Shivakumar Ganesan, Founder of Exotel, spoke with Business Today's Taslima Khan about his entrepreneurial journey and why he pivoted his start-up from a classifieds business to a cloud telephony venture.
Q. TELL ME ABOUT YOURSELF?
A. I graduated from BITS Pilani and then worked with Yahoo, building products like maps and navigation for five years. Then I realised there weren't more challenges left at Yahoo for me. A colleague and I quit to set up a robot-based GPS navigation system. But then within a few months, the other guy realised that start-up was not his thing. Good for him he left me to eventually become an IAS officer. This was at Koramangala, the heart of start-ups in Bangalore in 2009, around the same time that Sachin and Binny Bansal were setting up Flipkart and had not even raised Series A funding. I used to spend some evenings with them because we knew each other through common friends. Sachin said why don't you come and join us. So I went on and joined as vice president of products and technology. I spent about six months there but the desire to start something on my own never really stopped, although Flipkart was a growth story at that point.
Q. HOW DID IT STARTING UP HAPPEN?
A. It so happened that the fridge at home was not working. So I said okay, since I was out of job, why don't I get a second-hand refrigerator. I found that the classifieds sites were broken and I could identify a lot of gaps. I thought somebody needs to fix them. That's how I started Roopit in early 2010 right after my marriage. Those days both Quikr and Olx were around but they had a large amount of spam content. Other sites were Craiglist and Sulekha. All of them were focused on content, as in advertorials, with links for products or services, but were not really a marketplace that was helping people buy or sell. I designed the classified site as a C2C site, enabling peer-to-peer buying and selling. There was one fundamental difference from those like Olx. I designed a product that could work well for multiple mediums or channels or communications. Those days, neither smartphones nor Internet access on phones was popular. I built a product that worked very well on the Internet, calls, voice, SMS and technically it was a social-local-real-time classifieds service. So a classifieds service that was completely medium agnostic, which was new. Then we were only buying and selling tangible products, not services.
Q. WHAT SCALE DID IT REACH OVER TIME?
A. We were actually working as a classifieds service only in Bangalore. At its peak we were receiving 3,000 unique visits on the site per day, 100 phone calls and about 100 SMSs. We were connecting about 70 to 80 buyers and sellers a day.
Q. WHAT WAS THE KIND OF TEAM YOU HAD IN PLACE. WHAT WERE THE VERTICALS YOU HAD FOR THE CLASSIFIEDS BUSINESS?
A. There was no team but me. I used to write the codes in the night, and in the day I used to gto o places like Shivaji Nagar where I used to go to car dealers, real estate brokers, etc. and tell them I will give you leads of people who have things to buy and things to sell. Give me Rs 1,000 a month and will keep sending you SMSs daily. That's similar to Sachin Bansal's story - they even did their own deliveries to start with.
Q. HOW DID YOU MANAGE THAT SINGLE-HANDEDLY?
A. I did hire a couple of interns writing codes or picking up calls. About 90 per cent of the business was automated. I was actually very clear that won't hire more people or raise capital. In the best month, I would make about Rs 20,000 of revenues on this product in about a year since I started. This was largely through leads that I was supplying to real estate brokers, car dealers etc. They were paying a monthly subscription fee to getting leads from us.
Q. SO YOU WERE GRADUALLY GETTING SCALE. WHAT WAS THE NEED TO SHIFT TO A DIFFERENT MODEL?
A. We were actually receiving about 100 phone calls a day and it was actually becoming very difficult to manage. I actually started with a single cell phone and then I did configuration and coding to make the same number work on two-three different cell phones. But then at some point I realised that this was not going to scale. And also I didn't want to set up a large call centre to handle the calls. I did not want to set up a people-driven business. I wanted to create a decentralized call centre. Everybody has a cell phone in his pocket and everybody has some spare time... So I thought I will go and ask people to sign up as call centre agents. All they would need to do is to have a cell number and fill up a form with some references. A central system would start driving calls to their phones. And we thought we will pay them five rupees for every call they attended. So one got 100 calls in a month, he could make about Rs 5,000 a month. Similarly, the central system would also capture all the information being exchanged on the call. So this also needed a person sitting at home with a laptop, getting to hear the call conversation and do data entry. For every transcription, he gets five rupees. So, the idea was to scale via a decentralized call centre. When I built a prototype with this model, a bunch of friends who were start-ups themselves came to me saying 'Hey, this is a cool idea. Can I use this for my company?' Such requests grew, making me believe rather quickly that there is a market which is not being addressed. I had a C2C marketplace where I really had to wait for a lot of traction to come in before I could really monetize it.
Q. SO, THE IDEA OF AN OUTSOURCED CALL CENTRE CAME IN BECAUSE OF RESOURCE CONSTRAINTS?
A. No, not necessarily. Actually, that wasn't a kind of company I wanted to build. I thought I was not going to run a business that was as good as running a body shop. I come from a consumer Internet background. I have written codes for things that hundreds and millions of people do. So I wanted to create processes on going about operations through automation and computer-driven technology. That was how I actually took the first few steps towards that direction. Most of these guys were ready for pay for such a service from day one. So I had, on one hand, a C2C marketplace that wasn't making a lot of money and on the other side I had a tech product that people were willing to pay for.
Q. WHAT DROVE YOU TO GIVE UP ON THE CLASSIFIEDS BUSINESS COMPLETELY?
A. Largely because I was actually running out of cash and, on the other side, I thought people will pay Rs 2,000 to Rs 3,000 a month on a recurring basis. So it was a combination of me running out of money and on other side I had a tech product that people were willing to pay for and then looking at a B2B product for which the ability to pay money was higher, so the pivot was rather organic.
Q. WHEN YOU WERE PIVOTING, WAS IT EASY BECAUSE YOU DIDN'T HAVE MUCH INVESTMENT AT STAKE AND YOU DID NOT HAVE A TEAM TO HANDLE?
A. The classifieds business was big in the sense that it was actually a working business. There was lot of traction. People were actually using the service. I had only one or two people in the company and we were mostly automated. There was actually not much of investment in terms of hardware or CAPEX or people. So there was no major loss. But, of course, I wasted one-and-a-half years of my life thinking of something I won't go long with.
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Q. SO HOW DID EXOTEL EVOLVE FROM THERE? ARE THE START-UPS WHO WERE USING THE SERVICE EARLY ON STILL AROUND?
A. Around 10 to 15 of the first 20 guys who used the service early on are still there. Some shut down. The first company that used Exotel was of a friend which was trying to teach English through telephone in Tier-II, Tier-III cities. This was MyEnglishShoes, which no longer exists. Then there was a friend running a company who wanted to put a number on the site and wanted IVR service. There was another friend running an NGO in Singapore. They wanted some number where they could automatically receive calls and send SMSs, because they did not have anyone to receive calls. There was another company that actually wanted to receive calls from the US. So there were different use-cases that were emerging. Largely, we could customise the phone system to what they wanted. So the early product was satisfying the requirements of a wide variety of customers.
Q. WHAT'S THE DIFFERENCE BETWEEN THE PRODUCT AS IT TOOK OFF WITH START-UPS AND WHAT IT IS NOW?
A. I think the technology remains the same, but the product and the positioning and the use-cases have changed quite a bit. So it started as a distributed call centre. But I quickly realised that the call centre was a cost centre, so the ability of people to pay for such a thing is rather low. So then we shifted the focus into lead management. So people are calling into the company asking about your services or you are now calling into potential customers, trying to explain what services you are offering. In both these cases, this was about growing revenues, so the ability of people to pay was higher. Also, these were start-ups and many of them were also techies so there was a lot of integration into the systems that they were building such as ERP, CRM etc. So we also ended up building a very good API. Then requirements around messaging came in, people wanted voice mail, call queuing and all those features. So slowly we build a phone system on the cloud from a call centre. We began with start-ups, then moved up the value chain to SMEs and then now to more of middle level and large companies. That is largely around use-cases in their call centre, marketing automation or in API integration. A slightly largish enterprise derives more value from Exotel than a small company.
Q. SO THAT'S THE CLOUD TELEPHONY TECHNOLOGY. TELL US MORE ABOUT IT.
A. In an earlier use-case people used to buy an EPBX and computer and a telephone server and then they had to wire up the entire place which took more time, effort and money. Now because they are outsourcing it to cloud telephony companies like ours, they can go up live and running in 15 to 20 minutes. We are basically the guys who are now doing the plumbing work, becoming cloud providers for our customers. We actually own and operate and manage their end servers across the country. The fundamental difference is, earlier you used to own and operate complex pieces of hardware across several offices and there had to be lines that had to be connected with every single office across the country. Now, we have sort of centralised that all in one place. People have landlines and cell phones, you can now divert a call to them by just making a call to them. The hardware need not exist within the company. Because of the design, it is also is very well suited for small and medium companies.
Q. HOW HAS THE BUSINESS GROWN FROM THAT SMALL START?
A. From about Rs 12 lakh in the first financial year, we have grown to about Rs 5 crore for the last financial year. We have about 600 customers. Exotel is going to disrupt enterprise communication. We are increasingly launching new products that cater to telecom requirements.
Q. WHEN YOU FINALLY DECIDED TO SHUT ROOPIT, WAS THE DECISION EASY OR DIFFICULT?
A. I was actually sad because I had given it time. Looking at the way things have worked on for Quikr and Olx, I now look back and think I was in the right market at the right time actually. The world is going in the direction I was envisaging at that time. So I always have the nagging feeling that if I had stuck on it would have worked. But again, Exotel is also working so it not a big deal. I had to make a choice. You can't grow two babies at the same time. I had to let go of one. There was promise in both, but in one there was the additional lure of making money from day one. So it was a tough choice to shut down Roopit and forget about it. But when I initially got about 15 to 20 customers for Exotel, these small wins enabled me to move on rather quickly. It was like the universe forced it on me.