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A Masterclass on Capital Efficiency in the Age of Unicorns | Satya Prabhakar (Sulekha)
297 Plays2 years ago
"Success is an 'and' condition, whereas failure is an 'or' condition."
This profound insight from Satya Prabhakar captures the brutal reality of entrepreneurship: for a startup to succeed, everything from the team and timing to the business model and funding must align perfectly. However, failure can occur if just one of these critical links breaks.
Satya Prabhakar is the Founder & CEO of Sulekha and ProManage.biz. A distinguished alumnus of NIT Trichy, he famously gained admission to all four top IIMs before choosing to pursue his Master's in Computer Science in the US. Before his 20+ year entrepreneurial journey, he spent nearly two decades in the corporate world at giants like AT&T and Honeywell, where he led technology projects worth nearly $20 million. Today, Sulekha is a profitable tech company that has connected millions of users with over 50,000 paying small business customers annually, all while raising a modest ~$45 million and having no external funding since 2015.
In this conversation with host Akshay Datt, Satya Prabhakar unpacks his two-decade journey of building a resilient, profitable, and ever-evolving tech company in India.
KEY INSIGHTS FROM THE CONVERSATION
- Contrarian Capital Strategy: Satya explains his deliberate choice to stop raising venture capital in 2015, focusing on capital efficiency and profitability as a core competitive advantage while competitors raised nearly 8x more funding.
- The Power of the Pivot: The discussion covers Sulekha’s multiple reinventions—from a community site to a classifieds portal, then to a focused matchmaker, and now a SaaS-enabled ecosystem—as essential for survival and long-term relevance.
- The 'Middle Path' Business Model: Satya details his strategy of positioning Sulekha between a simple directory and a capital-intensive managed marketplace, creating a scalable and defensible niche with strong unit economics.
- Cracking SME Monetization: He reveals that shifting from a subscription model to a pay-per-lead model was the key to unlocking profitability, as it directly aligned Sulekha's value with the primary need of small businesses: getting connected to motivated customers.
- Resilience Through Crisis: Satya shares how an 80% revenue drop during COVID became a catalyst for innovation, leading to the creation of his new hyperlocal marketing SaaS venture, ProManage.biz.
TIMESTAMPS / CHAPTERS
(00:00) Introduction
(01:28) Early Days: Rejecting all 4 IIMs for a Tech Degree in the US
(03:03) Corporate Lessons from Honeywell & AT&T's Failed Disney JV
(08:26) The Birth of Sulekha: A Side Project for the Indian Diaspora
(13:59) The Painful Pivot from Classifieds to a Local Services Matchmaker
(20:11) The "Ant vs Elephant" Problem: Why We Couldn't Compete with Google
(24:17) Unlocking Profitability: The Pay-Per-Lead Model That Changed Everything
(33:02) How COVID's 80% Revenue Drop Forced Our Biggest Reinvention (ProManage)
(36:05) The Future is Hyperlocal SaaS: Building ProManage for Enterprise Clients
(48:13) A Founder's Philosophy: Why Success is an 'And' Condition
HASHTAGS #FounderThesis #StartupIndia #SatyaPrabhakar #Sulekha #Entrepreneurship #Bootstrapping #CapitalEfficiency #BusinessStrategy #SaaS #IndianStartups #MakeInIndia #VentureCapital #AkshayDatt
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Transcript
Introduction to Satya Prabhakar and his journey
00:00:00
Speaker
Hi, I'm Marsithya Prabhakar and I'm the founder and CEO of Sulekha and ProManage.
00:00:20
Speaker
This is a story of an Indian engineer who went to the US, discovered the power of technology to change the world, and finally ended up coming back to India to build his startup. In this episode of the Founder Thesis Podcast, your host Akshay Dutt talks to Satya Prabhakar, who has had a front row seat to the evolution of startups in the US and India. He started sulekha.com in the US as a community plus classifieds platform for Indians in the US way back in 2002.
00:00:48
Speaker
In 2006, he raised $10 million as his first external fund raise, which was a phenomenal amount of money for that era.
Exploration of Satya's educational and early career choices
00:00:56
Speaker
Post this raise, he moved to India to build Sulekha as a platform to discover trusted local service providers and the rest, as they say, is history. Listen to this fascinating conversation about Satya's journey spanning multiple decades to get a first understanding of the evolution of startups and learn from Satya's amazing insights.
00:01:13
Speaker
Stay tuned and subscribe to the Foundrathisos podcast and any audio streaming app to learn about the veterans of the startup world.
00:01:28
Speaker
My father used to teach mathematics in a college. He was one of the department of math. My mom used to take care of us and go. And I had a particular handicap. In this sense, I had a pretty bad speech impediment at the time. My aspiration always has been to be a technology-based businessperson. And so while doing NIT, I tried my best to do well.
00:01:53
Speaker
But I also simultaneously was preparing for about two years for both IAM entrance and also for admission to US universities for master's degree in computer science. There were four IAMs at the time and I had the good fortune of getting admission into all the four IAMs, A, B, C and L, I think, A, B, C and the year.
00:02:13
Speaker
But simultaneously, I also got an assistantship to do my Masters in Computer Science from the US. But the lure of America was too strong. So I left this admissions and I went to the US. So that's what happened. It was a great experience because I didn't have any programming experience while I was in India.
Lessons from working at AT&T and the birth of Sulekha
00:02:33
Speaker
But once you do a semester or two semesters of programming, then you'll come to the same level as everybody else.
00:02:39
Speaker
It so happened that my school also gave me an externship to do my MBA because MBA is quite rare to get an externship. Externship is both paying your fees and also paying your scholarship for living, neither of which I could afford at the time. So I continued to do my MBA. But immediately after my MBA, I did join a technology job. Where did you join? I went to work at Honeywell.
00:03:05
Speaker
in St. Paul, Minneapolis. In St. Paul, Minneapolis, I was an R&D engineer, writing mostly operating systems, real-time operating systems and multimedia projects, primarily for Honeywell's internal R&D and also for other external organizations such as US Air Force. Post Honeywell, I went to AT&T. That was the beginning days of internet.
00:03:28
Speaker
It was in the 1996, 97, 98. So I went to work for AT&T. At that time it was called SBC. But later on SBC acquired AT&T and renamed itself by AT&T. There it was more of a technology-anchored business development role.
00:03:46
Speaker
The idea was to take technology and develop products that can be sold. At that time we built one interactive set up box. Like today you see boxes like Apple TV or Roku is there. It was the earliest version of a Roku.
00:04:06
Speaker
It's an interactive set-top box. At that time it was cutting edge because most set-top boxes were analog set-top boxes where you only could switch between channel to channel and it came as analog. But this set-top box is a digital interactive set-top box through which you can stream video and have original programming. That project that we did was in collaboration with Walt Disney
00:04:32
Speaker
and Microsoft. What Disney was supposed to create the interactive experience, Microsoft provided the hardware and the software and the food companies provided MIPS exactly. And that was a colossal failure. The thing they what they what they missed was they thought that the internet transmission is
The evolution of Sulekha into a hybrid platform
00:04:53
Speaker
inherently incapable of handling video and audio. Only because see once if you are a
00:04:59
Speaker
transmitter and even a receiver and the transmitter transmits any content or data immediately that gets chopped up into IP blocks right and each block of now I don't maybe it's a little bigger at the time it's about 57 bytes long with the headers and other things each one takes a different path potentially
00:05:22
Speaker
to arrive at the receiver and gets reassembled at the receiver. For the email, it's fine because at the receiver, the email will wait until all the blocks have come in. A simple thing that shows it to you. The fact that it was late by three seconds, you wouldn't know.
00:05:39
Speaker
How would you know? The email came at 1047.26. The fact that it should now come at 1047.23, you don't know. Same thing with a website, if you're accessing a website. But video has got synchrony properties. Every 24 frames have to display within a second. And your ear is even more sensitive than the eye. You are much more sensitive to audio disturbances than video disturbances.
00:06:03
Speaker
So, they thought that because you don't control the transmission, you can't really run a video application on the general internet. At that time internet was also not was flaky. It must have been like a few KPPS kind of speed. Yeah, KPPS and not reliable in the sense it will come but it will come after six seconds or four seconds.
00:06:26
Speaker
But by the time, just know your video froze for two seconds and people can't handle it. In the sense that if there's a pause, they think something has gone wrong or whatever. Yeah, it's a poor experience. Why would someone shift from that analog TV into this if it's going to have stutters in?
00:06:42
Speaker
So what they did was they said I need to control the entire thing end to end. I will control hardware. I'll control the programming. I'll control the interactive TV guy. I will also control the hardware of the setup box. I will also control the transmission protocol into it. The first few are OK. But when they said they need to control the transmission, it became very difficult to pull off because then you need to develop the entire protocol from scratch.
00:07:11
Speaker
And four companies are not known for engineering talent, so they couldn't pull it off. If only they had said, we will use the internet, they would have succeeded. That one call may be the failure. They wanted a proprietary technology instead of the internet as a medium of transmission.
00:07:28
Speaker
See, because today you have Hulu, you have Netflix, Amazon Prime, Z5, all these guys, they don't care about how it gets to the end user. They only control content, right? And they only control the consumer subscription. In between it's all, they just leave it. But I have learned a lot in that in terms of how to work. I'll learn more about how to deal with people, other business, business partners, different kinds of personalities, but great experience working.
00:07:58
Speaker
I also had a chance to work with the current CEO of Microsoft. Satya was the project manager at that time. He is an astonishing device, no? Amazing. For a company such as that to put the entire responsibility for a company that runs the software for pretty much every organization that is in the hands of an immigrant who has come in, first generation immigrant. That speaks a lot both about the company and about him. So what next after that AT&T Center?
00:08:26
Speaker
This is before 2007, a few years before that, because I had this urge to write and I felt that there is a need for a platform or Indians to express themselves and interact. It was an Indian specific social slash commercial network. What I meant was social means people could write articles and people could write various things and interact and post comments and so forth. And the second one is we made it location specific.
00:08:55
Speaker
In the sense of inner city, what are the events that are happening? Primarily, it was meant the expression part was universal because there was no such thing as India living in the US experience, another one. But the hopper's part was restricted primarily to cities in the US. In the sense, local classifieds, local events, local things. That just actually took off.
00:09:17
Speaker
You were the founder here. Like this was your original product. Okay. What would be a comparable product to what you made? What did you call it? Like comparable product to I'll tell you comparable product to the social expression.
00:09:32
Speaker
part would be Facebook and the other part would be I would say Craigslist, OLX model. So it's like a Craigslist with community element in it where you can have forums and chat on those forums. You know chat, it is forums, it is asynchronous.
00:09:54
Speaker
And that took off because both Indians in India and Indians in the US had a need for connecting easily because you don't find people with the similar intellectual wavelength in the near vicinity or proximity of where you live. So suddenly you log into this world
00:10:14
Speaker
And you are similar minded people who are curious, who are expressive, who are debating. Plus you had this local connect of, okay, I can look at events, I can buy and sell. It's a curious thing. Only because initially it was about expression only. Then we added the commerce part because expression doesn't feed your children. So we added the commerce part. That was before 2000.
00:10:40
Speaker
These would be like microtransactions, right? Somebody would pay maybe a couple of dollars for listing some product for sale or whatever. And the event's organizers used to pay us a lot for ticketing their events. Even now,
Challenges and strategic shifts at Sulekha
00:10:55
Speaker
Sulekha is the number one event's local community for Indians in the US. So you called it Sulekha right from I think 2002 or 2003, somewhere around that time, when you were still in the US.
00:11:07
Speaker
A few years before 2007, yeah. But at that time it was mostly a hobby kind of a thing. It's not a serious thing. But you were still at AT&T or like you quit your job. I quit my job, yeah. So in 2007 is where it got serious because we raised our first round of institutional capital. And you were still in the US in 2007.
00:11:29
Speaker
I have seen the U.S. and it is a capital from NVP, the head of NVP Mr. Rajshri Prabodhak. He led the round with the condition and not a condition, not that he was imposing it on us. It was our consensus that the future is going to be in India and not in the U.S.
00:11:47
Speaker
because we felt that India will perhaps add as many people a week to internet as all Indians living in the US. And that has come out to be true. So that's when I moved in 2007 was when I moved to India. What was the status of Sulekha by the time you hit 2007? What revenue was it doing? It was largely a pre-revenue company. It was maybe a billion dollars of revenue.
00:12:16
Speaker
And you had payment gateway and all of that for these microtransactions or through some PayPal or something like that. Commerce was only in the US at that time. There was no commerce in India. So India had like a listing option or it was only communities. India had classifieds. But you were not monetizing. It was like free classifieds.
00:12:37
Speaker
India is difficult to monitor because there's no way to pay because the online payment was not there. So we started as classifieds. So we kept it as US. It was still continuing to do this events and other stuff. And India was a classifieds play. This was like peer to peer or you would like a? P2P. But in the US, you would have gone to businesses and told them that, list your events here or list your products here and so on.
00:13:02
Speaker
Events, yes. That was like through a sales effort that you got that business in for events. And the rest was like, again, individuals who wanted to do something. So in the US and India, what we found is that classifieds were pretty cool in terms of traction.
00:13:19
Speaker
People like like OLX is today or Picker is today. There is a lot of consumer interest in wanting to post things to buy and sell. Craigslist was very like a very hot company at one point of time. Like it used to be seen as today we see Netflix, Facebook and all that. One point of time, Craigslist used to be seen like that. Even though it is pretty strong in the US because it has occupied the niche and
00:13:44
Speaker
But what we found is that it's off to, what do you call, make people pay. They want to pay. They want to use it, but they don't want to pay. And so they seem like once you landed up in India and tried to find monetization in India, then you discovered this? Yes. After a year or so, we discovered that classified, you get a lot of traffic, but traffic is largely useless from a monetization point of view. What all did you experiment and try to try and model?
00:14:12
Speaker
Yeah, what we tried but what we found curiously that is see the product guys are a different breed because the product guys are they are transactional. In the sense, if I want to sell a phone, when I sell the phone I have no use to the plant.
00:14:27
Speaker
But what we found is, there are service businesses always looking for opportunities to grow. Because if I'm an architect, if I'm a decorator or an event organizer, boss, I can deal with 100 inquiries a day, I can grow and I want to grow. So, my need to be always out there,
00:14:46
Speaker
And the need to be known, the need to connect to potentially motivated buyers of my service and my ability, my capability to want to be able to convert them is constant. So we said screw products. I don't know how to do products. We'll focus on the service part of the business.
00:15:05
Speaker
where there is an intent and a motivation to pay. So I don't know if you know this. I think it is Greek or Roman. It is a thing called the Ship of Thesis. Ship of Thesis. Different parts kept getting replaced. It's known as the same ship, but none of the original parts remained kind of a thing. So we started focusing on service businesses.
00:15:27
Speaker
One question here. All this while the traffic was free, like you didn't spend money to acquire traffic. That was all organically generated. We had never in our history spent money on traffic. And this was because it was like user generated content. If I'm looking for barbershop near me and Soreka has listings of barbershop, so naturally Google will give it a high ranking and therefore get organic traffic.
00:15:51
Speaker
Well, we were not promoting these businesses on Google, but we were promoting ourselves on Google so that when people come looking for interior decorators in Chennai, our page would rank and people would click and come and this is where they find the businesses.
00:16:08
Speaker
So, initially, we were a service. Now, Sulayka has become largely a services-based business listing service. And initially, it was listings only. People used to pay us for listings, for preferred listings. And this was happening, how did you... Because in India, I imagine at that time, it wouldn't have been easy to have self-checkout and all that happening online. No, we had a sales day. You must have needed that. And so, tell me about that journey of discovering how to make money.
00:16:35
Speaker
Because we were not new to this online payer, online payment, we created that online, but nobody would pay online. They didn't have means to pay. When if you had create drugs, when if you had any alternate means of payment, how would they pay even if they want to? And even if the food that had a means to pay, they didn't trust you to give you credit.
00:16:54
Speaker
There's a fear. So we had to build a sales force. How did you do that? Did you go city by city? We expanded to all the cities and I developed the cities, opened offices and built that. And I think we had it in about eight cities. By when? You had in eight cities? By 2014.
00:17:12
Speaker
And what was your playbook for opening up a city? Like, how would you go about... Mostly based upon population. Because the four big cities are, you know, Brena, Delhi, Bombay, Bangalore, Chandraya, Hyderabad, this top five. Then Pode, Ahmedabad, Volkata are the next three. Then we had, we did open offices, but we had people on the ground in other cities like Lucknow, Chandigarh, Madurai, places like that.
00:17:37
Speaker
when we kept growing. How did you manage the output from these people? With a great amount of difficulty. I want to understand those challenges that you must have faced. Very hard. The only saving grace there is in sales, I find that it is quantifiable and the performance is quite clear. It's very hard for technology, for product development and other things.
00:18:04
Speaker
And you also have a reasonably reliable yardstick, saying that, hey, your size is so big, opportunity is so big. You have 50 people. Look at Chennai, comparable opportunity. It also has 50 people, but it is able to do 1.6 times more than, you know, what's your problem? We had a good, pretty good analytics. We had pretty good systems and data, which we were able to do that.
00:18:31
Speaker
We did that, we continued to grow and we continued to grow. There were a lot of competition even at the time. I remember in 19, 2000, 12, 13, a lot of companies got funded. There were at least 30 companies that got funded. And of course the names that we know today, who else was there? Like a serious competitor. Companies like Ask Leila. Ask Leila, yes. Now floats.
00:18:53
Speaker
Now floats, here, now, something like that. One of the guys who raised a reasonable amount of capital. There were some, I say, say, funded Yellow Pages or something like that. Some company was there. Yeah, there is an India comp. There was, of course, India part was focused on B2B. There were other Yellow Pages itself was there and so on.
00:19:13
Speaker
And there were also outsiders coming in. Craigslist also tried to make an entry in India. And there were other companies that came in. And the biggest fear that we had was of actually quicker. Because it raised so much money. Massive rounds of money. We were just thrown off for chairs. I think they totally raised about $450 million. That's half a billion dollars almost. Huge capital. How much did you raise? What was your fundraising? See, till that time, we raised about $16 billion. Till 2014.
00:19:45
Speaker
What revenue were you doing by 2014? We were growing at about 30-40% a year. Double-digit millions? We would be around 7 million or so. But we were growing and then around 2014-15 we saw the writing on the wall.
00:20:03
Speaker
saying that plain listings is not something that will sustain us because the game is going to be owned by Google. I exist that concept because Google is saying I want to organize all information and they're investing tremendously in the local listings. Yeah like a Google map like listing your business on Google map is also like a classified listing only in a way.
00:20:29
Speaker
So I was in the US. I was traveling with somebody. We wanted to go to a restaurant. He didn't go to Yelp or any focus tab. He went to Google Maps for the listings. He found the news. We are going to compete head on with Google. I am an ad and Google is like an elephant.
00:20:46
Speaker
We can't find that war and win. So then as we understood what our customers want, see the SME is cut from a different plot. SME is cut from a different plot in the sense he's never profitable. He's always struggling. He has nobody.
00:21:01
Speaker
He is short of capital. He wants to grow. He is not as concerned about a brand. He just wants sales. He wants customers. His shirt has only a single pocket. Whereas, CMO has got two pockets. He has one personal pocket and the pocket of his company.
00:21:18
Speaker
and his company pocket is not his money. Not that he is careless in spending, it's a different orientation. He has access to more budgets. More budgets and his scale is different and his horizon is different. He's not saying, if I give you 100 rupees today, tell me what business you gave me today. He's not as exacting in his expectation of return.
00:21:41
Speaker
Whereas the poor SME is counting every rupee. So we felt that guy wants something else, which is that he wants to be connected to a motivated buyer. He's not happy with, say, hey boss, you are there at the top. People are looking at you. So many people are clicking you. He says, what the hell is a click man? I don't hear a click. So we transformed.
00:22:03
Speaker
the platform into a qualified matchmaking platform. We felt that on the user side also, there is a need. See, if you're looking for an event organizer, if you already know a good guy who can do good work for you, then you will do that. The reason you are searching is because you don't have that person. So if I just throw you 10 businesses at you and say, you will figure out which is the best, that's of no value to you. That's what Google does. Or even like Gestile also.
00:22:34
Speaker
So, see it is not in the kitchen, microwave oven that is point. It is a pretty low value, headache solving kind of a problem. You really do not care who comes and fixes it as long as the guy comes, fixes fast and gets out.
00:22:49
Speaker
he may charge 300 rupees, he may charge 400 rupees, you are not that sensitive to the thing. So it's a commodity service. Let us say, suppose your sister's engagement, you are organizing it. And you need a photographer. You want any sister, very loud, pampered sister, everybody loves her, it's very big party. 300 people are coming. You found a good venue or you don't even know a venue. So you want somebody to help you with it. It's the first time you are throwing such a
00:23:17
Speaker
So what is it that you want? You want somebody who specializes in that kind of social events with 300 plus people, which does it in a classy way. As opposed to the first birthday of somebody with 50 guests in a small place. Those are two different things. One is if you are a corporate, you want to organize an offsite for your employees. That's a different kind. So not all event organizers are the same.
00:23:40
Speaker
Yes, yes, absolutely. Yes. What we said is there is value in one, qualifying these guys and profiling them, right? So, when you come looking for an event organizer, I ask you, sir, what is it that you want? It's actually, what is it that you want? And Akshay will tell us, listen, we say, social event, it's a
00:23:58
Speaker
weekends out, 400 people, 300 people, right? And I'm looking for somebody.
The emergence of ProManage and its impact
00:24:05
Speaker
So I understand that. So I use technology to match it with a select set of event organizers who are qualified by me and connect you to them. And a lot of you ask, why is it that you can't enable the transaction? These don't lend themselves to enabling transactions because it's not that you look at four guys, look at the profiles and say, okay,
00:24:25
Speaker
This guy is charging me 1.5 lakhs. Let me pay 1.5 lakhs. Yeah, you need to have that slightly more engagement. You need to engage with multiple people before you finalize. You want to talk to them. You want to ask them questions. And you want to negotiate. You may want to say, listen, my budget is 1 lakh. And the guy will say, I suggest you take out this part of the event and we do it like this. So we built it on that. And it was a phenomenal success.
00:24:52
Speaker
It helps our ability to distinguish ourselves from everybody else in the market. Okay. I wanted to understand from a product perspective a little bit. So you said that you connect them like a curated set of sellers with buyers. So is it like you have categories? Let's say Flipkart will have mobile as a category and then in mobile you can then put filters on price and screen size and so on.
00:25:15
Speaker
We had over 200 categories. Give me some examples. When we start using our data analysis, how do people look for service providers in different categories? Give me some examples of what are those categories. For example, cadres, overseas education counselors, interior decorators, then we have IIT coaching centers, like that, home improvement, lawyers, advocates, business counselors, where the service value is in excess of about 10,000 rupees.
00:25:43
Speaker
And so like the moment someone types event manager, then it could show them filters, like you can apply filters on size of like audience, how many people so on and so forth. And then what, like how do they get in touch? We provide phone numbers, we provide details of both to each other and their
00:26:01
Speaker
of each other, they chat with each other through the app. Initially, when we started, people were more comfortable with having your phone conversation. Now people are more comfortable with chatting. Yeah, most products have evolved from phone to chat, like even the other classifieds.
00:26:17
Speaker
With chat, the problem is we all are in a different world because we are so comfortable with English. But you go to a small town like Yibjavada, Rajidabad, and even in major cities, people have difficulty chatting in the local language through app. They don't have to see what they want to see because the composition is very difficult. So they want to talk, they want to chat, they want to talk on the phone.
00:26:41
Speaker
So, the business doing the listing can decide to display phone number or to just respond via chat and all that. And then how do you monetize? So, we have developed a new model which is saying that the business pays a monthly platform fee and per connection to a potential buyer. We charge them. That business is liked a lot because they felt
00:27:07
Speaker
They are not paying for just being there and not knowing what they are going to get for it. For the first time, a platform in India has come to them and said, you pay me when I deliver value to you. And the value to you is a verified, motivated,
00:27:22
Speaker
newly minted consumer who was looking for you, not looking for you, who was looking for your city category. If you are an event organizer in Hyderabad, I am not going to connect you to an event organizer looking in Ahmedabad, nor am I going to connect you to a guy who is looking for an architect in Hyderabad. I am going to connect you to somebody looking for an event organizer in Hyderabad.
00:27:46
Speaker
And in some categories, we went even further by breaking up the city into zones. Like education counselors, you would want near you. Yeah. Coaching centers, people don't want to travel more than four or five kilometers. We did that. So that's what we did. It was awesome. Before COVID, the quota we must have served about 45,000 businesses.
00:28:05
Speaker
paper lead model, is this prepaid or postpaid? Do they have to top up a wallet and then you deduct from that wallet every time a lead? What is all of our businesses? It is prepaid. I will not chase you for money. So they have the wallet and from that it gets deducted each time they get a lead, something like that. Okay. Okay. Okay. And how do you curate the listings? You said that you want listings to be curated with data points about them so that you can do better matching. So how does that happen?
00:28:34
Speaker
We have sales team. We have an onboarding team. So this happens through a call where we will talk to that business. We get the profile information, we get the contact, we get all the other stuff because we have established ourselves that it is a reliable business.
00:28:54
Speaker
We don't know all the time, but we have the ticks. We have to go farther than just the general listing. We collect the business contact information, the service tax information, the GST information. So any business listed on Sulekha is like a business which has gone through KYC and in terms of their legal entity status and things like that. Yes, of course.
00:29:16
Speaker
And any business on Sulekha is a paying business. You don't have a freemium model. We do. A freemium guy is a freemium guy in the sense he stands last in the queue. So there would be like a free listing option also where businesses can self-list. But to get leads, they would only get leads if there is nobody else in that category or something like that.
00:29:39
Speaker
And isn't that you can have a silver plan, gold plan and so on, and you get more leads if you're on a gold plan. Like what Jestile would have, I guess. You can buy as many leads as you want. But oftentimes we are constrained by how many leads. Yeah, how much demand is coming in. That's the challenge in that model. In some city categories, you have a lot of consumers, but no businesses. In some categories, a lot of businesses, but no consumers. But that imbalance is a painful thing to solve.
00:30:09
Speaker
Is it an imbalance because the behavior is not online or is it fundamental imbalance where there is more supply? Fundamental imbalance in that category. Okay. Give me examples of... For example, actually internet service, you have consumers who want it, but not businesses willing to pay for it. Okay. Because there's only these big three, retail, Vodafone, etc. Okay.
00:30:33
Speaker
And the other side, there are interior decorators. There are endless number of interior decorators willing to pay because each contract can be worth lakhs of rupees. They will pay any amount of money, but we don't have enough consumers. So there is the sub-optimality of that model. What would be your average earning per month from a small business? What would they be typically spending on?
00:31:00
Speaker
Business spends on Sulayka between 5000 rupees a month to a lakh rupees. What are the kind of businesses that spend a lakh a month? Architects, interior decorators and electric power generators, guys building contractors, building people who construct buildings.
00:31:18
Speaker
Right. Civil contractors. Okay. Okay. Okay. And so now where are we in the journey? You raised about $28 million in 2015. So that round was to build up this like a platform for service providers to get more business.
00:31:34
Speaker
We did work extremely well and in 2019 we were getting ready for a listing. How were you profitable? What was the secret to that? Because for listings businesses, none of the other businesses are profitable. So I think I'll tell you my hypothesis. See, in any listing business, right, there are
00:31:53
Speaker
Three scenarios. One scenario is if I'm a business guy, if I'm listing because everybody pays roughly the same to get listed. If I'm listed there, if I am getting a lot of responses and I'm getting a lot of value from the platform being listed there,
00:32:08
Speaker
Next time when I come up for renewal, you cannot get me to pay more money. You can get me to pay more by the rate of inflation. If last year I paid 50,000, now you can get me to pay 55,000. You can't get me to pay a lakh, even though I'm getting 3 lakhs worth of value from you. Because your model is, must this slot cost 50,000? Last year it was 50,000, this year it was 55,000. I mean, house rent is the same, right? For some reason you got a house rent for some x money.
00:32:37
Speaker
The guy comes and says, now you pay me two times more. So this is like when you're doing space selling, basically. Space selling. Now, a guy who doesn't get value, he won't pay you money next time. Yeah, there'll be a chart. So you are screwed up on both sides. Monetization of the same asset is better on the paper used model than on the subscription model. That's really more profitable, I think. What happened when coveted? See, the problem is the categories we were dealing with are all high value categories.
00:33:06
Speaker
Second is they were all in categories that got shut down. Okay. Home improvement. Nobody wants people to come into their home for two hours. Even now, people are weary. Events also shut down. Events, totally there was a law against events. Coaching centers were all closed down. Business services were
Current market dynamics and future plans for ProManage
00:33:26
Speaker
all... So suddenly, it was cataclysmic and that just pushed us behind. And we also couldn't sustain the size of the organization. We had to reduce the size.
00:33:36
Speaker
Because you would have had a large sales team, I am guessing. We had a sales team and the problem we had was that we didn't know the end game of Kuvil because we never experienced it. We had a playbook of saying, I know how to deal with a 15% shortfall in.
00:33:52
Speaker
cash revenue overnight. I can even deal with 25% but I don't know how to deal with the 80% drop. It just fell off the cliff. It took us ways to re-size the organization for the new opportunity and also be conservative because we didn't know when COVID would lift.
00:34:10
Speaker
And actually COVID lifted after two years, really. So we said, okay, we'll have a smaller team and rebuild the company back up and reinvent ourselves. In COVID, we stepped back and we said, what do we do? Because aggregate demand has come down dramatically. We don't know why it'll go back up. So how do we compensate for this shortfall? And in a way, it forced us to reimagine what we do. And we have succeeded in
00:34:37
Speaker
developing a new platform called ProManage. We both had small businesses and large enterprises. So the thing that we said was, listen, why should these customers of mine only get connected to consumers who are coming to Sulekha? See, if you are an event organizer, you just want to grow a business and you are
00:35:00
Speaker
technologically speaking, illiterate. You are an event organizer. What do you know about optimization, platforms, profile optimization? You don't know.
00:35:10
Speaker
If you are looking for help, there is nobody well organized to help you. The agencies, small agencies that say, sir, I will do optimization, but they are not qualified. So we said, let us take these customers and also target large enterprises and you won't believe it. Large enterprises are even more humbled than SME.
00:35:32
Speaker
An SME can go and get to some local guy to optimize his GMB profile, Facebook profiles, you know, all these things, right? But a large enterprise can't do that. We can't do that because it has, let us say, 1000 locations. How do you manually manage, optimize 1000 locations? You got to put an army. Army is not affordable, right?
00:35:56
Speaker
So we looked at it and we said that it requires a different approach, which is a technology and AI-driven approach towards digital management. I don't know if you have heard this number. There are 700 searches per four products and services in India.
00:36:14
Speaker
So, two things have happened in the last year and these are profound seismic changes in the way we approach life, which means people are wanting to discover products and services and businesses online. They don't want to search anywhere else. They will never search anywhere else, number one. Number two, they also don't want to engage with businesses digitally.
00:36:41
Speaker
If the fridge is broken, Samsung is broken. You rather send a chat via WhatsApp saying that please send a service person. Samsung comes and shows you, okay, sir, please pick a slot. Pick a slot, right? Done. Somebody comes. That's what you want. You don't want to move on the line, pick the IVR junk and wait on the line. And then they'll ask you to read out the serial number.
00:37:04
Speaker
Businesses both large and small have to contend with this fundamental behavioral change. A lot of people think this is a marketing exercise. It's not. It's a hygiene. If you have a restaurant, would you say putting a sign board, a nice sign board above that tells who you are, your brand, and what you do, and it is properly visible to the traffic on the road. Do you consider it a marketing exercise or an operating exercise? It's essential.
00:37:31
Speaker
But you can't do it because a listing has got 70 variables. A simple GMB listing has got a large number of variables. And GMB is Google My Business, which is how you list yourself on Google Maps. But GMB is not the only show in town.
00:37:46
Speaker
There are others, and being present on others actually influences and accentuates your ratings on Google, the reviews of Google. Who are the others? There is, GMB is there, Microsoft big, Facebook pages, Locafying, Suleka is a listing platform. So what
00:38:03
Speaker
search engines are saying is there are hundreds of millions of small businesses. I can't potentially be talking to all of them, which is a good business, which is not. I will use proxies signals to find out which is a good business. And the proxies are, if you have been in business for long, if you are also listed on other platforms,
00:38:23
Speaker
If you have a website, if you have a social profile, all these things add to the score. And how many people are reviewing you? Established you are. There is authority. There is love. There is positive love. There are reviews of ratings and so on. So you just look for all these things.
00:38:40
Speaker
lot of businesses don't know. And let us say you are one of the large financial banks, you have 5,000 locations. So, 5,000 locations times 60 variables, there is 3 lakh variables. Let's say you want to be present on different
00:38:56
Speaker
five different platforms that is 15 lakh data values that you ought to manage. How will you do it? You tell me, you can't do it. So you need a technology and every profile has got a unique problem based upon the competitive landscape that particular branch is located in. So you need AI to compute the score of this which is a proxy for how well it gets
00:39:22
Speaker
visible when people come looking for you and let's say you are a score of 1 to 100, you are a score of 60 or 55, you need to move to 70. What do you do to move to 70? You don't know. That's not your gig. That's not your expertise. You need help. So that's what we've done is we went and created a program as a platform. It's got integration with all the major distribution platforms with GMB. So we can write to the platforms. We can read from the platforms in real time.
00:39:52
Speaker
that analyzes every profile and ensures that the representation of this profile on multiple platforms is the same. And if there are reviews on multiple platforms, they all come to one place from where you can respond. If you are able to chat in all these things, all the chats will come and sit in one place. So, it is all a unified, extraordinarily powerful and sophisticated air traffic control
00:40:15
Speaker
There are at least about 28 criteria or factors on which Google doesn't allow you to do certain things. Especially when you have multiple location branches, it would allow you to do things. By building software on top of it, we are able to do it.
00:40:35
Speaker
There is one unique property that no other audience or no other medium has. That is lead forward purchase intent. If you are watching let's say even when you go to Instagram reels or you go to Twitter or you are watching
00:40:52
Speaker
in Amazon Prime Video or you are listening to your podcast, right? At that point, I am sitting back, I am listening to Akshayi talk about this talk to Satya. He is making some sense. So let me listen to him. At that point, Satya or let's say one Ruby, one girl who is listening to this podcast, Ruby has no bridges in it. She's not looking for anything. She's just enjoying Akshayi talking to Satya, hopefully. But that is not the case.
00:41:17
Speaker
with search. When Ruby says weight loss clinics near me, that means in the market for a weight loss clinic. And 70% of the time, within 3 days, she will make a visit. 40% of the time it will convert into a sale. Because it's an inside out purchase intent. It's a strong one, right? Now, I am watching, let's say, a TV show on ZTV.
00:41:40
Speaker
There's an ad for Enfield bike. I'm not really looking for to buy a new bike. It just goes by what they are. It looks very nice. It looks sexy. Maybe I should. It's a very weak purchase intent. It was imposed on a guy with no position from a visitor. But the search is not it's inside out purchase intent. So you cannot ignore it. You essentially do a ranking of leads for a brand and say that this is a high purchase intent lead and this is a low purchase intent lead.
00:42:08
Speaker
So the pro manage is a digital marketing SaaS platform.
00:42:13
Speaker
It is not a lead generation platform. The incidental by-product of that is inquiries because by optimizing your profile, by improving reviews, ratings, by enabling channels, responding and by taking care of all aspects, 100% of the time you will see a static lift in visibility in terms of people visiting your profile. The conversion also improves because the profile suddenly is rich.
00:42:40
Speaker
is enticing. So it will happen. But we are not, unlike in Sulekha, we are not holding ourselves to, I'll give you 80 leads. We are saying, boss, it's a new world. You got to get your act straight. You, it is impossible for you to do it on your own. Let them know, prove manage. Everything will happen for you. The inevitable byproduct of that is engagement opportunities with your prospect customers.
00:43:05
Speaker
We have an exciting roster of corporate clients, which we never had before. We have people like actually DHL, Apollo's pharmacy. Anybody with a large offline detail presence essentially would be? Yes, it is. We have over 25 of them and that's all.
00:43:24
Speaker
So, that's one good thing that has happened because of Covid. And we are super excited because Suleka will continue to be a lead-gen platform and ProManage will be a bucketing suspect firm. They both can serve customers very well. What do you see the revenue split between these two platforms to be? Like, I'm sure right now ProManage should be small. We believe that this ProManage will be close to between 60 to 70% of the total revenue. Okay, because these are enterprise clients and... Enterprise clients is one. This is a more, the target group is a much wider
00:43:54
Speaker
target. Bad service businesses only. Because now product companies like Apollo Pharmacy, they also come in. Because previously we couldn't sell to product companies. They didn't want leads. Yes, it's a high value product. For example, five kilowatt power generator. They would be interested. But a guy who sells some mobile phones says, boss, I don't want leads. I asked the guy to come in.
00:44:19
Speaker
You do have a competition here. I believe there is a company called Single Interface. They offer something similar. Yes, similar. What is the differentiation between you and Single Interface? Is it very similar? In things such as this, I don't think either of us are constrained for opportunity. There are millions of SMBs. I don't think Sulekha is uniquely equipped to serve SMBs at scale. That's what we are doing.
00:44:47
Speaker
Plus, we also bring a certain tech innovation is our part of DNA and the customer success obsession is also part of our DNA. It's like a phone. You can compare two phones and design a very involved tech-based SaaS service offering. You can't compare very easily. Oftentimes, because oftentimes what we do is that we have a connection with the head of the CEO of the company. We have conversations about how to evolve.
00:45:16
Speaker
We are not an ad agency, we are not a BPO where I do stuff that you hate to do. I don't want to do that. That's not what we thrive on. What we thrive on is I will be your innovation consultant, powered by technology and partnerships. Of course, and we will also give you tech that makes manual work unnecessary. That's what we will do.
00:45:39
Speaker
Yeah. And how is the pro-manage priced? Is it fixed subscription or? Per-location per month. Okay. Okay. And what would that number be or how much do company spend like average order value or
Entrepreneurial insights and advice from Satya Prabhakar
00:45:52
Speaker
something? It's about anywhere from $15 to $50. And this you're saying is like the per-location price. So what is the difference? Which one would be 15? Which one would be 15?
00:46:03
Speaker
We have layers of services, service offerings, we have basic listing optimization, reviews, chat integration with their internal systems, whole bunch of things. We can choose. And this would be like a more customized solutioning approach here, right? It's not like a self-servicing where an SME can come in, sign up and just start using off-the-shelf.
00:46:24
Speaker
We will plan to do it that way. Okay. But right now it's more, let's say a sales force or an Oracle, which you buy, which is... For enterprises, it's a little bit more involved sale. It requires listening to the CEO, CMO and explaining it. But for SMEs, it'll be that. Sure. You'll have a more easy UI stripped down version for SMEs because they would just manage one location, I'm guessing.
00:46:49
Speaker
Like for an SME, they would just need to manage a single location. So your product could be a lot simpler, less complex for them, which they can do with self-service. Even that, I think only half will do that. Another half, I still have to talk to them. See, it's hard to communicate to an SME, convincingly, digitally, unless it is a tangible value payoff. They want to create a ticket to go see a movie. The 200, he won't question the 200 rupees pay, or 150 rupees.
00:47:19
Speaker
I know I'm getting a ticket or I'm buying a ticket. It's a very well understood value prop. Yeah, you're not asking him to change his habit. Here he has not purchased anything like this before, but he is also not answering the question. Hey, what will I get for it? So he has to understand the need for it and lock the payoff.
00:47:40
Speaker
You'll probably need to do some freemium model where they can use for free up with some limited features so that they see the value and then the power users can upgrade and pay. So what plans for the IPO now? We don't know yet. But you are still profitable? Yes, yes. Like even during COVID you remain profitable? Yes, we have. Except for maybe one quarter or so. Otherwise we have been profitable. And break even, let's say.
00:48:08
Speaker
What are some of those lessons from entrepreneurship that you'd like to share with young thoughtless? There are many. I would say the most important thing is success in entrepreneurship is an ad condition, whereas failure is an odd condition. Success is to happen. Multiple things have to fall into place. They all have to fall into place. You don't have the right business idea.
00:48:31
Speaker
you got to have the right team and you got to raise capital and the market has to be ready and you got to have the right revenue model. All these things will fall into place and they have to fall into place and hold together for a sustained build of time. Failure can happen if any of those links fail. It's an odd condition in the sense you can have a great team, you can have a great business model, market is there but you can raise capital.
00:48:54
Speaker
You can raise capital, the market is there, but you are an awful manager. You can't hold a team together. You are great to hold a team together. You can raise capital, but you are chasing the wrong business model. You continue to dig. There is nothing left. That's why successful startups are so real. Second is, I would say, ambition is cheap, but actually resolve is
00:49:18
Speaker
difficult. You pick any guy off the street who doesn't have an ambition. Everybody wants to be something because ambition is found in every heart, but actually resolve is not. The third one is the resolve should also become stapled with some amount of malleability or adaptability.
00:49:38
Speaker
to be organic, to be able to move fixably. Third one. You should be agile enough to pivot if it's not working. It's hard because the idea that you started with because you were inspired by something and that inspired by something idea doesn't make money. You have to find something else. And that brings us to the end of this conversation.
00:50:01
Speaker
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. Write to me at ad at the podium dot in. That's ad at t h e p o d i u m dot in.