iSPIRT works to transform India into a hub for new generation software products, by addressing crucial government policy, creating market catalysts and grow the maturity of product entrepreneurs. Welcome to the Official Insights!
Author: Peter Yorke
Peter is founder and CEO at Yorke Communications Private Limited, an organization that builds content marketing programs for both internal and external audiences and does Technical Writing. In the last 3+ years of operations, Yorke Communications has acquired a bouquet of marquee customers in the marketing and communications space and works with some committed and dedicated writers and consultants.
Earlier Peter worked with Oracle Financial Services Software (formerly i-flex solutions), Tata Consultancy Services (TCS) and Wipro Systems – among the top software exporters from India. Peter is also Director on the board of the International Association of Business Communicators (IABC), a SFO headquartered global body of nearly 15,000 professionals.
We are delighted that the Finance Minister singled out the Software Product Industry for mention in his budget speech today. This is momentous… the identity we have been so seeking especially in the corridors of power was finally articulated this morning in the highest legislative body of the land – the Indian Parliament.
We’d like to highlight four things.
First, the thumping endorsement that came from the Hon’ble Minister of IT and Communications Shri Ravi Shankar Prasad during his visit to Bangalore (July 1, 2014) where he spent a couple of hours with iSPIRT and the Software Product Industry and minced no words in lending the Government’s support to the Software Product Industry cannot be underplayed (link to video).
Second, the specific text of Section 62 of the budget speech (just 10 days after Mr. Ravi Shankar Prasad’s supportive visit) that focuses on digital India and the “imminent need to bridge the divide between digital “haves” and “have-nots” is noteworthy. The key highlight, of course is the statement about the “special focus on software product startups”.
Third, Section 103 of the budget speech which states: “In order to create a conducive eco-system for venture capital in the MSME sector it is proposed to establish a Rs. 10,000 crore fund to act as a catalyst to attract private capital by way of providing equity, quasi equity, soft loans and other risk capital for start-up companies”. Another boost by the Government for start-ups. Clearly the Government has its priorities straight.
Fourth, the taxation issue. Though there was no mention and we were certainly hoping to get a resolution to our issues of dual taxation (VAT and Service Tax) on software products as well as the issue of TDS deduction on software product payments, there is an intent to simplify and rationalise the tax regime with the proposal to set up an industry-CBDT/CBEC interaction committee that will look into industry specific issues and work to resolve them. We will of course take our issues to this proposed committee and remain hopeful that our issues will be addressed.
Meanwhile, various iSPIRT volunteers have shared their views on the budget with the media and these reactions are summarized here. Please spread the word about this to everybody in the software product industry.
Though we could have hoped for more, I think the consistent policy advocacy in recent past and the hard work put in by various spirited iSPIRT members have brought us to where we are today. The stage is now for ours to play on. Let’s make it happen.
For most food enthusiasts in India, the start of summer signifies the beginning of the much awaited mango season. The “King of fruits”, as it is most aptly described, is in the market for a few weeks before it completely disappears. Drawing a parallel, it’s an equally good time to be a technology start-up in India as well – of course, the season will certainly last more than a few weeks but tech start-ups are certainly the talk of the town and the opportunity is here and now.
A recent report by Helion had three key pointers that give a boost to the software product ecosystem. Significantly, CIOs and top IT decision-makers keen to look at start-ups. Though common belief may be otherwise, 90% of IT decision makers said that they are likely to see a demo, implement on a trial basis or conduct a review of new technology products. As many as 72% of respondents said they were likely to invest in a limited implementation of the solution, while 54% are willing to invest in a full implementation of the solution. IT Decision makers also recognize that newer technologies would increase the agility and flexibility of their organizations. Surprisingly, cost is not a major factor that is driving the adoption of these new technologies as less than half the respondents (43%) strongly believed that it had impact.
The other key fact to note is that Indian product start-ups are geared to disrupt IT adoption across the enterprise: As many as 82% of the respondents have developed and deployed applications for various business use cases. Business analytics and big data solutions are being offered by 46% of start-ups that responded to this study, enterprise services on the cloud by 30% and mobility solutions are served up by 21%.
Key functions targeted by these solutions include sales (73%), business development (70%), service delivery (66%), HR (51%) and supply chain (48%).
The third heartening fact is that Technology buyers keen to fuel the start-up ecosystem. The survey shows that IT DMs are demonstrating a new-fangled willingness to help start-ups. 85% of respondents stated that they are willing to work (and play an advisory role) with the start-up to help evolve or improve the product. A majority of respondents (82%) are keen to provide customer references while 68% agree that being one among the first five customers for a start-up is acceptable.
But start-ups also need to realize thatIT decision makers primarily worry about the reliability of the solution (78% cited this as a high risk) as well as the long-term quality of support from a start-up vendor (72%). Scalability of the solution and its performance are also aspects which IT buyers believe that start-ups must fine-tune in order to seal the deal. As long as tech start-ups can build on the trust element they are sure to have a clear growth trajectory ahead of them.
“Why isn’t there a place where we can store all our medical information?” is the question that bugged Shashank ND, Founder of Practo.com. Jamming together with a classmate from NITK Surathkal, they found a solution and founded Practo.com – a cloud based service that covers over 8,000 doctors and manages the records of nearly 3 million patients.
Shashank, I was looking at your website and I was intrigued by the fact that you actually started this business because of a personal experience. Do give us an insight into how you started?
My father was to have a knee operation, and we had visited a couple of hospitals where we had some tests done and got some reports. The doctor advised based on the reports that my father required surgery. Now obviously I was concerned and we wanted to take a second opinion and have these records shown to a doctor in the US. It turned out to be a quite a clumsy and cumbersome affair. I had to take a photograph with my camera then transfer it online and then the doctor in the US responded to us asking for more information and then it suddenly struck me, if all the information was available in a secure repository that could be accessed easily 24/7 we wouldn’t have so much back and forth and delays.
But I wanted to double check things so the next time I visited my ophthalmologist I asked him to give me the prescription on email so I could keep a digital record of it. He told me that the system he used was 10 years old and didn’t support this functionality. He went on to say, if someone can give me a system like this I will gladly use it. So my imagination started running wild and I thought of a system where all our personal health records could be available digitally.
Fundamentally, we have a Facebook where we keep all our personal information, we have a LinkedIn where we keep all our professional information, I just wondered why there isn’t a place where we can store all our medical information. If you really look at it, doctors need records because they become more efficient in servicing patents. Patients are keen on information digitally stored because they don’t have the hassle of storing stuff physically as it is also subject to wear and tear. The problem was really the intermediary software and that’s the gap we stepped in to fill.
Did you have to invest a lot of time in educating the doctors on how to use the software or what potential benefits they would get?
Honestly, the first few we didn’t have to, because they proactively told us that they need it, so it was more about convincing ourselves to quote for the software. All the doctors who came to us already had the problem, so they were contacting us to build the software, rather than us convincing them about buying it. But after the first few, we had to really sell the proposition to the other doctor’s.
So what’s the revenue model, you charge the doctors to use this or the patients, how does it work?
No, we charge the doctors. We give the software to the doctors and doctors pay us on an annual basis. Now what does the software do for the doctors, it helps them with four main things, one- it helps the doctors in scheduling, so all the appointments, reminders to the patients about their appointments are done through our software, it basically ensures that without any manual information the patients are reminded about their appointments and the patients visit the clinic on schedule. So the dropout rate because of being misinformed or not informed comes down drastically.
The second thing is EMR or Electronic Medical Records, just like my father’s report or my eye prescription. We allow the doctors to maintain all the digital records on an account of the patients. Now this information can be inscribed, a prescription, printout, and every type of medical information that can be stored about the patient.
The third thing is billing, so doctors who are doing billing manually or on MS Word or any other intermediary software can now do it on ours.
Finally we have built a functionality to generate reports; reports allow the doctors to keep the history of patients. So for example the doctor will come to know how many new patients they have seen in a month, such data could never be accessed earlier by a and we allow the doctors to see how many patients they have examined, the money they have paid, how much has been expensed, what is the profit for the month.
Shashank, you have a young team. I looked at that photograph on your website; they are all youngsters, average age, probably 25 or so, how do you keep them motivated and charged up to kind of support you in whatever you are doing?
One of the thing that has worked for us is that even though I started the company, we ensure that everybody feels that this company is theirs by making sure that some part of the responsibility is completely given to them. Take our website for instance, the person who designed it used grey as the background color and frankly I hated the color but it was his design, it was his work, so even though I did not like it I allowed it to continue.
I make sure that each and every creator has ownership, and that’s what keeps them motivated. The other thing we did is to add experienced people to the mix and now we have about 30 people in the company who provide the experience to the team members who are inexperienced so that they can learn a different dimension of the corporate world. This keeps everyone going.
Finally, the idea that we set out with never changed. Whatever we embarked on from day one continues to stay. This is a very good thing that binds us all together.
How do you really take care of balancing the expectations of various stakeholders – investors, customers and your own employees…
That is a great question and obviously it is a tough ask, but I have this pyramid of priorities that I have created in my life. Whenever a major decision is taken, I have a mental image of the pyramid. At the top of the pyramid is the company vision. The second block pertains to the needs of the customer; the third relates to my employees, fourth is the investor and fifth is me. So I ensure that any decision that I have to take, it is a combination of these priorities.
So where does this go from here? Are you looking at international market, what is your vision, what is your roadmap for the future?
Our approach is very clear – we want to enhance the patient’s experience of healthcare. We also want to help doctors to be more effective in doing several things – working in their clinic, treating patients and learning new things among others. So with two fundamental principles of helping the patient and helping the doctor, we believe we can concentrate on healthcare for all of us. Implementing the solution in India certainly is a focus but there is no reason why it cannot be scaled and implemented overseas so we have set up base in Singapore and already gained a customer there.
In this fascinating story, Kailash Katkar recalls the past almost two decades of running a business that at one time faced closure. But riding on quality people, constant innovation and proximity to the customer, Quick Heal has become a leading anti-virus software company that is giving even the international anti-virus companies a run for their money. Read on….
Why did you start this business? Why did you form Quick Heal? What was the intention behind it, and did you go for it alone or do you have partners?
When I started this company I never thought I will convert this company into Software development. It started as a computer repair shop. I used to do calculator repairing first, and then I was into laser printer machine repairing. And in those days it was a monopoly in Pune. But when I saw that these machines were not going to continue for a long time and computers are going to take over I started, computer maintenance and started taking AMCs. In fact, I had a lot of customers. I was not into computer sales. I was purely into computer maintenance.
My younger brother(Sanjay Katkar) after his 12th standard wanted to get into electronics for his graduation, but I instead said why don’t you do computers. He was a bit reluctant because it was very new and the fees were high but on my advice he did that and used to come to my shop for practice because I had computers in my shop. Now those days, nobody bought antivirus software. In fact it cost a prohibitive Rs. 14-15,000. Customers assumed it was the responsibility of the contractor to provide it and when computers came for maintenance it was the contractor who had to format the machine, re-install the OS, and reload the data.
Now my younger brother as part of his curriculum had to do a project so I asked him to write some tools which could automatically remove viruses since formatting the machine and reloading all the data was very time consuming and cumbersome. The Michelangelo virus was infamous in those days and was quite a problem for many computer users. He managed to write one simple utility that could eradicate the virus and it worked very well. So I started distributing the tool to my customers and that was the beginning of the anti-virus business.
So based on customer feedback, I ventured into anti-virus software and believe me I had no knowledge of the software industry. We started work on a full-fledged anti-virus software in 1993 and the first version of Quick Heal was released at the end of 1994 most likely.
It was quite funny actually when I think back. The software was a DOS version that came in a floppy, and then we designed a small envelope with colorful packaging and started selling it. It was a bit tough for me to sell, but then gradually I started getting success, and I got this success through channel partners, because since I was into computer repairing, I used to know most of the computer repairing people.
So, what was the competition like in those days, Kailash?
There were a lot many antivirus software. I mean, there was Norton antivirus; there was McAfee; there was Dr. Solomon. And there were a lot of Indian antivirus also.
From Pune itself, there were three antivirus software manufacturers. The two prominent ones were Cure and Vaccine.
In Chennai there was Vx2000 and Star antivirus software. And from Mumbai, there was Red-Armour antivirus software, Red Alert antivirus software. From Delhi, there were three antivirus software. So overall across the country, I think there were about 10-11 software, and this doesn’t include international software.
So from a customer perspective, was there a leaning towards the imported software or Indian software?
People were more fascinated by imported products and software was no exception. McAfee and Norton were the preferred choices in the market.
Correct. you must have had a lot of courage to kind of get into the market at that point.
Yes. Actually, my computer maintenance work was still on. I continued my computer maintenance until 1998 and this gave me the cash to pump into the anti-virus software development and marketing also. Personally, I used to spend 50% time on computer maintenance and 50% time on software sales. And my younger brother was fully focused on development.
What was your proposition to the customer?
Actually, it was quite difficult considering the huge competition, with so many number of antivirus software. But in the late nineties, a virus called Dir 2 came into the market. The virus was extremely dangerous and used to decrypt the hard disk. In fact, users never knew when the machine is infected and after infection how many times the machine was rebooted. Now if you applied an anti-virus software in the traditional way, it was just remove the virus but whatever data was decrypted would be lost and the machine would crash. So every time the machine was formatted about 30-50% of data would evaporate.
So Quick Heal pioneered a unique approach. We managed to find out how much data was decrypted and encrypt it before cleaning the virus. That way we got the virus out and the data restored. This way Quick Heal was the first antivirus software in the market which used to do this. Even Norton and McAfee were not doing this.
What was your communication strategy to inform the market of such developments?
I was not able to go pan India, but I was able to communicate with most of the customers in Pune. In fact soon after Dir 2 came Natash a dangerous polymorphic virus. Again many of the antivirus software companies took a hit but we were able to find a solution and gradually started converting larger customers like the Times of India who took a corporate decision to adopt our software.
How did you scale that now? From a development perspective, how did you scale it?
Now we have a team of around 650 people but we went through some tough times. In 1998 I decided to close down the computer maintenance business because it was very difficult to run two business together. I focused on a distributor strategy but that put a strain on my business because while the distributors sold the product they never paid me on time. In fact it reached a stage when in early 2000 I decided to close down the company.
In 2001-2, I had about Rs.2 to 3 lakhs in the bank, and then one of my friends advised me that if you really want to scale and grow your business, invest in a proper technical team. Also get a good business team. So finally we decided to do it under a lot of strain because in those days banks never supported software companies.
I somehow inserted a big advertisement in the Times of India, almost a half page ad, saying that I’m looking for country managers and city managers. I was then able to hire good people and together we changed the entire structure of the company.
Why did they come and join you? What was it that they saw in Quick Heal that was the game changer for them?
Quick Heal had become a bit popular in the Pune market and most of these people were from Pune itself. So, they knew about this product. They knew about the quality of the product, but they were quite also that the product was not reaching the masses. So they joined the company to take up the challenge and I am proud to say that more than 10 years later they are still with the company.
With these new people, we embarked on a strategy to open branches in other cities. Soon I developed a lot of confidence that sitting in Pune I can manage branches in other locations also. We started with Nasik. And after Nasik started running well, in three months’ time I started an office in Bombay and then in Nagpur and then in Indore, and then gradually I went into Gujarat and then I went into North India and South India. Today, we have around 23 offices, apart from Pune, across India.
So you still believe that a large part of your sales has to be achieved by physical presence?
Yes, yes. Most software companies try to appoint national distributors whenever they scale their product to other countries. And perhaps a few regional distributors. I don’t believe in that. Because what happens, if you….if you appoint a national or a regional distributor he expects a lot many things to be done by the company. He really does not make efforts. He just waits for customers. If the customer demands the product, then he sells the product.
When I appoint more than 100 channel partners, then I try to appoint one stockist on top of it, so that I don’t have to deal with each and every channel partner for a transaction like billing and invoicing and payment collection and all these things. I can just deal with all the channel partners just to maintain a relationship and make sure that they are comfortable selling Quick Heal, and if they have any issues or problems, we can go and help them.
So, this is how I started developing a market all over India, and now we have around 12,000 channel partners across India. We have direct connectivity with each of our channel partners.
How do you keep this channel partner base updated about the product and about new developments?
By giving continuous training. Every branch has a set of people for a sales team, a set of small – one or two persons – for marketing. Then a team for support, and then the administrative team. And among the support team, there is one person who is a trainer who keeps on training all the channel partners about the product features and product support and other functions. We have a training program conducted every Saturday for a specific set of channel partners.
And how do you keep updated about the innovations that you need to bring into the products? So, the new antivirus, antidotes, whatever.
Actually, since the team is spread out across India we always have meetings with the branch managers once in a quarter, and then we keep on getting a lot of feedback from the entire market through these branch managers as to what the customers are looking for.
Okay. Looking at this 15 year journey now, what would you pinpoint as the most important thing that you have done.
Customer relations are very important for me and understanding the customer is very important for me. So, I have to focus more on that, what exactly customers are looking for and how I can get that service with less effort for me as well as for my team by developing some tools or something like this, you know.
How do you keep abreast of fast changing technological developments?
Our senior level team of about 7 to 8 executives constantly are attending conferences and travelling across the globe. For instance, we attend the Red Hat conference and this Hackers conference and most of the antivirus conferences and a lot many security conferences that keep on happening….Not only do they attend, but we also keep on presenting our research papers in these conferences. So every year, around four to five papers are being presented by Quick Heal.
Founders of iYogi, Vishal and Uday have a candid chat with ProductNation about how they started the company and the reason for their success in the support space. They assist more than 2.5 million individual and small enterprise users today across the globe. Interestingly the idea originated from a very simple notion – that of “people centricity”.
Vishal and Uday, I was just curious about the origins of your company. So, when actually did you start and what was the context that you founded this company in?
We started working on the idea in 2005, and the context was, fundamentally, that in the consumer support business at that time no one was actually building a support capability that focused on the consumer. Everybody was focused on trying to figure out what the brand wanted to do. So, to give you an example, you know, if you called a PC manufacturer for support, they basically had rules of engagement for the kind of support that was required to be given – simple stuff like what part of the support is within the scope, what part of the support is outside of scope, and essentially you would get transferred from one queue to another queue based on the request, and then the entire service paradigm focused on cost management, cost reduction and the consumer was not at the center of the design or the process related to support.
Also, the entire support service was mostly engineered around the fact that it was for an enterprise. There you have standardized technology and a ‘one size fits all’ kind of a process, which is followed and believe me that works. But when you start using the technology in your home or in your small business, the technology environment changes – you have a personalized environment, a personalized desktop. You personalize your settings. You have different kinds of Operating environments. Every home, every office is very distinct from the other. So, you can’t have a ‘one size fits all’ support, because people are so different in their use of technology.
You are not supporting the device. And we thought that was the big gap in what was being offered and what really the consumer wanted all over the world, and that was really the trigger.
So we thought that there is a great opportunity here to create a completely different paradigm in business and do that using technology. Because it’s the only way to deliver very high quality services through a technology platform on a consistent basis that allows the consumer to select what help he needs and what time and how he wants to get that help; whether he wants it on the phone or through the self-help method; he wants to be educated via tutorials. Should the tutorial be on the web or should it be on video? Would he rather have a chat session with the technician and hand over a report or would he want to bear the project load himself? These are all the choices the consumer makes depending on his comfort and the nature of the fault that is raised and demographic and the kind of technology he uses.
So, we designed our support capability, to provide that flexibility to the consumer and put him the center of the entire design of those and that ultimately turned out to be the, you know, key and the major differentiators, not only in our business at the start but also, continues to be the sort of mainstay of our organizational design.
Okay. But when you started out, did you believe that the consumer would actually kind of, you know, be willing to pay for the service, because and why?
Oh. I think the first thing is that we have to understand that consumers all over the world are willing to pay for anything, which provides them value. And that is true even in India, where technology adoption is growing. As long as you can provide value in what you are selling as a service, the consumers will pay. But at the same time, you know, propensity to pay varies from geography to geography, based on people’s lifestyle and demographics. Demographics are different in even within this large geography, and so you need to be able to define which consumer segment you are targeting and you are marketing to and build your pricing and your product strategy oriented on the target audience.
So, what was your sales strategy basically? How did you kind of decide which markets you’d go after, and why did you go after those markets?
Well, I mean, if you’re in the technology business, I think the easiest decision is choice of market. You go after the largest technology market there is in the world; it’s the United States.
Traditionally, that’s been the strategy, that I think every technology company worldwide adopted until and unless they were building a product or service, which is specific to a local geography. So I think, you know, the maximum penetration of PCs, the maximum penetration of broadband and the high-value broadband customers were in the US, and so it was easy…it was an easy decision to say that there are 75 million broadband homes in North America. Those homes have between two to three PCs, their wireless networks in the home. People have printers, and…and they are truly dependent on using the internet for their day-to-day life, whether it’s for entertainment or it’s e-mail or it’s for commerce.
Consumers needed a service, which is available 24×7 on demand and provides them peace of mind, which means their technology is up and running continuously. So, it was a pretty simple decision actually. But having said that, we actually tried the service in a beta mode in the UK first before we launched the US.
So having decided to enter the US markets, what’s the kind of preparedness you had at your end?
When we started initially we supported the Windows XP operating system and 32 popular software applications. Our services was geared to deliver a personalized support that could proactively help manage the environment and since this was different that the traditional incident based services, we had to educate the customer on the new type of services we were providing. We were also creating a new category of subscription based support services, which amplified the initial challenge
Education was based on creating an opportunity to engage the prospect. Our sales has been geared as an experiential model, where someone can get a free diagnostic or support incident and we use that service experience to upsell a subscription. It worked. Consumers were exhausted with oscillating in the support eco-system of device manufacturers, not understanding how they can connect their symptom to the problem. Our pitch was simple; call us anytime for any problem. We eliminated complicated IVR’s and call-wait times and focused on creating a new support experience with highly trained tech experts.
The final part of the launch was basically on price testing. So, when we actually launched our service, it was initially priced at $99. Over a period of time, we started increasing the scope of support by including additional coverage for more devices, apps and also provided a different service level so we gradually increased the price to $169.99. Then there’s a Digital Home Plan which is unlimited for any device that you have and that’s for $30 per month.
How did you manage your technology infrastructure?
First of all, in this space, you know, there wasn’t any platform which was a plug and play and which we could use to deploy in managing the growing complexity which is there in a home today or in a small business. So we actually invested in creating a platform, which is Internet grade and currently deployed across 11 geographies. It’s multi-lingual, multi-currency and agnostic to where services are delivered. But most importantly it actually harvests all the service incidences that we encounter and makes a rich database of scenarios in our knowledge base. We have invested in automating support through scripts that offer diagnostic and a higher resolution.
Everyday we handle around 20,000 service requests. With growing footprint in 10 countries and the an increasingly heterogeneous technology environment we have increased our scope of support to over 500 different types of applications, 11 types of devices and over 33 different peripherals. This list keeps growing depending on the adoption of consumers and small companies we service. And we see a rapid adoption to a new set of cloud applications and services.
So where is your team based for all the support that you provide?
We find geographies where they are pockets of talent that we can bring on board. So, Gurgaon is obviously primary center and we have around a little over 2,000 people that are employed here. And then we have people in Chandigarh, Kolkata, Hyderabad, Bangalore, Pune, Indore and most recently in Goa. It finally boils down to finding the right talent. But because we work with premium partners like IBM, Teleperformance, Infinite, etc. we’ve now got the ability to recruit some top talent
The technology platform has a learning and performance module that provides a virtualized environment for training. That combined with greater support automation drives consistent customer satisfaction benchmarks from a new candidate versus a tenured technician.
If you look back at your business these past few years, what are things that you have done successfully?
I think the first thing was the whole approach of becoming customer centered. And there are certain basic tenants that we have put in place. For example, we answer every call within one minute, and have maintained that service level for 98% of all our calls despite the dramatic ramp in our business. Another metric we track religiously that endorses this success is our customer satisfaction metric. Since inception we have maintained a customer service score of greater than 90%. This is 20 percentage points higher than the industry average.
The second is actually in the investment in platform. It was the only way to scale our business and address the increasingly complex technology landscape in homes and businesses. We did a recent survey with our customers and on an average two members in a household have approximately 11 devices. So, what you’ve got is a heterogeneous environment, multiple operating systems being used for different kinds of purposes, and so to provide support in that environment you need to have a platform. This capability is fairly unique and we are licensing this SaaS based cloud platform www.digitalservicecloud.com to other companies that are at the frontlines of managing millions of customer problems.
And the third, you know is people, and we’ve sort of been uncompromising in finding the right people. I believe we were also very fortunate because it was just that turning point where people were tired of working in the support backwaters of a third party company and not being able to innovate, and everything was driven by cost optimization with no sense of ownership. So when we said that we wanted to create a consumer services brand to stand out of India it resonated well with people.
Manav Garg’s career exemplifies the statement “where there is big risk, there is big reward”. Throwing up a lucrative, six-figure plus salary and bonus as a commodities trader to start a software company that would build a commodities trading product required guts. Manav took it in his stride and today has built a world-class company that competes globally with its commodities trading software. He’s also built a company – EKA Software – that is domain driven and highly customer centric. In this interview with ProductNation, Manav talks about the origins of his company and some key factors that went into building it.
You began a career in trading commodities. So when and how did you foray into the software industry?
Yes, I am not a techie. I used to trade commodities enjoying import and export for a firm in Mumbai. But during this time, I saw a need for software for commodity trading. So, I spent more almost 24 months meeting with customers as a trader, trying to understand how to fill the gap and how systems would be a boon to traders like me. Since I have no background in software, I researched for a year on the requirements of the commodity trading industry, how it works, how to install a system for a particular pain point. I moved to Bangalore, and set up shop, hired people and started out, spending almost 50% of my time meeting and talking to people on the benefits they would get from the software. This was how I educated myself about software.
So you are saying that your entrepreneurial spirit was lit by your ability to identify an opportunity. While there are opportunities everywhere, the main point is you need to have the guts to take a risk, and the research to back it to believe that the opportunity can be translated into business success.
Obviously, in my experience this is exactly what happened — careful research combined with my intuition that this opportunity will be a success. Many times too much research is done with no action. I do not believe in market reports. I believe that research and study done by yourself and through interaction with customers and feel of the market is what will make your product a success.
How do you identify customers and ensure that they will give you the right picture while your product is being built?
Since I was in touch with customers for 24 months before starting the business, it was easy to contact them. It is important to know how to convey the right message to your customers, tell them about the kind of solutions you are proposing. Moreover, if you are connected on LinkedIn through your professional contacts and friends, you can easily connect with customers.
I don’t think it’s a big a challenge to identify customers. I think the biggest challenge is the right approach. I recall when I contacted people whom I have known for at least five years, be it in Hamburg or Amsterdam, we were able to relate because they felt that I understood their pain points and were confident that I would bring to the table valuable solutions.
So your next step was to build the team. So how did you form the right team, especially the founding team?
You must be passionate about your product because then you can speak with conviction about the advantages of your product.
When I started, I used the personal contacts route. At that time, I did not know anybody in the IT sales or products fields. All that I was confident about was that Bangalore is a good place to do business in the IT field. I met people, worked with them for some time, and they helped me understand how the whole industry works.
For product development, I also reached for professional assistance to some of the larger technology MNCs who had more experienced talent. Since I did not have a software background, I decided to concentrate on sales from inception.
For any start-up I think it is very important to decide from an early stage as to what is the main driver in the business. If you are doing business applications then sales is key driver, if you are doing online sales then marketing will be the key driver and if you are making tech based products then technology is the key driver here. But if it is very important to identify the key driver that will then help decide the skill set of the team.
Today, what would you say are the key things that differentiate EKA in the market?
For many years, people have been trading in rice, sugar, wheat and metals. It is important to have a good supply chain to manage this trading. And for this you need excellent software that simplifies the supply chain. This was the challenge as a trader I was trying to overcome. We basically cover that need in EKA today.
A lot of our competition, mainly in the US, is focused on crude oil, gas, trading industry. We were the first one to focus on the commodities industry and therefore had an edge in the market. We carved a niche for ourselves.
Please share with newer entrepreneurs the learning’s that you have had over last five years, especially amidst the challenges you and other emerging companies in India face?
The biggest challenge is putting together the right sales team. The product might be good, but it is the taking of it to the market that will bear fruit. You also need an efficient global online distribution model. Another serious issue is how to retain employees. How do you convince people that your product is here to stay for a long time and not just a couple of years. Emerging companies need to convince employees that their products are not fly by night, but bring value to customers and, thereby, employees over a longer span of time.
Bharat Goenka is the architect of what is arguably India’s most successful business solution — Tally. Co-Founder and Managing Director of Tally Solutions, Mr. Goenka developed the famous accounting solution under the guidance of his father, the late Sri S S Goenka. Today, the product is the de facto accounting solution for many SMEs and Mr. Goenka serves as an inspiration for many aspiring software product entrepreneurs. In an interview with pn.ispirt.in, Mr. Goenka talks to us about the company’s ‘stubborn’ decision to stay focussed on products, the non-DIY nature of the Indian SME and the necessity for product companies to stay focussed on the product mentality.
Tally is one of India’s most successful product stories, and it definitely appears to have ticked all the right product story boxes: responded to a genuine market need, stayed focused and evolved with the needs of users. Given the benefit of 20:20 hindsight, would you have done anything differently?
The reality is that one doesn’t really learn from the past. We continue to do audacious things, we continue to get some success out of that as well as failure. Over our 25 year history, this has happened multiple times. Multiple times, we have taken a decision and it has gone wrong — but if the circumstance arose again would I take the same decision? In all likelihood, yes — I would have no reason to expect success, but I’d still have the optimism and think just because it went wrong in the past doesn’t mean it also has to go wrong this time. So although I would say it’s unlikely that one would have really done anything different, I can give you an example of a decision not working out for us. In 2004-2005, we changed the price of the software from 22,000 to 4,950 thinking that we would be able to sell software as a commodity. The reality was that for that time, it was difficult to sell software as a commodity in India in the B2B space. And so we suffered, massively. That proved our belief that we couldn’t sell software as a commodity, but it didn’t stop us from trying. We lost almost 50 crores in those one and half – two years, so I would say our single biggest mistake was that.
Tally – or rather Peutronics — was founded in 1986 at a time when much of the Indian software industry’s focus was on services. The decision to remain a product company when the tide seemed to be going the other way couldn’t have been easy – why did you make this decision?
Actually when we started off, virtually every company had a product. Whether it was TCS, Wipro or Mastek — everyone had a business product. The shift to services took place in the mid-90s, particularly towards the edge of the Y2K environment. We were one of the few stubborn companies who believed that while there was a lot of money to be made in services, we would never be able to address a lot of customers. So the mandate with which my father and I started the company in 1986 was that we were going to change the way millions of people do their business. We were clear that by moving to services, we would never be able to achieve the objective. We were unclear how long it would take us to get to a million — 25 years later, we are still trying to reach even the 1 million mark. But in 1986 we were clear that we want to be able to touch millions of customers. Therefore we remained focussed on our product line.
So what was that inspiring moment for you? Did you wake up one morning and decide that this was what what you wanted to do — to change the way these millions of customer did their business, or was it a gradual evolution?
In the months before we got the product Tally out, one was into the product mindset but for developing systems related products like compilers and operating systems. So I was preparing myself to do those kind of products. At that time, my father was searching for a business product for our our own small-scale industry business. He examined multiple products, but couldn’t make sense of any of them. He very famously said: “When I’m buying a car I want to be a driver and not a mechanic.” Similarly, he was looking for a product that would help him run his business — not his computer! Every product that he was looking at required him to change the way he thought about his business. So because I was interested in software, he said these guys can’t do anything can you do something? So I was trying to solve his problem. After six months of development, I would say that it was his inspiration and thinking that formed the idea and belief that the product should be something that the country should also use.
The belief is that Indian SME’s need to be “sold to” – the job that’s conventionally handled by IT resellers who are critical to Tally’s business model. What are your thoughts on the changes that Cloud technology might bring to this scenario, with the whole “self-service” angle coming into play?
India is not a DIY country, and this is unlikely to change in the SME sector.
The way the market works in India is like this : SME’s expect people to come and sell something to them, even if it’s bottled water. You expect it to be delivered, and you expect to pay for it in a different way. In India, SME’s behave identical to the way enterprises behave abroad. Abroad, SME’s behave identical to consumers. That’s why in most MNCs, you see that the SME and SO/HO market being handled by a common head while the enterprise head is separate, because they need to be sold to. In India — actually, in all developing markets — the SME and the enterprise behave similarly. In the west, the cost arbitrage of selling to a business is so high that the small business has no other option but to behave like a consumer. In developing markets, the cost arbitrage is low enough to send people to do the sales. And therefore, the buyer expects someone to come and do the sales. It is not about whether the visit is required because of the software complexity or the commercial complexity — it is an expected visit.
In your opinion, what are the three most common things that mislead or cause the downfall of Indian product companies today? What advice would you give them to overcome these?
I think it would boil down to one — which is to be clear about which business you’re in. Most people believe they are in the business of making money. Okay, even I am in the business of making money but my point is this: you can never be in the business of making money, you have to be in a business — money is an outcome of that. To explain it better, imagine that you are a software developer who wants to start your own product company. Capital costs are not very high — a single computer will cost about 20k, and assuming you develop the skill, it will some months to develop a software, and you’ll get your software out. You might put together an infrastructure, sales people etc and you’ll put up a monthly expenditure of about 25 – 30k. You start seeking customers — you find me. You sell me your product for say 10k. In all likelihood, I bought your product because I like your software development style and perhaps your product solved two or three problems I had — but I still have twenty more. Now because I like your software development style, I’ll ask you to do more work for me. I might ask you to expand the product features, solve some HR problem that I have which this software doesn’t solve and I’m willing to pay you for it.
Your first ten customers will give you so much work, you won’t have time to go out and find your next 100. Or even if you find your next 100, they will give you so much work that you won’t be able to look for your next 1000.
So ultimately, you will still continue to successfully make money, but you will never be able to create a successful product company. This is the single trap that I see almost all product companies fall into today. They all make money, and that’s why they’re still in the business but they stop eyeing the fact that they were supposed to be in the product business and not the services business. Now imagine taking a strategic decision like this in the early days when there was no competition in the market– today you can take a decision to change over night. But in the early days, while we did do services for companies (if someone asked you to do something extra, you did do it) we refused to take a single penny for any services that we did. That forced us to focus on selling new licenses. Otherwise once you’re able to get money from services, there’s no requirement to sell new licenses!
In your opinion, what’s the reason behind Tally’s popularity? At the risk of being politically incorrect, is it because of its “accessibility” due to piracy? Or is it largely because it’s simple and user-friendly?
Pirated software doesn’t become popular — popular software gets pirated. We strongly believe in one thing: if my software is not valuable to you, your money is not valuable to me. So customers are able to see tangible value in our software after they’ve paid for it, and therefore they tell their friends to also buy our software. Word of mouth has been the principle pivot of popularity, and we’ve told people on a number of occasions that if our software has not been of value to them, we would return their money. Even after three years, people have returned and we have returned their money. In 25 years, this has happened nine times to us. But fundamentally, if our software doesn’t work for them, their money doesn’t work for us.
We see a lot of product start-ups coming up in both the enterprise and consumer space. What would be your advice to start-ups — where do you think they are lacking, and how should they go about correcting these issues?
I would ask them this: are they solving the problem for someone else vs are they solving the problem for themselves? If they are unable to be the most prolific users of their own solutions, they will find it difficult to put it elsewhere. It’s the problem of architects, right? The architect is building for you — so they build and go away, but you have to live in the mess. I think as a company we had the privilege of this insight from my father. My most famous depiction of his words was in this context: in the early days, I had asked me a question against a certain context and when I was trying to explain to him that it was very difficult to solve the problem in that manner in software, which was why it was done in a particular way he asked me “Are you writing programs to make the life of the programmer easier or the life of the user easier?”. The general tendency I have seen is that very few start-ups are willing to take the challenge of solving the complexity of the product themselves so that they give simplicity to the end-customer — and this is a fundamental requirement of the product.
The second problem that I find with product start-ups in the country is that most people design the software as if they are going to be present when the software is going to be used. It makes great sense for them to explain to someone how to use it, but if you want to be a software product company you have to design a product that can be used when you are not there. So, from a technical viewpoint fundamentally I would say that it is about being able to sit back and reflect upon these issues that impact your design. From a operational viewpoint, from day one you have to design as if you are not selling. It’s easy for you to design a product and for you to go sell it, because you’ll design your sales processes which are centered around your ability to sell. And this ability, because of your intimate knowledge of the product, will always be higher than someone else. So be able to design sales and service processes that are not operated by you will truly bring the product into the product category
Jay Pullur is the founder and CEO of Pramati Technologies, software and services company based out of Hyderabad. The company recently announced that it’s enterprise social collaboration software platform — Qontext — had been acquired by Autodesk, the maker of design, engineering and entertainment software. Jay’s career in the software industry spans 25 years, and his primary interest lies in building products for new markets. This has led to Pramati Technologies incubating and spinning-off multiple startups. In an interview with pn.ispirt.in, Jay talks about the importance of a product development team, switching from a services mindset to a product mindset and importance of giving customers not just a product but also an experience.
When you’re conceptualizing a product do you ultimately have the end goal in place or does that fall into place somewhere long the journey?
Well, the end goal is to make the product successful. Normal entrepreneurial expectations are to build the business big enough to pursue the acquisition path, or an IPO. However at Pramati, even before we think about that end goal we practice what we call ‘careful entrepreneurship’ — we don’t venture into something just because we’re passionate about doing something in a certain area or because we want to jump on the bandwagon. Working with an end goal in mind is like playing the game with the sight set on the scoreboard; we might loose track of the ball.
Instead, we start an idea in a small fashion, watch it gather momentum and then form a core team. The spectrum of opportunities is wide and how else would one choose? We build a core team around the project with people from within the company who have established capabilities and chemistry. We then have to craft the product pitch and try it out in the market before committing funds to sales and other activities. Based on the product-market fit, we formally make it an independent entity and float it out like a typical startup. This approach as worked better for us.
So on an average, how long does this preparatory phase take? And what’s the profile of this team – do they come from multidisciplinary backgrounds?
Idea development stage can take anywhere up to a year, most often 6 months. During this period, we have a really small team — like for Qontext, we had a three-person team. And they are usually people who’ve been with the company for sometime, so we know they are right for exploring certain aspects. There are many aspects to explore because a product is a confluence of market opportunity and certain technology changes. The company has built strong capabilities to address this confluence in a few chosen areas, and we play around our strengths. The team might include people from technology, user experience, business development, consumer marketing or enterprise sales, and the composition entirely depends on what aspects have to be explored before we dive deep.
So given your background in Wipro, where you were employee #36, getting into the product mindset would have required a different mentality. In Wipro it was about the client doing the spec and asking for something, and the services organization providing the people and delivering the project. How did you resolve yourself to a new business model where the waiting period itself to kick of a project was anywhere between 9-12 months?
When I started at Wipro, it was early days of the IT industry in the country. We did have to innovate on the services side of the business model in some fashion, however the services industry enjoyed many natural advantages. Understanding the services part of the business gave me good insights as to what is possible in India and the expectations of global clients. But, now we had to innovate on the business model further and we were ready for that.
I left Wipro with the intention of experimenting and bringing a new level of innovation in the country using the same IT professionals but creating higher value offerings. Those were the days when the Internet was just beginning to boom, so our first product was an infrastructure for web applications. The company vision has been to find the right model for building globally successful products or services and go beyond what the traditional IT industry in India has done.
Talking of teams, you have different very distinct product lines doing some very focused work. How do ensure that the best practices that come out of the product development exercise are replicable across the organization?
Product development no doubt needs very high-levels of skills, capabilities, teamwork and commitment to excellence. And when we are able to that well, we need to ensure that it spreads through the organization and remains as part of our DNA even as we grow.
This actually is a very critical element of our business model and you will notice that we are organized as multiple independent businesses with a core, underlying infrastructure, technical expertise, work culture and purpose. The independent business gives them the freedom of smallness (read startup) structurally and the core brings the power of the big.
In some ways Pramati is not only a software company but also as an incubator and an angel investor with a portfolio of businesses. The strength lies in bringing this synergy between them, and building the infrastructure that is common for all these companies — and this is beyond just providing facilities and finances. It is about building the core capabilities of creating teams, spotting talent and integrating them. The Pramati corporate base provides a common infrastructure such as access to a strong legal and M&A specialists needed for deals like our recent one with Autodesk. Such Corporate development capability is hard to build in a startup, although very essential. Also, our model gives us the opportunity to bring talent in to the company even earlier than we’d actually need. We are always looking to bring the right people in the system and be part of our culture; opportunities may get worked out subsequently.
So in the product development game, if you had to put your finger on three vital resources without which you wouldn’t even contemplate beginning, what would those be?
Deep understanding of technology. The organizational knowledge in key technology areas plays a big role. It gives us the confidence to deal with changing market needs and customer preferences.
The ability to think globally. Over the last 14 years we have built complementary operations in both India and the US. So this gives us access to both markets – customers and talent, enabling us to build products and market them.
Our brand. Customers don’t want to deal with small brands and unknown products. Having been in business for a long time and served thousands of customers across different categories, we understand the kind of expectations customers have. We constantly strive to understand customers better and enhance the experience we deliver.
Typically, Indians have been accused of being great from a technology perspective but are sometimes very poor at packaging and brand building. How have you tackled this?
I think being good at technology alone is not enough. Customers today are expecting more than just a product or a solution — they’re expecting an experience. We always design and build the whole product, not just the software part. Few important things here are – the experience of dealing with company, the first impression with the product, the usability, the interaction with our support team. Nothing less than world-class sells today and no customers are captive; there are hundreds of other players in every market who are ready to service them.
So obviously we had to build a team that’s global in nature finding the right resources in the right place. Fortunately, we found right talent in India who could design user interface and experience that works well for our global customers. However, as a company, we have placed heavy emphasis on packaging, user experience and brand development which has paid off well.
Suresh Sambandam is the founder and CEO of OrangeScape, a company he set up along withcolleague from Selectica, Mani Doraisamy. OrangeScape provides a Platform as a Service (PaaS)to build domain rich solutions, easily and fast. The company recently launched KiSSFLOW, the firstworkflow-as-a-service exclusively for Google Apps which seamlessly integrates with Google mail,docs and contacts. In the first of a two-part interview for pn.ispirt.in, Suresh talks to us aboutwhat inspired him to start OrangeScape, what factors he feels are important while starting up andwhen to recognize the deciding moment of whether to give up or continue.
So many people from smaller town today who are getting into the business today — for exampleyou have people from Udupi and Agra who are foraying into the business. What about your story –you yourself hail from Cuddalore, a Tier 3 city so where did it start for you?
I believe that there are two sources of ideas. One is typically a B2C idea – and this comes from your common encounters. You yourself are consumer, and you encounter different problems as a user of a product. You get frustrated and you think about building new products or solutions to solve this frustration. This is where you can see a lot of younger people like college kids or graduates getting in to the game – if you carefully observe most of these products you’ll see more B2C products because the founders would have been users themselves who were faced with a particular problem and then thought about solving it. These don’t really require very deep domain knowledge. On the other hand you can take OrangeScape which is a B2B product that’s complex, as B2B products tend to be. This is because it takes someone who’s been in the area to understand the dynamics, gain deeper knowledge and figure out the gaps and challenges.
Personally, prior to starting OrangeScape I was working for a company called Selectica which is a US based company that was one of the leaders in business rule engine space. At some point Selectica sold the Division I was part of, to Accenture, and we saw that as a great segue into the problem of how can we democratize application building process? That is a deep domain knowledge we got exposed due to our intensive work at Selectica in an adjacent area. So all this experience and knowledge helped the core team generate the idea and we decided this was something we should address and go after.
So essentially there are two key factors that started the OrangeScape story. One was theexperience that you gained from the previous companies you worked at, that helped you identifyscope for improvement. The other was the core team, which is obviously fundamental to gettingout on your own. What other factors would you say are important when you’re starting up?
India is slowly moving from services to a product building country. OrangeScape takes this thinking to one more level of sophistication which from product to creating sophisticated technology /platform. As I said before, to know this side of the tracks you need a lot of domain expertise. You need to know the problem and go after that. Second, of course the team is the most important thing. We had been blessed with a great team starting with my co-founder Mani that stayed on course for a longtime on this journey. Thirdly, I would say to some extent the phrase ‘ignorance is bliss’ plays a role here. Initially, we didn’t know how big the problem we were going after really was.
It was only after years did we realize that this is problem that an IBM or Oracle would go after, not a startup. But then if I knew all that when I started off, there are chances that we would have given up. Sometimes you don’t know everything about the problem, but then you take chances. And then you need to stay put on the path and committed. You have to be convinced about the problem and pursue the solution. So all these things need to come together for you to go in the direction that you want to.
When you do you decide that you’re making it or breaking it? What is that deciding factor? Wheredo you decided ‘enough is enough it’s time to get a day job’, or ‘hey, we’ve cracked it’?
The defining moment depends on your assessment of how big the problem you’re trying to solve. If the problem that you’re trying to solve is big enough for you to stay put on your course, then that’s a pretty strong deciding factor. I don’t think many people realize that it took SAP 15 years to go from product concept to launch and in the last ten years, they’ve been doing good business. Now cloud is disrupting their business, that is a different story. SAP was convinced that the problem they were dealing with was big enough and this inspired the vision for them to stay on course. So this is one aspect that determines whether you should hang up your boots or not. I would say that if you’re going after a small a problem then after some years you may decide to give up, but if it’s bigger then this may not happen. The other aspect is that if you’re meeting progress and you’re doing reasonably ok (not significantly, but you’re definitely progressing) then again this gives you the motivation to stay focused. If none of this is happening, then that may be an indicator that you may have to move on.
Pallav Nadhani, CEO and Co-founder of FusionCharts, was just 17 when he started the data visualization product company in 2002. The company today is one of India’s most successful product stories and happens to be one of the first Indian start-ups to have caught the eye of the Obama administration. FusionCharts has a user base of 450,000 across 118 countries, and the company celebrates its 10th year of existence on October 22, 2012. In the second half of a two-part interview with pn.ispirt.in, Pallav Nadhani tells us about keeping a product relevant in the constantly evolving market, how he communicates with team members and what it’s like to work with teams from two very different cities in the country!
How do you manage to keep your product relevant in the market? How do you keep yourself in the game even after going through the process of scaling and maturing? Usually after this it’s a case of either re-birth or death, right?
For us a couple of things work well : there are nearly half a million developers out there who use our product, so we get more feedback than we can sometimes handle and implement. This is huge repository for us to understand where the market is going. There are some developers out there saying in a few months or few years we see ourselves using the product this way so we require this functionality. So there’s a lot of consolidated information that we get from both our existing clients and prospects, and we add some amount of research and gut-feel to this so that we can improve the different versions.
If you had to pick three functions in the company which are critical for a product company like yours, which ones would you choose?
I’d choose engineering and marketing together first. In our case, marketing and engineering go together because the value proposition and positioning done by the marketing team is done in consultation with the engineering division. Similarly, right from day one of product development, marketing defines the product features such as labels so there is a lot of interaction. I would choose the support function next, because ours is a B2B product so implementation does require some amount of support.
What are some of the tools and techniques that you use internally to keep communication alive? What are some the things that you do keep communication going right from the top to the most junior most employee?
The advantage we have is that we are a really small company — we have a team size of about 60 people. So anything that’s happening gets communicated within the team quite easily. The next advantage that we have is that most of the team is based in Kolkata, and I like to say that the Kolkata team is more like family because of the inherent nature of the city! In terms of messaging, We’ve divided teams into functions so if a team needs to know something, we tell the team head and the trickle down effect just ensures the right communication. All the heads are supposed to involve their team members, and this is relatively easy because there are only four to five members per team. Then we have layers of communication protocols built over this, so engineering has its own system which is visible to everybody within the team. For cross-company communication its either face-to-face or I send out an e-mail — since this is quite rare (like once in three months), people do read them. I also ensure that I ask a question or engage the reader somehow so that I know who is involved. We also use Yammer, the enterprise social network. Another thing we do is celebrate birthdays, so this becomes a one or two hour event which does involve some discussion.
How do you manage the culture difference between Bangalore and Kolkata? Both the cities and their people are very different — Bangalore is more fast paced and Kolkata is not like that.
Like I mentioned, I tend to say Bangalore is the team, Kolkata is family! There are some inherent challenges : when we brought in some senior management in Kolkata there were some issues as most people were used reporting to me and suddenly it wasn’t the case anymore. Now the senior management is trying to put in more systems and processes so that that Kolkata team can work more professionally! There was some resistance, of course, but once they were able to see the value of the changes then things changed. Now there is data to react to, and today they are able to pin-point where things went wrong and fix it. Overall, I’ve not had any major problems. Initially, for the first six months I had to go to Kolkata once every week to act as a mediator. Now I go once in six months so I guess that really shows how far we’ve come!
So FusionCharts has now matured and you’ve been in the business ten years — what are the nuggets of information you’d give product company entrepreneurs out there?
There is nothing thats right or wrong. It depends on the context of the product your are building. A few things that you need to get right are even if you are a developer, you need to focus on packaging your product. Packaging and marketing has an important role to play as no product can really be sold on it’s own — there are only exceptional cases like popular apps which get downloaded millions of times. Team building is another important thing — once your product starts getting traction, your company will get split across so many different functions that you will require help with this. You’d like to believe that you can solve every problem, but it’s not very scalable. Specifically in India, an entrepreneur requires a lot of focus. If there’s a new product idea every week and there’s no focus on one thing, it can disastrous. For the last ten years, we’ve just focussed on data visualization — despite the audience we have and despite our capabilities, we’ve not ventured into other areas because we know that this particular category has a lot of scope and if we branch out into too many other things we won’t be very good at any one thing.
What is the leadership style that you employ? What do people typically have to say about your leadership style?
I would say mine is more of a laissez-faire style of leadership. It’s very different from the concept that people are not trustworthy. I prefer not micro-manage — I believe in giving people work and a broad outline and let them go about it. At the end of it I’ll tell them how I feel about what they’ve done.
Pallav Nadhani’s list of Top 10 mistakes entrepreneurs make
Not delegating early and enough for the fear of things not getting done correctly
Hiring senior people who don’t fit and have different expectations and lesser hunger
Not setting culture right – focus is more oriented towards result, than behavior. Also setting unreasonable deadlines which set the wrong culture.
Using the same team to deliver multiple products – bandwidth bottleneck
Not establishing clear communication channels and ownership between teams when moving from generic team members to specialists.
Not getting enough exposure locally for hiring — like the first 4-5 years I lived a cocooned life in Kolkata.
Not bringing in a sales team early — they bring in more deals to close and also free up your time
Losing focus in between — too many products and extensions
Not saying ‘no’ enough to many employee and customer requests
Building custom additions for a few customer along with the main product — upgrade issues.
Pallav Nadhani, CEO and Co-founder of FusionCharts, was just 17 when he started the data visualization product company in 2002. The company today is one of India’s most successful product stories and happens to be one of the first Indian start-ups to have caught the eye of the Obama administration. FusionCharts has a user base of 450,000 across 118 countries, and the company celebrates its 10th year of existence on October 22, 2012. In the first part of a two-part interview with pn.ispirt.in, Pallav Nadhani talks to us about what inspired him to start FusionCharts, the importance of marketing in a commoditized industry and how the company believes in training and retaining its talent. (Don’t forget to download the Free copy which has the complete story of FusionCharts)
Pallav, congratulations to your team and you on FusionCharts’ 10th anniversary. We’re curious to know — when did you decide that you wanted to get into the product space and start a company? What was your inspiration?
I call myself an accidental entrepreneur for a reason. When I started thinking about FusionCharts, I had no idea I was going to develop a product or even run a company. It was something I wanted to do for pocket money! In 1999, I was in Class 11 when I came across this site that accepted innovative articles on technology. By then I had already done a bit of coding (there’d been a computer in my house since I was eight years old) and I was using Microsoft Excel in school, and I hated the boring charts that the program created. I thought — why not convert those boring Excel charts into a lively format for the web? So I wrote some code, and then wrote an article based on that code which got picked up by a website called ASPToday.com. I got paid $1500 for the article which is a lot of money when you’re 16! I got a lot of feedback from developers on the article, and it got me thinking: if so many people were interested in the concept and were giving me inputs, why not consolidate all the modifications and start selling the concept as a product? So there was no market research as such. However, I did make a clear-cut decision when it came to choosing between developing a product and a service: despite the fact that I had some experience working in a service model (I worked in my dad’s web design firm), I knew that there were problems like working with only one client at a time, and the fact that people didn’t trust you as a 17 year old! So for a while my dad fronted me: he would bring in the clients and I would do the work.
In a product company there are guys who develop and then the guys who package, market and sell the product. Traditionally, in the services model it’s the developers who tend to take center stage but in the product space people usually say it’s the marketing which makes the difference. What’s your take on this?
I absolutely agree. When we set up FusionCharts we were very aware of the fact that we were going to be operating in a commoditized world. Our top five competitors are amongst the biggest companies today: Microsoft, Yahoo, IBM, Google and Adobe give competing products for free and there are others who also offer charting libraries like ours. On an average, our product is 10 to 100 times more expensive than our nearest competitors. Still, we’ve grown in this fiercely competitive market, and this is not just because of our product: it’s because of our positing, our story telling and the whole packaging. Other products out there directly appeal to developers who often have limited budgets when it comes to purchasing components — but our approach involves appealing to the level just above the developers who are often the decision makers and this has worked well for us.
Much of a product’s success relies not only on quality of the development but also on the kind of people who are part of the team. You have guys who are hesitant about joining a smaller setup because they are worried about stability and are unsure about joining a place which gives no guarantee whether it will exist the next year or not. What’s your strategy when it comes to hiring good people?
The only time when we found trained talent is when we shifted to Bangalore, but this was for the middle management level. We’ve found it quite rare to find ready-made talent at the development level. At this level, almost everybody who is on our team has come to us fresh out of college, and have been trained by us for anywhere between 12 and 36 months. We’ve trained them with the approach of building the product. This is important because one of the issues we had with people who came from bigger companies was the difficulty they had in adjusting to the fast and agile environment of a product company like ours. So we decided it would be better to concentrate on hiring high intensity guys, giving them some light projects to work on and training them so that they’d be good to go in a couple of years. This also helps create a sense of loyalty because we’re taking them on board at a very early level in their career and this means we have a lower attrition rate.
You make a very valuable point. So what do you feel about the fear in the market about spending time training freshers and then watching them jump ship after spending about two years with you?
I look at it as an engineering challenge: if a guy is willing to move to the competition, what are the incentives that he’s getting? Nobody moves from a product company to a services company purely because of the type of work. Sure, some companies sell to employees just like they sell to customers and the employee may want to opt for a bigger brand name but this is often at the cost of his or her engineering lifestyle. What you do at a product company like ours is something that you can talk about to your friends, you know where your code is going, you have a complete idea about the product and you can proudly point out what your contribution is. In a large organization this is not really the case, and often you don’t have a clear idea of why you are writing a certain piece of code, and you may not be able to talk to your friends about what you do because of confidentiality clauses. Whereas here, you’re given a problem statement and given the freedom to figure out how you want to approach it. Then there are things like the US President Obama selling FusionCharts in 2010 to design digital dashboards for the federal administration. These things inspire confidence in employees, and give them a level of satisfaction. So the employee has to make a decision if this is something he or she wants to give up, as well as give up working with a team he or she has grown comfortable with.
Vishnu R. Dusad is one of the founders of Nucleus Software Exports Ltd, and is presently the company’s Managing Director. An alumnus of IIT-Delhi, Mr.Dusad’s vision and passionate belief in product development has helped establish Nucleus Software Exports Ltd as a leading, global software product company. His experience spans areas of software development, creation of strategic alliances, business development, and strategic planning. In an interview with pn.ispirt.in, Mr. Dusad talks about why Nucleus Software Exports Ltd ventured into the product space, transitioning from a services company to a product company and the importance of family support for entrepreneurs
You started Nucleus in 1996, at a time when the flood was to get to the US and provide software services. You went against the tide and concentrated on doing something in products. What caused you to go for this differentiator – why did you get into products?
The whole world at that time was talking about how no products were coming out of India and this was something that was a point of concern for me. So initially we got into this space to demonstrate that India can create world class intellectual property, and that’s what drove us into this direction. At the board level, we took a very conscious decision that despite the fact that the trend was to concentrate on providing services outside the country, we would not have any revenue coming from this area because it would divert our attention from the focus on products.
So one factor was this conscious decision to do something different – but then why choose financial services?
This was actually coincidental because we started Nucleus Software in 1986 and for a good six or seven years, Citibank was our only customer. So we felt that this gave us a good understanding of the banking and financial services sector, and it felt like a good idea to stay in that domain and build a product.
The risk factor at that time must have been high, so what was your mind-set at that time?
You’re right; the risk factor was very high. We came out with an IPO, where shares cost 50 a piece and soon after — thanks to our product focus — our revenues fell to a share price of 9! We were not used to the stock market, and we did feel bad because of the huge risk we had taken. However, at the same time we were confident that we could do a reasonable job in the track we had chosen. There were a few weak moments when we had doubts in our minds, like the time when we lost an order for an account we had pursued for nearly seven months. At times like that we questioned if we were doing justice to shareholders’ money, but we felt we had the spirit to make things happen.
After six years of having Citibank as your primary customer, you took a call to do product development and you probably had to undergo a major shift in thinking internally. How did you tackle the HR factor – how did you get your people to re-align to a product development methodology? Or did you get a different team in place?
I would say that both things happened: we brought in a separate team who was oriented towards product development. That team started working on new products, independent of our services revenue. In terms of our services team, we thankfully were never into the business model where we worked according to x number of people multiplied by y hours per person per month – we were always into projects. In fact, we were already used to taking on fixed-price projects right from 1991 – 1992. So we were confident about making the transition into a product company, because our services team was halfway oriented with achieving something within a limited time frame. To make sure that the customer was always deriving business benefits out of the work we were doing, we never talked to technology teams alone. We were always talking to the business team also. So to align the entire company around product development wasn’t very difficult.
How did you manage talent in those days? Did you have to invest a lot in terms of re-training them?
For hiring talent, we went to places like the Delhi College of Engineering and BITS – Pilani. I would say re-training wasn’t such an issue because thanks to our business practices and opportunities, we’ve had a whole lot of people who stayed with us for a decade and more. This helped us ensure that domain and business knowledge was retained within the company, and could we could preserve the shape of the project.
As a company who focused on aspects like cash-management and products around core-banking loans, there was competition on the landscape. There were other smaller niche players like CashTek, as well as Citibank’s own captive business in the country. So was competition ever a concern or did you feel the pie big enough? How did you tackle expansion?
Around the time our product was ready, we were already aware that our existing competition were running their own product. We did fear that the market wouldn’t be big enough in the country and that we’d have to go overseas – but we were wrong. Surprisingly, when we bumped into one of our earliest customers at a conference and we showed them our product, they started asking “Where were you all this time?” So this gave us the perspective that there was definitely a sizeable market, and we didn’t have to be unnecessarily concerned.
In terms of growing the company, we recognized that the existing team comprised mostly hard-core techies, so we brought in sales people to join the team. Initially, we were worried that to drive sales they would need to have an exhaustive understanding of the domain and the technology – but again we surprised to find that it was not such a big challenge. We then started participating in events, we started making cold calls and we were able to bid in the international markets. We started having MNCs signing up with is in India, who would be happy with our work and would recommend us to other companies and we’d get the next contract. This took us to the next level globally, and that’s how we built up the business. We didn’t hesitate in investing in marketing – as our services business continued to grow, we ploughed that revenue into the marketing.
There’s been a lot happening in the product development space, like a change in momentum and the development of the SaaS model. You’ve been a solid player in the market now so how do you see the future for product development? How do you see product companies going forward?
We believe the future is bright for product companies as long as they are committed to understanding the domain and are focused on providing meaningful solutions. There will be no dearth of market for companies like these. There is a lot of technological development happening, so it’s up to these product companies to leverage these developments on and on-going basis. This should be with the focus of using this technology for customers in your domain and continue to add value.
You’re an alumnus of IIT-Delhi, and there are a lot of companies today who are getting into the product space in the start-up category who are being led by CEOs from IIT. So in a sense, they are jumping straight into forming companies. Would you say this is a big asset, since they come already orientated with technology and create companies that offer a technology solution?
I would say that if you have a bent of mind which says that “I have to add some value to society” and you are passionate about it, then experience is immaterial. There are global brands which have been created by dropouts, or people who have just graduated. According to me, the only components that are required are the passion to make a successful product and the passion to bring value to customers.
You are an entrepreneur who took the plunge at a time when the future wasn’t very clear. Today, there are a lot of guys who are standing on the edge of this pool are undecided about whether they want to jump in or not. What are the things that you would advise them to keep their eye on when they start a product enterprise?
Depending on the age at which the individual is getting into the software product development space, family support is very important. This is different before marriage and after! This support may not be just financial, but also psychological. In my case, I was fortunate since I was not required to get a job and straight away start sending money home – I could choose to do whatever I wanted. I came from a family where getting into business was the thing to. So I am lucky to have a family who provides me with unflinching support. So this is one core component, in my opinion.
Another thing you need to have is the passion to make things happen, because you can’t afford to give up. There will be enough moments and situations where you will ask yourself, “Am I going to pass this hurdle or will I collapse on the way?” You need your internal support system to let yourself and everyone around know that you are going to deal with this. You also need to give this support to customers and show them your internal strength to inspire confidence. Go in with the intention to understand your customers’ needs and bring your technical (and other) capabilities to fulfill those needs. It’s natural to feel that when you have created something, customers are going to line up at your door but it doesn’t work like that. You need to find out what the pain areas are and what customers are excited about.
5 key take-aways from Vishnu Dusad’s interview
No products were coming out of India and this was something that was a point of concern for me.
To make sure that the customer was always deriving business benefits out of the work we were doing, we talked to both technology and business teams together.
Nucleus Software Exports Ltd.’s business practices and opportunities helped retain talent for considerable periods. This ensured that domain and business knowledge was retained within the company.
The future is bright for product companies as long as they are committed to understanding the domain and are focused on providing meaningful solutions.
The only components that are required are the passion to make a successful product and the passion to bring value to customers.
Piyush Singh is the Chief Information Office (CIO) and Senior Vice President at the Great American Insurance Company—a property and casualty insurance company, and Vice President of it’s parent company, American Financial Group [NYSE:AFG]. Under his direction and vision, Great American’s IT department has transitioned from supporting a legacy IT environment to become a trusted player in the company’s business success—offering agility and adaptability to align with the executive vision. In this interview, Mr. Singh shares his observations on innovation in Indian software companies, product development, and how large IT companies could accelerate the pace of product innovation.
Piyush, you have been watching the Indian software industry over a period of time. What are some of the changes you see now especially in the context of the software product industry in India?
The Indian software Industry is the envy of many countries around the world, and numerous governments and business associations have been trying to emulate its model. It has made a significant difference in elevating the professional services job market and provided the necessary fillip to the country’s infrastructure—transforming sleepy suburbs into high-tech cities with world-class facilities. The Indian software Industry contributes $67B to the economy in direct revenue, but delivers a bigger economic impact (probably tenfold) when you think of all the tertiary employment it generates and the indirect revenues created.
Yet, this phenomenal growth has been a result of labor pricing arbitrage, and many of the large companies that lead the software servicesare today challenged by lack of innovation and intellectual property (IP). Yes, outsourcing and large services contracts are definitely attractive but unsustainable in the long-term. Sustainable growth and maintaining unique value propositions demand significant investment in IP—and this needs to be more than just systematizing processes. I do not see IT services companies investing in actual development of product portfolios that might address vertical markets or provide horizontal solutions. Typically, I see global services brands create deliberate pools of internal innovation that harnesses the knowledge of its workforce or buy IP-based companies to provide them the necessary scale for reach and investment. So far, I’ve seen neither processes here, but am hopeful that this will change.
Culturally, do you think Indians (and this is very broad considering our diversity) are risk takers and willing to start out businesses? Or are they averse to taking risks?
I don’t think so, and there are numerous examples of our appetite for risk—numerous Indians in the Silicon Valley have taken their start-ups all the way to public offerings. What I have noticed is, we tend to invest in real estate—really investing for the long haul.
Today, I find ourselves increasingly accepting entrepreneurship and its risks, even as senior executives leave large corporations to do something more meaningful, and different. But these new companies will need significant capital and gestation periods before they begin to show results. This is in contrast to the services industry growth that sets an average 20-30% growth every year—leaving start-ups struggling to showcase such growth. The risks and returns are completely different in a product company—Oracle, SAP, Microsoft, Apple are all shining examples of IP-led revenue-generators. Their valuation and market sizes are incredibly spectacular. But they didn’t grow into such successes overnight.
Product companies will constantly change business plans, product ideas, and offerings to meet the ever-changing market opportunities. These evolutions take time, effort, and capital—ask any Silicon Valley venture capitalist.
On the other hand, if you read the balance sheets of many of the services firms, they have idle cash, and great market reach. It will be a win-win for all if they use the cash to fund or accelerate the incubation of products that they can take back to their markets.
What is your take on emerging companies in the product space? We see, for example, many of them are developing apps and very few seem to be venturing into the enterprise or B2B space. Do you agree?
I agree completely. In the insurance space, for example, of all the companies out of India I’ve worked with, only a few have made any real IP investments—MajescoMastek, PlanetSoft (acquired by Ebix), L&T Infotech, and Mphasis. But if you see the revenue portfolio of the top 200 services firms out of India, the financial services industry is a leader in driving investments. And only a handful companies have made any IP-led investments. Strange, don’t you think?
What’s interesting is that it’s not that India doesn’t have the talent: every large US-based company (Microsoft, HP, Cisco, IBM) have a lot of product development out of India. The capabilities and talent definitely exists—we need the larger Indian companies to show the way. They should make use of the talent that exists in their own setups, sponsor ideation, build incubators and make a directional investment in product development. They should stand up to explain their actions and the promise it holds. Analysts might not like the idea initially as it does not fit in their current forecasting models but as they realize the potential and see results over time, they will warm up to the concept and probably push for higher investment. I would argue that Indian companies do bring in a lot of process expertise in any project that they manage, so they can definitely build processes that would seek ideation and lead to valuable IP.
What’s your view on innovation in the Corporate environments?
Innovation has become a necessity for existence. As Robert Murdoch, Chairman and CEO of News Corp aptly said, “The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow.” Innovation is being taken out of R&D labs and becoming the fabric of the entire company and an integral part of the culture at all levels. If it’s not happening, it can hurt them. Look at what’s happened to Kodak—they invented the digital camera concept but now the only value left is in the patents which they filed. Blackberry (RIM) is facing a similar situation – in May of 2008, of the corporate companies surveyed 82% of them were looking at buying RIM based Blackberry’s. Their lack of innovation in the world of user experience design has left them in a situation no one wants their company to be.
Do you think a major contributing factor in the last couple of years has been contributed by bandwidth availability, relatively easier capital and technology disruptions from areas like cloud computing? Have these leveled the playing field?
Well, these not only level the playing field but also give you an opportunity to differentiate your offering. For example, cloud computing levels the playing field, making it a lot easier for people to invest in or explore new products as long as you provide open integration points,a level of flexibility and a blueprint for future innovation. Commoditization brings prices down but forces you to decide on the USP that would help your company stand out. You need to balance commodity with strong uniqueness so you can leverage both benefits. People who are going to be nimble and fast, and people who respond to these paradigm shifts are going to emerge the winner. The key lies in how quickly you react to market forces and how adaptable you are. Any country that can produce a model of constant adaptability becomes a much more stronger player in the long haul.
Five years ago a typical software strategy didn’t take into account elements like user experience design, predictable analytics/big data, mobility and enterprise social networking. If you’re a ten-year old product company or a large services firm, it’s a little tougher to make a shift to embrace these elements. If you’re a smaller company though, and you’re nimble and watching these trends closely you can adapt to them quickly. It depends on how leading edge you are, because people are always talking in the context of ‘now.’ Mobility has been on the forefront since early 2008—but companies are still exploring mobile apps. Big data has been there for 3 plus years—but how many people are truly exploiting the value of this data? Enterprise social networking helps companies capitalize on people, collaboration and sharing better. It provides individuals more command and control—if the person at the lowest level comes up with a bright idea, everybody knows who to give credit to!
So you Piyush – if you had to give some advise to product companies or people who are venturing into the software product element India, what would you say?
Identify a domain where you see that there is market opportunity and don’t look at what is currently being offered as a solution. Try to look 3 years ahead and try to build it around the emerging model of doing business—it’s about how you’re going to do business tomorrow, not how people work today.
You’ve got to balance domain expertise with people from outside so that you can think differently. You can’t have people who think the same way all the time. You need to understand how to incorporate User Experience Design—making people react and say “It is obvious.” Product companies have the advantage of disrupting the existing ways and changing the model—that’s what DELL did with PCs, Amazon with the book store, and Netflix changed movie watching at home.
You should be willing to find a charter partner who can help you to bring about change and break the current paradigm. Once you have this, you’re on the path to building a product that will succeed.
Don’t just be happy with what you have and what you build. You really have to be dissatisfied with the present and galvanize resources into action. This requires a fundamental shift in the group mindset, how we operate and how the company is structured. We need to learn from the old Chinese saying ‘let a thousand flowers bloom’ – not just the management ranks!
Don’t make random calls and hope that there will be sales. Learn the market, understand the potential buyer fully and then target with laser focus. Do not take a shot gun approach and hope that it succeeds.
Which 5 product companies or fields are you interested in meeting?
I would rather choose three fields that are of interest for me:
Companies that are working in the insurance sector – what are they doing and what’s innovative
Companies involved in infrastructure–what are you doing to improve the end user experience/reliability and availability in the modern complex world
Companies that are involved in new and novel concepts that challenges any business model. I want to be challenged to look outside my standard thinking model.
If you are keen to meet with Piyush at NPC. Do drop in a mail to us at [email protected] and we will get back to you.
Shoaib Ahmed, President of Tally Solutions, began his career as a retail software developer in the early 90s. Formerly the Founder-Director of Vedha Automations Pvt.Ltd, Mr. Ahmed was responsible for developing Shoper, a market-leading retail business solution — and the first of its kind in India to bring in barcoding to the retail space. The company was acquired by Tally Solutions in 2005, where Shoper merged with the Tally platform to offer a complete enterprise retail software suite. In the last of a three-part series, Mr. Ahmed gives entrepreneurs some advice from the product development trenches.
In your opinion how important is the concept of funding? Do you think people can bootstrap easily without funding?
Unfortunately, I come from a bootstrap background so I have to admit that I haven’t
watched the successfully funded companies very closely! Looking at the components,
you need money for development and marketing. I also feel one key component is
requiring enough money to bring on board people with enough leadership qualities and
understanding to pre-empt issues on all fronts. You have to have the working capital to
confidently bring on board people with these qualities. In this kind of context come the
questions: who should fund and at what period of time. There are the elements of the
seed and angel fund — in my mind the concept of angel fund hasn’t matured completely
because there is the expectation is that there isn’t complete clarity but there
is an element of being able to patch the company through so that they experiment through
the formative periods, and the VC comes in when the company is ready to scale, like for
marketing to get big numbers.
The sharpness, unfortunately, is not yet there because the maturity hasn’t been
established. For example, once a product company has been funded, there is an
expectation that the trend set by early adopters is what the remaining set of customers are
going to adopt as eagerly. However, this set may not have bought into the idea yet — but
there now is an expectation that based on the reaction of the first set, the next set will get
automatically attracted and it’s just a matter of reaching out to them. However, the method
and timing of reach out will be different. What it takes and what can kind of expectation
to set is dependent on the fund, but it also largely depends on getting the right kind of
mentoring and product mindset so that the entrepreneur is geared in a sensible manner.
What opportunities should entrepreneurs in the SMB space be focussing on, other than in the accounting space?
Typically, the mid or large market gets most of the attention. For small businesses,
however, the pain-point is bringing hygiene into working systems like managing books,
inventories and people. At this point, there are options for the small business owner
to opt for enterprise integrated business solutions or specialised applications. The
opportunity lies in recognizing that different segments with different nuances exist —
and your focus is to design in such a way that their respective problems are solved. For
example, keeping in mind what a pharmacy needs both from a software and form factor,
I would say that billing is not the problem but replenishment is. Therefore, a large PC
may not be the solution — maybe an iPad or a mobile app makes more sense. So I would
say that you would need to wear the hat. To find a customer is the first element, and
giving a suggestion which works and bringing new technology in place are areas which
entrepreneurs in the SMB space should be focussing on.
What advice would you give to people who are getting into the product development space?
First, they should understand the product mindset, which is to be able to identify if they
are building a value proposition. The whole process of product development shouldn’t
confuse them – there is the whole question of what the customer is asking for and what
the product will provide them. This is important, but product development shouldn’t just be
about reacting to market opportunities – arriving at a product design is also critical.
Secondly, there’s also a tendency to concentrate on providing too many features,
understanding customer requirements and being in a perpetual development mode. This is
why the development team has to have a strong business and marketing background.
Thirdly, having a face in the Indian market is a huge opportunity, but technology adoption
continues to be an issue so that needs to be kept in mind. This has a bearing on how you
design the product and experience. How much of that product you’re designing needs a
deep engagement, as well as elements like value and price. There’s a catch-22 situation
here because these elements of the product will still be in infancy – I don’t see a method
which a product company can use to address a market across the entire country. This is
where a lot of product companies fall into a gap because they might move to a partnership
model to sell to more people and this may not always be logical because a partner will
be interested in someone who has already created a market! A product company falls
into this gap where it sells to a few people, finds that it cannot reach out to more, gets
into a deeper engagement with the few customers it has and then loses the shape of the
product. Over the past 25 years, many product companies have morphed into service
companies because of this reason. Yes, environments have changed today: there’s
internet penetration, elements of communication have evolved and so product companies
should leverage this.
Shoaib Ahmed, President of Tally Solutions, began his career as a retail software developer in the early 90s. Formerly the Founder-Director of Vedha Automations Pvt.Ltd, Mr. Ahmed was responsible for developing Shoper, a market-leading retail business solution — and the first of its kind in India to bring in barcoding to the retail space. The company was acquired by Tally Solutions in 2005, where Shoper merged with the Tally platform to offer a complete enterprise retail software suite. In the second of a three-part series, Mr. Ahmed talks about product development in the B2B space and reaching out to customers.
Why do you think we are seeing businesses that start off as a product company become service entities?
This is where I see the need for educating customers: why should you buy our product,
what can you expect from our product and what shouldn’t you expect from our product?
More importantly, will the product solve your key issue and will it do it well? Unfortunately,
who is educating the customer about these aspects? It may be a service provider who is
interested in the service revenue only. So there’s a disconnect — there’s nobody who is
evangelizing the product and being a product champion in the small and medium business
What do you feel about having ‘pilot’ customers who can obtain the product with an attractive offer like a reduced price?
I don’t think this is the right way of doing things. When you’re reaching out to customers,
it’s important to solve some of their key issues. To do this, you need information about a
particular profile of customers so very clear about who your customer is and what your
customer looks like to you. Now, if you want to get a large enough slice of the market
make sure you have experience with a complete set of customers — you cannot pilot
a semi-experience. You need to be able to engage with him and get your value from
him over the proposition you are making. This means measuring not only the product’s
effectiveness, but also measuring the quality of the sales pitch and that the service
capability and the service quality promise is being fulfilled.
You may decide in the first six months to choose a smaller customer set to target but
you’ll be measuring to see if all elements of your complete product experience are being
monitored for effectiveness or reviewed. This gives you an idea of scalability, since you
can then adopt an attractive pricing strategy with confidence. It can be an incremental
process, but unlike a pilot, you’re not only reaching out to a few customers and shaping
your product around them. With a pilot, the danger could be that the pilot customers are
early adopters who will view evangelizing you product amongst their peers as letting go of
a competitive advantage.
Do you think it’s a myth that it’s easier to develop B2C products rather than B2B?
I think the success of Tally disproves this. Out of a potential 80 lakh businesses, nearly
40-45 lakh own computers. A large group use Tally for their business — nearly 90%
of the market. So, the constant need for us to deliver a value is critical and it’s also
important to keep communicating this value. If I as a business owner don’t see a value
in paying you for a product or service then I don’t, but increasingly in the connected
world a businessman understands that he can grow his business manifold by leveraging
technology. The information system now has to support him because he is in a connected
world so the game is changing.
In the B2C area, let’s look at the average individual : he has a higher disposal income and
is more exposed to technology. A lot of his day-to-day activities are done using technology
(like banking and filing returns). When he’s engaging with the rest of the world, he’s going
to expect a similar experience. This may act as a driving force for businesses to match
that : for example, can an individual get his doctor’s appointment online? If there is no
supporting eco-system for the the tool that the customer has, then even the greatest
online tool available to this customer can’t drive enough value. In my mind its critical that
business-to-business product development is on the system and the efficiencies have a
direct economic impact. For example, the average time for payment reconciliation in the
small business space is an average eight days. From a digital perspective, it should be
instantaneous. Just imagine the impact and velocity of commerce!