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Disrupting The Trillion Dollar Business Travel Market | Mayank Kukreja @ Itilite
357 Plays3 years ago
As a McKinsey consultant, Mayank saw firsthand the inefficiencies in corporate travel. This led him to build Itilite, a Tiger Global-backed SaaS enterprise that offers travel and expense management solutions to companies to ensure seamless travel. Mayank speaks about bringing the ease of personal travel experience to business travel.
Know about:-
- Incentivize people to save money
- Defining the problem statement differently
- “You are not as unique”- learnings at McKinsey
- Strategy to enter the US market
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Transcript
00:00:00
Speaker
Hi
Introduction to the Founder Thesis Podcast
00:00:00
Speaker
everyone, my name is Mayankuk Reja and I'm the founder and CEO of Pitylite. Take me on a tour. I'm Akshay. Hi, this is Aurob and you are listening to the founder thesis podcast. We meet some of the most celebrated sort of founders in the country. And we want to learn how to build a unicorn.
Cost Management Strategies in Tough Times
00:00:33
Speaker
When the going gets tough, companies will start tightening their belts and cutting costs. Often, large companies will call in a consulting company like McKinsey to help them cut costs and boost their profitability.
Origins of Itilite: Solving Corporate Travel Inefficiencies
00:00:46
Speaker
And McKinsey may deploy a consultant like Mayankuk Reja on the project.
00:00:50
Speaker
Mayank, who is a product of IIT Delhi and IIM Ahemdabad, spent four long years at McKinsey, helping clients solve business challenges and saw first-hand the inefficiencies in corporate travel, both as a drug-setting consultant and as someone advising clients on how to cut their travel expenses.
00:01:08
Speaker
After his stint with McKinsey, he joined Mitra for some startup experience and that's where he met his future co-founder and also crystallised the idea of building a product to solve for inefficiencies in corporate travel. Today, his venture Itilite is one of India's largest corporate travel companies and is also rapidly expanding globally.
00:01:30
Speaker
The
Raising Capital During a Crisis: A $30 Million Success
00:01:30
Speaker
fact that they raised close to $30 million even during the pandemic when all travel businesses were badly hit is a testament to both the massive opportunity in the space and the strength of their execution. Here's my young telling Akshay Tath about the journey of building Itilite. Once
The Partnership: Mayank and Anish's Vision for Travel Savings
00:01:48
Speaker
Anish and I finalised, we want to work together.
00:01:50
Speaker
I showed him my list, here is my list. I used to always maintain a list for the last six, seven years and here are the ideas I want to do. So I think the idea we finalized about six odd months before we left. And then we actually had started talking to customers. In fact, I had a commitment of a funding before I left Mitra. We had not signed the term sheet, but I had a verbal commitment.
00:02:13
Speaker
So yeah, I had spent about 4-5 months in Vidra thinking and working on this. So tell me the idea. So we started by saying that we'll help companies save costs on business travel. How
Reinventing Travel Incentives and Identifying Flaws
00:02:27
Speaker
will we save costs? When you are traveling, your company allows you to stay in a $300 hotel, right? And you will always stay in a $300 hotel. I had been a consultant, remember? I had stayed in $700 W Hotel at Times Square.
00:02:39
Speaker
and slept the yards. I had done that. So what if the company gives you a choice that if you stay in $100 hotel, whatever you save, you get to keep a part of the savings. It seems so logical. Why would anyone not do it? Again, I now see that there will be some people will not do it, but I am a very cheap person.
00:02:55
Speaker
And if you give me a little bit of discomfort, I just need to sleep at night. It sounded so logical. On the other hand, again, yes, consultants do a lot of cost-saving projects and travel was always a small part of it. I had done that four times, I think, over four years at McKinsey. And always the answer was same. Apply with your stronger policies, do this tight, do that tight.
00:03:15
Speaker
That process does not work. First, companies want it, but it doesn't work because it is driven by humans. You need technology to implement those policies and things like that. So I had some sense of companies want to save costs on travel, and I have traveled a lot. This idea that incentivize people to save money is amazing. That was the starting point. We went and spoke to some people.
00:03:37
Speaker
This is something which was, I think, being done in Google internally for the last 10 years. Google had a system for this incentivizing people. So I spoke to the chief product officer at Mintra. He was ex-Google. He remembered that five years ago, I had these many points in incentives.
00:03:53
Speaker
Yeah, remember this clearly this idea works. So I think that was the genesis of the idea. Very, very quickly we realized this itself will not work because incentives is great,
Business Travel Solutions vs. Consumer Services
00:04:02
Speaker
but you would now have to work with a travel agent to book the ticket and that travel agent is offline. So the whole travel process is broken.
00:04:10
Speaker
But Make My Trip was already there, right? So that's the big difference, which we didn't realize in the beginning. Make My Trip is a consumer travel company. What is a consumer travel company? And again, there are multiple consumer travel companies. They help you book your flights and hotels and whatnot.
00:04:26
Speaker
If you go to any large company, any company more than 500 people, and if you ask them, how do you book your decades? They will, invariably, at least in India, 90% of companies will have a travel desk. Yeah, the Amex registered for large corporates. We also have Amex and McKinsey. Call Amex. Why are you calling Amex? That's the problem. The problem is not that you can't book a flight at a hotel. The problem is your company wants to apply controls. They want to make sure your finger
00:04:53
Speaker
right hotel or flight or within policy, taking approvals, things like that. So that a human is doing over e-mails. The more that booking of flight or a hotel, it's those rules which have to come online. There is almost no product for that. That was the tricky part. Consumer products exist. Business products. No product has been built for business. There were a lot of products. All consumer large companies have a business travel product.
00:05:20
Speaker
But what they do is provide a version of their consumer product to the travel desk, using this. It didn't have workflows, business unit workflows, the approval workflows and all of that. And then the top 10% companies have workflows, but they have custom built for them by a very large company over six to nine months. There's no product for it. So the way we position it, right? What does it like do?
00:05:44
Speaker
Italite helps you solve three problems, not in that order. We
Cost Control and Convenience in Corporate Travel
00:05:47
Speaker
have cost and convenience control. The biggest reasons, company bias, at least in India, we sell in India and US, is control. I want to apply those workflows, rules, get data. The second is cost savings. You may assume that why do people want to have control because they want to save costs. That's not true. That is not true. We learned it over the first year.
00:06:10
Speaker
many CFOs told us, I don't really want to save costs, but I have a discomfort. I don't even know what's going on. Tell me what's going on. And that's enough. That's control. And then some of them want to save costs, which then comes later. That's where the incentives idea I told you came comes in, control it was having, but we have this unique incentives idea as well. The third part is convenience.
00:06:32
Speaker
Frankly, very few companies in India buy us for convenience. US, actually a lot of them buy for convenience. What is convenience? Even the senior people have to use their EAs to book. Why? Because when I'm traveling, let's say I'm going to a new city on the tip of Tokyo. I have no idea about Tokyo.
00:06:48
Speaker
I will tell my travelers 0.23 good hotels and give me up. I will choose because I don't want inspiration and 500 hotels. That's when you can use technology to automate it because I know your company. If anyone from your company has gone to Tokyo, I know which hotel in Seattle. Like you are going to miss similar.
00:07:06
Speaker
What is personal, where every person is different, travels differently. I can put flights based on how you travel, how your company travels. When you search on a delight, you actually get only three options. It's like people select from the top three options we show. Then there is a button which opens up a lot longer list, but that's the convenience part. Yeah, which is a user experience decision you took. Absolutely. We have taken, again, it looks very different from our consumer travel product. Three options only.
00:07:33
Speaker
because we are acting like the online version of your travel desk. That's the world we like from. That's broadly the product, which helps you using workflows and then over time, you can reimburse using the platform as well.
Evolving from Cost-Saving to Comprehensive Booking Solutions
00:07:48
Speaker
Tell me the evolution when you initially pitched, did you pitch the cost saving idea or did you pitch the workflows idea? It's the cost saving idea, but I remember even the first presentation we gave to Matrix and that's our first investor, we said we will be full stack. We did not know what it meant to be full stack, but we will have to do bookings because by then we had spoken to, we had, I think, were in the process of starting the first two pilots.
00:08:16
Speaker
Even they realize we'll have to work with these travel agents. And it's really, really hard. This needs to be fixed. It's a very unsexy job. Most people don't even know about it. Because when you think travel, you think, make my travel. You think the word travel. I do not think travel agents. But I realize this is what needs to get fixed. Expense is something we realized very early on 2017 that this is a very related problem. Our customer wants it. And actually, travel products and expense products are very different.
00:08:47
Speaker
Reimbursement is a very crowded market, lots of software, but different players. And it doesn't work if it is a different player because as a finance person, these two are similar problems for me. But we decided not to build it early on because that's how it typically works. Let's solve one problem well. Once we have a sense of this problem is solved to some extent, it is never fully solved. Then you pick up another problem.
00:09:12
Speaker
That's why I think in the third year, 2020, at the 2019 end, we started building expense. Now we think in India, we have a product which is far ahead of anyone in business travel. Let's start building expense. So the pilot version which you built, that was just the cost saving, allowing people to get points.
00:09:33
Speaker
I think we took the lean startup method to Xtreme. It was one web page where you can input your going from X to Y place, Delhi to Mumbai, all that. Once you put a request, it used to come to our team and they will give you these three options. First option, which is your normal option. Second option is your cost saving option. When you choose, it will go to your travel agent. He will book.
00:09:59
Speaker
We will just get in this data and tell the company, okay, this person saved 1000 rupees, give them 500. So very little technology. We had a vision in mind, but we literally launched with three web pages and three people. And this was something that you were monetizing or it was like a... We never gave anything to a customer free. Very, very good company.
00:10:19
Speaker
was very little money but never free. And so then like how did this product evolve then from this one form based product where people fill out a form and then they get some information.
Automation and Integration: Revolutionizing Travel Booking
00:10:30
Speaker
From that form, this finding three options have to go automated, which means we have to now get APIs to get results from flights and hotels. We have to get connected with them, which we did. There's a lot of engineering which went into it. But in parallel, we are evolving. At some point, I think after a couple of months, after the first two pilots realized, we can't work with travel agents. What are travel agents doing? They are just opening some window and booking. Why can't we do that? So in that we'll be part of booking.
00:10:58
Speaker
And that was in August 2017. Second August 2017 is when we made our first booking. This was manual booking, like? Manual booking. In general, we are automating stuff on our platform, but we started, anyway, travel agent is also booking, we will book. I think that's the November of the first year, that year, 2017, is when we went to customer and said, now, at least a full flow.
00:11:19
Speaker
your search, your three options, your booking, everything is automated. So again, first year was that journey running those two streams in parallel. And this booking service, I'm assuming there would be a commission-based earning, right? Like you would be... There is, again, very little in the beginning and that's...
00:11:37
Speaker
but you make some money from the customer and then there is some commission from bookings. That's our revenue model. For the customer, it's a monthly subscription. No, for the customer also, it's per booking they pay us. By the way, we tried every possible model we can think of. We tried monthly subscription. We tried fixed fee per booking percentage of your total travel spend. Good learning, I think you have to be clear where you want to innovate. The monthly subscription model was much more economical for the
00:12:07
Speaker
company and much more predictable for us. Very hard to sell, right? Another learning, again, as a company, as we started selling to, again, 15th, 20th customer, realize we are not selling technology. We are not, we can't say we are tech company. We are another travel agent, which is very smart and new age. Yeah, you are a competitor to Avex. Exactly. Or local travel agent, whichever is serving you. You can't protect your company. And if you are a competition,
00:12:34
Speaker
customer doesn't know how to compare prices. If your pricing model is different from their pricing model. What is the traditional pricing model for Amex? It's a fixed price X rupees. Okay. 100 rupees per ticket, 200 rupees per ticket, every cancellation 50 rupees more. So there's a whole rate card, different for flight, for bus, different for train. And we use the two models we tried in the beginning. One was a fixed fee per month.
00:13:04
Speaker
And second was for the whole trip, we'll charge you, let's say 250 rupees. You can book in flights, both flights, buy hotels, change in number of time. The problem with that is customer doesn't know how to compare. Now a travel agent is saying, I will charge you 150 rupees for flight one, 150 rupees for flight two, and 100 rupees for hotel. You are saying 250 rupees for the entire trip. How do I compare? But your overall number seems higher. You are moving.
00:13:33
Speaker
It has happened to us. Again, you would think the buying is very logical. It's not. Do we really need to innovate here? And finally, we said, let's go with pricing, which the customer understands. It's not great. It's not fast, but pricing came down to what the customer understands. The numbers, we are still a little premium because we are offering more, but the model is.
00:13:54
Speaker
Again, hard learning, you don't necessarily have to innovate on pricing. And secondly, you have to be clear what you're selling. I think we are selling tech-based travel.
00:14:06
Speaker
Another travel agent, but better. No shame in saying that. So then, how did the backend integration happen? Because you were doing it manually, booking of tickets and all that. Is it like getting a payment gateway where it's just a simple few lines of code? It's a very painful process. After five years, it's still going on. There are 500 airlines in the world.
00:14:34
Speaker
commercial airlines, and there are, I don't know how many hotels, just the top chains in India, probably only 20% hotels. And then there's a long day. And same for us, it's a completely different set of that keeps on growing. And always the thing is we are, we defined our problem statement differently for a consumer travel company.
00:14:57
Speaker
The problem statement is I have the widest range of hotels with me. Like it's relatively easy to get because 500 still you will get through three, four API connections, but I have the widest range of hotels and I have the best price.
00:15:09
Speaker
Every communication you would get from a travel company will say that. I have the most exclusive hotels out of the best price. We said our problem definition is not that. Because we are serving business travel companies, we can actually ask you where do you go. And we primarily work with mid to large size companies, not very small companies. In India, at least 500 people company. So they know where they're going.
00:15:29
Speaker
They're going to a place where we don't have a hotel, we can actually get a hotel up front. It's a predictable demand. That's how I built on it. But yes, it's a very distributed market. You're building it. Even on flight, which is the easy one, there are players which give you an API which connects you to all the airlines. But you will make less money and you will not have all the fancy features. For example, you will not be able to book a seat online and blah, blah, blah, and things like that.
00:15:57
Speaker
It'll just be search and book. You'll not be able to yield on the API. Like the web checking part of it will still be manual. In that API, it will not have the capability because these players are not the most evolved ones. But with these players, then you have to build enough scale that you now can go to an airline directly and say, I want to integrate with you. Before you go on day zero, they'll say, well, you run away. Certain scale, now you say, I am large enough.
00:16:23
Speaker
give me your API. Let's negotiate. Then they'll give you the API, then you integrate with the airlines directly. Now you get all those capabilities as well. And you get a little more money. So, it's an ever-evolving process. In India today, we are again connected to all the airlines directly. If not, then we are among the top 5 to 10 buyers in India. But now in the US, which is less than a year old market, we are still going through the journey again because we are not a big buyer.
00:16:52
Speaker
The airline would ask for an APA or they would want a minimum guaranteed business to give you an APA. That's not a big thing. They'll charge you some money and that I think from day one you are ready to give. They will not engage with you unless they know that you are doing this volume. It's still that world that they have to spend time ensuring we have done the integration right. It's not like the strike in the razor piece of the world. We still move a little slow.
00:17:21
Speaker
They will actually take you through a full certification process that you have integrated, correct? And so they have to invest time. So they won't give you a serious player, then only engage with you. And the aggregators, so these are like Amadeus, Galileo, these are aggregators. So now we are going a little deeper into travel. I'll try to still keep it simple. Aggregators are not that. Aggregators are
00:17:45
Speaker
Completely different players aggregators are companies like one of the large companies travel booty online. It's a company which is just about going public now, right now.
00:17:54
Speaker
The Amadeus and all are actually purely tech systems.
Building the Itilite Infrastructure: Software, Inventory, Support
00:17:58
Speaker
They are called GDS tools. When I said you go to an airline, you don't really go to an airline. Airlines don't have API. They distribute through a GDS. Amadeus, Sebar, Galileo, these are the ones. They are the easiest way. They are the tech partners for airlines. You go to an Amadeus, you get a tech connection to, let's say, 10 airlines. Apparently, you go to an airline and say, let's do a commercial negotiation. So it's a slightly complicated part, but again, stepping back, right?
00:18:24
Speaker
What many companies get deeper into? And I think that was the part we kept very clear about. What are we building? When we are building travel, we are building three layers. We are building a software, which is again workflows, convenience, things like that. And we are building inventory, which is supply, all this stuff. And third, we are building a support layer because travel will always need support. You will get stuck at the port and you will need support.
00:18:48
Speaker
We have a large support team, 24x7, 365, where we will differentiate. First, we will differentiate on the software. That's the primary part. Second, we will differentiate on support because we will tech enable them and we put people, processes, things like that.
00:19:04
Speaker
In inventory, we have to remain hygiene. We are not bad. We have all the flights, reasonable rates. Every consumer company is trying to win on inventory. Best price, widest cost, any communication which goes from it, right? Whether it's a salesperson, marketing communication, we rarely emphasize our inventory. When get asked, we have competitive inventory, but you can't win on inventory. Even today, in one of the things we tell our sales people, right, in a sales call, if you get asked, will your price always be cheapest?
00:19:34
Speaker
The answer is no. Because if one player can guarantee the cheapest price to you, a Sky scanner or a Trivago would not exist. They are the comparison size. They exist because one player is never cheap. So at least that stepping back helped us. Yes, we have to do a lot of work on inventory.
00:19:50
Speaker
and keep improving it. But this is the right to play, not right to win. Yeah, because in consumer travel, there is a long tail, like someone will want to go to some off-beat in-station location, which is never going to be the case for corporate travel. It happens. Actually, it does happen. Most like off-site terms, larger players, the larger companies which spend the most on travel,
00:20:17
Speaker
They actually go to tier 4 and tier 5 towns. Imagine all these FMCG companies and tech companies, they're going to win all towns. But there's predictability. When they go to that town, we know which hotel they will stay in. Those two hotels are with me.
00:20:33
Speaker
Not the remaining seven. And from the hotel tie-ups, do they have systems? It's very distributed. Again, especially the market like India, very distributed. Chains are not there. Chains only consider about 20% of the market. There are lots and lots of systems. But again, the problem is hotel also has many systems.
00:20:53
Speaker
Each system will sell them saying, okay, you use this to manage your hotel, but they will be optimizing on price and not using any one system. So taking off by moving, right? Especially that tier four and five towns and the smaller hotels are not very online. We have also built some systems to kind of bring them online in. So for the very long tail, for the very small hotels, we have some where email gets triggered to them that here is a booking. Are you ready to take it? Press a button to say yes. All that happens with us.
00:21:22
Speaker
Okay, what somebody might have manually called to confirm that you put a button on an email, click here to confirm. One of the things we try to do, again, there are hotels which don't accept credit cards or online payments, they will say, no, there is my, they literally send a picture, there is my GBID, pay on GBID. We have at least one a large project released about three months ago, where all that workflow also somehow went online, right? How do you collect, how to look and then make bank or
00:21:53
Speaker
Okay. So yeah, you know, when you started acquiring the customers beyond those first 15, 20, you were going to them with like as a replacement for an Amex or a local travel agent, but.
Sales Strategy and Workflow Customization
00:22:07
Speaker
with better support service because technology would make you quicker to respond. Easier to book. So literally, the sales pitch was we would go, and I do remember there was this thick book we would carry. We had printed out an email chain, which one of our customers had for booking one travel ticket. It was a 20-page printout, back and forth to book one domestic credit ticket.
00:22:31
Speaker
One of our sales pitch was that this is how you're booking your tickets. Many people may not even understand that. We literally had laminated and printed out in McKinsey Lamy. We used to throw that on the table. This is how you're booking your tickets. Can't it be online? That too and tell helps. How were you doing the sales? Was it you personally going out and cold calling and like what was the way in which you were doing sales?
00:22:53
Speaker
So we used to be a very outbound company, still continue to be at large part. Calls, emails, LinkedIn, personal connects, investor connects to get a meeting and then demo and sale. So my co-founder actually led sales for India. At that point, I was leading product and engineering. We are both very generalists, so we keep switching all that. I used to personally spend 20-30% of my time on sales, but I was leading product engineering at that point. You would keep saying what are the things we're doing manually and then
00:23:19
Speaker
build automation around that basically. Yep, yep, yep. Again, we interesting, we actually had when we started to use to work six days a week, then we moved to alternate Saturdays. Today we work five days a week and it was very clear to the whole company that a metric to move is not revenue or top light, how many of our transactions had a human involved, right? How many of transactions have a human involved? We had said benchmarks, when we reach this benchmark, we'll never reach 100. Very clear. Today also not 100 in large team.
00:23:47
Speaker
When we reach X benchmark, alternate Saturdays. When we reach Y benchmark, alternate days off. So salespeople don't sell things which we don't have automated. Customer success, don't promise teams we don't have automated. Every team was clarified. How can you contribute to this? Not just product-giving and running.
00:24:05
Speaker
Well, that's an amazing way to incentivize people. You will work only five days a week if you hit this. Amazing. Okay. So tell me about those automation things, which, you know, what are the human elements that you kept automating over the years? Lots of them, but even today, to be honest, a large part of things do go offline, right? People still call us to make a booking.
00:24:33
Speaker
Many times. So we internally monitor now, actually we show the company as well because today in India, we are a very enterprise sales company in US sales mid-market. We actually tell them adoption metric is very important. Adoption is when you launch, how many people came on the platform to book versus call or email because invariably we are moving people to from a travel agent to us. So a bunch of things people had, even when they book a ticket, they would call us, where is my ticket?
00:25:02
Speaker
Right. So literally, sometimes the ticket, even if automated, comes after 10 minutes. So there will be a timer which rings there, right? Like food delivery, your ticket is... Wow. Okay. UX decision. Understanding of UX is something you constantly applied here.
00:25:24
Speaker
Absolutely. Very small things you have to change. In search, I told you, we show only three users. Now, the normal habit is when you search for a city, when you are going to go to, you will search for Bangalore and then filter in all that. And someone would search for Bangalore for us. We can't show the most relevant options because Bangalore is a very large city.
00:25:42
Speaker
Which hotels do you show? Because you may be going to very different places in Bangalore. And what would happen is, after that, people would not search and they'll call or chat with them and say, oh, do you have this hotel? So when you search, and if you search for a city, there is a prompt which comes on it. It says, do you have a specific locality in mind? We make it very explicit. Every travel site takes a locality. But we keep it very explicit before you search. Do you want to put a locality? Because we can serve you better there.
00:26:11
Speaker
of any user behavior which leads to things going offline. We just click and keep solving. But again, the user behavior also keep evolving. But how do you increase that adoption metric that people start booking online directly instead of calling? Lots of communication and training. And what is the workflow element in the product? Like you asked the company for their rules according to hierarchy, like people at assistant manager, grade, get out, like how do you like it can get real-time by the way.
00:26:38
Speaker
That's the secret sauce. It can get very crazy. So there are companies which ask for three approvals before you make a booking, right? And you can ask approval at different levels. Just to give you an example, before you travel, you say, I'm going from India to New York. Somebody needs to say, okay, this is a valid trip. Then once you get the options, you're allowed to book within certain limits. And those limits also we'll talk about that if you are booking within limit, then person I will approve. If you are booking outside limit, person B will approve.
00:27:09
Speaker
If you are booking within 7 days of travel, somebody else will approve. If you are booking before that, somebody else will approve. And let's talk about limits. How do you set limits? You can't stay 5000 rupees per night. Because 5000 rupees per night in tier 2 city is a 5 star hotel. In Mumbai, what even a 3 star? So how do you set limits? Do you go city by city?
00:27:30
Speaker
For every large company, they will be travelling 200 cities in a month. So how do you set policies? We said again, the traditional mode is even the software we have, you said city by city. Why can't you choose a good three-star hotel for me? And every word has a meaning. I can see what are the three-star hotels in that city. I also publicly find their ratings and reviews.
00:27:57
Speaker
I define a benchmark, at least this much is a good. So good three star, which means I can adjust your policy dynamically. If you're going to New York, it'll become $300. If you're going to again, and the bar that will become 300 rupees.
00:28:11
Speaker
Even with work at online, good 3-start for managers, good 4-start for VPs. Unsexy work, but that level of detail is what we solve for customers. Amazing. So, do customers then adopt this? Because there would be a legacy policy that they would already have, right? Are they ready to trash it and adopt?
00:28:30
Speaker
Almost always, again, it takes time.
Automating Consulting and Implementing Rewards with Itilite Mastermind
00:28:33
Speaker
That's why we have a very strong customer success team and they're the team which consults the company on what you should do. Customers, some of them, one extreme is when they say, okay, we have offline and we don't follow anything. You tell us what is the good policy.
00:28:47
Speaker
and then we are able to change up one. Some will say, I want exactly this going online, which is a very bad idea, but we start from there, and then things start ticking. And then we go to them, and we have the monthly and quarterly review. See, this is breaking. Actually, we launched a product last year, and we tried to automate it. We are both consultant founders. So with all due respect to consulting, we believe this is not so hard, and we can automate this. There is a product we launched called Itilite Mastermind.
00:29:14
Speaker
Then what is analytics? So at the base, you give an Excel, then you give the charts, right? But that's not still the person who has to be smart enough to read the chart and see what do I do? Why can't you change it? So basically the vision of Mastermind where it is, you go to that page and says, okay, you spent a million dollars last year, you could have saved 200,000 on it. How do you get 200,000? Here is idea one, there is idea two, there is idea three.
00:29:43
Speaker
Here is a button. If you like this idea, press this and the settings will be changed. Wow. Amazing. Okay. They are doing the same thing when teaching every customer this. Why can't we automate consulting? How would you build something like this to have that, you know, there would be so many variables which need to be looked at to create one idea?
00:30:04
Speaker
And you have to create maybe hundreds of ideas because each customer, there will be a different idea, you will suggest. How did you break it down into a process flow which can be automated? Go back to meeting Z. That's where it came up, that thinking.
00:30:21
Speaker
Problems for every company are super hard. How can a 25 year old with no experience of the industry solve it? Yes, the person is smart, but also McKinsey has literally knowledge book. It's industry. Here are the possible 20 problems. Here are the templates how to solve it. You should broadly fill in broadly to one of these four templates. I think it came from consulting days that you can solve these problems because
00:30:48
Speaker
Outside everything will look different. We can see taught us how can templates work. You are not as unique.
00:31:00
Speaker
If you like to hear stories of founders, then we have tons of great stories from entrepreneurs who have built billion-dollar businesses. Just search for the founder thesis podcast on any audio streaming app like Spotify, Ghana, Apple Podcasts, and subscribe to the show.
00:31:21
Speaker
Okay. Okay. So basically over the years, as you kept working with customers, your customer success team would keep giving recommendations. Then you were able to see trends that these are the recommendations for this kind of use case. These are the recommendations from this panel. Really not hard. Literally when I started building this, we thought there'll be like 20, 30, at least seven recommendations, which go again and again. Seven recommendations. What are they, if you're at liberty to share? I know it's probably a secret sauce, but
00:31:50
Speaker
This is something which we do share again. One of the most common ones is companies spend high because a lot of bookings happen last minute. People travel, they will book within the last three days of travel and that leads to very high cost. And it is most expensive, right? Very high cost. You can, again, you can quantify this. We can benchmark what is a good benchmark for how much looking should be last minute.
00:32:19
Speaker
Where is the company? And we have data to say because of this, how much money you are losing. What are the solutions for it? Traditional solution is now you discourage people by asking for a special approval if you are booking last minute. Go and repeat approval. We can automate that. That's one of the answers. It's a setup.
00:32:41
Speaker
So it'll set up additional approval in your workflow. You will have to enter that. We can also automate that using the incentives idea we have. If you go 7 days in advance, you will get 100 rupees. That's the other idea which is there. Do you want to set that up? So companies which won't adopt incentives upfront, when they see it here and quantify it, they can adopt. That's one of the ideas, many ideas like this. And by the way, this is another place where you go to a company
00:33:07
Speaker
And I, Chris was my favorite one. And every company I could imagine, as soon as they say last minute booking, our business is unique. We don't need to travel last minute. Every company we ever implemented, ugly booking rewards, right?
00:33:25
Speaker
So like, you know, this rewards idea is when we've not spoken about the original idea which you had of rewarding. How did that play out? Like, was that the main pitch? You pretty much soon went into a travel desk pitch.
00:33:40
Speaker
Even if you go to Italy.com today, after the first fold, when we talk about why are we unique, the first thing is rewards. Now I do believe still to date rewards is a very strong concept. Anyone who has used it, any company has seen lots of savings. What we estimated was the change management. It requires a lot of change management. This is not how companies have worked. Initially, we were selling to founders, so it was easy to sell.
00:34:06
Speaker
But after that, companies have to be clear, will HR take the decision, finance take the decision that we have to achieve rewards? With larger companies, that becomes a challenge.
00:34:17
Speaker
Inch management, I think we have to put a lot more effort on to get rewards introduced, but any company which uses rewards sees a lot of benefit. Right. Yeah. The idea is hard to swallow because you are anyway giving travel. I mean, you know, they are not entitled to travel, but you're giving travel to make them comfortable. And then over and above that, you also give them a reward for a CFO. Reality is when you have to confront reality sometimes. When we make the statement, first you have to believe that if you are giving 5,000 rupees to someone,
00:34:47
Speaker
They are spending five over.
00:34:49
Speaker
They are not saying that even 3000 hotel is comfortable for me, I'll say there. That is a reality. You have to first confront reality. Now, that extra 2000, even if you get 1000 by paying extra 1000, why not? But it's funny, you have to adjust to that, not every employee is thinking for the company. And that's a hard thing to say yes to. It's a mindset change, which is needed. Yeah. Okay.
00:35:19
Speaker
But what percentage of customers opt for rewards? At different series, I think upfront about 20-25% opt for rewards. But then, over time, through mastermind, through consulting, I think similar ratio, we are able to get them on board. Okay, okay, okay. So, someone like one year plus age, customers, half of them would be using rewards? At this point, again, lower because we are just coming out of two years of COVID, where everything went higher.
00:35:51
Speaker
How easy is it for an employee to claim that? Do they have a mobile app or a dashboard where they see I've earned this much and transferred to the bank account? What is the employee experience?
00:36:04
Speaker
employees have it very visible to them, their first dashboard when they log in says the number, multiple ways to use it. One is we just give the data back to the company, pay with payroll, take the tax, whatever. Second, we have a gift card platform. You can use this by different gift cards, Amazon and card and whatnot. The third one which we have seen is actually this
00:36:26
Speaker
feeds back into the program of a company. Companies generally have a rewards program. We have to give points and things like that. These points also go there. Okay, we are saying we are a data company. We are getting you the data, however you want to use it.
00:36:39
Speaker
If the company was for these gift cards, then the tax element is saved for the employee. They will not have to. Not really. Again, up to $5,000 a year, there is no tax and then there is tax. There is still tax. Companies have given more innovative than us. So there are a few companies who said that I don't want to give individual. I will give for a team and then there is no tax. There is a budget for a team out taking because you give this much. We are getting innovative and we carry it on from there.
00:37:08
Speaker
Okay, got it. So when the salesperson closes a deal, what is the journey after that? Is there a human driven onboarding process where you understand and then onboard and like a consultative approach? There is. As I said, in India, we are selling to enterprise companies, at least five to seven hundred people company all the way up to hundreds of thousands. So there is a power gain.
00:37:35
Speaker
varying from when we get data from the company, two days to two weeks onboarding process, where we understand their policies, their approval flows, set it up. There are also eight and another nuances, most companies have their own deals with airlines and hotels, large ones.
00:37:50
Speaker
which have to be set up in the system, that these are your deals which will get through with that platform. Again, it depends from a consumer platform because all this starts coming. So all this has to be set up anywhere from two days to two weeks, it takes for a company to start. Capability-wise, now again, as we sell in the US, we still are going album. It is still not your website and get started because you still have to see if this is a good fit customer.
00:38:16
Speaker
but it will give you another link, this link you can use to onboard yourself, right? Because we are selling to mid-market in the US and much more open to setting up things by yourself in that market. Self-service, right. Got it. Okay. So 2020, Feb, like, you know, Feb March, what was the scale at?
Scaling Up During a Pandemic: Itilite's Growth Story
00:38:34
Speaker
Like, what kind of, that year, like that financial year, what did you close at? And then tell me about the COVID impact post that.
00:38:42
Speaker
So just first set the setting, what were you at just around that time? What number of customers? So we had about 150 customers, India only, February 2020, and March customers were there.
00:38:58
Speaker
We make a reticue based on transactions. We have no fixed, you know, for March, April, May, there were many days which were at zero. But what was your average pre-COVID, like daily, monthly, like number of transactions or whatever metric you measure? Those metrics also changed. Again, those numbers we don't disclose in publicly. We are doing decent amount, 150 customers and larger customers. We're doing decent amount and it went to zero. The interesting part, the timing we got right. We signed our series, we term sheet the day first COVID case in India game.
00:39:26
Speaker
Yeah, wow. 100 crores term sheet at the day. We were fortunate, lucky, whatever you can call it, all our fundraisers, I think have been from a position of strength, multiple term sheets in three year runway left. So raises to accelerate. This one, we said we need to accelerate now to open US market. Obviously, the timing we got
00:39:54
Speaker
fortunate, unfortunate, whatever, very different. But the good part is from February of 2020, to December of 2021, at scale increased by 5x. How do we scale our travel company in the middle of code? That's also an interesting question. Yeah, exactly. Exactly. The metric we used to look at is transactions, travel bookings and revenue from there. Obviously, it didn't make sense.
00:40:23
Speaker
One question, transactions, travel bookings, are they the same or what is? From travel booking, same number, right? How much travel booking is on the private firm and from there, how much revenue you make. Now, travel bookings are not happening.
00:40:38
Speaker
How did you even measure what is your sales team target? We were still selling in that time. I think the first game, March, April, we were hard, but beyond that, we started selling. We said, when we sell to a customer, after the first wave started subsiding, customers started to travel again, and they were open to having some conversation. They were open to having conversation more because the travel agents had shut down or fired their travel teams.
00:41:04
Speaker
Hiring that fixed cost again, let's think difficult, like other things. But when you get a customer who is not traveling, how do you measure? So we moved to a different metric, that metric we call Bookings Under Management. When we onboard a customer, how much did they spend in 2019? Because we as a company, strongly still continue to believe that travel will come back. 6 months, 12 months, 24 months, we are not running out of money. Travel will come back. And it's a very low churn industry, at least for us.
00:41:32
Speaker
customer comes, doesn't go. When you onboard a customer, that's what potential you have onboarded. Without that potential, we went 5x in those 18 months.
00:41:47
Speaker
Or they are going to much, much, much larger customers. Broadly, our average customer used to spend 10-12 lakhs a month. Today, our average customer spends 50 lakhs plus a month. Because larger companies became open to digitization. Their providers had left India or sat down their shop.
00:42:08
Speaker
or travel teams had been let go, they didn't want to build those teams. Plus, when they said, now we want to go digital because everything was going digital, reimbursements were going digital, there are not many digital pairs. So that's why as a travel company in the middle of forward, we were able to sign a lot of customers.
00:42:26
Speaker
or a customer to sign up doesn't cost them anything, right? Because there's no subscription. Here, again, the pricing accidentally or whatever, that pricing helped you, right? If you had stuck to a monthly subscription, it would have been very difficult.
00:42:40
Speaker
Yeah, especially monthly subscription and COVID would have been a disaster. But there were a few customers, I think five or seven customers, which were on monthly subscription, which we literally for the first four, five months said that we'll take it off because you're not traveling. And it becomes very tricky. How, why do you pay monthly subscription? Yeah. Okay. Reimbursement product. What is that? Is it just this travel only or what is that like? Help me understand.
00:43:04
Speaker
It is like the reimbursement product. Whenever you want to file for any reimbursements from the company, it could be internet at your home. That became a very wide use case in work from home. I think from our team, about 20% of people used to file reimbursement pre-COVID. During the remote work, it became almost 100% because everyone was claiming internet. So how do you file for those reimbursements is the product. Again, a lot of workflows there. Policy is whose approval is needed and blah, blah, blah.
00:43:33
Speaker
As I said, it's a very crowded market. But why we launched that product is travel and expense are related. Very simple example. Why our product versus any other product, right? Why have you thought of it? Any expense product, one of the biggest pains for the finance team is people don't file on time. I have to wait three months for people to file. And I can't even know who has to file. You don't know how they file. 70% of reimbursements are when people travel.
00:44:04
Speaker
You travel to your food and all that. If you have booked a travel to us, we can remind you, you have to file your reimbursements. Actually, we can remind you when you're sitting on your return flight, you have nothing to do. We see three in your gallery, which look like receipts, so you want to file them now. Oh, wow. Okay. So there's a mobile app, which employees download. Okay. Web app for every product we have is available on web and app. You can literally click a picture, file it easily. But again, that.
00:44:33
Speaker
Any good reimbursement product has that. You can click a picture, your credit collections can come in. The difference is because you are at travel and expense, we can remind you. You have more data, like the context is clear to you. Absolutely. For our to check, an audit is a big thing in reimbursements.
00:44:56
Speaker
One of the fraud you will not imagine it to be is, the finance team has actually checked. You are filing new investments for Mumbai. Were you really in Mumbai on that day? We can check that because you would have booked your ticket through us. You are not in Mumbai on that day. So, we need to do it automatically.
00:45:11
Speaker
Okay. Okay. Who are the other companies in real investment space? I know of companies which are like issuing a card, like an expense card to employees. Are these the companies you're talking about? Many, many, many companies. Again, the largest one globally is called SAP Concur. Very large company. And there is a company called Expensify, which just went public, I think last year, 3 billion. Very crowded space. Every ERB
00:45:37
Speaker
or HR system will build four forms and then say I have reimbursement product. That is anyway doesn't work because you need rules and workflows which this extension ERP and HR products will not have generally. The good ones I named definitely have them. That's why the way we think about expense is we are comparable to a good product, first of all.
00:46:03
Speaker
But why we are better than them is if you use travel and expense, you get powers which you can't get only expense. The fraud prevention is much more robust with you. We will make your filings go faster. That's the most important. Actually, we can also, we can actually make your 70% reimbursements go away.
Attracting Major Investors: The Itilite Advantage
00:46:22
Speaker
Because if you book travel with us, there is a way company can directly pay for your travel. So you don't have to pay and reimburse. What does that mean? Okay. Yeah. The company is buying the tickets, right? You're not paying for the tickets. You are not buying for the ticket. You're not buying for the hotel. Those reimbursements just go away.
00:46:38
Speaker
your work as a company is reduced so again there's a lot of value in bringing these two together. So are you looking at moving to the US and staying there so that you get a more first-hand understanding or how are you opening the US market? What's the strategy?
00:46:54
Speaker
Long term, maybe if that is needed. I've already lived there for a couple of years, but as of now, we are doing completely remotely. We have about 30 plus customers in the US as of now, completely remotely. We have an entity in the US. We don't have any employees in the US.
00:47:09
Speaker
sales from India, servicing from India, as we start going upmarket to slightly larger companies, definitely we need employees in the US, both for sales and service at least, sales and customers actually. And if that's needed, then founder needs to be there, sure. But is the pricing same there, like in India, per transaction? Per trip. There's a slight difference. The one I explained earlier, all combined, one
00:47:34
Speaker
The buyer in the market is slightly different. Most buyers have reached a point where they think this big rate card is a pain. Can you give me a simpler raising? We are still not there where they want to pay a fixed fee per month.
00:47:47
Speaker
So we want to explore pricing and then again, numbers are also very quite different. So I wanted to ask you, you know, your revenue split between commission on what you book versus the fixed fees that you charge, which is a bigger contributor? Okay. Okay. Okay. Okay. Yeah. And tell me about your fundraise journey. So you did tell me that you raised a hundred crores in like that Jan 5. That was, we actually raised another round. We just announced.
00:48:17
Speaker
Less than a month ago, we raised about 29 million round from Tiger. We raised four rounds still now. The first one was from Matrix Partners. As I said, even verbal commitment, even before I left Mitra, actually it was that, okay, at least we got full time, then we'll side down sheet. So, side down sheet.
00:48:35
Speaker
The day we became full-time, I think a week after that, we signed the Ramji and they have been very supportive. They have invested in every round since then, including the latest one. They have doubled down. There were a few angels also we brought in. Very small check in early stage who were more people we wanted to take advice from and they just
00:48:55
Speaker
In the fourth round, we gave them an exit with 40x returns. The second round was from VY Capital. Now, this is an interesting story. Apart from Matrix, all the investors who have invested in us, second VY, third Green Oaks Capital and then fourth Tiger are actually very late stage investors. All of them can individually write a hundred million dollar check.
00:49:19
Speaker
So at least, again, from a capital perspective, the company is reasonably secure that if we continue to execute well, we have investors who can keep funding us even in-house. But what makes investors so excited about investing in Ethylite? Obviously, the fact that you are attracting such big names, what do you think investors get excited about?
00:49:42
Speaker
So I think in the initial days, it's more the idea in the actually less the idea, the founder in the market. Yeah. Okay. Travel is a big market. You're disrupting Amex in a way.
00:49:54
Speaker
Travel is a huge market and business travel is a huge market, very offline and founders, right? You have to build your own credibility, something we have done in life, which has built credibility and shows credibility, right? At some point, as you go further, it has to then now come to execution. That seems like we're growing. I think even growing two things which have been consistent.
00:50:14
Speaker
One, we have kept growing even through the period of COVID. Second, we have been extremely capital efficient, extremely. The capital we have raised now, I still had a two-year runway. At a high burn rate, I had a two-year runway. So we can, one is runway, we can go to the typical conversations with our investors have been. I think we are at a point where with additional capital, we can do KBC. I don't need it.
00:50:41
Speaker
But I can do ABC. So on that point, you can actually say that, okay, I need this much money and this much dilution. If you are not comfortable, then in 6 months or 12 months, we'll have the same one decision. And these are investors we have been speaking for a long time. If they come and see that in those 6 and 12 months, you have achieved what you have promised,
00:51:04
Speaker
Right. Better have that getting early than late. Right, right, right, right. Okay. Okay. You build that credibility. Right. Okay. So when you keep executing, second, you'll be capital efficient. You are not running out of money. Our economics is actually pretty good. Right. We have even this travel, so to say, which is supposed to be a high touch market. We have 50 to 60% plus cross margin. Our CAC paybacks are six to seven months. We get our payback on customer acquisition costs in six, seven months.
00:51:34
Speaker
So economics makes sense. We are not profitable because we invest a lot in sales and marketing and technology. Opening new countries. So keep executing what you are saying, be capital efficient and don't close your head when you get money. That's some of the things which does help in having those conversations.
00:51:54
Speaker
You didn't get tempted to launch a cards product and a payments product. Those would have been high-run products. So I think that this is actually the secret sauce behind the credibility. How do you measure CAC? You said that your CAC is recovered in six, seven months. How do you measure that? Sales and marketing costs, again, revenue signed. I mean, at this point, it will be signed that if you have signed a company which spends, let's say, a crore a month, how much revenue will make from them?
00:52:25
Speaker
That's the revenue multiplied by gross margin. So that's gross margin from customer per month, sales and marketing costs divided by gross margin added per month. Okay, got it. It's the CAC way back. Again, CAC is different. I have been asked about LTV by CAC. I don't like that metric. Why is that? I don't know lifetime. Still, after five years, I don't know lifetime. I have customers which required in year one, which are still with me. How do I guess they'll be with me for five years or eight years or 20 years?
00:52:54
Speaker
So, LTV requires me to put a number how long the life of a customer is versus CAC payback and say, okay, in seven months I have recovered. Definitely my customer will need for more than seven months. That is good. In your case, your customers would only...
00:53:11
Speaker
It's only if a company becomes bankrupt, then they would leave you. There are other reasons they leave. What are they? One of the big reasons is a travel booking of a senior person gets screwed up. We are still a marketplace. We don't control the experience. The flight or the hotel does. A very common thing in the hotel industry, you reach the hotel at 1 am.
00:53:39
Speaker
Typically, in a hotel, there is an intern standing at 1A, and that intern, if they check for the same day check-in, instead of our previous day check-in, they will say, you have no booking. This has happened, I've told you, this specific thing has happened so many times with us, and it comes back to horn cuts, right? We have a team which actually calls the hotels and reconfirms. You have the booking, you have received the payment,
00:54:06
Speaker
Please be careful. OK, that's interesting. There are these make or break travel cases which you have to be extra careful about. Have you automated these yet for the system to flag this as a make or break? So people get tagged. Again, senior people who have had escalation in the past get tagged in the system and their bookings go to a special desk which does something manual to make sure things are OK.
00:54:33
Speaker
Wow, how amazing, so amazing. If you like the Found A Thesis podcast, then do check out our other shows on subjects like marketing, technology, career advice, books and drama. Visit the podium.in, that is, T-H-E-P-O-D-I-U-N.I-N for a complete list of all our shows.