Empowering the blue-collar workforce

Pravin Agarwala was living the Indian dream. He was an engineer who had had a very successful career with the European tech giant S.A.P.

But the itch to give back and impact the lives of millions of Indians drove him to quit that job and start up. In this episode, Pravin shares the journey of building BetterPlace - which is today among the most successful HR Tech companies in India.

The startup has built a platform of products for companies with a large blue-collar workforce. They help companies manage their employees better and help them get access to financial products previously unavailable to them.

BetterPlace has raised almost 75 million dollars in the last two years thanks to the amazing combination of a large addressable market and very low customer acquisition costs and churn. 

Pravin shares his journey of building BetterPlace!

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Additional readings:-

1.BetterPlace to offer loans to frontline workers on its platform

2.BetterPlace acquires fintech lending startup Bueno Finance

3.Workforce management software provider Betterplace enters Malaysia with Troopers acquisition

Read the text version of the episode:-

Pravin: Hi everyone, this is Pravin Agarwala, co-founder and CEO of BetterPlace.

 So I started my journey as a developer, right. So entire 18 years, I worked with SAP prior to BetterPlace based out of Bangalore, but doing multiple different roles globally. When I quit SAP, I was heading the cloud ERP product called Business ByDesign globally for SAP.

And when I was working with SAP now, SAP largely provides solutions for white collar from an HRMS point of view, and you interact with a lot of frontline workforce blue collar workers, right? To study more. I stayed in Chembur, that's a slum area in Mumbai.

So a couple of weeks I spent there to unki life kya hota hai na life, what is this life of people? So this was a very interesting eye-opening thing for me. And then I always read about that there is no employment. People are struggling to find jobs. Companies I talk to, they say I don't have people, right? If you go to a retail company, they don't have resources. They go to security guard company, any security guard company you talk to, their only problem they'll say, I don't have resources right,

to grow. You talk to a construction company; they struggle with resources. So I saw this problem. I said, somebody has to solve this problem and that's where the idea of BetterPlace germinated with a key focus Akshay, which is how do we create value for the blue-collar workers?

And that's why we call ourselves BetterPlace. So creating better place for millions of people across the world, right? That is how BetterPlace started. 

Akshay: Like, there's a very global statement, make employment, like, make companies a better place for blue collar workers, which I'm sure today you can explain it well. But at that time, you probably had a narrower focus. Tell me about that evolution. 

Pravin: I think, yeah, that's a very profound question.

So how we started is how can we help a person find a better opportunity in future, right? Or from an employer point of view, hire the right guy. That was the first statement we had. So, for example, you do not know who the people are, what is their background and how this happens? So we said, okay, we'll create a database of millions of people first of all. Right. Of every Indian possible in the system.

And now as an employer, you have identified the person, you want to hire Pravin, but you want to know more about Pravin.

So you come to the database. So it's more like a background verification, KYC service that we started with then we looked into what are the other problems of the employer, right?

But at the same time, how do you create more data about the individual, right? At the end of the day, you have create more data.

If you want to give a credit solution to Pravin as a blue-collar worker, you have to know more about Pravin to give a credit right. So we said, how do we create, so we said, ok, we'll create more solutions for the enterprise, thereby building more data about the individual. So hum ny onboarding aur KYC sy shuru kia. Then we added the training solution into it. Then we added attendance solution into it, then we added payroll, then we added compliance, then we added rostering, task management and so on. 

Akshay: This is a very ops heavy kind of a business. You're coming from SAP, which is like, from a focus of building pixels into something so ops heavy, like how did you pull this off?

Pravin: So coming from SAP you always focus on white collar. 2015 we started BetterPlace, right? First six months we were keen on our white-collar shoes, more or less, right? From a product point of view, thinking point of view, design point of view, resolution to bana dia aur customer ky pass jaty ho toh ye kya hai yaar tum kar kya rahy ho.

So it not solving my problem, right? We said, you take the software and you do it. They said I don't want the software. I want the problem to be solved, right? Software is not solving my problem. Somebody has to solve the problem. 

Akshay: You gave them like a workflow tool where a workflow tool manages background verification on their own. 

Pravin: Correct. Correct. So now we had to learn about background verification.

So I started meeting a lot of companies who were doing background verification. I'm very thankful to a lot of people who guided me into that process. But knowing nothing about background verification technically at that moment now we do millions of people. So we have some idea that time we didn't know anything.

So we started questioning everything. Some of the questions were very idiotic, right? For example, ki ap samjo ki blue collar worker ho, aur apka ek address hai Koramangala mai and you have to, someone, I have to go and verify your address. Now the address will say one of the address thing words that my house is behind the temple. Ab jaisy abi hum apna ghar ka address dy ty hai toh this is house is near Mulberry apartment number and all, but in this case behind the temple, right?

And address verification failed. So that was never working. So I started doing address verification myself. I went on the street. I was checking the houses to figure out ki problem kya hai, because we said you cannot do address verification if you have to do, let's say, 1 million address verification every month.

You cannot do with people, right? There has to be technology. So we went to the drawing board again, so un ny bola ki hum technology use kary gy. So we created a technology. We said we will create verifiers across the country, we map the address with the geotag, then the verifier is the nearest person. We locate the person and say, okay, you are close to the house. You take this mobile app, go to the person, take a photo of the house, then it'll geotag take a photo of the person.

So it'll do a facial match and then you are done. Now you do not have to take address anywhere. You can do it anywhere in the country. Right? Because you just have to have more and more verifiers. Then we said, ki verifiers kaha sy aye gy so we spoke to India Post, right? Because there are postmen everywhere in the country. So we partner with India Post.

So it worked beautifully, right? 

Akshay: In background verification you started only with address because background verification includes like, verifying education credentials. So you have to check if they actually passed out from the university or police case, court case all of that.

Pravin: So in blue collar, you do not know that much of education Akshay because education kya hota hai ki typically they're, 10th and below. So education does not matter 

Akshay: You're not hiring for education anyway like, 

Pravin: Haa so vo critical nai tha. But you have to do identity check, identity check start.

So identity check was easier because you can partner with Aadhar, and PAN and Voter ID, and there are a lot of systems available. Criminal, court record check was a problem. So we said, okay, if you have to go to a police station, get it done. It takes time, right? Because police is also busy, the processes are longer. So we started doing a digital verification using court data.

So there are government data which are digitized. Fortunately this is possible in last six, seven years, it was not possible 10 years back, right? Because there was no digitization of data. So the push for digitization also helped us. Toh hum kya karty hai, we do lot of artificial intelligence and machine learning algorithms, and we run through the system every day to figure out if there is any incident against Mr. Pravin and it will pop up based on our algorithm ki haa Pravin ky againt mai ek case hai ya nai hai.

So it happens by the system again, right? There's no manual intervention required. 

Akshay: This collaboration with India Post. How did that come over? That seems like a key unlock, like unlocking that collaboration would've really changed your trajectory in terms of giving you instantly the ability to do pan India verification and like really increasing the value that you can add.

Pravin: Yeah, so I think India Post, if you think of India Post like 10 years back, India Post was only a postman company as such, right? But they changed quite a bit over last six to eight years, right? They started becoming more a startup kind of mindset. They partnered with e-commerce companies to delivery as well, right?

They started a lot of new initiatives, so they were very progressive in their thinking that I have a huge manpower, I have a reach. There are companies like BetterPlace like Flipkart, like Amazon, who needs the reach. So they started doing that, right? There was no new initiative like the mobile banking, which the postman was carrying on top of Aadhar and also so there are a lot of such initiative they brought up.

So they were very, very forward thinking that way. So they said, ok, we are good to do. But we, have we also run our own verifiers as well on the ground. So we have thousands of verifiers on the ground who can also do, so we basically look at optionality all the time, right?

Whether the person is doing or someone else is doing right. So anyone can pick the task. It's like you're booking an OLA cab. There are 10 OLA drivers who can pick up and one of them will pick. We do the same thing. We have multiple people in the same location and whoever picks it up.

Akshay: Amazing. So these are like gig workers? 

Pravin: Haa ye gig workers. Exactly. 

Akshay: Okay. So tell me the journey from there. So once you built this in, then how did you go about in terms of client acquisition, scaling up? So you fixed your supply chain in a way, like being able to supply the verification service.

Tell me about the demand generation part of it. 

Pravin: Certainly, certainly. So we started in 2015, right? We had our first customer in 2015, September after nine months. And this was HouseJoy one of the growing startups at that point. Urban clap competitors.

Exactly. So Sunil was the co-founder and we worked very well with them. That was the first customer. And I was the only salesperson. I was the only inside sales, marketing, lead generation. And this is the case for every company that starts, right? So, the first few customers we got through personal contact will go and talk to them.

We'll get them the next set of customers were through LinkedIn. So we will, so every day we will read newspapers. Jis ko be ek million, half million, do million funding mil gaya. So you start chasing them. And that's how we got to our customers. Like, I read the newspaper in the morning, Runner raised some money.

Runner is the company that Zomato acquired later. So Runner raised money. I sent a mail to the Runner founder, runner founder said, okay, come meet, next day we closed the deal. So it worked that way, right? But we were still operating in a limited location. We were operating in Bangalore.

We were operating in Delhi and part of Mumbai. So we used to be very selective in where we pick up our task, right? We met one of the customers, I would not name them but we made one of these customers, which was one of the fastest growing startup at that moment. Lot of blue-collar workers.

So they said, can you do Kolkata and Hyderabad and we had no clue how to do it, but we said, we are pan India and we do everywhere. So they laughed that we know that you don't have, but you are confident you can do it. So they gave us a task. So they said, if you can do Kolkata and Hyderabad and you can do it, we'll give you entire country. My co-founder and I were there in the meeting.

We came out, we chatted for some time, But the interesting thing was that we said, okay this is our opportunity. So I also believe in biting more than I can chew then I chew it. So we took this and finally we delivered the company gave us entire India, and that's how we became pan India, actually. And this was early 2016. Furthermore then we said, okay, if you have to acquire more customers, there has to be more relationship. We started organizing customer events. We started building communities. So B2B is more like relationship sale, right?

You have to be on the feet. It's not like digital sale. So we started organizing event, we started sponsoring events. Some of the events we sponsored I thought we didn't do our job well because we could not sell the story. So we also learned. Lot of misses that we happen. But finally we realized that how to manoeuvre through the community building.

So now we organize our own events, we build our own communities, we bring people together, we share knowledge, and it's a constant activity that we do almost every week for last few years. Right? And, I think what we also realized is that earlier we were selling from Bangalore for the India, right?

So then we realized that we have to have people in every metro city where company headquarters are. So now we have a sales team in Delhi, in Bombay in Hyderabad, Chennai, Kolkata, Pune, Ahmedabad and all these places, right? So we meet them very often and so on, so forth. So this continues and now we have a bigger sales team. We have an inside sales team, we have a marketing team, we have a presale team, we have a sales team.

So it goes to the entire funnel of typical B2B sales as we focus on typically medium and large customer section.

Akshay: Customer persona, like your ideal customer persona. Did that evolve over the years like you were earlier chasing startups in the early days? So, tell me about that journey. You must have realized with experience that this is a better customer as compared to this and so on. 

Pravin: Yeah, I think first, first year and a half we were focusing on largely jaha p conversion fast hojaye and the conversion was happening faster in startup world. Right. And that too logistics and e-commerce. Yeah. Fast decision making, good turnaround, digitally savvy. You don't have to convince them, there is no legacy

Technology vala banda ja ky unko bolta hai ki you know, I can do something better for you. They trust that guy more than anyone else. And we were carrying our own pedigree of SAP and lot of technology and other things. So it worked well. But we realized that the overall market for blue collar that we target is 15 crore, 150 million people in India.

The startup world or the digital economy, e-commerce logistics, were only catering to 10 million people. Right? So we are leaving everyone aside, right? So first we said, okay, we focus on this industry, we win this as much as possible. Then we said, okay, which are the other industries where the problem is bigger and potentially, we can solve?

So we went industry by industry, city by city. So then we picked up private security guard because that's where, when we did our study, I thought private security guard hotay hai.

When we went deeper, we found there are 70 lakh private security guards in India. And it was a big, big number and never served, right as an industry. So we started partnering with them. We had our own association, partnerships and all. So we started serving private security. Next was facility management. Like Accenture was one of our big customers that we signed in 2017-18.

 Accenture has 25,000 blue collar workers. They're the drivers, security guards, cleaners, janitors, plumbers, and so on aur unka koi system nai tha. So we came, we brought the system. Then we saw retail b bohat bada chain hai. We spoke to I was with some of the largest retail chains.

They're all headquartered in Bombay. I said, how do you do it while you go to a particular retail chain or you go to a KFC or a McDonald. There are only 10, 12 people, right? Or The Dominoes. But there are thousands of those shops or chains, right? If you aggregate them, this number is almost 50-55 lakh people in India.

The organized ones, the unorganized one, like mom-and-pop shop. So we said, ok, we'll not get into unorganized, we'll focus into organize. So retail became another industry. Similarly, BFSI became, now we look into manufacturing. We are yet to get into construction, right?

Because construction something we're planning later this year or next year. But we went industry by industry. And city by city, right? So that's how we planned our solutions. The other thing that could be interesting for you and the audience is that when you go into industry, you also need deeper understanding of an industry because every industry does not behave in the same way, right?

A logistics industry, a delivery boy can come in the morning due to our job and run away, right? But in a McDonald's, the guy has to work eight hours because there is a lot of expertise required, right? So it works very differently. When you're on the field, it works very differently versus you are under a shade, right?

Like a shop, it works very differently. So we had to also learn, and it's not like just copy, paste everything. You have to learn that industry and do it specifically for that industry. 

Akshay: Targeting founders was something which you could do through, let's say cold emails or personal connects introduction

so on. How did you learn to target like these large companies, like say a retail company headquartered in Bombay. You would obviously not be able to reach the CEO. Why would the CEO give you time to talk about background verification, for example. So how did you crack these large deals? 

Pravin: Yeah, Ap sab mera secret sauce ly lo gy.

Yeah. So I think we did three things Akshay and I'm being very candid and open in this conversation. So number one, we still use our digital reach out, right. Through LinkedIn sending mails, sending this thing someone is respond, sending five people in the same company, those emails and all.

Second is that we started looking at one degree of separation. That means someone who knows them, who we know, right? For example, we have investors so my investor might know them, or we have a customer. That customer might know them, right? So let's say I'm working with one customer can you connect with the other customer or the person in that company and so on.

So that's the one degree of separation we used. And the third thing that we realized is that you have to bring community together. So we started doing events, smaller, bigger events, either participated. So let's say there is an HR event happening, we will go and participate in that event, with 10 people then we started organizing our own smaller event.

So we partner with ET HR world that call 10 HR heads from this companies and we'll do a dialogue, right? And in that dialogue, we'll talk a little bit about BetterPlace also, so that at least you have got a card and they know you by name and the company and then later you go and meet them. Right? So these are the three approaches that we had Akshay from building the network and connection.

And that's, these are the three things that we continue to use even now. 

Akshay: How did you decide on the pricing part? I guess you are operating in an industry where pricing is already set because like background verification has very standard rack rates for different types of verifications. Did you like just go with that or like. 

Pravin: No. So the price, for blue collar, not many people used to do background verification. Most of the background verification used to be done for white collar and the price point was typically 3000 to anything between 3000 to 8000 rupees and in some case, it can go up to 20,000 rupees. Now in blue collar where salaries are much lower, you charge 3000, no one will do it, right? Hum ny toh technology sy kia tha toh humara cost bohat kaam tha so I said ki yaar cost toh kaam hai chalo 50 rupay mai kar dy ty hai 100 rupay mai kar dy ty hai then resolve kia ki 100 rupay mai kary gy toh

people will not trust us ki yaar tum itnay price kaam mai kaisy kar ty ho that guy is charging 3000 bucks it not that they are making 2900 rupees profit, right. Whether it's a white collar or blue collar, kaam toh kaam hi hai and you still have to do the same background verification. Bola ye baat toh sahi hai 100 rupay mai charge kary gy toh people will say ki they are sending junk data and they'll not trust, so we increase the price. So increase the rack price we said rack price would be 550 bucks, 800 bucks, 900 bucks, depending on different models that you use.

But we also told them that, ok, see I'm doing technology. This is my cost. I'm ready to do at this price. This is my rack price. I'm ready to give you the discount. So we said, okay, we have to have certain margin for our account management, sales costs, technology costs, and some margin to run the business. But I will pass all the benefits to you because I am getting the benefit.

So we brought the price down from 3000 bucks to 300 bucks actually. And that is where we created the complete disruption in the market from a pricing and product point of view. Because product bi humara kya tha ki phly background verification will take 15 days to a month we were doing in hour right because of technology. So we brought the, speed, we brought scale, and we brought efficiency, which is from a price cost point of view.

So, no, I was just saying that the pricing was more of a discovery at that time than a very thought through process. Nowadays we have a very standard protocol on defining price of our all models. 

Akshay: As in, you're not doing discounting anymore. I wanted to understand discounting, like when is it a good idea to do discounting?

When should you have, like, this is our pricing, take it or leave it. Like, very standard kind of a model. Like which model is better for what situation? 

Pravin: it's a very tricky thing to do especially for a B2B customer on a pricing side, B2B mai you set the price for future also, right? So once you do enterprise 

Akshay: Yeah, yeah, yeah. Renewals will happen. 

Pravin: And you have set the price for future. So you cannot bring it up and down and all so you have to be very careful with pricing. We did some mistakes, but we corrected it. So 

Akshay: like you gave too much discount, 

Pravin: we gave too much of discount or we just focused on acquisition and didn't bother about price at that moment and all.

But it's the company decision, I think how you want to set it up. So my suggestion, and I'll tell you how we did wrong, but my suggestion would be that have a fixed price, knack price always. So let say it's a hundred rupees, depending on your customer volume. Your LTV and other things, you can give a discount anything which ranges from hundred percent to zero percent, right?

But that's your call on how you want to, what margin you want to have and so on, but have a fixed price. What we did was we didn't have a fixed price. We were always changing the price for every customer in the conversation, what we continued to do, we continued to give discounts of course.

So it's a part of the model. So our thought process is that if a customer, one of our customers has let's say a hundred dollars of potential business, including all the modules that we have, I might be landing with one module, but what is the total size that I have? So I don't bother about price of one module.

I only look at total volume that I can get over a period of five year, and then I price it accordingly. Same thing, I will be pricing to someone else. So let's say I come to you and I say, you use my Hire ATS or onboarding module. You have, let's say 10,000 people. I will give my Hire onboarding and ATS model might be for free to you.

I will not even charge a dollar. So I give you hundred percent discount in that case, right? But I have a possibility that I can actually start expanding into all the other services and I'll make enough money out of that. Right. But in some customer, I know that my journey will end with onboarding and Hire ATS then I do not give discount there. I charge might be 50%, might be a hundred percent depending on the volume or the size of the customer. 

Akshay: So Hire ATS is a product plus service, right? Like, because you do verification within Hire ATS or that is like separately priced. What is Hire ATS? 

Pravin: Yeah. So the three parts of the solution typically, one is that you identify as resource and hire the person.

Second is you manage the person, right? Day to day operations and other things. And third is that you want to engage the person by benefits and other things. The first block has three components, Hire ATS, onboarding and KYC. So Hires ATS is applicant tracking system. You want to hire 10,000 people. You come to that system, you say, I wanna have 10,000 people out of the 10,000, hundred people in Bangalore, 10 people in Koramangala. Phr us par ap gender ye vo sab bata sakty ho. Us ky baad 

you want to post this job in Facebook, you want to post this job in shared chat. You want to post this job in the job board. You want to post in BetterPlace job board like Rocket. You can do this entire thing. Candidates will start applying and the database starts getting created, right? And you can track.

Who applied, who got selected, not selected. Once the candidate is selected, you have to onboard the candidate, which is collection of documents, right? Ki ap kon ho kaha sy ho apka document one, and you have to who is your going to be your manager, working location. There are multiple different things that you do, right? You also sign an employment letter, code of conduct and all those things.

And then you verify those documents, which is your KYC and background verification. These three things is basically one block of hiring as we call it hire and onboard. 

Akshay: And what is Hire ATS priced at like broad range 

Pravin: So Hire ATS onboarding, typically if you give Hire ATS, we give everything. If you take only Hire ATS, we give it for free. Because that's our engagement model. But if you take Hire ATS onboarding and KYC together, then per person, per month could range, depending on your volume.

It could range from 50 rupees to 100 rupees. Per person per month. 

Akshay: Okay. Okay. So the first set of product was Hire ATS plus onboarding, KYC, which you built. So tell me, about the product extensions, how you created more upselling opportunities and what was the thought process for each launch that you did?

How did you go about launching it? 

Pravin: So, we did this Hire ATS. So Hire ATS, we built later. First, we built a KYC, onboarding and then Hire ATS. So then we were with the customer, a security guard company. MD was a person named Vishvanath Kati and he became a very close friend. And our mentor as well he has been in this industry for like 35 years.

So we were sitting and chatting ki what is the other way of creating meaningful data that will give access to credit in other things, right? Because with onboarding data, you do not get credit still.

Akshay: why did you care about credit?

Pravin: I think if you look at the blue collar, we take it default ki humaray pass toh credit card hai jaky kahin p b swipe kar lo blue collar people they do not get access to credit, right?

They end up paying 36%, 50%, 100% interest rate, right? Which is kind of insane, right? So we said we have to do something. We're still trying to crack the code even now. But when we are sitting with him, he said, ki yaar mera ek sab sy bada problem hai. I have the data now with you and I have, my guards are working in different locations, but I don't know whether they're coming on time or not, and I do not know.

I have to pay for 30 days. I have to pay them 20 days because they all writing a register then we started investigating sary loog register mai likhtay hai overtime ka problem hai, iska problem hai, compliance ka problem. So we said, okay, let's look and think through. So then we research a bit more. We saw ki biometric device hai which is like full proof, okay. You can still do your thumb and do it, but that's not cost effective, right?

Because biometric devices are expensive. If in a location you have only five guards and you deploy a biome device of 20,000 bucks it's not cost effective. Now everyone has a smartphone. How can we use a smartphone for this purpose? Right? So we created a facial recognition based geotag attendance solution. Now that solution not only takes attendance, but does multiple different things.

And that's what our research and progressive improvement that. So it becomes your lease management system. It becomes your overtime management system, your compliance system, your payroll system and everything. So that's how that one conversation with Mr. Kati that was in 2018, that led to the complete solution of attendance and payroll the way we have built it today.

And then we saw this is a requirement in logistics as well. Ku ki logistics mai the people who are in the warehouse, their packers, movers, they need it. Right. So we started working now with logistic e-commerce customers like Dunzos of the world or Amazon and so on. So there are many customers that we have, which are outside.

Then we saw this is required in retail as well because shop mai jo ata hai usko chiye.

We evolved over time. That took, there are multiple different things that we can do. That was one part that we did from management. And now when you do attendance, we saw there's another problem rostering, right? How do you say the person has to work in the morning shift or night shift, right? People will, what they will do is that samjho ki you have, thousand employees. Ap subha bolo gy ki kal sy tum shaam ki duty p ana, then you'll call someone ki yaar tum subha ki duty p ana. And this is such a manual process which was not scalable, right? So we said, since we already have the data, we have the attendance, why don't we build roasting on top of it. So we set a manual rostering, right? You'll say that, okay, Pravin will come for this week, morning shift, next week, evening shift, and so on.

So we did an automating rostering mechanism. You build a engine, you say a person has to work one week this one week that one week this. And if the person is not happy to do night shift, then you swap with another person who can take night shift and so on. So now the system automatically started doing rostering and the person gets a message that you are rostered for next week in the evening shift.

So you come at that time, right? And attendance now is linked to rostering. So if you're rostering is in the evening shift, you come in the morning, the attendance is not activated for you. So

phly kya hota tha ki register that us mai koi activation nai tha. Mai jab bi b aya, mai ny sign kar dia, aur vo system mai dekhy ga ki isko ko pay karna hai ab vo problem b khatam hogaya, right? 

So, many things that you can do with digital, journey, right? So 

Akshay: Did you price this as a service, like, per employee? I mean, there is like payroll as a service, which you can get, or did you price this as a product pricing with a subscription or like how did you price this?

The payroll, leave and attendance? 

Pravin: So this is the software part, which is again, charged per person, per month, three years contract, part of the platform. So attendance could, typically we charge a rupee per person per month, per attendance. So if you have 10,000 employees, then it's 10,000 rupees per day is what we charge, right?

And, if you need any support from us, some customization, some training, then there is an over some price that we charge, right? And that leads to your payroll information. Because what we do is that we take the attendance data, we build a master role, we build all the compliance things and calculate your salary.

Now you can use the salary and pay into the bank account. Of the individual through our system. Or you can take the attendance data, take into an Excel and do whatever you want, right? Today we do it for roughly 25,000 people. Payroll as a service, payroll as a software we do for lakhs of people, but as a service we do only for 25,000 people. 

Akshay: But why restricted? Why not just offer it to everyone? Because if you built the systems processes, then you know why not? 

Pravin: No, no, we'll do it. So we started it only with the acquisition of Olx people last year. So we acquired a company with that. We built a service; this is not what we were doing. 

Akshay: You said the Olx people like the Olx, that classifieds. 

Pravin: Yeah. Yeah. They had a, they have five divisions. One of the divisions was Olx people that we acquired.

Akshay: And that was like a job portal or what was that? 

Pravin: Job portal. And payroll as a service. Staffing as a service. So that's the company that we acquired and then we started doing it. We grew it already almost 150% in last one year. Now we are going all out. So we wanted to set the process correctly.

Now it's easy to expand because payroll is something that you have to be hundred percent accurate every day, every minute to the last penny, right? You cannot have a chance ki yaar thk hai iska ek rupaya kaam chala gaya, 

thk hai yaar dy do. Toh vaisa nai hota hai. I mean it has to run 24/7. Right? If you have an onboarding system, if it goes down for an hour, you can still survive. An attendance and payroll solution has to run 24/7. Even if we do a downtime, we do a downtime at 12 o'clock in the midnight to 12:30 in the midnight, right. But just focus on that half an hour window, because that time perhaps no one is using.

Right. So that's reason we wanted to take our own time. Now, this year onwards, we will offer it to every potential customer of ours. 

Akshay: Yeah. Okay. Got it. So now once you have payroll, then the opportunity for FinTech arises like, you know that because now you are giving salary once a month. You could, for example, do like a daily salary.

 There are some startups doing that kind of a daily salary thing and so on. So, tell me about that. Like, what all kind of FinTech stuff have you done because you have payroll information, so, 

Pravin: Exactly. We acquired another company called Oust last year. Through that, we trained millions of people every year, right? So that's a digital way of learning. So then we realized that now we have sufficient data and enough data to do all the benefits that we wanted to do from day one, right? So the first thing we started was insurance.

So we have now partnered with insurance companies. You want to buy insurance for your employees. You come in the platform, you create quotes, insurance will be bought, and you get the best deal compared to anyone else because it's a package better. And since we have a larger volume, the pricing is better, right?

So you can get the insurance. Now, the advantage that you buy through the platform is abi kya hota hai typical insurance. You, have used HRMS system, but you are buying insurance, let's say from. Another insurance provider. You take the data, send the data on an Excel to them, they'll read the data and they'll give the insurance.

The insurance card will come after 15 days. Now 10 people left the job or thousand people left the job in between, again, you have to send the data again this will happen and the process is a daily process. Because people are leaving. People are coming. So we said we'll integrate with insurance companies. Because you already using the system. So now what happens is that you say anyone who joins in Bangalore as a security guard in my location in Accenture office should get 50,000 rupees of insurance.

Now you have set the rule. Now a person comes as soon as you assign the person as a security guard in Koramangala Accenture office, 50,000 insurance gets automatically assigned to that guy. The insurance partner will get a API message that the person has joined. Please include. Immediately API message comes included.

This is the credit or the insurance card number of that person. The person on the mobile app gets the insurance card immediately. Right? So that entire process is done without people intervention. Right? So that's the one thing we have started with insurance. We do it for, again, many of our customers, including Accenture.

Akshay: and this is largely health insurance. 

Pravin: could be health insurance, it could be life insurance, it could be bike insurance. These are the typically what we see, health insurance and life insurance are the two most commonly used through our platform right now. 

Akshay: And how much premium do you collect?

Like what is your, like your total, like your monthly premium total collection or annualized total premium collection, like, just to get an idea of how big is the Insure tech part of BetterPlace. 

Pravin: Number of employees that we insure right now through our platform is more than hundred thousand people,

who are insured right now. And this is something we started in recent past only. So now we are partnering with more and more insurance companies. So we will launch it pan India going forward. And then we are also launching on top of that, that you have taken an insurance, your employer bought an insurance of 50,000.

You want to take additional 10,000 insurance or you want to add your family into it or you want to take a, we're also creating some interesting products. So three months, dengue hota hai sab ko. So I want to buy Dengue Insurance for three months. Pay 20 rupees take that insurance, right. I don't want to spend for the entire year, right because in this segment the ticket size is small.

You have to cater to this specific media. So you can buy now. Those are the products that we'll be launching. Then we launch merchandise as a offering, as a service. Merchandises like companies are buying t-shirts and bag and other things for their employees. Now, again, the same model we have partnered with manufacturers.

You assign the guy that you have to take two t-shirts, one bag or whatever it is, the person comes, joins automatically the t-shirts are delivered to them, right, not manually anymore. Right? The entire process runs automatically. Now we are launching,

Akshay: And what is the GMV of the merchandising business? 

Pravin: Merchandise business. We do roughly right now we do around five crores of monthly business in that. Then we are launching now the part which always excited us, that's the early wage access and loan, right? And then we will advance it to savings product. The problem of any company who is in FinTech Akshay is.

But they do not have data for decision making, and they do not have a distribution channel. So CAC is high, right? What we have, we have the data for decision making. We already have engagement with the users. So our CAC is almost zero, or no CAC itself. So now we, with the EWA we will start pushing very hard from, April onwards.

We are launching it. And I'm very bullish at this because everyone in this space, and this is not only for gig workers, Akshay even if you, let's say I'm a security guard. I'm working with you. I work from 1st of January till 31st of January. My salary will come on 10th of February.

I need my money on 31st of January, not on 10th of February, but this is how it working. So we want to bring this more in the traditional economy, more than the gig economy only.

Akshay: This is like, this credit product is also launched, 

Pravin: no, April we are launching it. Akshay 

Akshay: April you'll launch. You said EWS. I didn't understand that.

Pravin: EWS is early wage access, which is like daily pay. 

Akshay: Early wage access. Okay. Okay. Okay. Amazing, amazing. And this is with a NBFC tie up.

Like there would be a NBFC at the backend who would provide the funds and like you would be a distribution channel for that NBFC. 

Pravin: That's right Akshay, that's right. I mean, we will not take it to our own books. We have no plans right now. We want to partner with many NBFC and create a lead generation and collection model on top of it, because we know who should get it.

We can do the underwriting algorithm. We have a very solid underwriting algorithm in place which we have been testing trying for last few months. And we have a collection engine, which because of the payroll integration, so we can collect it automatically. And that's where we'll focus. We do not think right now we will go our own NBFC but let's see how business pans out over next couple of years.

Akshay: And collection would be like totally automated hundred percent. Because from the payroll only, you'll be able to do the collection. Like you don't even need to ask the person to pay. Like the employers pay out from that you can directly deduct. 

Pravin: That's right. That's part of the contract that if you've taken, it'll be deducted.

So contractually you have to do it. But it'll be automatic. Yes. 

Akshay: Amazing. Amazing. So I guess, the big challenge, as you said for FinTech, InsureTech companies is customer acquisition cost, which in your case is completely zero. Does that translate to a better margin for you or does it translate to lower price points for users or like, how does that play out?

Pravin: We are looking at reducing the price point for the user, actually. So pass the benefit to the user. It's insane. Per month you charge 3% interest rate, 36% annualized, sometimes 50%, and all, if you're, if you and I take the loan, it'll come at might be 14%, right? Why 36% to that guy? So typically you charge 36% because they're delinquency, that means out of hundred people, five people are not paying.

And hence your charge more interest, but you are charging more interest to the good guys who are paying you.

So I really want to bring it down to a sustainable model of 18 to 20 percentage. Rather than 36 percentage because that's where your delinquencies go down. Your cost of capital goes down, your CAC goes down, and hence you can do better margins on it. 

Akshay: Amazing. So like, if you were to do a better future gazing, like say five years down the line, will you largely be getting your margin through FinTech, InsureTech or will it be like, with the other businesses giving you the low CAC, which powers FinTech, InsureTech margins, or will it be like each of these businesses contributing to margin?

What will it look like five years down the line? Because these are early products right now, the numbers may not reflect the, what the stable state will be, but what do you think the stable state will look like? 

Pravin: HRMS will give you the, will give us the best revenue and the best margin. Akshay so the complete HRMS platform that I spoke about from sourcing till exit, including onboarding, KYC, ATS, attendance training, payroll compliance, that would be the largest part of our revenue as well as largest margin, right?

That's where the growth happens. FinTech and all, I think would contribute FinTech, InsureTech and all those things put together would be around 20 odd percentage of our the entire marketplace services would be around 20, 25 percentage of our total net revenue is how we see right now. But SaaS would be the game changer.

And this is something which is like required by everyone across region. So today we are in India. We acquired a company in Indonesia. We'll go live in Malaysia next month, then going out all across South Asia, middle East, and everywhere. I have been in last few months. This is the need, same as India SaaS product and services on top of it.

Akshay: Is this a conscious choice? FinTech fundraiser has been a lot more aggressive in the last two years, probably 500 million dollars those such companies would've raised. But you feel this is only going to be 20% of your margin. So that's a conscious choice? 

Pravin: FinTech if you look at while the capital raises happened, right. That will be a very small number 

Akshay: Because of CAC, customer acquisition, which you don't have. So, I mean

Pravin: That is EBITA part, CAC comes into EBITA actually. But I'm only talking about the net revenue, which is like, you paid the cost of capital and what is your net revenue? So they, might have a book of, let's say hundred crore, let's say in hundred crore of book value.

Your net revenue is only six percent comes, rest all goes to the bank and other things. Right? Now, you with hundred crore. So to get to hundred crore revenue, you have to get a book of thousand, 200 thousand 300 crore rupees, right? Of your book running. In blue collar, that is a large amount, right? Because the ticket size will be like 2000 rupees per person, 3000 rupees per person, 5,000 rupees per person.

That is why we are looking at, SaaS revenue, on the other hand, per person, if you have, let's say you are, having hundred thousand employees. You'll take SaaS for all hundred thousand employees, but my FinTech products, my credit product might be taken by only 10,000 of those hundred thousand people, right?

So my per person revenue on SaaS is much higher versus per person revenue, if I divide that 10,000 people into hundred thousand people, right? If I calculate for the entire hundred thousand that revenue is smaller, that's the reason I said the contribution is here more and this contribution is still significant. But it's the SaaS revenue would be always more. 

Akshay: So, I wanted to understand your learnings from how to make an acquisition successful.

You told me about that training company which you acquired. Tell me a bit about that and how you integrated it and, how it benefited getting acquired by you, how does a product benefit by getting acquired by another company? Give me some of your thoughts on that. 

Pravin: Sure, sure. Akshay, so I think first of all, it's a very, very important decision to acquire a company. You do not acquire ki you are going for a in a shopping mall, found a shirt. It has to be a very long term commitment. To your customers, to your employees, to your shareholders. So there's a lot more thought that goes into it, right?

So a few things that we looked into is whether we should build or should we buy such a solution. Before that we looked into is that, do we really need such a solution, right? So what is the value proposition we will bring it to our customers. Is there a need? Is there a, some kind of loyalty amenity that we can build up with our customers?

Can we get more share of wallet and so on, right? Once we were convinced that this is a required solution, it was a question

Akshay: your customers were asking you for training like for support and training and you felt that this would increase your share of wallet.

Pravin: That's right. That's right. And we saw that this was the biggest problem and everyone was struggling doing it manually.

And we said, why don't digitize it? Right? They were spending already money to do it, but they were not doing it the most efficient way. So you keep your eyes and ears open, see what's happening with the customer, listen to them, and you make your judgment based on that, right? And then you talk to few customers ki yaar I want to do this would you be interested. And they said yes super interesting, and if it comes in one platform why not, right. So then we decided shall we build it or buy it. Build will take two years; you need to mature the product. Would you lose an opportunity, which is right there in front of you? Would you lose a customer in that case, it's a speed to market. Speed to entry becomes very, very crucial, right? So we did the cost estimation. We felt buying it would be better.

So we started looking at various different providers, right? Who would be the right choice for us? And when you start looking at different providers, you look into multiple different things, right? Whether they're ready to sell, first of all not because you can't buy something which is not ready to sell.

Second is that, is the product technology, the product the stack, which is there is matching with your stack or not, right? So how easy it would be to integrate, because you can't have two different world running in parallel, right? Third is the people, right? Are they thinking in the same direction or not?

You can buy the product, you can pay, but then people are not aligned. Then it'll fail as well, right? Because they have a different direction altogether, different vision, different philosophy, different culture. So we spend a lot of time talking to each other, right? So, once we were clear that this is the path that we'll take we took the product in, but after taking the product, then the next step starts, right?

What is my 90 days, six months, one year roadmap in terms of people integration, process integration. How do we communicate to our customers? We had spoken to only few set of customers, right? But we had not spoken to all the customers. Now you have acquired it, you have integrated it. How do you create a GTM around it?

How do you position yourself to your customers that this is a winning proposition? How do you ensure that the existing customers of Oust, they get excited with other solutions of BetterPlace because you have to do cross-sell and upsell all directions, right? You don't just take it to your existing customer, but you also take your solution to their customers.

Where there is there's a unique different customers, right? So that strategy we worked over six months and fortunately we were successful in doing that. So after that, we acquired Aasaan job. We acquired EzeDox, we acquired OkayGo. Now we just announced the acquisition of MyRobin and we have kind of a template right now on what to do, how to do.

So hopefully we'll be able to do the others as well successfully. But one of the things that I learned, Akshay, whatever you do, whatever product integration, strategy, whatever you have, the first focus is aligning people mind that together we will make it better together we'll make it bigger.

Then everything falls in place.

Akshay: How do you retain the founders? Because you would ideally want the founders to continue to build and scale, right? So what is the mechanism,

Pravin: It's a part of, as I said that there is a alignment of vision. When you buy a company, traditionally you buy a company, you say, I'm the boss, you work for me, I bought you.

Right? But what happens actually on the other side, if somebody buys me, let's say somebody acquires BetterPlace and they want to retain me, but what will run in my mind, I'm a founder. I'm an entrepreneur. Let me run as an entrepreneur, right? I'm not an employee here. Give me the freedom to run this as my company.

And that is what we do. Second is that what is my incentive, right? I'm not here for salary anymore. If I have to take a salary, I'll start another company. I have enough money, right? Because you have already paid enough money that they'll earn over the next 10 years as, or 20 years, 50 years as salary, right? So people are working then for a purpose, the purpose is aligned, right? And then you create an incentive around that purpose that okay, you are still running this as your company.

You are the founder. You are the entrepreneur, and I am there only to help wherever you need help to grow the company. I'm not here to boss you around. Right? So that has to be very, very clear. That's the first part. And second part is of course you have your own agreements, processes in place, SHA and everything.

So there is there's contractually also you do it, but contracts can be broken anytime. In my view it is all about alignment is what I strongly believe in.

Akshay: So like the founders get some cash and some would be equity in BetterPlace. So that there is long term alignment. 

Pravin: So we always do Akshay this is a very important point.

We always do cash plus stock. So cash is basically to ensure ki you have something as you exit but stop because you looked at a long term value creation for all the shareholders, including yourself as a founder of that company.

Akshay: In like this two-year period of 2021 to 2022, you raised about almost 65 million dollars which is like a I think probably amongst your peers you would be the most well-funded and not just amongst your peers, but across sectors.

So tell me about that. Like how did you pull off like such a feat? It is quite an achievement. I would personally say.

Pravin: Thanks for that. First of all, I think we were just lucky we did our race during the most difficult times. Fortunate or unfortunately, right?

So in 2020 we did it at the middle of Covid when people were pulling out 2021, we did it again when the third wave hit, unfortunately we were at the wrong time and 2022, when everything was better in the early part of the year, we didn't do it. We did at the, towards the end when funding winter had come in.

So it was at, it was always at the wrong time, but we were lucky. I think the reason are twofold in my view Akshay. One is that we are a company that believes in creating tangible value, right? So it's a very sustainable business model that we have. If we have money or we don't have money, the business will continue to grow and run.

Money is helping us to grow it faster. But we don't need money to run the business and grow the business. It is only expanding the business. So people appreciate that fact that it's a very sustainable and in tough times we become the darling and principle that people say, okay, if nothing happens, at least this will give me 5x, 10x return. If not 

Akshay: I guess irrespective of economic conditions you would not get hit, right? No company will want to cut what they spend on BetterPlace because you are an integral part of how they operate. 

Pravin: Without us, they cannot scale. So it's a win-win for us. Every issue that comes up is a tailwind.

It's not a headwind for us, right? That is number one problem, and number two, I think you already mentioned, is the purpose and opportunity will never die down. So if you look at this opportunity in Asia, we are the largest now if somebody has a big fat money, so at least we'll be considered first. Now, whether we take it or they do not get convinced with our modal whatever, then they'll go to the next one.

But as a leader, when on the list, if you prepare as a VC, that five companies I want to invest, we'll be always there in that list and hopefully always number one, right? That's how we see ourselves right now.

Akshay: Can you help me understand, like, as you said, if a VC was to say, okay, I'm bullish on the blue-collar workspace and you will always be in the top consideration. So what are the other companies which are operating in this space? How is each company positioned? I mean, each company would have some different kind of positioning and specialization.

Help me understand this blue-collar workspace sector.

Pravin: There are three distinct types of companies, three to be honest. One is the traditional old companies who are doing the payroll for the blue collar. Teamlease and there are many such companies who are not public as well. Right?

Akshay: Okay. These are like what we would typically call as third-party staffing companies. 

Pravin: Third party staffing companies, right? And their VC is not looking at investment in that sector because that is not going to scale the way they want to scale it. Right? 

Akshay: That's not a technology player really. Like that's,

Pravin: that's not a technology player. The second is the vertical players, right? Like, Apna is a job board or Refyne is a EWA, or there is this early wage access or loan, right? FinTech company. So that could be a vertical play on that or there isn't a vertical play on skilling, but VC's have funded that those companies as well, Apna has got a lot of funding, Refyne has got lot of funding and so on, so forth, right?

So there is a lot of money that has gone into that. But that sector has its own challenge because LTV in a blue collar is per person for a vertical solution is very small. So your CAC will be always higher than your LTV which came in. Now if you see everyone is looking into a comprehensive platform play like BetterPlace, right?

So we were the largest and the largest in India. Now we are the largest in Asia. The company which was the largest in Indonesia. We acquired the company, which is largest in Malaysia we are acquiring. And we will go into, so they basically, like, if you read anything new right now from a VC point of view, for a blue-collar segment in future, they all talk about the comprehensive platform because of the reasons I mentioned.

So in Spain the company which is doing fairly well is jobs and talent, right? In US, if you look at their company like Upwork, which is doing really well, right? So there are companies in other regions who have also started coming in a similar fashion, 

Akshay: This company, MyRobin that you acquired what was the rationale behind that? What do they do?

Pravin: So MyRobin is the largest when it comes to gig staffing model in Indonesia. They have large number of customers.

Some of them are like Shopee. And then so on. So they basically provided technology platform when you need resources, right? So for example, you want 50 people in next one week for one month. They will take care of that on their platform. They have 3 million job seekers on the platform. They manage roughly 10,000 plus people every day from a job opportunity point of view.

Akshay: And the money flows through them, like they handle, 

Pravin: and they take a fee for the flow of the money, right? So for us, so when we look into Indonesia or Asia, we wanted to get into, first of all, South Asia. That was very clear. Then we chose Indonesia because of similarity with Indian culture.

Digitization is taking place, but still behind India. Population is very large. Very, very eager to use technology in every aspect of life. So we had very clear picture that, okay, Indonesia has to be our first option in South East Asia. Now we look into multiple different options there. MyRobin came out as the best option, primarily because what the founders and we are completely aligned in our vision.

The teams are completely aligned in the vision. So we have absolute clarity on how we want to move forward. Like some of the examples that I mentioned already. They ticked all the boxes and then we looked into their customer base, very solid customer base. Now with that customer base in the country, with the solid team with this solid growth over the last two years, we now can expand that as well as bring the entire platform that BetterPlace has and even increase the share of wallet and create more value for our customers.

Right. So we saw this beautiful marriage and, then there was no looking back. Okay, let's go ahead. And they were very keen to partner with company, like BetterPlace to also take wings, to fly further down, right? So we, thought this works very well for customer, for people, for shareholder.

Why not do it? 

Akshay: And are you planning to bring that product to India? The like, hiring gig workers, payment flowing through that platform? I don't think there is a comparable product in India, or at least not a large one. 

Pravin: Yeah, we're currently evaluating, we'll bring everything in the single tech stack Akshay finally.

So the offerings will be available across all geographies, right? Not only India and Indonesia, but it'll be available in Thailand and Middle East and wherever we go, because it'll be one single tech stack that we'll have finally. So we are currently working on the roadmap execution, it'll take some time, we have between six to nine months is when we are planning to do the complete integration. And then its available to all.

Akshay: What happens when you do the technology integration? Do you like rewrite the code on which it was built so that everything is using the same language and stack and all that? Or like, how does that happen? 

Pravin: Because if you do that, then you have a hell lot of tech debt, right? That means you have only acquired the customer and the team and you're writing everything again.

So that will create lot of issues. So one of the things that we look at the very beginning of acquisition, is there a possibility to integrate or not? You take the, stack and how easy they can be merge. So we both run on microservices. So its rewriting, but integrating now when you integrate, one is the technology integration.

The second is the process integration, because you have to follow different processes. Third is the customer has been using certain parts. Now you have to migrate the data into the system as well, which is the new system and principle, which is integrated, right? So migration typically takes three months, four months.

So tech integration can happen very fast. The migration can take longer because customer also has a say into that, right? So that is why it takes slightly longer, like I mentioned, six to nine months. But we look at reusing as much as possible. Of course, there'll be certain changes that we have to do specifically creating new APIs, new services for integration.

So the large focus is on integrating, not rewriting. 

Akshay: And this OkayGo, which you acquired. This is like similar to MyRobin right? In terms of

Pravin: Yeah, there are similarities. There are similarities. And this is where we are bringing capabilities of each one. And then we'll have a comprehensive one single landscape.

Akshay: And OkayGo is like India based. 

Pravin: OkayGo is India based. Yes.

Akshay: What would you advise to the listener who is thinking of starting up, who wants to be a founder, any advice you'd like to share with people about before they actually jump into the journey of entrepreneurship?

Pravin: That's a very big thing to answer. I'm not sure how I'm capable of doing that Akshay but like, let me take a stab and experience my thought process. I think as an entrepreneur, what runs in my mind all the time, right? Is chaos is frustration, it is uncertainty, it is opportunity, right? So these are the things which are running all the time.

So as an entrepreneur, first of all, you should be very happy with what you are doing. You should be very; everyone says it is not possible. You should be absolutely convinced this is possible, right? Second is that you love it. You just fall in love because you, when you fall in love, you do everything around it, right?

Even if you were not in love before starting, but once you started, you fall in love with it, right? Third thing is that I think most of the time we think about survival and what's due or valuation, but we should think about really big and creating value for our users or customers, right? If you think that money will pour in some way or the other, even in the difficult times, which we have seen for ourselves as well, right?

Fifth is the patience is very important. Patience is very important. I think especially in a market like BetterPlace it takes sometimes longer journey to create a sustainable model, right? So patience is very, very, very, very important in my view. And sixth and last one is; have great people around you.

People who are who are challenging you. So one of the philosophy that we follow we only hire people who can become my boss. We do not hire people who works under me. So people who tell me what to do, people who drive me, people who guide me, people who order me so they can become my boss at any point of time.

That's the philosophy that we follow, have people who run it so you can go home and sleep at times. Right. So that is the basic thing.

Akshay: How do you attract people who are smarter than you? Like people whom you could make as your boss? Like, what's the way in which you run the hiring function? 

Pravin: We, first of all, we look at that can we have a coffee and a drink and talk about anything and everything other than work together. So that's the first thing.

Second thing is that the person is able to take risks because taking no risk is a bigger risk in our lives. So can you think big? Can you be entrepreneur? Is the leader, is the person looking for his or her own success or looking for something, creating positive, right? Because success follows if you have a great team, not for yourself, right?

So third thing we look at is the person really happy in life. If you're not happy, you cannot create happiness for your customers, your employees, your partners, colleagues, whosoever, right? And the fourth thing that we look at is the creative thinking, podasius thinking, right?

If you have those things, then it works in principle. That's how we go about from a leadership position or anyone for that matter. 

Before you go……the analytics only tell me so much, I want to hear what you feel and think about the conversations.

Mail me at ad@thepodium.in with your comments & feedback or if you just want to hear my comments on your startup idea - I love getting your emails!

Until the next founder's thesis📕,

Your host, AD