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Sanjay Ghare takes a masterclass on building vertical SaaS | Vervotech
177 Plays8 months ago
Building a successful SaaS business is both challenging and rewarding. There is a real risk that you may end up solving a problem so narrow that it has a very small market but if you focus deeply on solving a common problem, more people will choose your product over a one-size-fits-all solution. In this episode, Sanjay Ghare spills the beans on building Vervotech as a vertical SaaS in the travel tech domain. Vervotech helps travel agencies stay relevant on travel websites by providing smart information about the best deals and prices, so they can offer great options to their customers.
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Read more about Vervotech:-
1.The Digital Transformation of Hospitality: How Technology is Reshaping Guest Experiences
2.Vervotech aims to create standardization in the hotel industry through hotel mapping
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Transcript
Introduction and Vertical SaaS Overview
00:00:00
Speaker
Hi, everyone. I'm Sanjay Gharay, founder and CEO of Overtake. Thank you for having me here today. Looking forward for a great conversation.
00:00:22
Speaker
Have you heard the term vertical SaaS? It essentially describes a SaaS company solving a very narrow problem but solving it deeply. Building a successful SaaS business is both challenging and rewarding. There is a real risk that you may end up solving a problem so narrow that it has a very small dam but on the other hand if you solve a problem deeply then everyone who is facing the problem will prefer to use your product as compared to a generic Swiss Army knife type product.
00:00:48
Speaker
This episode of the Founder Thesis Podcast is a masterclass in building a successful vertical SaaS business as Sanjay Gharay talks about his journey of building Verbotec as a vertical SaaS in the travel tech domain. Stay tuned for this insightful conversation with the seasoned founder.
Sanjay's Early Career at Taviska
00:01:14
Speaker
So Sanjay, you are a prolific entrepreneur. I think maybe even the word serial entrepreneur doesn't do justice because there are so many things you're doing together. Let's start from the beginning. You know, tell me about your journey into the world of startups.
00:01:31
Speaker
Yeah, so, you know, I passed out back in 2008 from D.Y. Patil College and that was a kind of recession. So I remember, you know, the startups who are, you know, very small startups who typically doesn't get the slots in the early days of the campus placement. They were getting the slots because the big companies who were typically hiring in 50s and 100s were not hiring, you know, in 2008.
00:02:00
Speaker
So this company called Taviska, they came to our campus on the third day of placement, when placement started. And I was the only one who got selected. I think my experience, because when you're in college, when you hear about the corporate world,
00:02:19
Speaker
The expectations are you will, you know, get into a startup and, you know, there would be a salary, there would be a post, there would be colleagues around. So my actually beginning is very funny. So, you know, I got into this startup and my interview happened on Friday. They said, come on Monday for collecting offer letter. So I went to their office on Monday. I thought, you know, I will take offer letter and go back.
00:02:49
Speaker
And they said, you have time, we have work, buy two besties. Where did you start the work? So I started working on Monday. I really went for, you know, getting the offer later. The funny part is for a week, I never got an offer later.
00:03:09
Speaker
And I was like, you know, and there was no end, you know, the company was great. There was, you know, eventually I realized, but I was like, am I going to get offer later? But everyone was so busy. It's a small 12 people team sitting in a bungalow, you know, row house, walking. They don't have time for things like offer later. So I have followed up and after I think eight, nine days, I got off a letter as well.
Growth and Challenges at Taviska
00:03:31
Speaker
Of course the first day was interesting too because there is always an impression that you know a good looking girl or boy you know someone who is very handsome honestly I expected girl who will be HR who will come and you know welcome me and introduce and all that
00:03:48
Speaker
but there was nothing like HR in the company there was this guy who was handling finance and you know admin and HR everything who was asking me very weird questions like okay do we have
00:04:04
Speaker
farm in your village, you know, very weird questions. But it was a complete shocker and you know, I tried to call back my, you know, campus placement officer that can I sit for more companies and he said, no, no, because there's always a recession. They wanted to make sure maximum people get an opportunity.
00:04:24
Speaker
But that's how my journey started. I never thought I'll spend more than a six month in this company where I spent almost 12 years though. So that was kind of a beginning where you know how I got into the company.
00:04:37
Speaker
So what's like a five minute or a 10 minute summary of those 12 years for what the company went through? I mean, Tabiska itself is an interesting story. It has birthed other founders. So I'd love to understand that Tabiska story as well.
00:04:56
Speaker
Yeah, absolutely. So I think, you know, I would say the best part of my life is, you know, Tabiska, you know, it could have happened. So there were seven, you know, co-founders, as I said, like in a 12 people team, seven co-founders and then five more employees. Most of them were freshers. I would say all of them were freshers like me.
00:05:19
Speaker
joined two months before founders also or the employees well employees seven founders who had a good experience amazing guys and then I was like software industry guys yeah
00:05:33
Speaker
Yes, software industry guys and we were five of them. So, you know, because of that a small startup, I got an opportunity to work with directly founders as a fresher. These guys were, you know, most of them variety and very smart, very hardworking. So I think that started influencing my life very early in the days. So when I was going, initial time was very funny. I don't know, you know, how do I look at it?
00:06:00
Speaker
There is a guy who joined three days before me. I joined on Thursday someone joined on Tuesday and second day of my You know second my second day in office the guy who joined on Tuesday got fired
00:06:15
Speaker
And there used to be a weekly company meeting where CEO address everyone, everything is really kind of informed to everyone very transparently. So, you know, these kinds of shockers, I was, you know, that how can I spend at least six months a year here?
00:06:32
Speaker
And in that six months to a year, actually I became just a part of, you know, family that everyone is so close. You know, it's like we used to work typically three or four in the morning. In initial days. What were they doing there? These seven founders, what were they building?
00:06:52
Speaker
Yes, so they were building a travel technology product, that means a complete ecosystem which can power travel agencies. So, in 2010, as an example in India, the Mi'kmaq trip was there, but there were very few. A lot of people wanted to go online and build online booking engines and so on.
00:07:15
Speaker
So these guys were building an online booking platform for flights, hotels, car activities, everything as a one-stop solution for powering travel businesses.
00:07:30
Speaker
These legacy travel agencies would be their customers who would buy a white-labeled solution and brand it with Howisco logo and all that. That was their idea. Absolutely. The only thing is Tabiska back then was focusing on US and Canada as a market.
00:07:46
Speaker
So, very similar to like Sita in India, they were focusing on a similar set of customers in US and those customers were already ahead in terms of understanding of technology and their readiness to adoption was much higher than these Indian table agencies. But you are correct.
00:08:07
Speaker
So it was kind of going on. The first within six months, I never realized when I changed earlier, when I was sitting in the office till three o'clock, you know, I was actually sitting in office because you know, the founders are sitting, you know, how can I leave before that? It's a recession time job is important, right? I never realized when things are changed. I think nine months of experience into IT.
00:08:33
Speaker
and the company has grown very fast because you know when I joined within three to four days in a second week they moved to a new bigger office in a Kurega Park so you know we started hiring within nine months actually things have changed where I started leading a team of people typically people end up in taking eight to ten years to really reach that level I was leading a team in nine months of experience
00:08:58
Speaker
And honest lecture, it has nothing to do with my talent or anything. The only thing is, they were short of people, right? Yeah, as an example, I remember there's this guy called Amitpore, I remember he's a good friend. He joined just 20 days later.
00:09:18
Speaker
And I got training from
Acquisition by CX Loyalty
00:09:21
Speaker
the founders. And since I joined 20 days before, they asked me to train this guy. He still feel bad about it because I did a horrible job. 20 days into corporate world, I have taken a training from founder. I probably understood a bit. But I can even now think how horrible job I have done in training him.
00:09:43
Speaker
So the point I'm trying to highlight is because of the startup, the kind of opportunities you get are amazing. And these people were extremely opinionated. So I got an opportunity to really observe all these guys, how they are thinking, how they are taking a stand, how they are, you know, every time they fight with each other for their opinions, you know, like this.
00:10:04
Speaker
They will do a fight for 30 minutes about their opinions when they don't agree, and then they will go for lunch together, right? So all these kinds of corporate development, how you really think as in a corporate world, I think I got a great exposure. And after that, I never realized how time has passed. I have grown. Eventually, I got to actually create a SARS division in Tviska, where I had around 150 people team.
00:10:35
Speaker
We had nine products. We were actually having customers across the globe. I got an opportunity to kind of manage the entire P&L, travel to different countries, meet all customers, do all the things, and probably try everything possible which I can probably try in my own company.
00:10:57
Speaker
She knew that was a Toviska journey, but in those 12 years... What do you mean you started a SaaS division? Toviska itself sounds like SaaS, right? Yeah, so Toviska was more into managed, so Toviska had this whole booking engine thing, right? And it is a big thing. The customers we were targeting back then is at least a customer who has at least million dollars spent back in 2010-11, right?
00:11:26
Speaker
So we know we've discovered only working with large customers, we'll have some dedicated teams, we'll do customizations for them on top of products. We were not really doing, you know, you sign up and just take a product and pay 10 or 20,000 for a particular thing and on their own and 1000 subsets. You know, that's not the idea. We got into those kinds of things around 2015 and after that.
00:11:52
Speaker
So we had products which could have been offered as SaaS, but the focus was large enterprises where we give them managed services along with customizations. So it was a smart company but not true SaaS from the beginning. And what about Tabiska's own journey? Tabiska got acquired while you were there, right?
00:12:12
Speaker
Yeah. So, you know, so in my journey, I would say, you know, up to a few years, like 2013 onwards, I started filling up, doing something on my own. And the reason for that is, you know, just tell me about the acquisition once quickly.
00:12:34
Speaker
Tabiska got acquired in 2018 by a company called Connections Loyalty. So CX Loyalty is one of the leading brands in providing loyalty solutions mainly in North America.
00:12:47
Speaker
And then, because Toviska created such a great IP, CX loyalty has acquired Toviska in 2018. And later three years down the line, CX loyalty got acquired by JP Morgan Chase.
00:13:04
Speaker
which is the largest bank and the fifth largest travel agency in the U.S. as well as Chase Travel. So that way, you know, the Tabiska, the technology is today powering the Chase Travel, you know, which is the largest bank in the world as well as the fifth largest travel agency in North America.
00:13:23
Speaker
Okay. Okay. Interesting. And what was the reason for CX loyalty to acquire Toviska? They wanted to diversify into travels. No, no. So CX loyalty was largest customer of Toviska. Okay. CX loyalty, when started their travel was always the travel technology was always powered by Toviska.
00:13:44
Speaker
and with the technology of Tabiska, CX loyalty got to a great level and of course they had a plan. CX loyalty would have these, they would be running these like miles, those loyalty programs for airlines and that was powered by Tabiska.
00:14:03
Speaker
Yeah, airlines or even the banks, you know, let's say you have a credit card, you get the points, you want to use those points to book travel. That would be the loyalty. And CX12 is the viscous technology for powering that. Okay. What happens is one is CX loyalty has grown to a great level.
00:14:25
Speaker
Second is, there is a clear need when companies getting valued or companies want to get acquired themselves, they have started understanding the need of owning the IP, where CX loyalty's IP was actually owned by Taviska. And third is, Taviska started getting even bigger customers like CX loyalty. So that has pushed the trigger that, okay,
00:14:50
Speaker
Now, you know, if I want to grow and get valued, you know, I have to own the IP and that is the reason CX loyalty was largest customer from a billing and revenue standpoint for Tevisca decided to acquire Tevisca.
00:15:07
Speaker
And that's something that worked out so well. With that IP, CX loyalty has pitched. And JP Morgan has acquired CX loyalty at a very huge value. And CX loyalty would be, for example, a competitor to capillary, which also has a loyalty solution.
00:15:32
Speaker
Yes, as the largest competitor of CX loyalty, I would say North America would be Expedia rewards division. Expedia do have loyalty division and his travel is the largest customer, which was with Expedia, which CX loyalty has got on their side with the help of. You know, this question might sound a little ignorant, but
00:15:55
Speaker
There was so much that Tabiska was intending to do. There was a SaaS division which you were running and they wanted to power legacy travel businesses. How is it that they ended up with CXloyalty as the biggest customer and then getting acquired by CXloyalty? I mean, it just, as an outsider, it seems like it could have become bigger, had a bigger outcome than what it had. Am I right in this view?
00:16:22
Speaker
So it depends. So first of all, definitely the eventual goal for any company is to achieve some value to create some impact and make a great money out of it. So there is always some time for the exit. It was already more than 10 years into building of Tabiska.
00:16:49
Speaker
So, you know, I think that way, okay, of course, could they have waited and kept growing up? Of course, you know, there is no end to it. And at the same time, the Teviska founders, you know, who started back in 2008, have actually have more ideas beyond this also. Some of them have started, you know, building more companies.
00:17:15
Speaker
Even some of the Teviska founders have actually built more companies and sold it already as well. So I think founders also started getting into more businesses. They have more opportunities available to work on. So this may be the right time. And of course the one large reason is
00:17:39
Speaker
Tabiska built a technology back in 2008-09 and started rebuilding the entire tech in a modern way in 2015. And whatever Tabiska was doing in a modern technology and rewriting, CX loyalty was aligned with everything in terms of investing in building all of that. Tabiska founders were very passionate about building great products and get technology. So one is definitely, I think they were always open to take the help and get collaborated, you know, in a way.
00:18:07
Speaker
if it is aligned with their vision and the idea of building the product.
Founding Verbotec and Travel Tech Innovation
00:18:11
Speaker
That was one and second is from their standpoint it may be the right time to kind of you know cash out because there are more opportunities waiting outside and it was more than 10 years into journey anyways.
00:18:24
Speaker
Okay, how could it have become bigger than what it was in 2018 when it got acquired? What could have been an alternate history of Tabiska? I think... Very hypothetical question, but just to... Correct, correct. So I think in 2008, when Tabiska built everything, sweeter products, the companies were in the early adoption where you have to give and provide everything.
00:18:50
Speaker
When the company got acquired in 2018, technology has advanced. Technology became very simpler and easily manageable. More self-service. And at the same time, travel businesses also adopted technology much more. So there was an opportunity that when you are selling a suite of let's say 10 products,
00:19:10
Speaker
Each product can become a division and there may be companies who are using 9 other products on their own or other companies, so it could have been a much diversified business. Because what happens is when you work by giving everything and there may be a customer who is giving you $2 million a year, but you may have just 5 customers and one of them drop, you lose 20% of revenue.
00:19:36
Speaker
Whereas, you had thousands of customers who were using different products, it became a much, so from those managed and enterprise set of customers, you have to whisk a continued journey and get into SaaS and try to work with. Whereas, you know, the focus was North America, but the entire globe was kind of evolving.
00:19:56
Speaker
The situation of US in 2008 was very similar to a lot of other countries, like Southeast Asia was ready by 2018. So technology could have been sold to all other companies, diversified different business models, tweaking different products. It could have been much bigger.
00:20:17
Speaker
a company which could have been public. So I think there is no limit for an alternate journey. Interesting. So did this influence you in terms of when you were deciding to move out? Tell me about that journey for you to move out and be a founder.
00:20:36
Speaker
So I always wanted to do something, you know, of my own because, and when I say I always is, you know, that's the third process which got developed in mind, you know, after six, seven years of work, I got a good exposure, good travel. And the great part is the founders of Toviska were very open and they always wanted to guide. Their mission was actually to, you know, create entrepreneurs in the company.
00:21:02
Speaker
And there are examples where someone wants to work on some idea, Tabiska would give a space and all the help, work from here, build your company. So to my these thoughts, Tabiska founders also have always kind of helped in developing method process. And I tried two startups while I was in Tabiska as a part-time thing along with some friends and stuff.
00:21:28
Speaker
But it never worked. One is we tried to build something for 10-11 months, but it didn't work out. What was it? We were trying to build something as a platform for sharing the self-contracted rates across the borders and trying to solve the payment problem for that.
00:21:53
Speaker
The rates of what? Of what else? So we are trying to simplify the payment processing and the cross border sharing of the contracts for hotels. So that becomes more affordable and the intermediary is right now charging very huge. We are trying to pass on the benefits too.
00:22:17
Speaker
You know before getting you know, as in without going into a lot of details or in 2018 When the whisker got acquired I was very clear. Why am I to start up in work and there were two primary reasons for that One reason is I was trying to do something which is when I was in the whisker Which is not a complete team with the whisker
00:22:39
Speaker
Okay, since Toviska was doing pretty much everything, doing something which is not competing with Toviska was a big challenge because I don't have any knowledge or I don't know much beyond what Toviska has been doing because that scope was already huge. And second is doing it a part time without leaving a job. There was always an option of coming back and you will give up quickly.
00:23:06
Speaker
So I remember I was in, actually I was in Des Moines US on our client trip and our CEO called and said, so this was, you know, the discussion was going on for two, three years, you know, that, you know, this acquisition might happen, but he, you know, he called and told that, okay, this is now happening. Okay. So when he told, I was very clear that now I can do anything on my own, the way I want, uh,
00:23:35
Speaker
Because you know, I don't have that, you know, because of course when Tabiska get acquired, Tabiska's interest and focus would also change based on the acquirer's priorities. And second, that I will do on my own without having any plan B.
00:23:54
Speaker
I don't want to have a job or, you know, anything like that. This is so, it was very clear now, you know, I can do it. I think it was very clear because it was going on for a couple of hours before, a couple of years before that. So it was very straightforward with a forward discussion. There is nothing to think about.
00:24:12
Speaker
Yes, it is so true that, you know, no plan B is, I mean, it is so important to succeed. It's very counterintuitive. Most people will say you should have a plan B, but I think when you are at a very early stage of an idea, if you have a plan B, you might end up taking the easy roads. And honestly, when we started, you know, in 2018, end of year,
00:24:38
Speaker
2020, within 15 months, the pandemic came. Travel was at a worse situation, right? There was no revenue travel businesses. Who is going to pay technology company, right? And we were just building a product probably, we just had first five to six customers out. This was the toughest situation than ever, than any other situation I faced with my previous startup which failed.
00:25:06
Speaker
But since there was no choice of going back, there was never a discussion of, okay, can we shut it down and go back? The discussion was always, okay, how do we handle it to move forward? You know, it's like you might have heard that story, you know, the great warriors in the history. And there's, you know,
00:25:28
Speaker
It would burn the bridges behind the road. Yeah, just break the bridges or cut the ropes. So the only way is you have to win the war. No way of going back, I think. I believe that helps. True, true. Because success is, you know, in my opinion,
00:25:50
Speaker
The early time is tough. You have to be patient success. There is no shortcut to success. It's not going to happen in a day or month or year. And it's not even the objective thing that are you successful or not. These are subjective thing. You may be less successful or more successful, but you will be successful. What matters is as long as you are successful, that's good.
00:26:16
Speaker
How did you identify the idea in the market? Yeah, good. So when I was actually working for Tabiska in the initial days, and we did all this, and I started visiting customers a lot, I saw that when we are providing pretty much everything in travel, we got everything. And when you provide a lot of things as a package and what you're charging versus,
00:26:43
Speaker
There are some companies in the market back then who had very, you know, I would say very small, just, you know, as in they were providing very niche offerings. Okay. So one example of that, there's the GDS Sabre who had a product called Trams. That's a counting product. Everyone, almost everyone I know or we used to work with or talk, they were using it.
00:27:09
Speaker
So then there is this company called IQCX. That's like an accounting product for travel specifically, like for flight and hotels. Then there was another product called IQCX by a company called Cornerstone. It was only doing auto ticketing and everyone using it. Small teams, great product.
00:27:33
Speaker
When I looked at these kinds of products that I realized, you know, the one way is you build everything, you have hundreds of engineers and you sell it to 5, 10, 20, 30 customers.
00:27:49
Speaker
I'm a technologist myself. Once you spend some time, you are generally curious about things where you don't have enough experience or exposure. SaaS as a concept was really booming. There were people who were talking about SaaS and all.
00:28:05
Speaker
So then I thought, what we will do is there are enough problems in travel. This industry is evolving. So we had to take the problem and a very niche problem and solve it at a level where everyone will work with us. And that is how we thought about hotel content is a problem, where hotel mapping needs to be done, room mapping needs to be done, the condensation needs to be done. So we'll take this problem and we'll work with everyone.
00:28:34
Speaker
Of course, the companies would come if we are working with a large customer, they will ask, do we have this? And it is very easy to get tempted. But you know, I strongly believe, you know, focus is like, you know, very popular saying that it's not really about being focused on something. It is all about not getting distracted with everything else.
00:28:58
Speaker
So, you know, we kind of continue doing that and because of the SaaS product, a very small revenue size, it takes time initially to feel better. But once you have customers and if two customers lose for their own reason, it really doesn't matter, right? Because then you start, you know, start working with everyone. So I think with, you know, that was a, this is a known problem. There were companies who were trying to solve this.
00:29:22
Speaker
There was one company who was focused on doing this. When we started, they were already into a business for more than a decade. And there were hundreds of other companies who were doing this, but a lot more, you know, many other things as well. And they never did a perfection. So I thought if there is only one company who is doing this as a focus, there is enough opportunity there because
00:29:46
Speaker
there are more than 300,000 travel agencies globally. So, you know, more than 300,000 customers, even if you get 10% of that, it becomes huge. So that was the idea that, you know,
00:30:03
Speaker
go into nation, then that's how we started and kind of kept growing. And all of these things, all of this decision, Akshay is the 12 years in Taviska, all of them, you know, kind of has taught a lot of things that, you know, what we need to do differently, why we need to do differently and so on. Okay. I want to take a slightly macro view first to understand the problem better.
00:30:32
Speaker
When it comes to discovering flights between any two points, then I believe you have these, like Sabre you mentioned, you have these central, like you have a few players who aggregate flight data across the world. Every airline possible is listed there. So it is very easy for
00:30:54
Speaker
anybody to start a flight booking business because you can just plug into those one or two companies and through them get access to all the flights. Am I right in this understanding? So, you know, this is right understanding, but I think this is not a problem. The similar thing exists in the hotel also.
00:31:14
Speaker
There is something which anybody can start a hotel booking business by connecting to this. I will tell you difference of what is the fundamental difference between flight and hotel guide. If you look at the flight business, flight will fly between two airports.
00:31:36
Speaker
and any airport when it started gets a airport code which is unified everyone would say you know Pune is P and Q or you know any airport you know Dallas is DFW or you know London is LHR London Heathrow right so any airport has unique code that means airports are identified uniquely by everyone there is no confusion or there is no way of saying Delhi Airport New Delhi there's nothing like that there is a airport code which is standard
00:32:06
Speaker
Then any new airline which starts, they have an airline code, right? Air India will be AI only, right? And every airline flying between, you know, every route, there is a unique flight number, you know, let's say AI 911 is a specific flight.
00:32:25
Speaker
So what happens is let's say Sabre, as you said Sabre is a GDS who is giving the inventory and aggregating all of them. What's the fault of GDS? It's a global distribution system. Okay. Okay. So yeah, yeah. So, you know, when all these airlines were working, they were not able to sell it to everyone. So these GDS came in where they were working with flights to source the inventory and they were working with the travel agencies to sell it. So they were like the distribution hub.
00:32:53
Speaker
And the way to understand Saber is say Visa and Mastercard. Like Visa is aggregating merchants on the one side to accept digital payments and banks on the other side who will provide the authorization and the money transfer and all of that. And Visa is the network connecting them. So similarly, Saber is doing something similar to Visa.
00:33:13
Speaker
correct yeah and you know so there is a saber let's say there are other gds also let's say there is a medias or there is driver port okay and eventually there are aggregators who are not gds but they are also in a sourcing and the same flight let's say Pune to Delhi flight or let's say you know Delhi to New York flight
00:33:35
Speaker
That Delhi to New York flight may be given by Sabre and may be given by MDS as well. And as a travel agency, I can decide which one I want to show which is cheaper or better for me. But this is the same flight I can very easily identify because there is a flight number, airline code, airport codes, everything unique. There's a standardization in the flight industry.
00:33:57
Speaker
Whereas when you look at hotels, I start a new hotel tomorrow Sanjay Hotel and there is no unique way to identify that hotel. I can say Sanjay Hotel, you can say Hotel Sanjay. There is no hotel code assigned to me.
00:34:11
Speaker
This is the first level of problem. So when one supplier is giving Sanjay hotel and the other supplier is giving Sanjay hotel and if I say these two hotels are same there is no easy way because there may be hundreds of Sanjay hotels or two on the same road because you know let's say you go to a place which is famous for let's say this Eiffel Tower. There may be 10 hotels in nearby which may have Eiffel in their hotel name.
00:34:35
Speaker
Right? If you go to, you know, let's say Ayodhya, which is the, you know, the new destination getting built in India, on a one road, you will find, you know, five hotels with Dharam in the name of hotels, right? So there is no standardization.
00:34:54
Speaker
So, how do I identify these two hotels are same, those same hotels is coming. I cannot show same hotel twice to customer and make them confused. I have to show only one and show the best rate. So, that is the first problem where hotel needs to be mapped. The same hotel is coming and it's very complex. The same hotel comes from 400 times because there are 600 plus very good suppliers in the world.
00:35:16
Speaker
and every hotel will at least come more than 100 times and you need to understand okay this is same so take only one copy and show the best rate which is you know given among these hotels now the second problem is when you go and you decide okay this is the hotel I want to go you will go and try to see the rooms now
00:35:42
Speaker
The rooms in the hotel would also be named differently by different suppliers. Someone would say superior room, someone would say standard room, someone may just say room. How do you know that this room is same? Otherwise, in one hotel you will end up in showing thousands of rooms. If hotel only has 10 rooms, you have to show 10. So those rooms also needs to be mapped.
00:36:05
Speaker
So these are the two problems on a very high level. Mapping the hotel, mapping the room is something we do and we have developed, you know, AI based algorithms using, you know, for room level, we use NLP a lot. And for hotel level, we are using our algorithms to kind of map these hotels and rooms. That is in a nutshell what we do Akshay. Okay.
00:36:31
Speaker
You said there are 600 aggregators. So just like you have Sabre, there are 600 such players in the hotel space. So why is that? Why did the hotel space get like a few dominant players? Why is it so fragmented? Okay. There are, you know, dominant players. Okay. But I will tell you the categorization, right? So first of all, there are OTAs. Okay. Let's say Expedia or Booking.com is an OTA. They're selling hotels online.
00:36:56
Speaker
So they gave it to others also, you know, as a B2B. So these OTA act as suppliers. Then there are saver, like you said, the GDS also have hotels. Then there are bed banks who kind of pre-buy the inventory and have the best rates, but they will not have it for all hotels, you know, whatever they're able to contract. So like, you know, bed banks like hotel beds, web beds, these are the leading bed banks.
00:37:20
Speaker
Then there are regional players, so if you come to India, the clear trip and yatra are the players who are very strong in India, they are in Indian contact. If you go to UK, then there are Trivco, Miki, Restel. If you go to US, then there is Bonotail. So all these regional players. And then there are aggregators who, you know, kind of aggregate from everyone, try to give the best out of it. And now the aggregators who have their own contact rates also, it's a mix of it.
00:37:51
Speaker
This is how this list is evolved. Today, you know, in order to get the best rates and every market is different. As an example, North America is a very mature market. They don't just look at the best rates. They say, I want to make sure the API is fast. My results are shown fast. Data is good. So they typically every travel agency in US would work with six to 10 suppliers at the max.
00:38:16
Speaker
But if you come to India, they want to show the cheapest rate available on the earth. So everyone would work with 30, 40, 50 suppliers. And of course, there are business models, different business models. Someone just say, my data would not be best, but I would always give you the best rate. Someone would say, I am in a luxury segment where I would have my best rates, best service, best experience.
00:38:41
Speaker
But yeah, this is how that evolved and everyone works with everyone. Trust me, even the 600 suppliers would be working with each other as much as possible. And there are top, you know, and you can always based on your market, you can work with the top, work globally top, some regional and kind of limit your supplier set to kind of 6 to 10.
00:39:04
Speaker
Interesting. How do these suppliers earn? They charge the hotel fees or they take a commission or how do they earn? What is the deal with the hotel? Who does the hotel owner work directly with?
00:39:18
Speaker
So, you know, so there are different, you know, of course there are different models in this. At the end of the day, someone who is buying from hotel, hotel is, you know, sharing the commission with them. And either hotel may be collecting the money or supplier may be collecting the money, but there is a commission sharing. But as I said, one hotel doesn't work with the 600 companies. They may be working with one, two, three, or four.
00:39:45
Speaker
But then this four companies is giving to, so everyone works with everyone. And that commission, which is originally collected, who is directly working with hotel, you know, uh, get shared, uh, you know, between multiple parties. So let's say supply is selling to customer and charging a hundred dollars. Maybe actually what hotel gets is 70 or 75.
00:40:09
Speaker
So, you know, then the rest of the Commission gets kind of, you know, get in the ecosystem. And the things like which we are doing like standardization, everything mapped using the AI, which can do it in real time is also a big enabler.
Verbotec's Business Model and Client Solutions
00:40:26
Speaker
to kind of get rid of multiple players in the ecosystem because it is an efficiency at the end of the day someone who is owning and managing the hotel has to get the maximum benefits in order to deliver the best services to your guest.
00:40:44
Speaker
Again, interesting thing about this industry, you're saying 25% is the commission amount, which I think for the airline industry is much lower, right? What would be the commission of airline, a flight manufacturer or some of those manufacturing passenger ticket? What is the commission they pay out typically?
00:41:01
Speaker
So, so two things you know first of all commission may not be 25 always it may be so you know if let us say there is Maldives right some destinations where the demand is always high it is always going to be sold out the commissions may be lesser as well.
00:41:16
Speaker
But in the average would be like maybe 20% is definitely a split and you might have heard the even news where all the hotels in Ahmedabad one of the top agency a few years back in India because they were charging huge commissions right on the flight side in fact actually commissions went to almost zero but the way it works is
00:41:43
Speaker
Airlines have to pay a significant fees to GDS because you know the distribution happens through GDS as a technology and GDS then pay our travel agencies you know which is called as segment fees so today's flight industry
00:42:03
Speaker
is load running on the segment fees. Commission component is less or almost zero. Then some travel agencies are even charging the service fee to customers and rest of it is all on the segment fees. And segment fees, that means if you book a flight from Pune to Delhi, return, these are two segments, Pune to Delhi, Delhi to Pune. So for two segments, if you are booking that on a Sabre or a Marius or GDS, GDS will pay you segment fee.
00:42:31
Speaker
and GDS is charging airlines for using their technology based on the bookings happening on their GD system. And that's when, you know, airlines always trying to go direct, take my API direct because that's the additional cost for them. But it's not easy. How is it, does an airline pay to GDS? What percentage of, is it a percentage of booking or is it like a subscription?
00:42:58
Speaker
Of course, the way airline pay to GDS has multiple components, but typically what GDS pay to travel agency is basically if it is a domestic segment, there is a fee. If it is an attached segment, there is a fee. It is typically six to eight dollars per segment.
00:43:19
Speaker
But yeah, it is a segment. It is a single digit percentage of the ticket price. It's not percentage. It's not ticket price typically. It is typically based on number of segments. Every route, you know, one segment is based on that. And the difference for domestic versus international segment fee is because international ticket price is typically high. Okay. Okay. Okay. Understood. Okay. Interesting.
00:43:46
Speaker
Now you realize that hotel supply information is very scattered and not streamlined. There were two ways to do it. One way is to
00:43:58
Speaker
sell this as a service to travel agents and charge them for doing this standardization or the second way is to become an aggregator where you standardize it and then you take a commission. Why did you choose to sell it as a service instead of earning a commission? That's an interesting question. Okay. And I think, you know, my thought process to that actually is
00:44:26
Speaker
You understand the problem and you only focus on the problem instead of trying to deliver entire solution by yourself. Okay. As I said, there are hundreds of aggregators and suppliers in the ecosystem already. If I actually help these aggregators to solve the problem they have, they will easily adapt and easily grow.
00:44:47
Speaker
versus if I solve this problem and become my aggregator myself, I'm never going to own 100% of the business. So this problem, swallowing it for myself is already not worth it. You know, being an aggregator can be a separate thing, but being an aggregator was never a problem. There are aggregators who are able to sell, who are able to fulfill everything. The problem they have is they don't have unified data.
00:45:11
Speaker
So rather focus, doing everything, just focus on what is missing and that way I'm able to work with all aggregators instead of just being my own aggregator and solving the problem for myself. How would you classify your customers into buckets? Like you work with the OTAs, those are it, or you also work with people who are selling inventory to OTAs?
00:45:35
Speaker
Both, so you don't typically anyone who is buying hotel inventory from multiple suppliers, we work with them. Okay. So let's say, make my trip as an OTA who is buying from 10 supplies, we can work with that metric.
00:45:52
Speaker
But typically what happens is those train who are selling to make my trip they also work with 10 or 20. So that way we work with both. Anyone who is buying the only area where we typically don't work is if someone says I'm only contracting and I only have these 5000 hotels I'm directly contracting. I'm not taking from anyone else in aggregating.
00:46:14
Speaker
We don't then work with them. But anyone who is buying from multiple suppliers, let it be an OTA or Bedbank or supplier. We work with all of them.
00:46:26
Speaker
Okay. Understood. Give me an example of this aggregator who is selling to the OTA. Is there some name I would have heard of? Any big names here? Yeah. So, and I will give all the names actually, you know, in different categories of suppliers. So if you look at OTA, Experia and Bookings, you know, are the examples of OTA's who are selling a supplier to other OTA's.
00:46:51
Speaker
Then if you go to aggregators, then TBO is an aggregator, you know, gator room is an aggregator who are actually buying some multiple supplies as well as they have their own contracted rates and they are selling to others.
00:47:06
Speaker
I as a customer will not be able to go and book on these. Yeah, you will not be able to buy from TBO directly as a customer. It will be given to B2B. Correct. Then, you know, you have bed banks who are again B2B, like hotel beds and bed beds are the top two bed banks, who are pre-buying the inventory from hotels and selling it to all the businesses out there. And then there are local players in different markets.
00:47:30
Speaker
Okay. Understood. Understood. Okay. What's the value add to a customer who is using your product versus somebody who's not using your product? What difference does it create for their end customers eventually? I mean, from what I understand, this is an improvement in customer experience for them.
00:47:51
Speaker
Like the question will have a better customer experience if they use your product. Right. I will tell you if they don't use our product, because you know, if they're using a mapping product, which is good and accurate, the thing says when they are looking for a specific hotel, they will be able to see the cheapest with that hotel. Because if that hotel is listed twice and they see the hotel name, there may be the same hotel name somewhere else on the 10th page and the cheapest rate may be there. So those kinds of issues are gone.
00:48:19
Speaker
if you book a hotel then you will not end up in you know so you book you see the name you book it and when you reach there you might experience the problem that okay hotel doesn't have booking I assumed I booked a 5 star but when I go there on the same row 200 meter down there is a 3 star property and my booking went there so those kind of problems which kind of impact the customer you know experience those can be avoided very well if you go on the rooms page
00:48:49
Speaker
you don't see hundreds and thousands you know rooms you can see only eight rooms in the hotel and you can give an experience as an example you know our customer gives the experience like if you go in a hotel okay this is a standard room is hundred dollar
00:49:04
Speaker
If you want to add a breakfast to this room, $20 more. If you want to add a refundability, $10 more. This way it is very easy to make a decision because the rooms are mapped and the rate plans are mapped. It is very easy to show it and customer can make a decision. Okay. Uh, otherwise what happens is if you're showing $120 room, but this is with breakfast, this someone is with not breakfast, it's not easy to compare. It becomes very painful for customers to make a decision.
00:49:33
Speaker
This kind of clear experience helps us to make a decision, you know, I just want to buy this. I would rather buy the breakfast later. I would, you know, do a breakfast somewhere else. All the decisions can be easily made.
00:49:46
Speaker
Okay, interesting. What metrics do you improve for your customers? Is it like the conversion rates increase or the repeat rates increase? What are the metrics which customers would tell you that these metrics have improved after you started using your product?
00:50:05
Speaker
Two, two, you know, important things. One is the conversion should improve because every rate is now available and you don't miss out on the rates because of it is not mapped. And second thing, number of issues. You're able to show the lowest rate with more transparency on what it includes, what it doesn't include, etc. We are able to give them all the rates in a quantified way, structured way where they can make a decision and show the right things. And none of the rates would be missed.
00:50:34
Speaker
and second is we the number of cases you know which are coming as a error because customer booked something and happened you know
00:50:45
Speaker
they don't get their booking there and all those cases, reduction in those cases. Because of course, there would be errors. I would not say that if they use our product, there would not be errors. It's a AI based product. There is no way even a human does it. There is no way to do it 100% right. So there would be some errors, but the accuracy level, we work at 99.99%. So the error rate significantly goes down.
Bootstrapping and Financial Strategies
00:51:14
Speaker
Okay. Tell me about how you deploy the product with a customer. What's the journey like, like somebody contacts you and says, we want to use your product.
00:51:22
Speaker
Yeah, so because it's a data product which is helping you to map the data, it is not an end product. It needs to be consumed in your technology as a data. What we give is a data. So customer has to come up, sign up with us, fill all the details, they make the payment and they get access to our APIs. So they have a choice that they can actually implement our APIs to start downloading data at their end, which can be used in their booking engine process.
00:51:48
Speaker
Or they can just initiate a process, OK, give me a one-time dump. I will load all the data through a CSV, start my work, and then I'll implement the APIs. So in our case, it is just a click, click, click. There is nothing which needs to be done at our end. Customer have to kind of, because what we do is a process, give a process data. So if customer comes and say, I work with this 10 supplier, they come to a platform and say, one, two, three, four, five. Automatically request goes to those suppliers.
00:52:17
Speaker
So let's say someone says, I am using Expedia, request will go to Expedia. When Expedia approves, their data becomes available for them along with our mappings. So as the 10 suppliers approves, all the suppliers says, oh, he's my customer or she's my customer, give her data. Our data will start growing to them in a mapped and structured way automatically.
00:52:40
Speaker
Okay. Interesting. So what you, the way to build this product would have been that you would have gone to the suppliers like an Expedia or a make my trip and told them that I want to consume your data and standardize it and.
00:52:59
Speaker
act as an intermediary between you and some new OTA who might want to use your data where I will take your data but provide it to them after doing my standardization on it.
00:53:13
Speaker
Yeah, that's a very interesting question Akshay, because when we started and we go to supplier, they don't have you in a second to talk about who, who are you, why we will talk to you even, right? Yeah, because you're not giving them revenue as such. I mean, at least not on day zero. Right. So all it starts is.
00:53:32
Speaker
We work with customers. So, let's say, you know, we find out a large customer, we work with them because they are the one who are facing the problems, right? If you're able to tell, okay, how this is how we know we are helping you and we are able to improve. And that customer decides, oh, I want to use your services. These are my 10 supplies.
00:53:52
Speaker
And then we'll tell, okay, why don't you introduce us with your 10 suppliers. And now let's say TBO comes and go to supply and say, I want to use over take, then supply, then we talk to supplier. Hey, we have a product and your customer is now mutual, you know, our mutual customer and you need to work with us. Then do agreement with supplier to get their data.
00:54:15
Speaker
set it up and then they will approve the access for TBO. So early days is basically we figure out the customer and based on customer's recommendation or push, supplier are ready to work with us.
00:54:30
Speaker
Then, you know, once at a level where every supplier wants to make sure they work with us so that they get access to customer, all of that, they want to do webinar with us. Now it's all changed, but beginning it is customers who helped us to actually push suppliers that they can work with us.
00:54:49
Speaker
Interesting. Interesting. So tell me that essentially you would have had to start building the product once you got your first customer who introduced you to suppliers, right? That's when, because without data, you can't build anything, right? You need data first. Otherwise there's nothing. Yeah. So basically, you know, what we did is we, you know, identified one customer in beta.
00:55:12
Speaker
And we said, you know, this is what we are building and you know, we can do better. They don't want it to even work, you know, introduce us with supplier unless they are convinced. And we cannot convince them unless we have a supplier data. Yeah, you read data. The way it started is they have exported a two suppliers data from their system and gave us two files and said, this is my data for two of my suppliers. You map and show me the results.
00:55:41
Speaker
So we started algorithm there, okay, this is a data field and create the first, make it perfect, give it back. That means then we got access to six suppliers working with them. And that's how the journey started.
00:55:53
Speaker
So when they gave you data of two suppliers, you were able to take common properties on both suppliers, put them together and then show them that this property is listed at this price with supplier one, this price with supplier two with these. Not price actually, not price. Our job is only to tell, you know, uh,
00:56:12
Speaker
And this hotel is basically, our vertical master ID is this, which means this ID you want supplier in, this ID you want supplier to. Now you know these two properties are same, you decide everything goes on your end. It is a hotel level mapping, then room level mapping, but we went to room level mapping up to 18 months of the product experience. And when we have first customers where suppliers are already working with us and so on.
00:56:38
Speaker
But we spent time. When we get a data, we took around three and a half months to go back to them. Because really, unless we had a data, once we had a data, we had to tweak algorithm and really get to a level. Yeah, your development starts only after you have data. Before that, there's no development possible. Very interesting. Which also makes this a
00:57:03
Speaker
Business doesn't need a lot of upfront investment because essentially it's more about relationships than capital here. If you have relationships to get one or two customers and get data from them, you can like kind of start the cycle. So the real investment here is of course, you know, once your product sales, marketing events, a lot of these things really needs investment, but building a product also needs investment.
00:57:33
Speaker
And we had all the plans for, you know, getting investment. But what happened is we thought we will have first six customers, you know, in beta, make them successful. And then we will actually go for investment because we were, you know, tech people will build the product first and then go for investment. But by the time, why would
00:57:54
Speaker
Why would you need investment? Is it because the per-customer pricing cannot be too high and so therefore you need a thousand customers to break even? Not exactly. So basically the way, if you look at it, we started building a product and we will build a product. But taking to enterprise level, having the security, so there is a product level investment.
00:58:16
Speaker
Then we will need a lot of marketing, right? As an example, we needed a good marketing team, a good content writer, the digital marketer, inside sales team, web designer. We have to go to different events to do a branding because we are a new company.
00:58:33
Speaker
People will, you know, the good product will not get sold just because the product is good. No one is going to check it. We have to present ourselves in front of everyone. We have to write kind of pay that perception. So we spent a good amount in branding also. So all of these things needed money. How much would each customer give? Or next is you said six customers you want to hit. What would be your MRL with six customers?
00:59:01
Speaker
So, back then, we were charging around $12,000 per month, per year, you know, for six customers. So, it's like a $1,000 per month per customer. What we did is, in the pandemic hit, the situation for getting the money was not really the great.
00:59:23
Speaker
then you know you keep moving right in the same time then we realized okay it might make sense to diversify and do a tech services business also so you know in 2020 I started a tech services business right in the middle of pandemic to kind of get some money and you know see if that money can be funded here
00:59:44
Speaker
I guess tech services was really booming at that time because suddenly everyone realized you need to have an online play. You can't be an offline business. I think within a year that company has crossed 100 people, first 2 million in revenue. So that drone really smashed and that was a good hit.
Acquisition by Constellation Software
01:00:03
Speaker
But of course. What is that business called? The services business? Yeah, it's a company called Textbien services. Yeah. And you know, that's doing pretty well even now, you know, it's growing, it's on its own. And Textbien is essentially your cash cow. You're using the money there to invest it. Like that helped you build over tech.
01:00:26
Speaker
yes that helped us to build up but not for very long because when we did this and we realized that this tech services can become a big company itself within a year's time kind of we kind of tried to you know cut down the two companies how they can remain separate so what we do for Verbotik then is we thought
01:00:49
Speaker
if we are taking $1,000 from a customer and that gives me $1,000 per month, instead of charging $12,000, I will charge $10,000, but I will charge annually. So we shifted and started annual payment to just create the cash. So we were actually negative because this revenue is for 12 months, but we were able to manage the cash flow.
01:01:13
Speaker
Every new sign up is immediately giving you much bigger amount. It's giving me 10 customers money, right? So when I'm actually signing up, let's say three customers, now I have actually many of 30 customers. So that helps to manage the cash flow. And of course with pandemic, we're very, very sensitive. We had always very lean. I think best thing happened to us, Akshay is pandemic.
01:01:39
Speaker
because we learned the lesson for a lifetime. And then we never thought of raising money. I'm not a fan of raising money for anything. Of course, some things are just too big, you need it. Instead of managing the investors and spending time there, I would spend time on building the great products. So I think we learned a lot out of pandemic. How can you be lean?
01:02:09
Speaker
learn to be lean, you will be profitable at a great level eventually.
01:02:22
Speaker
Yeah, so our take is profitable. Our EBITDA is, you know, always about 30%. Yeah. So we always meant it. So, you know, we got acquired last year by a company called Constellation Software. It's a public list. Constellation Software is a public listed company in Toronto Stock Exchange.
01:02:47
Speaker
A lot of people don't know about the company because it doesn't do any marketing. The founder Mark Leonard has a very different principles. If we know he doesn't, he keeps saying this, you know, don't waste the money where there's no ROI, focus on the business. You'd be surprised it is a 78 US billion dollar market cap. It's eighth largest software company in the world.
01:03:13
Speaker
But people still don't know about them. You know, there's a very small headquarter team. What Constellation does is Constellation acquires vertical software companies like Ververtic who are specialized and in product into something and let them run on their own and help with the best practices, resources, capital and all those things.
01:03:36
Speaker
I have heard of Constellation software. I've heard of it as being the Berkshire Hathaway of software. They basically build a portfolio of software businesses and with a very light touch approach where they are essentially doing capital allocation and very broad level strategic calls but not involved in day-to-day operations.
01:04:01
Speaker
They don't really buy the companies, they buy the team who are actually building that company and they pick a head for them. They make those teams very successful. Most of the companies who became a part of Constellation, even for more than 10 years now, the founders and CEOs are still with those companies, running and growing. And they never sell companies.
01:04:24
Speaker
So what is the way to make the founders stay? How do they achieve that? Because typical acquisitions founders leave in one or two years max.
01:04:34
Speaker
Yeah, two things, I think, you know, and of course, you know, we are in less than one year, so I still have to see a lot. But what I have seen, you know, the other founders in the sister companies and, you know, people I'm talking to, I think two things. One is as a founder, nothing changes. You know, you are still on your own. When you say you're on your own, you're literally on your own. There is no
01:04:59
Speaker
The only is they have the financial guidelines. As an example, 30%, you know, you should be about it. If you're about it, you're good. If you're not about it, then only they will say, okay, what can we do?
01:05:14
Speaker
So only financial matrices are tried, which is important for the business, rest year on your own. And second is, their incentive plans are basically so great where, you know, even after selling the company, you keep making the money and not just the founder, but you know, the teams and the leadership typically have an opportunity to grow and stay with CSI for longer.
01:05:43
Speaker
How do they structure the compensation? One part would be like you would get some upfront money or is it equity? What do you get when you sell the business? Do they acquire it 100%? Yeah, so CSI always acquire companies 100%.
01:06:01
Speaker
Okay. And the deal depends on actually, you know, what kind of company you are, what kind of preference you have. Some companies, you know, typically is 100% upfront on the acquisition. Some companies may be a part of it on the acquisition and the now. So it really depends on a company to company. But largely it is 100% acquisition with all the money off land, all the cash deal, not even a stock deal. But they're open, they're flexible for the kind of deal you want to do.
01:06:30
Speaker
And if you look at the stock price of Constellation also, it's always going out from 2008. Amazing. Oil cash deals and the founders still stay. That's amazing. And what is the incentive plan for a founder? How do you earn incentives for you to be motivated? Yeah, it is actually completely based on your, you know, BU, your unit or your company. It is directly linked with the amount of money you're helping company to make.
01:07:01
Speaker
And you know, of course it is not just for founder, I would say it is for a team who is making it happen. Typically the bonus go to everyone in the company. And you know, these are the small things actually which helped us to make a decision. Because as a company also, we also always done this the moment we became profitable, we said,
01:07:21
Speaker
we will share the part of profit back with the entire company. So we typically share a significant part of our profits back with every employee. So we say, let's say, I have to see our capital, which can be to share money, which can be shared back as a profit with everyone. Then we will sit as a leader and locate the money to his department and the department will decide then how to. So it's a very similar thing on a constellation also. So those are some of the things which are
01:07:49
Speaker
very similar from a thought process standpoint. So, what was your year round when Constellation bought you or what is it now some numbers about the scale of the business? Yeah. So, this year, we will be very close to 3 million in the year. 3 million. Okay. How did you think about the decision of sale versus built-in IPO?
01:08:18
Speaker
I mean, these are typically the two options for founders, right? No, I think this was very a strategic move for us because what we are doing is a very niche and what we need is access to a lot of customers. So Constellation has a very significant travel portfolio under a company called Juniper Group, 14 other travel companies in the group, Traveltech.
01:08:43
Speaker
and getting access to those companies and have a more, you know, strategic partnership to get access to customers, especially in the markets where we are not very strong. So we are very good in North America, India, Middle East, how we are doing well in Southeast Asia, Europe and South America where our, I would say, you know, weakness, we are not very strong because of language barrier and so on.
01:09:06
Speaker
So that thing, which could have taken several years, got kind of accelerated. And I see we will make a good business in those two markets in next 12 to 18 months now, all because of the Juniper Group synergies. Fascinating. So you would also get Z-branded as being a part of Juniper Group to, again, help you open doors and leverage the Juniper brand. Not really. So, you know, this also.
01:09:34
Speaker
All of this, you know, so there are a lot of collaborative thing happens. There are a lot of group thing happens. But as I said, everyone is on their own.
01:09:43
Speaker
Do we want to put the Juniper Group on our website or not is our decision. There is no guideline. Even the two group companies want to work together. Of course, they will want to work together, but it is not a forced decision. That's what I'm saying. The beauty is all you do is you do a good for your opinion. Whatever is helping, there is no waste of time in the things.
01:10:07
Speaker
on the name of just, you know, as a part of group. There is nothing like that. The amazing people, all they care is focus on your business, what help we need from each other and do what helps your business. There is no guideline for anything on those. So it can be, you know, it depends. And as a tech spin, also you're running that like you're the MD, the managing director or the CEO there.
01:10:37
Speaker
Well, I'm actually managing director there, so I kind of give a strategic direction to CEO and board, but I'm not running day-to-day things there. Of course, I get involved in strategic matters and key customers meetings and all, but there is a dedicated leadership team along with CEO from day one of the experience.
01:10:59
Speaker
How is your time split in a week? In a week, how much time do you give to each of your ventures? And there's a third venture we haven't spoken about. Just tell us about that also.
01:11:10
Speaker
I think time, I don't really do it that way as such. Typically, I look at three aspects. One is growth, second is profitability or I would call it as an efficiency and third is firefighting.
01:11:31
Speaker
So, we just keep doing that and of course, a lot of or most of time goes into OOTC because I am CEO running day-to-day operations here whereas, you know, in other two companies, my involvement is more strategic.
01:11:45
Speaker
Third company, you know, that's a very interesting part. Okay. So Jill Connect that actually we started back in 2016. And the idea behind the real connect is we wanted to do something which will help rural communities and farmers. So the first initiative we started in Jill Connect is selling vegetables from by directly from farmers to customers.
01:12:14
Speaker
And you know, and there are some lot of other initiatives we did. As an example, we had a farmer canteen in a village where farmers are able to get the grocery at a discounted rate, just like an army canteen in India. So a lot of small, small initiatives we have done for fertilizers we created something.
01:12:32
Speaker
What happened is recently, you know, last year, mid of last year I decided that we will have a branch office of Verbotec in a village. The idea is we want to kind of, you know, create some jobs there. So we have some work which is a manual process in terms of creating the content or making some manual decisions. So we decided to start around 30 people office, you know, back in my village.
01:13:01
Speaker
And you know, I started spending time on those things. It was a great experience. There are a lot of challenges. There was no internet there. There is no infrastructure available there. So I have kind of taken the internet from 14 kilometers use the residential building one floor to convert into 60 people office and all of that.
01:13:21
Speaker
And when we were doing that, in the process, we saw the kind of need. There are so much talent available there. People need a little bit of training, but they need a job. So we started our Dowdy branch for Verbotec on 12th of Jan, but by the time I conclude that I realized
01:13:41
Speaker
If I spend little more time, I use my relationships, actually I can probably give an employment to 400, 500 people in that village and it's not just one village.
Empowering Communities with Zill Connect
01:13:53
Speaker
You know, in a 30-people robotic team, there are people who are coming from nearby villages. Most of them, you know, are girls who are married. They cannot really come to metro city and do the job. So this, you know, job, which is, you know, and we want to do all kind of, so there can be some tech as well, but more of a BPO and robotic press automation kind of work. There is such a huge need.
01:14:20
Speaker
And I realized that, let's say, you know, I need 30 people right now for overtake. I may need 10 more people in next few months and I have 40 people, but how can I create more employments? That's when, you know, Jill Connect, which was always focused on
01:14:35
Speaker
developing the rural economy we thought of focusing or tweaking the zill connect focus to create these employments in hundreds so because this is you know I think I found
01:14:50
Speaker
This is probably a way where I can help in a much better way because this is my area of expertise. So yeah, that's the ZIL Connect. So today ZIL Connect's vision is again, ZIL Connect's vision was always to develop and empower rural economy. But now that vision is achieved through creating and delivering the world-class PPO and tech services to global enterprises.
01:15:20
Speaker
We signed first three customers there. I think business is picking up well. There is a shot of infrastructure and stuff where I'm trying to collaborate with some more people. How can we kind of create a new infrastructure like a business park there? We are kind of collaborating with the local politicians who are also very helping in developing some infrastructure for us. But yeah, those things are going on. So ZillConnect is
01:15:47
Speaker
that to tell you actually the fundamental difference is other things are business where we are trying to create the wealth, we are trying to create an impact. But Zill Connect for me is a way of life. I'm looking at, I would be working for Zill Connect till the last breath of my life. I will work on it till I die probably. I don't think I will work on anything else till I die.
01:16:15
Speaker
So it's very close. We had been doing different things in last seven years. We have struggled a lot honestly in doing things because it's not easy to work and do a bit.
01:16:30
Speaker
But my, my idea is now I think I have learned, and this is the same thing, you know, when I said, you know, at the time of when I was starting to overtake up to acquisition of Toviska, I realized I can do this because this is what my area of expertise is. I think now I'm convinced with the same thing for a rural
Business Philosophy and Final Thoughts
01:16:49
Speaker
development. Also, if I use my expertise, probably I will do better than, you know, any other way. And now, you know, I'm on that path.
01:16:59
Speaker
So let me end with helping to understand one thing for me. So from what I understand, you are extremely good at taking a business from zero to one and then putting it on autopilot for the one to 100 journey. What are some of the best practices around how to do this? Two things, you know, one is, you know, any business, a lot of people think business idea is important and, you know,
01:17:29
Speaker
In my opinion, the team is important. You have to have the right team. You always focus on building that right team. And building that right team is not about that you are 40 people, you build the right 40 people. You get the four right people for your departments, and they will automatically build their teams who are right. So in my opinion, idea can be tweaked, changed, diversified, whatever, all that can happen.
01:17:57
Speaker
but team is that one thing and second thing is you know focus on the right matrices and number if you are doing a business focus on the growth as well as efficiency slash profitability and really just everything around it
01:18:17
Speaker
So these are two things in my opinion which have helped because then in the execution one key thing is a visibility. So like in Vavotek for last five years, first used of every month, we do all hangs. And we always talk very transparently about everything in terms of our numbers, the new revenue, EBITDA problems. It's not also about just filling code, it's also about problems.
01:18:45
Speaker
So I think talking visibly where you align people, always transparently tell people about good and bad both. I think that helps to kind of develop a great team. And typically, if you have three to four great people, one of them is also ready to take over your own role as well. And we can always move on and focus on something else. That's how I kind of look at it.
01:19:14
Speaker
How do you define right team? What is the way to, I mean, you know, right team is not, there's not enough for someone to go on. Like how do I find the right team? What are like some more, can you zoom in a little more on what characteristics to look at or how to run the right selection process or any other insights?
01:19:35
Speaker
Yeah, I think and first of all, there is no way to figure out a person is right or wrong in just one meeting or two meeting. You may need to spend some time. But two factors, one is hunger and second is ethics.
01:19:49
Speaker
A person is hungry for some success and a person is ethical that in that hunger he will not mess it up. I think these two factors are important. Skills can be learned. There is no rocket science. Hunger and ethics are the two things. I would want to ask. These are very hard to judge.
01:20:10
Speaker
I think, you know, based on the actions, right? Because once you start meeting people, smart people with some experience, they will always do a good job in talking and articulating and all those, right? But you have to watch for actions.
01:20:27
Speaker
So let's say if I have one idea and I talk to someone, are you interested? And you will always say, yes, no. But then observe what happens in next one week. How many times he's calling you back to discuss that idea? How many times he's spending on that? What is the fire, right? That hunger is there or not? Because at the end of the 99% people want to do the business and they want to get into entrepreneurship. But they don't do anything about it.
01:20:55
Speaker
So you have to find by actions and ethics is a slightly tough thing, but if you watch out, you'll find out very quickly. What are the symptoms? Very, very small. I'll tell you, I'll tell you very small things, right? So things go wrong, right? I know every now and then things go wrong, but
01:21:18
Speaker
When things go wrong, what do you do about it? I'll tell a very interesting story. Our HR has called some college people to office for scheduling their interviews. She forgot that she called.
01:21:39
Speaker
And those people came. Now the two things can happen. No one else knows actually those guys came to office, right? And one thing is you send them back and you know, call them again and everything is perfect.
01:21:52
Speaker
But second thing is, she, you know, walks out to me and says, you know, I called them and I forgot, you know, we are not prepared for them. Okay. So, you know, I want you to talk to them for five minutes, you know, just say apology from a company standpoint. And they're just precious, right? But think a thought process, right? If we call people and we are sending them back, we need to make sure that they realize we are sorry about it.
01:22:19
Speaker
I need to make sure, you know. So I think this is a fundamental difference. How you react to a situation, I will tell you how ethical people are. Because when she comes to me and tell me about this, I can see, right, she has missed it. But she's not worried about what I think. She's worried about to do the right thing to people because she represents the company, right? These are the kind of things, you know, I look at as ethics.
01:22:48
Speaker
Amazing. That's an amazing example. Thank you so much for your time Sanjay. It was a real pleasure. It was lovely talking to you Akshay. It was a pleasure. Thank you very much. Thanks for having me.
01:23:00
Speaker
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. Write to me at adatthepodium.in. That's adatthepodium.in.