and regular trip. Sometimes the entire office will go out for a movie or lunch together, putting everything on hold. Our entire company, excluding me and one other person, went to Skardu recently as a company trip. You would be surprised how much fun we have here.
There is also a focus on building each other’s skills. We have formal and informal sessions in which a lot of information and knowledge is shared. Hackathons happen frequently over the weekend. We come together to try to implement an idea, prove or disapprove a business plan within 3 days. In fact, for the gaming division, every other weekend is a hackathon.
What’s your process of getting A-grade talent?
Abbas: We have 3-4 rounds of interviews, with interviews per person taking at least a few days. A lot of people hate us because we spend months interviewing candidates for a single position, and have even let a position remain vacant after we could not find the right person for the job. It is a must that a new hire is a good match for both sides. We make sure the candidates knows exactly what kind of environment we have here, and what is to be expected from them.
Our criterion is very strict, and we end up hiring only 5% of applicants. The interview is technical, behavioral and analytical so that we can really assess the skills of a person. You cannot look inside someone’s personality in just a few days, so we ask a lot of questions.
What does Conrad Labs mean?
Abbas: The name, Conrad Labs, is a play on words. “Con” comes from Conformity, the company we sprouted from, and “rad” is because we were the R&D development team for Conformity.
When starting a business in Pakistan, do most entrepreneurs already have a set exit strategy in mind?
Abbas: Seasoned entrepreneurs and CEOs almost always do. That is the first thing they have in mind – why they are starting what they are, and what their exit criteria is. However, there are a lot of new entrepreneurs out there. They are fresh, passionate and are redefining their own milestones and definition of success. Usually they have one product that they jump on and thrive. For more mature startups, it is not as much an exit strategy that they have in mind but a long-term vision. They know what they want to do, where they want to be in the future, and are specifically outlining short and long-term goals towards that future.
All of the above strategies are not set in stone. There is constant destruction and creation of goals and milestones. Startups by definition are agile and adapt quickly to the changes around and within them.
What is the culture of tech entrepreneurship in PK?
Abbas: It is a thriving and helpful ecosystem, and fortunately very conducive to work. There are several established channels for reaching out to fellow entrepreneurs and connect. There is the Entrepreneur’s Lunch Group on Facebook; we meet once a month for lunch sponsored by one of the entrepreneurs in it. OPEN Lahore and PASHA are also great avenues. It is definitely a brotherhood of entrepreneurs, and you do not have to be on your own without having someone to ask for help from. I spend a lot of the free time I get to help people out and share technical, legal or operational experiences with them. However, that is only true for executives. For programmers, there are not a lot of good forums, meetups and moots. We tried to have an online meetup for Java and Python programmers, but the turnout was very low.
Is it necessary to have a lot of highly specialized knowledge if you want to found a startup in PK?
Abbas: Not anymore. It was necessary 10, 15 years ago. Now, barriers to entry are non-existent. There is nothing stopping you to realize your idea and turn it into reality, as there is knowledge available online and the mentorship you need across so many channels. With programming education being mostly free, you can quickly learn and build a prototype or MVP, host it on the cloud, and go from there. Validate it, run it by potential users. The bar has never been lower.
That is true everywhere. A lot of startups I saw, when working in the US, were started by people with non-technical backgrounds. They built their prototypes with friends, or using simple programming such as Node. They did it online or at a coding camp. Before, you had to go through a rigorous CS program to learn the basics and potentially start a tech company. That is just not true anymore.
What advice would you give to an aspiring entrepreneur?
Abbas: The drive to solve a problem is the biggest prerequisite to being an entrepreneur. Find a domain you are passionate about, network in that field, and try to find the pain points (there are bound to be many) in that area. Validate it, and start working towards the solution from the problem and not the other way around. Do not jump into entrepreneurship just for the sake of being called an entrepreneur. There are not many successful ones. I do not consider myself successful because I am still learning the trade. On the other hand, if you have a passion for a particular problem you want to solve, absolutely go for it.
The searching for a domain should happen at a university level. Do not limit yourself to technology. Look at general issues around yourself, in local markets and tackle those. When you graduate, rather than succumbing to the pressure of finding a job right away, join an incubator or raise money because now you have a problem you care about solving.