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Empowering the blue-collar workforce | Pravin Agarwala @ Betterplace
427 Plays2 years ago
BetterPlace is one of the most successful HR Tech companies in India. The startup has built a platform of products for companies with a large blue-collar workforce. They help companies manage their employees better and help them get access to financial products previously unavailable to them.
Read the text version of the episode here.
Read more about BetterPlace:-
1.BetterPlace to offer loans to frontline workers on its platform
2.BetterPlace acquires fintech lending startup Bueno Finance
3.Workforce management software provider Betterplace enters Malaysia with Troopers acquisition
Recommended
Transcript
Introduction and Betterplace Overview
00:00:00
Speaker
Hi everyone, this is Praveen Agarwal, co-founder and CEO of BetterPlays.
00:00:16
Speaker
Pravin Nagarwala was living the Indian dream. He was an engineer who had had a very successful career with the European tech giant SAP and was a vice president there. But the itch to give back and impact the lives of millions of Indians drove him to quit that job and start up. And in this candid conversation with your host Akshay Dutt, Pravin shares the journey of building better place.
00:00:38
Speaker
which is today among the most successful HR tech companies in India. Betterplace has built a platform of products that helps companies with large blue corner workforce to manage people better and helps their employee base to get access to financial products previously unavailable to them.
00:00:55
Speaker
Better Place has raised almost $75 million in the last two years thanks to this amazing combination of the large addressable market and very low customer acquisition costs in churn. Stay tuned and learn how Pravin built this amazing business and subscribe to the Founder Thesis Podcast and any audio streaming app to learn about building businesses that last.
Pravin's Journey at SAP and Founding Betterplace
00:01:23
Speaker
So the start of my journey as a developer, right? So entire 18 years, I worked with SAP, you have to try to benefit based out of Bangalore, but doing multiple different roles globally. When I quit SAP, I was heading the Cloud ERP product called business by design globally for SAP. And when I was working with SAP, you know, SAP largely provides solutions for white corner from a niche's point of view.
00:01:43
Speaker
And you interact with a lot of frontline workforce, blue corner workers, right? To study more, I stayed in Chambore. That's a slum area in Mumbai. So a couple of weeks I spent there. I don't know what is the life of people. So this was a very interesting eye-opening thing for me.
00:01:59
Speaker
And then I always read about that there is no employment, people are struggling to find jobs. Companies I talk to, they say I don't have people. If you go to a retail company, they don't have resources. If you go to a security guard company, any security guard company you talk to, the only problem is I don't have resources to grow. You talk to a construction company, they struggle with resources. So I thought this problem.
00:02:19
Speaker
if somebody has to solve this problem and that's where the idea of better plane germinated with the key focus which is how do we create value for the blue collar workers and that's why we call ours is better place so creating better plates for millions of people across the world.
00:02:34
Speaker
That is how better place started.
Betterplace's Evolution and Services
00:02:37
Speaker
There's a very global statement, make employment, make companies a better place for blue collar workers, which I'm sure today you can explain it well. But at that time, you probably had a narrower focus. Tell me about that evolution. I think, yeah, that's a very profound question. So how we started is how can we help a person find a better opportunity in future, right? Or from an employer point of view, hire the right guy. That was the first statement we had.
00:03:03
Speaker
So, for example, you do not know who the people are, what is their bag, you know, and how this happens. So we said, okay, we'll create a database of millions of people, first of all, right? Of every Indian possible in the system. And now as an employer, you have identified the person, you want to hire Praveen, but you want to know more about Praveen, so you come to the database. So it's more like a
00:03:24
Speaker
background verification, KYC service that we started with. Then we looked into what are the other problems of the employer. But at the same time, how do you create more data about the individual? At the end of the day, you have to create more data if you want to give a credit solution to prevail as a blue collar worker. You have to know more about proving to give a credit. So we said, how do we create? We said, OK, we will create more solutions for the enterprise, thereby building more data about the individual.
00:03:52
Speaker
onboarding or KY2, then we added training solution onto it, then we added attendant solution into it, then we added payroll, then we added compliance, then we added rostering, document management and so on. This is a very ops-heavy kind of a business. You're coming from SAP, which is like from a focus of building pixels into something so ops-heavy. How did you?
00:04:12
Speaker
Pull this off. So coming from a imperialist focus on white collar, 2015 we started better place. First six months, we were cleaning our white collar shoes more or less, from a product point of view, thinking point of view, design point of view. So it is not solving my problem. You take the software and you do it. They said, I don't want the software, I want the problem to be solved.
00:04:38
Speaker
Software is not solving my problem. Somebody has to solve their problem. You gave them like a workflow tool to manage background verification on their own. Correct. So now we had to learn about background verification. So I started meeting
Innovations in Workforce Management
00:04:52
Speaker
a lot of companies who were doing background verification. I'm very thankful to a lot of people who guided me into that process. But knowing nothing about background verification technically at that moment, now we do millions of people. So we have some idea.
00:05:05
Speaker
That's why we didn't know anything. So, we started questioning everything. Some of the questions were very idiotic, right? For example, if you have a blue-collar worker or if you have an address, you have to go and verify your address. Now, the address will say, one of the addressing words is that, my house is behind the temple.
00:05:30
Speaker
I started doing address verification myself. I went on the street. I was checking the houses to figure out the problem.
00:05:41
Speaker
Because we said you cannot do address verification if you have to do let's say one million address verification every month. You cannot do with people, right? There has to be technology. So we went to the drawing board again. So we created a technology. We said we will create verifiers across the country.
00:05:59
Speaker
We map the address with the geo tag. Then the verifier is the nearest person. We locate the person and say, okay, you are close to the house. You take this mobile app, go to the person, take a photo of the house. Then it will geo tag, take a photo of the person. So it will do a facial match. And then you are done. Now you do not have to take address anywhere.
00:06:19
Speaker
you can do it anywhere in the country, right? Because you just have to have more and more vampires. Then we said, you have to verify it. So we spoke to India Force, right? Because there are postmen everywhere in the country. So we partnered with India Force. So it worked beautifully, right? In the background verification, you started only with the address because background verification includes like verifying education credentials. So you have to check if they actually passed out from the university or police case, court case, all of that.
00:06:46
Speaker
So in blue color, you do not know that much of education because education typically they are 10th and below. So education does not matter. You're not hiring for education anyway. So critical data. But you have to do identity check. Identity check start. So identity check was easier because you can partner with Adhar and Pan and voter ID. And there are a lot of systems available. Kidneral code record check was a problem.
00:07:10
Speaker
So we said, okay, if you have to go to a police station, get it done. It takes time, right? Because police is also busy. The processes are longer. So we started doing a digital verification using court data. So there are government data, which are digitized. Fortunately, this is possible in last six, seven years. It was not possible 10 years back, right? Because there was no digitization of data. So the push for digitization also helped us.
00:07:34
Speaker
We do a lot of artificial intelligence and machine learning algorithm and we run through the system every day to figure out if there is any antecedent against let's say Praveen. And it will pop up based on our algorithm. So it happens by the system again. There is no manual intervention required.
00:07:54
Speaker
This collaboration with India post, how did that come out? Because that seems like a key unlock. Unlocking that collaboration would have really changed your trajectory in terms of giving you instantly the ability to do pan India verification and really increasing the value that you can add.
00:08:11
Speaker
Yeah, so I think India Post, if you think of India Post like 10 years back, India Post was only a postman company. But they changed quite a bit over the last six to eight years. They started becoming more of a startup kind of mindset. They partnered with e-commerce companies to deliver as well. They started a lot of new initiatives. So they were very progressive in their thinking. If I have a huge manpower, I have a reach.
00:08:37
Speaker
There are companies like Better Place, like Flipkart, like Amazon, who needs the leech. So they started doing that. There was no new initiative like the mobile banking, which the postman was carrying on top of Adar and all. So there are a lot of initiatives they brought up. So they were very, very forward thinking that way. So they said, okay, we are good to do it. But we also run our own verifies as well on the ground. So we have thousands of verifies on the ground who can also do so. We basically look at optionality all the time.
00:09:04
Speaker
whether the person is doing or someone else is doing. So anyone can now pick that out. It's like you are booking an OLA cab. There are 10 OLA drivers who can pick up and one of them will pick. We do the same thing. We have multiple people in the same location and whoever picks it up.
00:09:18
Speaker
Amazing. So these are like gig workers. Okay. So tell me the journey from there. So once you built this in, then how did you go about in terms of client acquisition scaling up? So you fixed your supply chain in a way, like being able to supply the verification service. Tell me about the demand generation part of it. Certainly. So we started in 2000.
00:09:40
Speaker
15, right? We had our first customer in 2015, September of the nine months. And this was house joy, one of the growing startup at that point. Yeah, Urban Clap operators. How? I think that company exactly. So Sunil was the co founder, and we work very well with them. That was the first customer. And I was the only salesperson. I was the only inside sales, marketing, lead generation, and this is the case for every company that starts right. So
00:10:07
Speaker
So the first few customers we got through personal contact, we'll go and talk to them, we'll get there. The next set of customers were through LinkedIn. So we will, so every day we will read newspaper, this could be eight million, half million, two million, pointing million. So you will start chasing them. And that's how we go to our customers. Like I read the newspaper in the morning, you're gonna raise some money. The owner was in the company that Zomato acquired the letter. So the owner raised money. I sent a mail to the owner founder. The owner founder said, okay, come meet next day.
00:10:36
Speaker
So it was that way, right? But we were still operating in a limited location. We were operating in Bangalore. We were operating in Delhi and part of Mumbai. So we used to be very selective in where we pick up our tasks. We met one of the customers, I would not name them, but we met one of the customers, which was one of the fastest growing startup at that moment, a lot of blue-collar workers. So they said, can you do Kolkata and Hyderabad? And we had no clue how to do it. But we said, we are Pan-India and we do everywhere. So they laughed.
00:11:05
Speaker
that we know that you don't have, but that you are confident you can do it. So they gave us the task. They said, if you can do Kolkata in Hyderabad, and you can do it, we will give you an entire country. My co-founder and I were there in the meeting, we came out, we chatted for some time, but they
00:11:21
Speaker
interesting thing was that we said, okay, this is our opportunity. So I also believed in biting more than I can chew and then I chew it, right? So we took this and finally we delivered. The company gave us entire India and that's how we became Pan-India actually. And this was early 2016.
00:11:36
Speaker
Furthermore, then we said, okay, if you have to acquire more customers, there has to be more relationships. We started organizing customer
Customer Engagement and Market Strategies
00:11:42
Speaker
events. We started building communities. So B2B is more like relationship sales, right? You have to be on the field. It's not like digital sales. So we started organizing events. We started sponsoring events. Some of the events we sponsored, I thought we didn't do our job well because we could not tell the story. So we also learned.
00:11:59
Speaker
a lot of misses that we happened. But finally we realized that how to maneuver through the community building. So now we organize our own event, we build our own communities, we bring people together, we share knowledge. And it's a constant activity that we do almost every week for last few years, right? And I think what we also realized is that only we were telling from Bangalore for the India, right? So then we realized that we have to have people in every metrocity event, company headquarters. And so now we have a sales day.
00:12:28
Speaker
in Delhi, in Bombay, in Hyderabad, Chennai, Kolkata, Pune, Ahmedabad, and all these places. So we meet them very often, and so on and so forth. So this continues. And now we have a bigger sales team. We have an inside sales team. We have a marketing team. We have a retail team. We have a sales team. So it goes through the entire funnel of typical B2B sales, as we focus on typically medium and large customer structure.
00:12:52
Speaker
Customer persona, like your ideal customer persona, did that evolve over the years? Like you were earlier chasing startups in the early days. So tell me about that journey. You must have realized with experience that this is a better customer as compared to this and so on. Yeah. I think first, first year and a half, we were focusing on largely the conversion fast forward. And the conversion was happening faster in a startup world, right? And that too, logistics and e-commerce.
00:13:18
Speaker
Yeah, for decision making, good turnaround, digitally savvy, you don't have to convince them, there is no legacy. Technology, you know, I can do something better for you. They trust that guy more than anyone else. And we were carrying our own pedigree of SAP and a lot of technology and other things. So it worked well.
00:13:36
Speaker
But we realized that the overall market for blue collar that we target is 150 million people in India. The startup world or the digital economy, e-commerce, logistics, when only catering to 10 million people. So we are leaving everyone aside. So first we said, OK, we focus on this industry. We win this as much as possible. Then we said, OK, which are the other industries where the problem is bigger? And eventually we can solve. So we went industry by industry, city by city. So then we picked up.
00:14:05
Speaker
private security guard, because that's where when we did our study, I saw a private security guard who said, when we went deeper, we found 70,000 private security guards in India. And it was a big, big number and never served as an industry. So we started partnering with them. We had our own association partnerships and all. So we started serving private security. Next was facility management. Like Accenture was one of our big customers that we signed in 2017, 2018.
00:14:32
Speaker
Accenture has 25,000 nuclear workers. They are the drivers, security guards, cleaners, janitors, plumbers and so on. So we came, we brought the system. Then we spoke, I was one of the largest retail chain, they're all headquartered in Bombay. Then how do you do it? While you go to a particular retail chain, or you go to a KFC or a McDonald's, there are only 10-12 people, right, or a Domino's.
00:14:56
Speaker
But there are thousands of those shops are changed. If you aggregate them, this number is almost 50, 55 black people in India, the organized one. The unorganized one like mom and pop shop is three core people. So we said, okay, we will not get into unorganized. We'll focus into organized. So retail became another industry. Similarly, BFSI became, now we look into manufacturing.
00:15:17
Speaker
We are yet to get into construction because construction is something we are planning later this year or next year. But we went industry by industry and city by city. So that's how we planned our solutions. The other thing that could be interesting for you and the audience is that when you go into industry, you also need deeper understanding of the industry because every industry does not behave in the same way. A logistics industry, a delivery boy can come in the morning, do two hour job and run away.
00:15:44
Speaker
But in McDonald's, the guy has to work eight hours because there is a lot of expertise required. So it works very differently. When you are on the field, it works very differently. Worth it. You are under a shade, right? Like a shop. It works very differently. So we had to also learn. And it's not like this copy paste everything. You have to learn that industry and do it specifically for that industry.
00:16:06
Speaker
Targeting founders was something which you could do through, let's say, cold emails or personal connects, introductions, so on. How did you learn to target these large companies, like, say, a retail company headquartered in Bombay? You would obviously not be able to reach the CEO. Why would the CEO give you time to talk about background verification, for example? So how did you crack these large deals? Yeah. I've submitted tickets off Leylo.
00:16:33
Speaker
Yeah, so I think we did three things, actually. And I'm being very candid and open in this conversation. So number one, we still use our digital reach out, right, through LinkedIn, sending mail, sending this thing, someone with this point, sending five people in the same company, those emails and all.
00:16:50
Speaker
Second is that we started looking at one degree of separation. That means someone who knows them, who we know. For example, we have investors, so my investor might know them, or we have a customer, the customer might know them. So let's say I'm working with one customer, can you connect with the other customer or the person in that company and so on. So that's the one degree of separation we use. And the third thing that we realized is that you have to bring community together. So we started doing events, smaller, bigger events, either participating
00:17:19
Speaker
Events on what team? So let's say there is an HR event happening. We will go and participate in that event. We tell people. Then we started organizing our own smaller event. So we partner with ETHHR world that called then HR head from this company and we will do a dialogue. And in that dialogue, we will talk a little bit about better place also. So that at least you have got a card and they know you by name and the company and then later you go and meet them.
00:17:44
Speaker
So these are the three approaches that we had achieved from building the network and connection. These are the three things that we continue to do even now. How did you decide on the pricing part? I guess you are operating in an industry where pricing is already set because background verification has very standard rack rates for different types of verification. So did you just go with that?
00:18:07
Speaker
No. So the price for blue color, not many people used to do background verification. Most of the background verification used to be done for white color. And the price point was typically 3,000 to anything between 3,000 to 8,000 rupees. In some cases, it can go up to 20,000. Now in a blue color, where the salaries are much lower, you charge 3,000, no one will do it, right? So another technology is the cost work. So I said, here, cost to come, but that's what we make.
00:18:40
Speaker
People will not trust us. That guy is charging 3000 bucks. It's not that they are making 2900 rupees profit.
00:18:48
Speaker
Whether it's a white color or a blue color, you still have to bring the same background notification. People will take if they are sending junk data and they will not trust. It will increase the price. So increase the lag price. The lag price would be $550, $800, $900 depending on different models that you use.
00:19:09
Speaker
But we also told them that, okay, see, I am doing technology. This is my cost. I'm ready to do a display. This is my direct price. I'm ready to give you the discount. So we said, okay, we have to have certain margin for our account management, sales costs, technology costs, and some margin to run the business. But I will pass all the benefits to you because I am getting the benefits. So we brought the price down from 3000 bucks to 300 bucks, actually. And that is where we created the complete disruption in the market from a pricing and product point of view.
00:19:36
Speaker
Because the product we are making will take 15 days to a month. We were doing in hours because of technology. So we brought the speed, we brought scale, and we brought efficiency, which is from a price-cost point of view. So I was just saying that pricing was more of a discovery at that time than a very thought-through process. Nowadays, we have a very standard tentacle on defining price of our whole model.
00:20:02
Speaker
As in you're not doing discounting anymore? I wanted to understand discounting, like when is it a good idea to do discounting? When should you have like, this is our pricing, take it or leave it like a very standard kind of a model. Like which model is better for what situation? It's a very tricky thing to do, especially for a B2B customer on a pricing side. B2B may use the price for future also. So once you do at a price. Yeah, renew what's going to happen.
00:20:29
Speaker
And you have set the price of future, so you can bring it up and down. We did some mistakes, but we corrected it. Like you gave too much discount. We gave too much of discount or we just focused on acquisition and didn't bother about price at that moment. But it's the company decision, I think, how you want to set it up. So my suggestion, and I'll tell you how we did wrong, but my suggestion would be that have a fixed price, lack price.
00:20:55
Speaker
Always. So let's say it is 100 rupees. Depending on your customer volume, your LTV and other things, you can give a discount, anything which ranges from 100 per to 0 percent. But that's your call on how you want to, what margin you want to have and so on. But have a fixed price. What we did was we did have a fixed price. We were always changing the price for every customer in the country.
00:21:15
Speaker
What we continue to do, we continue to give discounts, of course. It's a more part of the model. So our thought process is that if a customer, one of our customers, has let's say $100 of potential business, including all the modules that we have, I might be landing with one module. But what is the total size that I have? So I don't bother about price of one module. I only look at total volume that I can get over a period of five years, and then I price it accordingly.
00:21:43
Speaker
Same thing I will be writing to someone else. So let's say I come to you and I say you use my higher ATS or onboarding model. You have let's say 10,000 people. I will give my higher onboarding and ATS model might be for free to you. I will not even charge a dollar. So I give you 100% discount in that case.
00:21:59
Speaker
But I have a possibility that I can actually start expanding into all the other services and I'll make enough money out of that, right? But in some customer, I know that my journey will end with onboarding and higher ideas, then I do not give discount there. I charge, might be 50%, might be 100% depending on the volume or the size of the customer.
00:22:20
Speaker
Higher ATS is a product plus service, right? Like because you do verification within higher ATS or that is like separately priced. What is higher ATS? Yeah. So the three parts of the solution typically. One is that you identify a resource and hire the person. Second is you manage the person, right? Day-to-day operations and other things. And third is
00:22:43
Speaker
that you want to engage the person by benefits and other things. The first block has three components, higher IDS, onboarding and KYC. So, higher IDS is applicant tracking system. You want to hire 10,000 people, you come to that system, you say I want to have 10,000 people out of the 10,000, 100 people in Bangalore, 10 people in Kauramangala.
00:23:05
Speaker
You want to post the job in Facebook, you want to post the job in church, you want to post the job in the job board, you want to post in better place job board like rocket, you can do this entire thing. Candidates will start applying and the data will start getting created.
00:23:19
Speaker
and you can track who applied, who got selected, not selected. Once the candidate is selected, you have to onboard the candidate, which is a collection of documents, EAPKON, GAHASIO, APKAT documents. And you have to, who is your going to be your manager, working location. There are multiple different things that you do. You also sign an employment letter, code of conduct, and all those things. And then you verify those documents, which is your KYC background verification.
00:23:45
Speaker
This three things is basically one block of hiring, as we call it, higher and on-board. And what is higher ETS price set, like broad range? So higher ETS onboarding, typically if we give higher ETS, we give everything. If you take only higher ETS, we give it for free because that's our engagement model. But if you take higher ETS onboarding and the KYC together, then 4% per month could range depending on your volume. It could range from 50 rupees to 100 rupees per person per month.
00:24:14
Speaker
Okay. Okay. So the first set of product was higher ETS plus onboarding KYC, which you built. So tell me about the product extensions, how you created more upselling opportunities and what was the thought process for each launch that you did? How did you go about launching it? Yeah. So, so we did this higher ETS. So higher ETS we built later, but first we built a KYP onboarding and then higher ETS.
00:24:37
Speaker
Then we were with a customer, a security guard company, MD was a person named Vishwanath Khati and he became a very close friend and our mentor as well. He has been in this industry for like 55 years. So we were sitting and chatting, what is the other way of creating meaningful data that we give access to credit and other things. Because with the onboarding data, you do not get credit still.
00:25:01
Speaker
Why did you care about credit?
Financial Solutions for Blue-Collar Workers
00:25:03
Speaker
I think if you look at the blue collar, we take a default here. A blue collar people, they do not get access to credit. They end up paying 36%, 50%, 100% interest rate, which is kind of insane. So we said we have to do something. We are still trying to crack the code even now. But when we are sitting with him, he said,
00:25:28
Speaker
I have the data now with you and my guards are working in different locations but I don't know whether they're coming on time or not and I do not know I have to pay for 30 days, I have to pay them 20 days because they're all writing and then I started investigating this over time problem, it's a problem, compliance problem, it's like okay let's look and think through.
00:25:52
Speaker
Then it serves a bit more with a biometric device there, which is like full proof. You can still do your thumb and do it. But that's not cost effective, right? Because biometric devices are expensive. If in a location you have only five guards, then you deploy a biometric device for $20,000. That's not cost effective. Now everyone has a smartphone. How can we use a smartphone for this? So we created a facial recognition based geotagged attendance solution.
00:26:17
Speaker
Now that solution not only takes attendance but does multiple different things and that's what our research and progressive improvement that so it becomes your leave management system, it becomes your overtime management system, your compliance system, your payroll system and everything. So that's how that one conversation with Mr. Kati that was in 2018 that led to the complete solution of attendance and payroll the way we have built it today.
00:26:44
Speaker
And then we saw this is the requirement in logistics as well. Logistics made the people who are in the warehouse, the packers, movers, they need to trade. So we started working now with logistic and e-commerce customers like Danjo's of the world or Milestone and so on. So there are many customers that we have, which are outside. Then we saw this is required in retail as well. We could shop maybe a lot.
00:27:05
Speaker
So we evolved over tying that together, multiple different things that we can do. That was one part that we did from our management. And now when you do attendance, we saw there's another problem, rostering, right? How do you say the person has to work in the morning shift or night shift, right? People will, what they will do is that, you have a thousand employees, then you will call someone.
00:27:30
Speaker
And this is such a manual process, which was not scalable, right? So we said, since we already have the data, we have the attendance, why don't we build rostering on top of it? So we said a manual rostering, right? You will say that, OK, Praveen will come for this week morning shift, next week evening shift, and so on. So we didn't offer the rostering mechanism.
00:27:50
Speaker
You build a rules engine, you say a person has to work one week this, one week that, one week this, and if the person is not happy to do night shift, then you swap with another person who can take night shift and so on. So now the system automatically started doing roasts, and the person gets the message that you are roasted for next week in the evening shift. So you come at that time, right? And attendance now is linked to roastering.
00:28:13
Speaker
So if your roastering is in the evening shift, you come in the morning, the attendance is not activated for you. So there are so many things that you can do with the digital journey.
00:28:30
Speaker
Did you price this as a service like per employee? I mean there is like payroll as a service which you can get or did you price this as a product pricing with a subscription or like how did you price the payroll leave an attendance? This is the software part here which is again charged per person per month three years contract part of the platform so attendance could typically be charged a rupee per person per month for attendance.
00:28:53
Speaker
So if you have 10,000 employees, then it's 10,000 rupees per day is what we charge, right? And if you need any support from us, some customization, some training, then there isn't over some price that we charge, right? And that leads to your payroll information because what we do is that we take the attendance data, we build a master role, we build all the compliance things and calculate your salary. Now you can use the salary and pay into the bank account of the individual through our system, or you can take the attendance data, take it into an excel and do whatever you want.
00:29:23
Speaker
Today, we do it for roughly 25,000 people. Payroll is a service. Payroll is a software we do for, like, the people. But in the service, we do only for 25,000 people. But why restrict it? Why not just offer it to everyone? Because if you build the systems, processes, you know, why not? No, no, we are. We'll do it. So we started it only with the acquisition of Oilex people last year. So we acquired a company with that. We built a service. This is not what we were doing.
00:29:51
Speaker
You said that a few OLX people like OLX that classifieds. Yeah, they had five divisions. One of the divisions was OLX people that we acquired. And that was like a job portal or what was that? Job portal and payroll as a service, staffing as a service. So that's the company that we acquired. And then we started doing
00:30:11
Speaker
We agree with already almost 150% in last one year. Now we are going all out. So we wanted to set the process correctly. It's easy to expand because payroll is something that you have to be 100% accurate every day, every minute to the last penny, right? You cannot have a chance. So, and it has to run 24 by 7, right? If you have an onboarding system, if it goes down for an hour, you can still survive.
00:30:41
Speaker
An attendance and payroll solution has to run 24 by 7. Even if we do a downtime, we do a downtime at 12 o'clock in the midnight to 12.30 in the midnight, but just focus on that half an hour window because that time perhaps no one is using. So that's the reason we wanted to take our own time. Now, this year onwards, we will offer it to every potential customer of ours.
00:31:03
Speaker
Yeah. Okay. Got it. So now once you have payroll, then the opportunity for FinTech arises like, like, you know, that because now you are giving salary once a month. You could, for example, do like a daily salary. Exactly. There are some startups doing that kind of a daily salary thing and so on. So tell me about that. Like, like.
00:31:21
Speaker
What kind of tech stuff have you done? Because you have paid only information. Exactly. We acquired another company called AUS last year. Through that, we train millions of people every year. So that's the digital way of learning. So then we realized that now we have sufficient data and enough data to do all the benefits that we wanted to do from day one.
00:31:40
Speaker
The first thing we started was insurance. So we have now partnered with insurance companies. You want to buy insurance for your employees, you come in the platform, you create cohorts, insurance will be bought and you get the best deal compared to anyone else because it's a package better and since we have a larger volume, the pricing is better, right? So you can get the insurance.
00:32:00
Speaker
Now, the advantage that you buy through the platform is, Avikya also typically insurance, you have used HRF system, but you are buying insurance, let's say from another insurance provider. You take the data, send the data on an Excel to them, they will read the data and they will give the insurance. The insurance card will come after 15 days. Now, 10 people left the job or 1000 people left the job in between. Again, you have to send the data. Again, this will happen. At the present, it's a daily process because people are leaving, people are coming.
00:32:26
Speaker
So we said we will integrate with insurance companies because you already are using this system. So now what happens is that you say anyone who joins in Bangalore as a security guard in my location in Accenture office should get 50,000 rupees of insurance. Now you have set the rule. Now a person comes, as soon as you assign the person as a security guard in Kauramangla Accenture office, 50,000 insurance gets automatically assigned to that guy. The insurance partner will get an FBI message that the person has joined, please include.
00:32:56
Speaker
Immediately when API message comes included, this is the credit card, the insurance card number of that person. The person on the mobile app gets the insurance card immediately, right? So that entire process is done without people intervention, right? So that's the one thing we have started with insurance. We do it for, again, many of our customers including Accenture. And this is likely health insurance.
00:33:17
Speaker
It could be health insurance, it could be life insurance, it could be bike insurance. These are typically what we see. Health insurance and life insurance are the two most commonly used for our platform right now.
00:33:30
Speaker
premium do you collect? Like your monthly premium total collection or annualized total premium collection? Just to get an idea of how big is the InsureTech part of Better Place? The number of employees that we insure right now is more than 100,000 people.
00:33:48
Speaker
who are insured right now. And this is something we started and written personally. So now we are partnering with more and more insurance companies, so we will launch it in India going forward. And then we are also launching on top of that, that you have taken an insurance, your employer bought an insurance of 50,000. You want to take additional 10,000 insurance, or you want to add your family into it. Or you want to take a, we are also creating some interesting products. So it's three months dengue. So I want to buy dengue insurance for three months, pay 20 rupees, take that insurance.
00:34:17
Speaker
I don't want to spend the entire year because in this segment, the ticket size is small, you have to cater to this specific media. So you can buy now, those are the products that we'll be launching. Then we launch merchandise as an offering in the service. Merchandise is like companies are buying t-shirts and bags and other things for their employees. Now, again, the same model we have partnered with manufacturers.
00:34:39
Speaker
You assign the guy that you have to take two t-shirts, one bag or whatever it is, the person come, joins automatically, the t-shirts are delivered to the price, manually anymore, right? The entire process runs automatically. Now we are launching. And what is the journey of the merchandising business? Merchandising business we do roughly right now. We do around five new rock monthly business in that.
00:35:00
Speaker
Then we are launching now the part which always excited us that early wage access and loan. And then we will advance it to savings product now. The problem of any company who is in intake of change is that they do not have data for decision making and they do not have a distribution channel so CAC is high. What we have, we have the data for decision making
00:35:22
Speaker
We already have engagement with the users, our CAC is almost zero, no CAC at all. So now with the EWA, we will start pushing very hard from three onwards. We are launching it and I'm very, very bullish on this because everyone in this space, and this is not only for gig workers, even if you're going to say, I'm a security guard, I'm working with you. I work from 1st of January till 31st of January.
00:35:48
Speaker
My salary will come on 10th of February. I need my money on 2th of January, not on 10th of February. But this is how it is working. So we want to bring this more in the traditional economy, more than the gig economy only. This credit product is also launched? No, April we are launching it.
00:36:06
Speaker
You said EWS, I didn't understand that. EWS is early wage access, which is like daily pay. Early wage access. Okay. Amazing. Amazing. And this is with a NBFC tie-up. Like there would be an NBFC at the back end who would provide the funds and like you would be a distribution channel for that end.
00:36:24
Speaker
That's right. I mean, we will not take it on our own books. We have no plans. We want to partner with many and create a lead generation and collection model on top of it because we know who should get it. We can do the underwriting algorithm. We have a very solid underwriting algorithm in place, which we have been
00:36:44
Speaker
testing crying for the last few months. And we have a collection engine because of the payroll integration, so we can collect it automatically. And that's where we will focus. We do not think right now we will go our own NBFC, but let's see how our business pans out over the next couple of years.
00:37:01
Speaker
And collection would be like totally automated 100% because from the payment only, you will be able to do the collection. Like you don't even need to ask the person to pay it. Like the employers pay out from that you can directly deduct. That's right. That's part of the contract that if you have taken, it will be deducted. So you contractually you have to do it, but it will be automated.
00:37:21
Speaker
Amazing, amazing. So I guess the big challenge, as you said, for fintech, in short tech companies is customer acquisition costs, which in your case is completely zero. Does that translate to a better margin for you or does it translate to lower price points for users or like how does that play out? We are looking at reducing the price point for the user actually. So part of the benefit to the user. It's insane. Per month you just 3% interested, 36% annualized, sometimes 50% and all.
00:37:49
Speaker
If you and I take the loan, it will come at might be 14%. Why 36% to that guy? So typically you charge 36% because they are delinquents. That means out of 100 people, 5 people are not paying and hence you are charged more interest.
00:38:04
Speaker
but you are charging more interest to the good guys who are paying you. So I really want to bring it down to a sustainable model of 18 to 20% rather than 36% because that's where your delinquencies go down, your cost of capital goes down, your CAC goes down and hence you can do better margins on it.
00:38:22
Speaker
Amazing, so like if you were to do a bit of future giving like say five years down the line, will you largely be getting your margin through fintech and short-tech or will it be like with the other businesses giving you the low CAC which?
00:38:37
Speaker
powers fintech and short-tech margins or will it be like each of these businesses contributing to margin or what will it look like five years down the line because these are early products right now the numbers may not reflect the what the stable state will be but what do you think the stable state will look like? HRMS will give you the will give us the best revenue and the best margin so the complete HRMS platform that I spoke about resourcing will be great including
00:39:03
Speaker
onboarding, KYT, peers, tenors, trainings, payroll compliance. That would be the largest part of our revenue as well as largest margin. That's where the growth happens. Fintake in all, I think, would contribute. Fintake and Showtake and all these things put together would be around 20-odd percentage of our... The entire market rate services would be around 20-25% of our total net revenue is how we feel right now.
00:39:27
Speaker
But SARS would be the game changer. And this is something which is required by everyone across the region. So today, we are in India. We acquired a company in Indonesia. We'll go live in Malaysia next month, then going out all across Asia and Middle East. And everywhere I have been in the last few months, this is the need, same as India SARS product. And so we say some talk of it.
00:39:48
Speaker
Is this a conscious choice? Fintech fundraise has been a lot more aggressive in the last two years, probably $500 million those such companies would have raised, but you feel this is only going to be 20% of your money. So that's a conscious choice. Fintech, if you look at while the capital raises happened, that will be a very small number.
00:40:06
Speaker
And because of CAC, the customer acquisition, which you don't have. That is the EBITDA part. CAC comes into EBITDA, actually. But I'm only talking about the net revenue, which is like you're paid the cost of capital and what is the net revenue. So they might have a book of, let's say, 100 crore, let's say.
00:40:22
Speaker
in 100 crore of a book value, your net revenue is only six percent. Rest all goes to the bank and other things. So to get to 100 crore revenue, you have to get a book of 1,200, 1,300 crore of your book running. In Glue Column, that is a large amount because the ticket size will be like 2,000 rupees per person, 3,000 rupees per person, 5,000 rupees per person. That is why we are looking at
00:40:50
Speaker
SARS revenue, on the other hand, per person, let's say you are having 100,000 employees, you will take SARS for all 100,000 employees. But my FinTech product, my credit product might be taken by only 10,000 of those 100,000 people. So my per person revenue on SARS is much higher versus per person revenue if I divide that 10,000 people into 100,000 people, if I calculate for the entire 100,000, then revenue is smaller.
00:41:17
Speaker
That's the reason I said the contribution is here more and this contribution is still significant but it sounds like it would be always more. So, I wanted to understand your learnings from how to make an acquisition successful. You told me about that training company which you acquired. Tell me a bit about that and how you integrated it and how
00:41:38
Speaker
it benefited getting acquired by you. How does a product benefit by getting acquired by another company? Give me some of your thoughts on that. Sure, I think first of all, it's a very, very important decision to acquire a company. You do not acquire a key or going for a
00:41:55
Speaker
In the shopping mall, you found a shirt key. It has to be a very long-term commitment to your customers, to your employees, to your shareholders. So there's a lot more thought that goes into it. So a few things that we look into is whether we should build or should we buy such a solution.
00:42:15
Speaker
Before that, we looked into is that do we really need such a solution? So what is the value proposition? We will bring it to our customers. Is there a need?
Growth Strategies and Competitive Landscape
00:42:24
Speaker
Is there some kind of loyalty, equity that we can build out with our customers? Can we get more share of wallet and so on? Once we were convinced that this is a required solution, it was a question.
00:42:34
Speaker
Your customers were asking you for support and training, and you felt that this would increase your share of wallet. That's right. That's right. And we saw that this was the biggest problem, and everyone was struggling doing it manually. And we said, why don't you digitize it? They were spending already money to do it, but they were not doing it the most efficient way. So you keep your eyes and ears open, see what's happening with the customer, listen to them, and you make your judgment based on that. And then you talk with your customers,
00:43:01
Speaker
I want to do this, would you be interested?" And they said, yes, super interesting. And if it comes in one platform, why not? So then we decided, shall we build it or buy it? I mean, build will take two years. You need to mature the product. Would you lose an opportunity which is right there in front of you? Would you lose a customer in that case? It's a speed to market, speed to entry becomes very, very crucial.
00:43:25
Speaker
So we need a cost estimation. We felt buying it would be better. So we started looking at various different providers who would be the right choice for us. And when you start looking at different providers, you look into multiple different things, whether they are ready to sell, first of all, not because you can't buy something which is not ready to sell.
00:43:42
Speaker
Second is that is the product technology the product the stack which is there is matching with your stack or not right so how easy it would be to integrate because you can't have two different world running in parallel. Third is the people right are they thinking in the same direction or not you can buy the product you can pay but then people are not aligned then it will fail as well right because they have a different direction altogether different vision different
00:44:06
Speaker
philosophy, different cultures. So we spend a lot of time talking to each other. So once we were clear that this is the path that we will take, we took the product in. But after taking the product, then the next step starts. What is my 90 days, six months, one year roadmap in terms of people integration, process integration? How do we communicate to our customers? We had spoken to only a few set of customers, but we had not spoken to all the customers.
00:44:33
Speaker
Now you have acquired it, you have integral it. How do you create a GTM around it? How do you position yourself to your customers that this is a winning proposition? How do you ensure that the existing customers are housed, they get excited with other solutions of better place because you have to be cross-sell and upsell all directions, right? You don't just take it to your existing customer, but you also take your solution too.
00:44:55
Speaker
They are customers where there is a unique different customer. So that strategy we worked over six months. And fortunately we were successful in doing that. So after that, we acquired a sound job. We acquired easy dogs. We acquired, okay, go. Now we just announced the acquisition of my robin. And we have kind of a template right now on what to do, how to do. So hopefully we will be able to do the others as well successfully.
00:45:21
Speaker
But one of the things that I learned actually, whatever you do, whatever product integration strategy, whatever you have, the first focus is aligning people mind that together we will make it better. Together we will make it bigger. Then everything falls in place. How do you retain the founders? Because you would ideally want the founders to continue to build and scale, right? So what is the mechanism? It's a part of why they said that there is an alignment of vision. When you buy a company, traditionally when you buy a company, you say, I'm the boss.
00:45:51
Speaker
you work for me, I bought you, right? But what happens actually on the other side, if somebody buys me, let's say somebody acquires better place, and they want to return me, but what we run in my mind, I'm a founder, I'm an entrepreneur, let me run as an entrepreneur, right? I'm not an employee here, give me the freedom to run this as my company. And that is what we do. Second is that what is my incentive, right? I'm not here for salary anymore. If I have to take a salary, I will start another company, I have enough money, right? Because
00:46:18
Speaker
you have already paid enough money that they will earn over next 10 years or 20 years, 50 years a salary, right? So people are working then for a purpose. The purpose is aligned, right? And then you create an incentive around that purpose that okay, you are still running this as your company, you are the founder, you are the entrepreneur.
00:46:34
Speaker
And I am there only to help very well. You need help to grow the company. I'm not here to boss you around. So that has to be very, very clear. That's the first part. And second part is, of course, you have your own agreement, processes in place, SHA and everything. So there is contractually also you do it, but contracts can be broken anytime in my view. It is all about alignment is what I strongly believe in.
00:46:57
Speaker
So like the founders get some cash and some would be equity in better place so that there is long-term alignment. We always do. This is a very important point. We always do cash plus stock. So cash is basically to ensure you have something as you exit. But stock because you look at a long-term value creation for all the shareholders, including yourself as a founder of that company.
00:47:22
Speaker
In this two-year period of 2021 to 2022, you raised about almost $65 million, which is, I think, probably amongst your peers, you would be the most well-funded, and not just amongst your peers, but across sectors. So tell me about that. How did you pull off such a feat? It is quite an achievement, I would personally say.
00:47:43
Speaker
Thanks for that, first of all. I think we were just lucky we did our race during the most difficult times, fortunately or unfortunately. So in 2020, we did it at the middle of COVID when people were pulling out. 2021, we did it again when the third wave hit. Unfortunately, we were at the wrong time. And 2022, when everything was better in the early
00:48:06
Speaker
Part of the year, we didn't do it. We did it towards the end when funding winter had come in. So it was always at the wrong time, but we were lucky. I think the reasons are twofold in my view. One is that we are a company that believes in creating tangible value. So it's a very sustainable business model that we have. If we have money or we don't have money, the business will continue to grow and run. Money is helping us to grow it faster. But we don't need money to run the business and grow the business.
00:48:35
Speaker
It is only experience the business of people appreciate that fact that it's a very sustainable and in tough times we become the darling in principle that people say, okay, if nothing happens, at least this will give me five X, 10 X return.
00:48:50
Speaker
I guess, irrespective of economic conditions, you would not get hit, right? No company will want to cut what they spend on better place because you are an integral part of how they operate. Without us, they cannot scale. So it's a win for us. Every issue that comes up is a tailwind. It's not a headwind for us.
00:49:08
Speaker
That is number one problem. And number two, I think you already mentioned, is the end of the objective will never die down. So if you look at this opportunity in Asia, we are the largest now. If somebody has a big fat money, at least we will be considered first. Now, whether we take it or they do not get convinced with our moral, whatever, then they'll go to the next one. But we as a leader went on the list. If you prepare as a VC that five companies I want to invest, we will be always there in that list. And hopefully always number one. Right. That's how we see our sense right now.
00:49:36
Speaker
Can you help me understand like, as you said, if a VC was to say, okay, I'm bullish on the blue color workspace and you will always be in the top consideration. So what are the other companies which are operating in this space? How, how is each company position? I mean, each company would have some different kind of positioning and specialization.
00:49:53
Speaker
Help you understand this blue collar workspace sector. There are three distinct types of companies, three to be honest. One is the traditional old companies who are doing the payroll for the blue collar, team leads, and there are many such companies who are not public as well. These are like what we would typically call a third party staffing companies. Third party staffing companies. And there VC is not looking at investment in that sector because that is not going to scale the way they want to scale it.
00:50:20
Speaker
That's not a technology player, really. That's not a technology player. The second is the vertical players, right? Like Apna is a job board or refined as an EWA or there is an early wage access or loan, right? Finanfin, tech company. So there could be a vertical play on that. Or there is another vertical play on skilling. But VCs are funded that most companies, well, Apna has got a lot of funding. Refinery has got a lot of funding.
00:50:48
Speaker
and so on and so forth. So there is a lot of money that has gone into that. But that sector has its own challenge because LTV in a blue collar is a person for a vertical solution is very small. So your CAC will be always higher than your LTV, which came in. Now, if you see everyone is looking into a comprehensive platform play like Better Place.
00:51:09
Speaker
We were the largest and the largest in India. Now we are the largest in Asia. The company which was the largest in Indonesia we acquired. The company which is largest in Malaysia we are acquiring and we will go into it. So they basically like if you read anything new right now from a VC point of view for a blue color segment in future
00:51:28
Speaker
They all talk about the comprehensive platform because of the reasons I mentioned. So they spin the company, which is doing fairly well is Jobs and talent. In, in, in us, if you look at the company like Upwork, which is doing really well. So there are companies in other regions where we'll started coming into similar.
00:51:44
Speaker
This company, My Robin that you acquired, what was the rationale behind that? What do they do? So My Robin is the largest when it comes to big staffing model in Indonesia. They have a large number of customers. Some of them are like Shopee and so on. So they basically provide a technology platform.
00:52:03
Speaker
you need resources, right? For example, you want 50 people in the next one week for one month, they will take care of their platform. They have 3 million job seekers on the platform. They manage roughly 10,000 plus people every day from a job opportunity point of view. And the money flows through them, like they handle. And they take a fee for the flow of the money, right? So for us,
00:52:26
Speaker
So when we looked into Indonesia or Asia, we wanted to get into, first of all, South Asia. That was very clear. Then we chose Indonesia because of similarity with Indian culture. Digitization is taking place, but it's still behind India. Population is very large, very, very eager to use technology in every aspect of life. So we had a very clear picture that, OK, Indonesia has to be our first option in South Asia.
00:52:53
Speaker
Now we look into multiple different options there. My Robin came out as the best option, primarily because one, the founders and we are completely aligned in our vision. Their teams are completely aligned in the vision. So we have absolute clarity on how we want to move forward. Like some of the examples that I mentioned earlier, they picked all the boxes. And then we looked into their customer base, very solid customer base.
00:53:18
Speaker
Now with that customer base in the country, with a solid team, with a solid growth over the last two years, we now can expand that as well as bring the entire platform that Better Place has and even increase the share of wallet and get more value for our customers. So we saw this beautiful marriage and then there was no looking back. Okay, let's go ahead. And they were very keen to partner with a company like Better Place to also take wings to fly further down. Right. So.
00:53:48
Speaker
And this works very well for customers, for people, for shareholders. Why don't you do it? And are you planning to bring that product to India, like hiring gig workers, payment flowing through that platform? I don't think there is a comparable product in India, or at least not a large one.
00:54:03
Speaker
Yeah, we are currently evaluating. We will bring everything in the single-take stack actually finally. So the offerings will be available across all geographies, right? Not only India and Indonesia, but it will be available in Thailand and Middle East and wherever we go because it will be one single-take stack that we will have finally. So we are currently working on the roadmap execution. It will take some time. We have between six to nine months is when we are planning to do the complete integration. And then it's available to all.
00:54:32
Speaker
What happens when you do the technology integration? Do you rewrite the code on which it was built so that everything is using the same language and stack and all that? How does that happen? Because if you do that, then you have a lot of tech debt. That means you've only acquired the customer and the team, and you're writing everything again.
00:54:49
Speaker
So, that will create a lot of issues. So, one of the things that we look at at the very beginning of acquisition is there a possibility to integrate or not. You take the two statistics, stack and how easy they can be marked. So, we both run on microservices. So, rewriting but integrating. Now, when you integrate, one is the technology integration. The second is process integration.
00:55:09
Speaker
because you have to follow different processes. Third is the customer has been using certain parts. Now you have to migrate the data into the system as well, which is the new system in principle, which is integrated. So migration typically takes three months, four months. So take integration can happen very fast. The migration can be longer because customer also has a say into that. That is why it takes slightly longer, like I mentioned six to nine months, but we look at reusing as much as possible. Of course, there'll be certain changes that we have to do.
00:55:39
Speaker
Specifically, creating new APIs, new services for integration. So the large focus is on integrating, not rewriting. And this Okgo, which you acquired, this is like similar to My Robin, right? In terms of... Yeah, there are similarities. And this is where we are bringing capabilities of each one, and then we'll have a comprehensive landscape. And Okgo is like India-based. Okgo is India-based, yes.
00:56:06
Speaker
What would you advise to the listener who is thinking of starting up, who wants to be a founder, any advice you'd like to share with people about before they actually jump into the journey of entrepreneurship?
Entrepreneurial Insights
00:56:19
Speaker
That's a very big thing to answer. I'm not sure.
00:56:23
Speaker
I am capable of doing that actually, but let me take a stab and experience my thought process. I think as an entrepreneur, what runs in my mind all the time is chaos, is frustration, it is uncertainty, it is opportunity. So these are the things which are running all the time. So as an entrepreneur, first of all,
00:56:43
Speaker
You should be very happy with what you are doing. You should be very foolish. Everyone says it is not possible. You should be absolutely convinced this is possible. Second is that you love it. You just fall in love because when you fall in love, you do everything around it. Even if you were not in love before starting, but once you started, you fall in love with it.
00:57:05
Speaker
Third thing is that I think most of the time we think about survival and what to do or valuation, but we should think about really big and creating value for our users or customers. If we think that money will pour in some way or the other, even in the difficult times, which we have seen for ourselves as well.
00:57:24
Speaker
Fourth is the patience is very important. Patience is very important. I think especially in the market like better place, it takes sometimes longer journey to create a sustainable model. So patience is very, very, very important in my view. And sixth and last one is have great people around you.
00:57:43
Speaker
People who are challenging you. So one of the philosophy that we follow, we only hire people who can become my boss. We do not hire people who are what's under me. So people who tell me what to do, people who drive me, people who guide me, people who order me.
00:58:00
Speaker
So they can become my boss at any point of time. That's a philosophy that we follow. Have people who run it so you can go home and sleep at times. So that is the basic thing. How do you attract people who are smarter than you, like people who you could make as your boss? Like what's the way in which you run the hiring function? First of all, we look at that. Can we have a coffee and a drink and talk about anything and everything other than work together? So that's the first thing.
00:58:27
Speaker
Second thing is that the person is able to take risks because taking no risk is a bigger risk in our lives. So can you think big? Can you be entrepreneur? Is the leader? Is the person looking for his or her own success or looking for something creating positive?
00:58:44
Speaker
Your success follows if you have a great team, not for yourself. So, the third thing we look at is the person really happy in life. If you're not happy, you cannot create happiness for your customers, your employees, your partners, colleagues, whosoever. And the fourth thing that we look at is the creative thinking. What else is thinking?
00:59:03
Speaker
If you have those things, then it works in principle. That's how we go about from a leadership position or anyone for that matter. And that brings us to the end of this conversation. I want to ask you for a favor now. Did you like listening to the show? I'd love to hear your feedback about it. Do you have your own startup ideas? I'd love to hear them. Do you have questions for any of the guests that you heard about in the show? I'd love to get your questions and pass them on to the guests.
00:59:28
Speaker
Write to me at adatthapodium.in. That's adatthapodium.in.