Behind the scenes of $2 billion Indian startup movie #PNgrowth

Last month, for the first time, I witnessed something really special. Even for someone like me, whose very job and calling is to evangelise this nascent software ecosystem of ours, this was something extraordinary.

I’ve been doing this a while, and what happened last month was one of the best feelings I’ve had in this journey.

This is what happened: Some of the leading B2B enterprise startups in the country, including Freshdesk, Eka Software, Capillary, Zenoti, FusionCharts, KiSSFlow, etc all got together under a single roof.

This is what they got together for: To help 52 other, smaller B2B startups in achieving scale, like they have.

It’s no exaggeration to say that the founders of these companies are some of the most important product leaders we have.

In the first session itself, Shekar Kirani pointed out that a platform like this will not be easily available, and the assembled startups needed to leverage the best from the network and from the folks who had arrived with the the express intention of helping them. And the product leaders who also made an important point – that they did not want the new age startups to go through the same grind, or make the same mistakes they had made in their years of scaling.

I was amazed. It is almost never that you see such accomplished professionals come together towards helping and nurturing young startups from their own learnings.

And what was this? What was happening?

This was the 2nd edition of #PNgrowth.

The first one had been in Jan 2016 at the Infosys Campus in Mysore where we had assembled around 186 founders to help companies think about Category Leadership. It went really, really well, but the feedback was that that perhaps keeping it focussed for fewer founders would help the cause better.

Many heated discussions were conducted over breakfast, lunch, dinner, and beer (especially beer) on the program for the 2nd edition and on how we can add value to the content.

These conversations were typically 4-6 hours long, which meant that the entire program/content took us over 200 hours with 12 founders brainstorming for the past 3-4 months.

It really did take us that long.

And those deep discussions based on the 1st edition’s feedback was what the program for November was based on.

And now that #PNgrowth 2016 is over, I decided to take a look back and share some of the learnings in organising this, and on how we pulled this together.

This year, the program was designed to help companies chase ‘Good Scale’, that is, to achieve high growth without compromising on quality. There were 52 founders with us, from all over India, and a few from outside as well.

Before we get into the details, a larger question must be addressed again, largely because it keeps getting brought up. This time, I’m trying to use a different approach to explain this. Bear with me.

WHY IS iSPIRT DOING THIS ‘MOVIE’ CALLED PNGROWTH?

iSPIRT’s mission is to make India a ProductNation. We have many initiatives like Playbook Roundtables, PNcamp, etc which are focussed around building products and helping companies achieve good scale. Although there are many accelerators in our country, very few offer value to the founders/companies. Keeping this in mind, iSPIRT wanted to do something unique and create a platform which would help companies think about growth in an effective manner. More importantly, we want to make ongoing mentorship accessible to the founders.

_mg_0662 The goal was to create 8-10 companies every year which would eventually go on to become $10mn revenue companies in the next 3 years.

WHO ARE THE DIRECTORS OF THE MOVIE?

These are the co-chairs.

The first edition of PNgrowth had just finished and I was looking for someone to be the architect for the second edition. I met Shankar Maruwada for lunch at Muffets & Tuffets and was having a completely different conversation. But, as we touched upon the PNgrowth topic, Shankar had lots of suggestions on how we could do this better. I immediately requested him to help in designing the program and helping me organise it better.. He accepted graciously, and was keen to help.

_a5a7389 My next request was to get Pallav Nadhani involved again. There is a reason for this. Pallav, in many ways, was the person who forced us to think around Category Leadership. The first meeting took place at Pallav’s place which went on till 2:30 am.

By then, I had had several interactions with Aneesh Reddy, and the early playbook roundtables on Product Management had been done by him. I reached out to him and he was very keen to be part of the program and help us.

With Shankar, Pallav and Aneesh on-board, the pillars of the event were erected.

WHERE DID I FIND THE STAR CAST FOR THE MOVIE?

These, of course, were the facilitators.

Around 4-6 months in advance, we started working on the content for the event. Various topics were discussed. One thing was clear to me: Every founder had immense passion and commitment to add value to a certain topic. The format we had in mind was to make very interactive session. All of us had had enough of the ‘sage on stage’ approach. The founders were to lead sessions and work along with the participating entrepreneurs to help them extract maximum benefit.

Many discussions later, Pallav & Shankar actually started with using the frameworks & mindflips and were later joined by Girish & Aneesh. Manav & Shekhar also used the same in their session.

_mg_7722 It was great to see that all the facilitators did an outstanding job of delivery of the frameworks and ensured that they shared real life stories and lots of data and numbers from their companies. What was more important was that they made sure they spent time with all the attendees and ensured they received personalised attention. They were able to build a personal connect and trust within the startup community by sharing internal information even though they didn’t have to, thereby making the discussion even more credible.

WHO CAME TO WATCH THE MOVIE?

Oh, that. We had huge demand for tickets from the audience, the founders of India’s growing startup community.

HOW DID WE THEN SELECT WHO ACTUALLY GOT TO SEE THE MOVIE?

This time, right from Day 1, we only wanted to get select founders to be part of PNgrowth.

To begin this selection process, we laid out which stage of startups would benefit from PNgrowth. We then went on and created a list of founders and reached out to them. Apart from this, we reached out to folks from within the eco-system and got them to recommend companies to us.

Each company was recommended by atleast 2-3 founders from the PNgrowth curation team. We did zero marketing for PNgrowth except for a video, which we used to communicate to potential participants. We received overwhelming response for the event thus putting me in a fix at several situations where I had to inform founders that they have been rejected for a program/event. It was difficult, but in the interest of the event, it had to be done.

_mg_8362
We finally had 54 founders who confirmed their participation, out of which 52 showed up for the bootcamp. These companies were divided into groups of 6 based on the type of customer/geography they were catering to.

WHERE DID WE HIRE THE SUPPORTING ACTORS?

These were the mentors, and we were able to get around 14 founders as mentors and were simply amazed by their commitment for the two and a half days of the event. Mentors were involved in all facets of the event – from intense board room discussions to the dance floor. Let me go little more deeper on the role that they played. In every session, the founders got access to few frameworks, mindflips which they had to fill and discuss with their peers + mentors. Lot of learnings were shared by mentors and it became very valuable to the founders. Very few of them tweeted from the program as everyone was busy interacting, engaging, absorbing content, but here is one of the tweets which acknowledges the mentors.

WHAT ABOUT THE CREW?

Getting to them, the volunteers.

In my work, I get to interact with many volunteers in many initiatives, but this time the commitment and the passion with which the volunteers worked was unimaginable. Folks would go to sleep at 5am and be ready next day at 8am. They would ensure that mentors/founders have had breakfast, etc and would go an extra mile to take care that founders are focussed on their work and don’t get distracted.

Volunteers also interacted with the founders to understand if the pace/level of the sessions suited them. Lot of planning was done in advance that each and every person who is part of PNgrowth goes back with a WOW experience. I still wonder where they get so much of inspiration from.

_mg_8120 I don’t know if i would ever be able to do something like that. Hats off to all the volunteers who put together an awesome experience for the PNgrowth family.

SO, WHAT WAS THE MOVIE ALL ABOUT, THEN?

Day 1

The Founders started with a cricket match between the cohorts itself.

Sharad Sharma, our guiding light, kick started the event with his words of wisdom for all the founders.

And then it began with Pallav’s session on Who are you? As founders, entrepreneurs have to pitch or sell their ideas constantly, so as to inspire the listener to believe in their dream to either fund the idea, join the team, tie up with the startup, or write about the startup. Is there a method to this? Can this be an acquired skill?

In this session, founders learnt and practiced a simple framework that enables them to improve their ability to pitch their ideas in the shortest time, to the desired target audience – VCs, journalists, co-founders, customers, business partners, and employees.

The next session was focussed on how to maximise the value of your product. If you as a founder were to increase the perceived value of your offering (Increase average MRR by 1.5X and/or reduce churn to 0.5X),how would your economics change? How would it change your CAC, margins? What would you as a founder then do differently with your product strategy, go to market strategy (positioning, marketing, channel, pricing), team/organization structure, to increase pricing by 1.5X, in the scenarios below as relevant to you. This was followed by an interactive session with the mentors.

This was end of Day 1 and then we had networking dinner, drinks, some dance and lots of conversations led by Vinod & Ashish.

Day 2

The second day was a more power packed with two sessions. To their credit, the founders were highly engrossed in their sessions, sans their mobile phones and laptops which helped in making these sessions successful.

During the first half, Girish and Aneesh engaged in an extremely fruitful session on product-market how to scale 10X with emphasis on how to establish your sales funnel and building a repeatable sales cycle. This session covered on selling processes from SMBs (by Girish) and enterprises (by Aneesh). They also shed some light on how pricing, positioning and selling varies from one geography to another.

Apart from this, Suresh also gave his insights on selling global products out of India.

_mg_7993 The complete session went on till almost tea break after which the candidates came back in for the third and final session by Shekhar and Manav.

This session was meant to give a befitting end to the two rigorous days of activity.

While Manav spoke about how to choose your niche category and expand to other similar industries and geographies, Shekhar’s session was centred around what a VC looks for a in a startup. In the session,

Shekhar did a Q&A round with Nags and Girish on what it takes to build a successful organisation.

He also delved a bit deeper on aspects like how to choose the right market and how to intelligently figure a way out of a market and move into one that is expanding by extracting maximum business value.

Here Raghu also added his thoughts on what it takes to raise venture capital and how one should structure an organisation for a CEO to utilise his time in the most efficient manner.

Though the mentors tried to cover as much ground as possible over the two days, they took questions from audiences on anything they still might have a doubt about.

After this was a complete group photograph since some of the mentors had to leave that night. The energy of the picture speaks for itself. Before calling it a day, the founders were given tasks/homework for them to present on the final day.

Day 3

The third day, we had some inspirational stories from Sanjay Anandaram(Seedfund), Mohit Dubey (CarWale), Phanindra Sama(RedBus), Raghunandan G(TaxiForSure), Sanjay Deshpande(FortyTwo Labs). We had actually planned for only Sanjay to talk about “entrepreneurial mindset” and then we thought about inviting all of the above folks to share their energy.

Something which we had planned for 20-30 minutes went on for around 90 mins and it was an absolute pleasure to hear some of the learnings/failures from all these founders. Below is the NPS score of 89 for PNgrowth 🙂

nps-score-pngrowth After this, all founders were made to do this exercise on “Getting to 3X Growth in 12 Months”. All mentors with their cohorts spent time with the founders and helped them on what they should be thinking about this. Six Founders got an opportunity to share with the whole group.

Finally Shankar invited all volunteers to share few words on why they volunteered for PNgrowth. With it, a spectacular three days came to end, with some photographs and a lot of hugs, cheers, and greetings.

For me, it was a great feeling to see all of this happen, and at this scale. This probably capped off the year of 2016 for me and iSPIRT as a year in which we were actually able to make the ecosystem function as a cohesive, united entity. Lots of work is ahead of us, but as I write this, I acknowledge a task well begun.

_a5a7717

Many thanks to Sairam for editing & Shruti for filling the blanks.

03/09/201515/03/2017

India B2B Software Products Industry Clocks Solid Growth from 2014 to 2015

India’s B2B software product industry has grown nicely since we published the first edition of this index in November 2014 – the top 30 companies are valued at $10.25 billion (₹65,500 crores) and employ over 21,000 people. The index has grown 20% in USD terms and 28% in INR terms from October 30, 2014 to June 30, 2015.

There has been an acceleration since 2010 in the pace of creation of B2B companies. Vertically-focused offerings in retail, travel, financial services, media have reached scale and we are likely to see some larger exits in terms of IPOs or M&A over the next couple of years. In parallel, we are seeing horizontal offerings targeting global markets emerge and start to breakout of India into the US and other global markets – we are starting to see not only India-based venture funds backing these companies but also Silicon Valley funds coming in once there is initial customer adoption in the US.

A new set of founders are coming into the B2B software products ecosystem. These include an increasing proportion who have worked at consumer and B2B startups that have scaled in India and who have identified problems that they can solve with software automation. We are also seeing continued venture creation from founding teams that have backgrounds from established enterprise software companies and some from IT services companies.

In terms of target markets, fast-growth Indian companies (in sectors such as organized retail, organized healthcare services and technology startups in product commerce and services commerce i.e. online-to-offline) are starting to purchase software from Indian B2B software product startups and have globally-aligned requirements, helping these startups get closer to product-market fit before or in parallel to starting to sell globally. We are also seeing many startups go global from day-one through a desk-selling model, as evidenced by many of the companies in the index. And finally, several startups have moved founders to the US and are succeeding in direct selling models there.

Some of the numbers: 80% of companies have global customer bases, while the rest are India-focused. 67% of companies are domiciled in India, with the rest principally in Singapore and the US. Bangalore and NCR account for half the companies’ principal city of operations with Chennai and Pune as key secondary hubs – there is a trend to newer companies starting up in Bangalore, Chennai and Pune and away from NCR. Average enterprise value per employee is climbing toward Silicon Valley levels – the index currently nets out to $480k per employee.

The top 30 companies in alphabetical order are:

Infographic for India B2B Software Products Industry Clocks Solid Growth from 2014 to 2015 from ProductNation.in

Here’s the report in its entirety:

India B2B Software Products Industry Clocks Solid Growth from 2014 to 2015 from ProductNation.in

Thanks to all the volunteers at iSPIRT who worked on this project as well as Professor Sharique Hasan of Stanford Graduate School of Business, Stanford University; Professor Rishi Krishnan of IIM-Indore; as well as Signal Hill for providing public market valuation comparables and Rakesh Mondal for designing the document..

We will publish an updated iSPIxB2B index every year starting with the next one in June 2016 – please do click here to submit names of companies you think should make this list.

04/06/201402/06/2014

This Fourth Wave of Indian Enterprise Software Startups is World-Class

India’s enterprise software industry has been slowly bubbling since the 1980s but has generally failed to deliver a large number of high impact, high value companies. We do have some companies that everybody talks about – iFlex, Tally, Zoho – but these are far and few between. I believe that we are seeing a new scalable wave of enterprise software companies coming out of India and there is a potential to deliver several high impact companies over the next decade. Here at Lightspeed Venture Partners, leveraging our global strength in enterprise technologies, we see opportunities to partner with companies that are cloud-native and have cracked a global market – examples of current active categories in India are CRM, analytics/big data, marketing automation and infrastructure.

India’s enterprise software industry has to be looked at separately from the outsourcing/BPO firms like Genpact, Cognizant, Tata Consulting Services and Infosys. Starting in the 1980s and early 1990s, this services industry is now mature and at scale.

Separate from the outsourcing/BPO industry, India’s enterprise software industry (or “products” as it is called by many here in India) has evolved from the 1980s to now in what I think can be divided into four waves, coinciding somewhat with three trends: 1) enterprise software moving from desktop to client-server to cloud; 2) evolution of Indian industry post 1991 liberalization; and 3) increased experience of Indians at successful US product companies.

WAVE 1

Tally-

The first wave of software products came along in the late 1980s/early 1990s – the focus was desktop products for business accounting. Companies in this wave include Tally Solutions (still the undisputed leader in SME accounting software in India), Instaplan, Muneemji and Easy Accounting.

WAVE 2

Infosys-finacle ramco

This generation of software products emerged in the 1990s as projects within outsourcing firms or from internal services arms of larger corporates. Infosys launched Finacle. Ramco Systems launched its ERP. And Citibank launched CITIL which became i-Flex. Other notable companies included 3i Infotech, Cranes Software, Kale Consultants, Newgen Software, Polaris Financial Technologies,Srishti Software and Subex.

Did you know? Year 1989, the first time CeBIT introduced the concept of a partner country. Our first partner? India! pic.twitter.com/9sWx68Yzmp

— CeBIT India (@cebitindia) February 13, 2014

I remember attending CEBIT in Hanover in 1989 when many of these Indian software and consulting companies were first introduced to Europe.

The late 1990s saw a wavelet of ASP (application service provider) startups in India, most of which got crushed after the dotcom bust.

WAVE 3

eka-nexus-funding-147

The 2000s saw on-premise India-first companies such as Drishti-Soft, Eka Software, Employwise, iCreate Software, iViz, Manthan Systems, Quick Heal Technologies, Talisma (for which I did some initial product management work while at Aditi Technologies) and Zycus get started. This was the era of 8-10% GDP growth in India which lasted till about 2010. Many of these companies had a direct sales model. After India, they generally expanded into the global South (Africa, Middle East, SE Asia, Latin America) where they found similar customer requirements and little competition from Western software companies. Bootstrapped in their earlier years, some of these companies grew over several years and have broken through to $25 million+ in annual revenue. Key verticals have traditionally been BFSI (banking, financial services and insurance), telecom, retail/FMCG (fast-moving consumer goods aka CPG in the US) and outsourcing/BPO.

Having been around for over a decade, some of these companies generally face the challenge of migrating to the cloud, upgrading user experience to modern Web 2.0 levels, and expanding addressable markets beyond the global South to the US and Europe. We have seen some of these companies get venture funded, typically at much later stages in their go-to-market relative to US-based software companies. Several of these companies have received funding in the past couple of years, ostensibly to “go international” and “go cloud,” not an easy task, especially when done together.

WAVE 4

Starting in around 2010, a new wave of cloud-native companies were launched, perhaps following the slowdown in India’s economy and the growth/acceptance of SaaS as a delivery model and as a sales model in the US. These companies have grown and now could power beyond the $10M/year revenue glass ceiling. The reason for the scale potential being higher for this cloud-native wave is the cracking of efficient online sales channels to reach markets globally.

Why this decade? Because there is an increased willingness of companies around the world to search for and buy software products online. There is now a large pool of founders who have worked at global enterprise product companies (e.g. Indian offshore development centers or in Silicon Valley itself with companies like SAP, Oracle, Google, Microsoft, Adobe) and have experience in product management, marketing and sales. And finally, there has been a dramatic reduction in the capital required to bootstrap enterprise software companies. Everybody uses AWS and software from other startups to get started. It’s quite meta.

Wave 4 companies have the opportunity to break through the barriers that previously relegated Indian enterprise software companies to selling to the global South. We have seen Atlassian (Australia), Zendesk (Denmark) and Outbrain (Israel) do this move to Western or global markets. Zoho is an Indian company that is rumored to be at $100 million per year revenue scale – they have been part of many of the waves I have described.

This cloud-native wave, I believe, can be divided into two dimensions. One dimension is the platform/tools companies versus workflow automation (applications) companies. The other dimension is India-first companies versus the global-first companies. We see opportunities in all four quadrants, each having its own challenges. We are interested in looking at companies in all these segments, with a bias toward companies which have reached some scale ($1M ARR) and are going after large addressable markets with aggressive sales & marketing execution.

Fourth Wave

[Please note this is not a comprehensive list of companies nor a view on which companies we admire or not]

Global-first companies coming out of India have started to crack or have cracked the online sales model, using SEO, SEM, content marketing and telesales. They are typically going after mature segments where buyers are typing keywords into Google at a high rate. This online selling model results in an SMB and mid-market customer base. In many cases, founders may have to move to the US to enterprise sales. It’s worth noting that scale markets are not necessarily all in the US – companies could get built with a general global diffusion of customers, perhaps with help from resellers.

I see India-first companies typically going after newer high-growth companies in India (e.g. ecommerce, retail) and startups. Some go after Indian arms of multinationals (MNCs). This is a reasonable early adopter market to cut a product’s teeth on, but has limited ability to scale. Of the newer crop of India-first companies, very few go after large enterprises in India – there are exceptions like Peelworks and Wooqer. The model here generally is SaaS as a delivery model but not SaaS as a sales model (ie direct sales, not self-service). Many software companies are essentially verticalized.

We continue to see a few high-ticket, high touch direct sales enterprise software companies which are global-first, including companies like Cloudbyte, Druva,Indix, Sirion Labs and Vaultize. Many of these start out with teams in both Silicon Valley and India or transplant themselves to the Valley over time. I think this will continue to happen but we will not see the explosion here that we are seeing in the number of companies utilizing low touch online sales models. I see several high-impact companies coming out of these direct sales enterprise software startups as well.

I think this dichotomy between India-first and global-first companies is interesting and makes India a distinctly different type of investment geography, different from Israel (which has very small domestic market where tech companies move to the US very quickly), different from China (which mostly has domestic market focused startups and very little enterprise software) and different from the US (which is primarily domestic-focused in $500B enterprise tech industry in the early years of most startups). In terms of investor and founder interest, the pendulum may also swing back and forth between these two models as the Indian economy grows, sometimes at high speed, sometimes at a snails pace.

[With input from the team at iSPIRT and several of the companies mentioned above].

Reblogged from YourStory & LightSpeed Venture Partners blog.

24/05/201324/05/2013

Insights on Building Sustainable, High-Growth Product Company

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.