It takes time to build something successful!

Since SaaSx second edition, I have never missed a single edition of SaaSx. The 5th edition – SaaSx was recently held on the 7th of July, and the learnings and experiences were much different from the previous three that I had attended.

One primary topic this year was bootstrapping, and none other than Sridhar Vembu, the CEO and Founder of Zoho, was presenting. The session was extremely relevant and impactful, more so for us because we too are a bootstrapped organisation. Every two months of our 4.5 year-long bootstrapped journey, we have questioned ourselves on whether we have even got it right! If we should go ahead and raise funds. Sridhar’s session genuinely helped us know and understand our answers.

However, as I delved deeper, I realised that the bigger picture that Sridhar was making us aware of was the entrepreneurial journey of self-discovery. His session was an earnest attempt to promote deep thinking and self-reflection amongst all of us. He questioned basic assumptions and systematically dismantled the traditional notions around entrepreneurship. Using Zoho as an example, he showed how thinking from first principles helped them become successful as a global SaaS leader.


What is it that drives an entrepreneur? Is it the pursuit of materialistic goals or the passion to achieve a bigger purpose? The first step is to have this clarity in mind, as this can be critical in defining the direction your business would take. Through these questions, Sridhar showed that business decisions are not just driven by external factors but by internal as well.

For example, why should you chase high growth numbers? As per him, the first step to bootstrapping is survival. The top 5 goals for any startup should be Survive, Survive, Survive, Survive, Survive. Survival is enough. Keep your costs low and make sure all your bills are paid on time.  Cut your burn rate to the lowest. Zoho created 3 lines of business. The current SaaS software is their 3rd. They created these lines during their journey of survival and making ends meet.


Why go after a hot segment (with immense competition) instead of a niche one?  If it’s hot, avoid it i.e. if a market segment is hot or expected to be hot, it will be heavily funded. It will most likely be difficult to compete as a bootstrapped organisation and is henceforth avoidable. Zoho released Zoho docs in 2007, but soon as he realized that Google and Microsoft had entered the space, he reoriented the vision of Zoho to stay focused on business productivity applications. Zoho docs continues to add value to Zoho One, but the prime focus is on Applications from HR, Finance, Support, Sales & Marketing and Project Management.  Bootstrapping works best if you find a niche, but not so small that it hardly exists. You will hardly have cut throat competition in the niche market and will be able to compete even without heavy funding.

Most SaaS companies raise funds for customer acquisition. Even as a bootstrapped company customer acquisition is important. As you don’t have the money, you will need to optimise your marketing spend. Try and find a cheaper channel first and use these as your primary channel of acquisition. Once you have revenue from the these channels, you can start investing in the more expensive one. By this time you will also have data on your life time value and will be able to take better decisions.

Similarly, why base yourself out of a tier 1 city instead of tier 2 cities (with talent abound)? You don’t need to be in a Bangalore, Pune, or a Mumbai to build a successful product. According to Sridhar, if he wanted to start again, he would go to a smaller city like Raipur. Being in an expensive location will ends up burning your ‘meager monies’ faster. This doesn’t mean that being in the top IT cities of India is bad for your business, but if your team is located in one of the smaller cities, do not worry. You can still make it your competitive advantage.

Self-discipline is of utmost importance for a bootstrapped company. In fact, to bootstrap successfully, you need to ensure self-discipline in spends, team management, customer follow-ups, etc. While bootstrapping can demand frugality and self-discipline, the supply of money from your VC has the potential to destroy the most staunchly disciplined entrepreneurs as well. Watch out!

And last but not the least – It takes time to build something successful. It took Zoho 20 years to make it look like an overnight success.

This blog is authored by Ankit Dudhwewala, Founder – CallHippo, AppItSimple Infotek, Software Suggest. Thanks to Anukriti Chaudhari and Ritika Singh from iSPIRT to craft the article.

I Just Wanted 50K INR per month, but ended up building company with $9M revenue – Paras Chopra, VWO.com

Paras Chopra from Wingify is great story for startup ecosystem in India and I personally become a fan of him after I watched his Unpluggd Talk on “How To Bootstrap A Tech Startup In India” – His simplicity and honesty gives lot of clarity on how he started his company. All that he wanted to earn is 50,000 INR and had no plan to create company that will generate 9M USD revenue. His perseverance, hard work, and ability to learn from few failures before has out wonderfully for him. Being bootstrapped and growing at 100% rate is just phenomenal success. I am very confident his story inspires many young entrepreneurs.

It was very clear in his words, that bootstrapped startups suffer from media attention which could help them to reach to their target customers, he was envisioning a dedicated publication on Bootstrapping, YourStory started a Bootstrapping Series where they have covered more than half a dozen startups and we are hoping they will do much more soon. The main stream media has been doing some story lately and our goal is to steer that interest and bring awesome ventures to forefront and provide them what they need most.

You can watch full conversation in this video: 

A Cloud telephony startup, VoiceTree- “Bootstrapped”, “Profitable”, “Still growing”

Indian economy is a cluster of more than 30 million small and medium businesses along with large enterprises which are lesser in number. Majorly, these SME’s powers the growth of Indian business industry.

This large SME pool presents a lucrative opportunity for Indian product and service companies only if one is able to tap it.

One such company which is creating a presence among Indian SME domain is “VoiceTree”. The cloud telephony startup, offers business call management solution with an Integrated IVR under its flagship product MyOperator and an automated order confirmation system on the cloud facility through its initial product, CODAC.

Team VoiceTree

Breakthrough

The startup was founded in 2010, though it was only in this March that things took a major turn for the company, in a positive way.It was the launch of  MyOperator, which subsequently became its most selling product.The product helped the cloud telephony startup, to scale up to more than 300 customers from 10 in a period of less than 8 months.

With MyOperator, VoiceTree targeted the large SME sector, mostly businesses which have an offline presence, though it also found a niche segment in the ecommerce industry.

In fact, the customers of MyOperator hails from various industry verticals, be it offline businesses like Berger Paints, political party like Aam Aadmi Party, religious groups such as Art of Living or ecommerce stores like Flaberry.

Other product by the startup, CODAC, targets enterprise sector and bags Snapdeal.com, Lenskart.com and many other as its clients.

Where MyOperator is  a call management and tracking system on the top of an IVR, CODAC is more of an order confirmation system on the cloud.

Bootstrapped and Profitable

Though various other cloud telephony players existed in the market before VoiceTree, still the Delhi based startup was able to strengthen its position, now turning profitable with a team of more than 40.

“Effective marketing and customer acquisition strategy has a played a big role for us”, says Ankit Jain, Founder, VoiceTree.

Though our price is on a higher side in comparison to our competitors, but enhanced product features and the product design which suited the Indian SME’s has been the key factor for our whatsoever success so far. Small and medium  businesses in India are not so much comfortable with Internet and concepts of cloud or SaaS, they just know about their business. We designed the product for them, with features they can easily grasp, while they focused on their business and daily routines, adds Jain.

The future of the startup looks bright as now it plans to go global and launch more features in its existing product, MyOperator. Also there are more products which are in the development stage which once launched, will help the company to expand its offerings for more business verticals.

Though journey so far has been very exciting and we did it while bootstrapping but now its time when we are looking to raise some capital for executing our more ambitious and larger goals, signs off Ankit.

Microsoft Accelerator Research on Starts and Closures in Indian tech startups

We are planning to release research findings every month week as part of our startup support program at the Microsoft Accelerator in India. There are about 50 different topics that we are curious about and are consistently doing research to find out ways to help our accelerator companies perform market research, target early adopters and focus on getting more customer traction.

This series is part of our accelerator database on engagement with startups, investors, mentors & entrepreneurship. Last week we did a report on Smartphone usage in India.

This week our focus is on the rate of companies starting and closing in the technology product space. Over the last few years Microsoft has been tracking new companies as part of its Bizspark program. Besides this we have access to several databases from multiple sources which has allowed us to consolidate all these into a single system to track startup activity. While we currently track over 73 different elements including founders, starts, closures, funding, etc. our focus is on trying to find patterns that can give us more clues to remove the roadblocks that reduce entrepreneurial failure early in the system.

We track over 6200+ entities – which includes services companies with a “product” they are building and also many viable side-projects, where the founder is generating some traction or revenue and 3900+ companies that are solely focused on building products (includes SaaS, eCommerce, traditional software, consumer Internet, etc.) in India.

On average there are about 450+ starts annually over the last 3 years, which has grown dramatically thanks to eCommerce.

While Bangalore has the most number of technology product startups overall, at neary 40%, Delhi/NCR came a close second in 2011, only to return to normalcy in 2012.

In terms of closure, 26% of companies still close within a year of them starting (either the founders giving up and moving on, or the company going dormant).

The biggest issue for closure (given that nearly 80%+ of all companies are bootstrapped) is collecting money from customers who have committed to paying for their usage of the product.

While not being able to raise funds is really #1, that seems to be a generic reason enough and a motherhood-and-apple-pie situation.

Unlike the valley (anecdotal information alone) most failed entrepreneurs dont go on to start another company or join a startup, but instead go to work at a much larger company (over 60%). Most reasons given were because of loans to payoff or pressure from parents (surprisingly not from any others).

Our recommendations are for new entrepreneurs to have a “cushion” of nearly 18 months in funds in their personal capacity before they delve into a new venture as opposed to 6 months.

We also recommend asking new customers for an advance in payment as part of the Proof of Concept instead of payment after the fact to aid in managing cash-flow more effectively.