Discover more from The Founder Thesis Podcast | Learn from disruptive founders
Transcript : Powering Hyperlocal Service Discovery | Satya Prabhakar @ Sulekha
Satya Prabhakar founded Sulekha.com in the US in 2002 as a community and classifieds platform for Indians. After securing phenomenal funding, he relocated to India to start up Sulekha, a platform for finding reliable local service providers.
Other Ways to Listen:
Read the text version of the episode below:-
[00:00:00] Satya Prabhakar: Hi, I'm Satya Prabhakar, and I'm the founder and CEO of Sulekha and Pro Manage.
[00:00:06] My father used to teach mathematics in in a college he was head, of the Department of Math my mom used to take care of us and home. And I had a particular handicap in this sense had a pretty bad uh, speech impediment at that time. My aspiration always has been to be a technology based business person. And so while doing NIT I, I tried my best to do well, but I also simultaneously was preparing for over two years and for both IIM entrance and also for admission to US universities for master's degree in computer science.
[00:02:05] There were four IIMs at the time and I had the good fortune of getting admission into all the four IIMs. A, B, C and L I think. Yeah, A, B, C and L yeah. But simultaneously also got assistantship to do my masters in computer science from US. But the lure of America was too strong . So I left this admissions and I went to US. So that's what happened. It was a great experience because I didn't have any programming experience while I was in India. But once you do a semester or two semesters of programming, then you come to the same level as everybody else. It so happened that my school also gave me an assistantship to do my MBA because MBA is quite rare to get an assistantship. Assistantship is both paying your fees and also paying this scholarship for living and neither of which I could afford at the time. So I continued to do my MBA, but immediately after my MBA I did join a technology job.
[00:03:02] Akshay Datt: Where did you join?
[00:03:03] Satya Prabhakar: I went to work at Honeywell in St. Paul, Minneapolis and in St. Paul, Minneapolis I was a, I was an RnD engineer writing mostly operating systems, realtime operating systems, and multimedia projects, primarily for Honeywell's internal RnD and also for other external organizations such as US Air Force. Post Honeywell, I went to AT&T. That was the beginning days of internet, right? It was in the 19 96, 97, 98. So I went to work for AT&T, at that time it was called SBC but later on SBC acquired AT&T and renamed itself for AT&T there, it was more of a business, a technology anchored business development role. Where we, the idea was to take technology and develop products that can be sold. So at that time, we built one interactive setup box, right? Like today you see boxes like apple TV or Roku is there. It was an earliest version of a Roku per se. It's a set, it's an interactive setup box.
[00:04:08] At that time, it was cutting edge because most setup boxes were analog setup boxes where you only could switch between channel to channel. And it came as analog but this setup box was a digital interactive setup box through which you can stream video and have original programming, And we, that project that we did was in collaboration with Walt Disney and Microsoft Walt Disney was supposed to create the interactive experience. Microsoft provided the hardware and the software and the phone companies provided pipes. Exactly. And that was a colossal failure. The thing they, what they what they missed was they thought that the internet transmission is inherently incapable of of handling video and audio only because see, once if you are a transmitter and you're a receiver and the transmitter transmits, any content or a, or data immediately that gets chopped up into IP blocks, right?
[00:05:09] And each block of, now I don't, maybe it's a little bigger at the time. It's about 57 bites long. With the headers and other things. Each one takes a different path potentially to arrive at the receiver and gets reassembled at the receiver for email, it's fine because at the receiver, the email will wait until all the blocks are have come in, assembles it and shows it to you. The fact that it was late by three seconds you wouldn't know. But how would you know? The email came at 10 47, 26. The fact that you should come at 10 47, 23, you don't know. Same thing. With a website, if you're accessing a website, if I, but video has got synchrony properties, Every frame, 24 frames have to display within a second, and your ear is even more sensitive than the eye. You are much more sensitive to audio disturbances than video disturbances. So they thought that because you don't control the transmission, you can't really run a video application on the general internet. At that time, internet was also not was flaky.
[00:06:15] Akshay Datt: It must have been like a few kbps kind of speed.
[00:06:18] Satya Prabhakar: Yeah. Kbps and not reliable in the sense it'll come, but it'll come after six seconds or four seconds. But by the time the video, like just now, your video froze for two seconds and people can't handle it. In the sense that there's, if there's a pause, they think something has gone wrong about it, right?
[00:06:35] Akshay Datt: Yeah. It's a poor experience. Why would someone shift from that analog TV into this if it's going to have stutters and
[00:06:42] Satya Prabhakar: So what they did was they said, I need to control the entire thing, end to end. I will control hardware, I'll control the programming, I'll control the interactive TV guide. I'll also control the hardware of the setup box. I will also control the transmission protocol end to end. The first few are okay, but when they said they need to control the transmission, that became very difficult to pull off because then you need to develop the entire protocol from scratch, and phone companies are not known for engineering talent. So they couldn't, pull it off. If only they had said, we will use the internet.
[00:07:19] They would've succeeded that one call may lead to the failure. So
[00:07:23] Akshay Datt: They wanted a proprietary technology instead of the internet as the medium of transmission.
[00:07:28] Satya Prabhakar: See, because today you have Hulu, you have you have Netflix, Amazon Prime, Z five, all these guys, they don't care about how it gets to the end user. They only control content, right? And they only control the consumer subscription in between it's all, they just leave it , but I have learned a lot in that in terms of how to move. I learned more about how to deal with people, other business, business partners, different kinds of personalities, and but great experience working. I also had a chance to work with the current CEO of Microsoft . So there was a project manager at that end.
[00:08:04] It's an astonishing, race.. No? Amazing. For a company such as that to put the entire responsibility for a company that runs the software for pretty much every organization there is, In the hands of an immigrant who has come in first generation immigrant that speaks a lot both about the company and about him.
[00:08:23] Akshay Datt: So what next after that, AT&T stint?
[00:08:26] Satya Prabhakar: This is before 2007, a few years before that. because I had this urge to write and I felt that there is a need for a platform for Indians to express themselves and interact. So it was a, it was an India specific, Indian specific social slash commercial network.
[00:08:44] What I meant was social means people could write articles and people could write various things and interact and post comments and so forth. And the second one is we made it location specific in a sense of, in a city what are the events that are happening? Primarily, it it was meant, the expression part was universal because they're no such thing as Indian living in the US experience another one. But the power part was restricted primarily to cities in the US. Lessons, local, classified local events, local things. that just actually took off
[00:09:17] Akshay Datt: You were the founder here, like this was your original idea and product. Okay. Yeah. Yeah. Okay. Okay. What would be a comparable product to what you've made and what did you call it? Like just
[00:09:27] Satya Prabhakar: Comparable product to, I'll tell you, comparable product to the social expression part would be Facebook. And the other part would be I would say a Craigslist OLX model. So it's like a craiglist with community element in it where you can have forums and chat, chat on those forums and
[00:09:50] You could chat those forums. It was asynchronous chat and that took off because it's both Indians in India and Indians in the US had a need for connecting digitally because you don't find people with the similar intellectual wavelength in the near vicinity or proximity of where you live. So suddenly you log into this world and you are similar minded people who are curious, who are expressive, who are debating. And plus you had this local connect of, okay, I can look at events I can buy and sell. It's a curious thing only because initially it was about expression only. Then we added the commerce part because expression doesn't feed your children. , you had to make money somehow. So we added the commerce part. And that was in the before 2007
[00:10:40] Akshay Datt: these would be like micro transactions, right? Somebody would pay maybe a couple of dollars for listing some product for sale or whatever.
[00:10:49] Satya Prabhakar: Yeah. And the events' organizers used to pay us a lot for ticketing their events. Even now, Sulekha is the number one events local community for Indians in the US.
[00:11:00] Akshay Datt: Ah, so you called it Sulekha right? From that I think 2002 or three, somewhere around that time when you were still in the US?
[00:11:08] Satya Prabhakar: The few years before 2007. Yeah. But at that time it was mostly a hobby kind of a thing. It's not a serious thing.
[00:11:15] Akshay Datt: But you were still AT&T or, or like you quit your job and
[00:11:19] Satya Prabhakar: I quit my job. Yeah. So in 2007 is where it got serious because we raised our first round of institutional capital.
[00:11:27] Akshay Datt: And you were still in the US in 2007
[00:11:29] Satya Prabhakar: I was still in the US yeah. And we raised a capital from MVP. And the head of MVP, Mr. Actually he led the round and with the condition and not condition, not that he was imposing it on us, it was our consensus that the future is going to be in India and not in the US because we felt that India will perhaps add as many people per week as to internet, as all Indians living in the US
[00:11:57] And that has come out to be true. So that's when I moved in 2007 was when I moved to India.
[00:12:02] Akshay Datt: What was the status of Sulekha by the time you hit 2007? What revenue was it doing and,
[00:12:08] Satya Prabhakar: It was a largely a pre-revenue company. It was maybe million dollars. Yeah. Of revenue million.
[00:12:16] Akshay Datt: And, and you had a payment gateway and all of that for these micro transactions or through some PayPal or something like that?
[00:12:22] Satya Prabhakar: Yes. All set. Yeah.
[00:12:23] Akshay Datt: the commerce was only in the US at that time. There was no commerce in India.
[00:12:26] Satya Prabhakar: Commerce was in the us Yeah.
[00:12:28] Akshay Datt: So India had like a listing option or it was only communities
[00:12:32] Satya Prabhakar: India had, uh, classifieds.
[00:12:34] Akshay Datt: But you were not monetizing it was like free classifieds.
[00:12:36] Satya Prabhakar: No. India is difficult to monitor cause there's no way to pay. Cause there this online payment was not there. So we started as a classified. So we kept it as US, which was still continuing to do this events and other stuff. And India was a classified play.
[00:12:51] Akshay Datt: And this was like peer to peer or you would like
[00:12:54] Satya Prabhakar: p2p peer.
[00:12:56] Akshay Datt: Okay. And, but in the US you would've gone to businesses and told them that, list your events here or list your products here and so on.
[00:13:02] Satya Prabhakar: Events, yes.
[00:13:03] Akshay Datt: That was like through a sales effort that you got that business in for events. And the rest was like, again individuals who wanted to raise something.
[00:13:11] Satya Prabhakar: so in the US in India, what we found is that classifieds while pretty cool in terms of traction, right? People like, like OLX is today are, Woodpecker today there is a lot of consumer interest in wanting to post things to buy and sell.
[00:13:28] Akshay Datt: Craigslist was very like a very hot company at one point of time. Like it used to be seen as today we see Netflix, Facebook, and all at one point of time. Craigslist used to be seen like that
[00:13:39] Satya Prabhakar: Craigslist is, even now it's pretty strong in the US cause it has occupied But what we found is that it's tough to, what do you call make people pay. They don't want to pay, they want to use it, but they don't want to pay.
[00:13:52] Akshay Datt: And so this talking like once you landed up in India and tried to find monetization in India, then you discovered this.
[00:13:59] Satya Prabhakar: Yes. After a year or so, we discovered that classified you get a lot of traffic, but traffic is largely useless from a monetization point of view.
[00:14:08] Akshay Datt: What all did you experiment and try to try and monetize like?
[00:14:12] Satya Prabhakar: Yeah what we tried. But what we found curiously in that is see the product guys are a different breed because the product guys are they're transactional in the sense I, if I want to sell a phone moment, they sell the phone, I have no use for the platform.
[00:14:27] But what we found is there are service businesses. who are always looking for opportunities to grow. Cause if I'm an architect, if I'm an interior decorator or an event organizer boss I can deal with a hundred inquiries a day. I can grow. I want to grow. So my need to be always out there and my need to be known, my need to connect to potentially motivated buyers of my service and my ability, my capability to want to be able to convert them is constant.
[00:14:58] So we said screw products. I don't want to do products, right? I'll focus on the service part of the business, Where there is an intent and a motivation. So I don't know if you know this I think it's is a Greek or Roman there's a thing called the ship of called the ship of theseus.
[00:15:15] Akshay Datt: Yes, yes.
[00:15:16] Satya Prabhakar: Ship of theseus . Different parts kept getting replaced. It's the same, it's known as the same ship but none of the original parts remain kind of a thing. So we started focusing on service businesses.
[00:15:27] Akshay Datt: One, one question here. All this while the traffic was free, like you won't, you didn't spend money to acquire traffic. That was all organically generated.
[00:15:35] Satya Prabhakar: We had never in our history spent money on traffic.
[00:15:38] Akshay Datt: And this was because it was like user generated content. If I'm looking for barber shop near me and Sulekha has listings of barbershop. So naturally Google will give it a high ranking and it'll therefore get organic traffic.
[00:15:51] Satya Prabhakar: Well, we were not promoting these businesses on Google, but we were promoting ourselves on Google so that when people come looking for interior decorators in Chennai, what page would rank and people would click and come, and this is where they find the businesses. So initially we were a service. Now Sulekha has become largely a services based business listing service. And we initially it was listings only. People used to pay us for listings, for preferred listings. And
[00:16:19] Akshay Datt: And this was happening. How did you, because in, in India, I imagine at that time it won't have been easy to have self-checkout and all that happening online.
[00:16:29] Satya Prabhakar: Oh, we, we had a sales team.
[00:16:31] Akshay Datt: You must have needed that. And so tell me about that journey of discovering how to make money.
[00:16:35] Satya Prabhakar: Because we were not new to this online pay, online payment, we created an online, but nobody would pay online. They didn't have means to pay. if you credit cards, if you had any alternate means of payment. So how would they pay even if they want to? And even if they feel that they had the means to pay, they didn't trust you to give you credit. There's a fear. So we had to build a Salesforce. We built a Salesforce.
[00:16:58] Akshay Datt: And how, how did you do that? Did you go city by city and ?
[00:17:01] Satya Prabhakar: We expanded to all the cities and I traveled the cities opened offices and we build that. And in all, I think we had it in about eight cities.
[00:17:09] Akshay Datt: By when you had, in eight cities?
[00:17:11] Satya Prabhakar: By 2014.
[00:17:12] Akshay Datt: And and what was your playbook for opening up a city like How would you go about like?
[00:17:17] Satya Prabhakar: Mostly based upon population, because the four big cities are is a no-brainer, which is Delhi, Bombay, Bangalore, Chennai, Hyderabad these top five. Then Pune, Ahmedabad, Kolkata are the next three. Then we had we didn't open offices, but we had people on the ground in other cities like now Chandigarh, Madurai places like that. And we, we kept growing.
[00:17:39] Akshay Datt: How did you manage the output from these people and, did you like?
[00:17:43] Satya Prabhakar: With a great amount of difficulty.
[00:17:45] Akshay Datt: I want to understand those challenges that you must have faced.
[00:17:48] Satya Prabhakar: Oh, very hard. Very hard. The only saving grace there is in sales, I found that I find that it is quantifiable and the performance is quite clear in the monthly, it's very hard for technology, for product development or other things. And you also have a reasonably reliable yardstick saying that, hey your size is so big. Opportunity is so big. You have 50 people. Look at Chennai, comparable opportunity. It also has 50 people, but it is able to do 1.6 times more than you. What's your problem? We had a good, pretty good analytics. We pretty good systems and data, which we able to do, right?
[00:18:30] So we did that. We continued to grow and we continued to grow. It was there were a lot of competition even at the time they were in, I remember in 19, 2012, 13, a lot of companies got funded. There were at least 30 companies that got funded.
[00:18:44] Akshay Datt: That are of course, the names that we know today. Who else was there? Like serious competitor,
[00:18:48] Satya Prabhakar: Companies like Asklaila.
[00:18:50] Akshay Datt: Ah, Asklaila. Yes.
[00:18:52] Satya Prabhakar: Nowfloats, now floats, here now, something like that, not, okay, so raise reasonable amount of capital.
[00:18:59] Akshay Datt: There was some, uh, ICICI funded Yellow Pages or something like that. Some company was there.
[00:19:04] Satya Prabhakar: Yeah, yeah, there is in India (inaudible). There was that of course India Mart was focused on b2b. There were other guys yellow Pages itself was there, and so on. And there were also outsiders coming in. Craigslist also tried to make an entry in India. And there was other companies that came in. And the biggest fear that we had was of actually Quikr.
[00:19:24] Akshay Datt: Because it raised so much money.
[00:19:25] Satya Prabhakar: Massive rounds of money. It's just we were just thrown off our chairs. They, I think they totally, they raised about 450 million, half a million dollars almost. It's huge amount of capital.
[00:19:34] Akshay Datt: How much did you raise? What was your fundraise journey?
[00:19:37] Satya Prabhakar: See, till that time, we raised about 16 million
[00:19:40] Akshay Datt: till, uh, 2014.
[00:19:42] Satya Prabhakar: 2014, 2015. Yeah. 16 million.
[00:19:45] Akshay Datt: And what revenue were you doing by 2014?
[00:19:47] Satya Prabhakar: we were growing at about 30, 40% a year.
[00:19:50] Akshay Datt: Like double digit millions?
[00:19:51] Satya Prabhakar: We would be around maybe 7, 7 million or so. But we were we were growing. And then around 20 14, 15, we saw the writing on the wall saying that plain listings is not something that will sustain us because the game is going to be owned by Google. Just, I exist a, that, that concept, because Google is saying, I want to organize all information, and they're investing tremendously in the in local listings.
[00:20:23] Akshay Datt: Yeah, like a Google map like listing your business on Google Map is also like a classified listing only in a way.
[00:20:29] Satya Prabhakar: So I was in the US I was traveling with somebody. We wanted to go to a restaurant to eat. He didn't go to Yelp or any focus tab. He went to Google Maps the listings. He found the reviews then we are going to compete head on with a Google. I am an ant, and Google is like an elephant, and that's not the, I mean, we can't fight that war and win. So then as we understood what our customers want, see the SME is cut from a different cloth. SME is cut from a different cloth in the sense he is never profitable, , he's always struggling. He has no money, right? He's short of capital. He wants to grow, but he's not as concerned about a brand. He just wants sales, wants customers. His shirt has only a single pocket, whereas CMO has got two pockets, his own personal pocket and the pocket of his company,
[00:21:17] Akshay Datt: Okay. Okay.
[00:21:18] Satya Prabhakar: And his company pocket is not his money. Not that he is careless in spending. It is, it's a different orientation.
[00:21:26] Akshay Datt: Yeah. He has access to more budgets.
[00:21:28] Satya Prabhakar: And more budgets, and his scale is different. And his horizon is different. He's not saying, if I give you a hundred rupees today, tell me what business you gave me today. He's not as exacting in his expectation of returns, whereas the poor uh, SME he is counting every rupee. Okay. So we felt that guy wants something else, which is that he wants to be connected to a motivated buyer. He's not happy with say, Hey boss, you are there at the top. People are looking at you. So many people are clicking you. He says, what the hell is a click man? I don't hear a click.
[00:22:01] So we transformed the platform into a qualified matchmaking platform. We felt that on the user side also, there is a need, see if you're looking for an event organizer, if you already know a good guy who can do good work for you, and you'll do that. The reason you are searching is because you don't have that person. So if I just throw you 10 businesses at you and say you go figure out which one is the best, that's of no value to you. That's what Google does.
[00:22:31] Akshay Datt: Or, Or even like Just Dial also.
[00:22:33] Satya Prabhakar: Just Dial, yeah. So see it's not in the kitchen your microwave oven that is spoiled. It's a pretty low value headache solving kind of a problem. You really don't care who comes and fixes it. As long as the guy comes, fixes fast and gets out, right? He may charge 300 rupees, he may charge 400. You are not that sensitive to the thing. So it's a pretty commodity service, let us say. Suppose your sister's engagement, okay? You are organizing it.
[00:23:02] Akshay Datt: And you need a photographer.
[00:23:03] Satya Prabhakar: Your only sister, very loud pampered sister. Everybody loves her. You throw a big party, 300 people are coming, You found a good venue or you don't even know a venue, so you want somebody to help you with it. It's the first time you're throwing such a, so you, what is it that you want?
[00:23:19] You want somebody who specializes in that kind of a social events with 300 plus people, which does it in a classy way, as opposed to the first birthday of somebody with 50 guests in a small place. Those are two different things. Third one is if you're a corporate, you want to organize an offsite for your employees. That's a different kind. So not all event organizers the same.
[00:23:40] Akshay Datt: Yes. Yes, absolutely. Yes.
[00:23:42] Satya Prabhakar: What we said is there is value in one, qualifying these guys and profiling them, right? So when you come looking for an event organizer, I ask you, sir, what is it that you want? Mr Akshay, what is it that you want? And Akshay will tell us, listen, it's a social event. It's so many weekends out
[00:23:59] Akshay Datt: number of guests and
[00:24:00] Satya Prabhakar: 400 people. 300 people, right? And I'm looking for somebody, so I understand that. So I use technology to match it with a select set of event organizers who are qualified by me and connect you two. A lot of people ask why is it that you can't enable the transaction? These don't lend themselves to enabling transaction because it's not that you look at four guys, look at the profiles and say, okay, this guy is charging me 1.5 lakhs let me pay 1.5 lakhs.
[00:24:29] Akshay Datt: Yeah, no yeah, you need to have that slightly more engagement, you need to engage with multiple people before you finalize.
[00:24:36] Satya Prabhakar: You wanna talk to them, you wanna ask them questions, and then you wanna negotiate, right? You may want to say, listen, my budget is one lakh. Then the guy will say, I suggest you take out this part of the event and we do it like this. So we built it on that, and it was a phenomenal success in terms of our ability to distinguish ourselves from everybody else in the market.
[00:24:57] Akshay Datt: Okay. I wanted to understand from a product perspective a little bit.
[00:25:01] So you said that you connect them like a curated set of sellers with buyers. So is it like you have categories, let's say Flipkart will have mobile as a category, and then in mobile you can then put filters on price and screen size and so on?
[00:25:15] Satya Prabhakar: We have over 200 categories.
[00:25:17] Akshay Datt: Give some examples.
[00:25:18] Satya Prabhakar: We understood using our data analysis. How do people look for service providers in different categories?
[00:25:24] Akshay Datt: Give some examples of what all categories you've.
[00:25:26] Satya Prabhakar: For example, cater ers, overseas education counsellors, interior decorators. Then we have IIT coaching centers and like that home improvement lawyers, advocates, business counsellors, anything where the service value is in excess of about 10,000 rupees.
[00:25:43] Akshay Datt: . And, so like the moment someone types event managers, then it would show them filters. Like you can apply filters on size of like audience, how many people, so on and so forth. And and then what, like how do they get in touch?
[00:25:56] Satya Prabhakar: We provide phone numbers. We provide details of both to each, each other. And they talk to each other. They chat with each other through the app. Initially when we started, people were more comfortable with having a phone conversation. Now people are more comfortable with chatting
[00:26:11] Akshay Datt: Yeah, most products have evolved from phone to chat, like even the other classifieds.
[00:26:17] Satya Prabhakar: With chat, the problem is, we all are in a, we are in a different world because we are so comfortable with English. But you go to a small town, like Vijayawada or Hyderabad or even in major cities people have difficulty chatting in the local language through app they don't know how to, what they want to say because the opposition is very difficult. So they want to talk, they want to chat, they want talk on the phone.
[00:26:41] Akshay Datt: So, the business doing the listing can decide to display phone number or to just respond via chat and all that. And then how do you monetize?
[00:26:50] Satya Prabhakar: So we have developed a new model, which is saying that the businesses pay us a monthly platform fee and per connection to a potential buyer who is to them, we charge them. That businesses liked the lot because they felt it is, they're not paying for just being there and not knowing what they're gonna get for it. Here for the first time, a platform in India has come to them and say, you pay me when I deliver value to you. And the value to you is a verified, motivated, newly minted consumer who was looking for you. Not, sorry, we're not looking for you. Who is looking for your city category. If you're an event organizer in Hyderabad, I'm not going to connect you to an event organizer looking in Ahmedabad nor am I going to look connect you to a guy who's looking for an architect in Hyderabad, I'm gonna connect you to somebody who looking for an event organizer in Hyderabad.
[00:27:46] And in some categories we went even further by breaking up the city into zones.
[00:27:51] Akshay Datt: Like education counsellors you would want near you.
[00:27:54] Satya Prabhakar: Yeah. Coaching centers, people don't wanna travel more than four, five kilometers. So we did that. So that's what we did. It is awesome. Before covid that quarter, we must have served about 45,000 businesses.
[00:28:05] Akshay Datt: Pay per lead model. Is this prepaid or postpaid? Do they have to top up a wallet and then you deduct from that wallet? Every time a lead?
[00:28:13] Satya Prabhakar: Always for all of our businesses, it is, it's prepaid. I will not chase you for money.
[00:28:18] Akshay Datt: So they have a wallet and from that it gets deducted each time they get a lead. Something like that.
[00:28:23] Satya Prabhakar: Yeah.
[00:28:24] Akshay Datt: Okay. Okay. Okay. And how do you curate the listings? You said that you want listings to be curated with data points about them so that you can do better matching. So how does that happen?
[00:28:34] Satya Prabhakar: We we have sales team. We have, we, we have an onboarding team.
[00:28:38] Akshay Datt: So this happens through a call where somebody will talk to that business and.
[00:28:41] Satya Prabhakar: We do their, we get their profile information, we get their contact, we get their, all the other stuff. Cause we have to establish ourselves that it is a, that it is a reliable business.
[00:28:52] Akshay Datt: Okay. Okay. Okay.
[00:28:54] Satya Prabhakar: We don't know all the time, but we have the ticks, we have to go farther than just a general listing. We collect their business contact information, their service tax information, GST information so on.
[00:29:06] Akshay Datt: Yeah. So any business listed on Sulekha is like a business which has gone through KYC and in terms of their legals entity status and things like that.
[00:29:14] Satya Prabhakar: Yes, of course.
[00:29:16] Akshay Datt: And any business, on Sulekha is a paying business. You don't have freemium model where
[00:29:21] Satya Prabhakar: We do, a freemium guy is a freemium guy in the sense he's, he stands last in the queue. Yeah.
[00:29:27] Akshay Datt: Okay. Okay. Okay. So there would be like a free listing option also where businesses can self list, but to get leads, they would only get leads if there is nobody else in that category or something like that.
[00:29:37] Satya Prabhakar: Correct.
[00:29:38] Akshay Datt: Ok. Ok. Okay. And is it that you can say Silver Plan, gold plan and so on and you get more leads if you are on a gold plan? Like what Just Dial would have, I guess.
[00:29:47] Satya Prabhakar: You can buy as many leads as you want. But oftentimes we are constrained by. How many leads,
[00:29:53] Akshay Datt: Yeah, how the demand is coming in.
[00:29:55] Satya Prabhakar: That's the challenge in that model is in some city categories, you have lot of consumers, but no businesses. In some categories you have a lot of businesses, but no consumers. That imbalance is painful thing to solve for.
[00:30:09] Akshay Datt: Is it an imbalance because the behavior is not online? Or is it fundamental imbalance where there is more supply?
[00:30:16] Satya Prabhakar: Fundamental imbalance in that category.
[00:30:18] Akshay Datt: Okay. Give me examples of,
[00:30:20] Satya Prabhakar: For example, actually internet service. You have consumers who want it, but not businesses willing to pay for it.
[00:30:27] Akshay Datt: Okay. Because there's only these big three Airtel, Vodafone and Reliance.
[00:30:33] Satya Prabhakar: And other side, there are interior decorators there are endless number of interior decorators we're willing to pay because each contract can be worth lakhs of rupees.
[00:30:44] So they won't, they'll pay any amount of money together, but we don't have enough consumers. So they're in the suboptimality of that model.
[00:30:51] Akshay Datt: What would be your average earning per month from a SME or from a small business what would they be typically spending on Sulekha?
[00:30:59] Satya Prabhakar: Business spends on Sulekha between 5,000 rupees a month to a lakh rupees.
[00:31:06] Akshay Datt: What are the kind of businesses that spend a lakh a month like
[00:31:09] Satya Prabhakar: architects, interior decorators and electric power generator guys. Building contractors, building people who, who construct buildings,
[00:31:18] Akshay Datt: right, civil contractors. Okay. Okay. Okay. And so now where are we in the journey? You raised about 28 million in 2015. So that round was to build up this like a platform for service providers to get more business.
[00:31:34] Satya Prabhakar: we did work extremely well. And in 2019 we were getting ready for a listing .
[00:31:39] Akshay Datt: How were you profitable? What was the secret to that? Because for listings, businesses, none of the other businesses are profitable, so.
[00:31:46] Satya Prabhakar: I think, I'll tell you my hypothesis, See, in any listing business right, there are three scenarios. One scenario is if I'm a business guy, if I'm listing, because everybody pays roughly the same to get listed. If I'm listed there, if I am getting lot of responses and I'm getting a lot of value from the platform being listed there, next time when I come up for renewal, you cannot get me to pay more money. You can get me to pay more by the rate of inflation, If last year I paid 50,000, now you can get me to pay 55,000. You can't get me to pay a lakh even though you are, I'm getting three lakhs worth of value from you because your model is boss, this slot cost 50,000 last year it was 50,000. This year it is 55,000. I mean, house rent is the same, right? For some reason you got a house rent for some X money there. A guy comes and says, now you pay me two times more.
[00:32:40] Akshay Datt: So this is like when you're doing space selling, basically.
[00:32:42] Satya Prabhakar: Space selling. Now, the guy who doesn't get value, he won't pay you money next time.
[00:32:47] Akshay Datt: Yeah. There'll be a challenge. Yeah.
[00:32:49] Satya Prabhakar: So you're screwed up on both sides. Monetization of the same asset is better on a pay per use model than his subscription model. That's why we were more profitable, I think.
[00:33:00] Akshay Datt: What happened when covid hit?
[00:33:02] Satya Prabhakar: See, the problem is the categories we were dealing with are all high value categories. Second is they were all in categories that got shut down.
[00:33:10] Akshay Datt: Ah, okay.
[00:33:11] Satya Prabhakar: Home improvement, nobody wants people to come into their home. For two years. Even now, people are wary.
[00:33:16] Akshay Datt: Events also shut down.
[00:33:18] Satya Prabhakar: Organized events. Totally. There was a law against events. Coaching centers were all closed down. Business services were all, so suddenly it was cataclysmic. And that just pushed us behind. And we also couldn't sustain the size of the organization. we had to reduce the size.
[00:33:36] Akshay Datt: Because you, you would've had a large sales team, I'm guessing.
[00:33:39] Satya Prabhakar: Yeah. We had a sales team. And the other problem Akshay we had was that we didn't know the, end the game of Covid, because we never experienced it. We had a playbook of saying, I know how to deal with a 15% shortfall in cash, in revenue, overnight. I can even deal with 25%, but I don't know how to deal with the 80% drop. It just, we fell off the cliff. So it took us ways to re resize the organization for the new opportunity and also be conservative because we didn't know when Covid would lift. And actually Covid lifted after two years. Really? So we said, okay, we'll we'll have a smaller team and rebuild the company back up and reinvent ourselves.
[00:34:18] In Covid we stepped back and we said what do we do? Because the aggregate demand has come down dramatically. We don't know when it'll go back up. So how do we compensate for the shortfall? And in a way, it forced us to reimagine what we do. And we have succeeded in developing a new platform called Pro Manage, we aim both at small businesses and large enterprises. So the thing that we said was, listen why should these customers of mine only get connected to consumers who are coming to Sulekha? See, if you're an event organizer, right? You are not, you just want to grow a business and you are technologically speaking, illiterate, You're an event organizer. What do you know about optimization platforms? Opt Profile optimization, you don't know. And you are looking for help. And there's nobody well organized to help you. Agencies, small digital agencies that says, sir, I'll do optimizing, but they're really not qualified, right? So we said, let us take these customers, right? And also target large enterprises, and you won't believe it. Large enterprises are even more hobbled than an SME, And SME can go and get some local guy to, to optimize his GMB profile, Facebook profiles, instagram, all these things, right?
[00:35:41] But a large enterprise can't do that. We can't do that because it has, let us say thousand locations. How does, how do you manually manage, optimize thousand locations? You gotta put ,an army. Army is not affordable, right? So we looked at it and we said that it requires a different approach, which is a technology and AI driven approach towards digital management. I don't know Akshay if if you heard this number, there are 700 searches per for products and services in India right? So two things have happened in the last year. And these are profound seismic changes in the way we approach life, which is people are wanting to discover products and services and businesses online. They don't want to search anywhere else. They'll never search anywhere else, number one. Number two, they also don't want to, they want to engage with businesses digitally, right? If say your fridge is broken, Samsung is broken, you would rather send a chat via WhatsApp saying that: Please send a service person. Samsung comes and shows you, okay, sir, please pick a slot. You pick a slot, right?
[00:36:53] Done. Somebody comes. That's what you want. You don't want to call on the line, pick IVR junk and wait on the line.
[00:37:01] Akshay Datt: Yeah. And then they'll ask you to read out the serial number and.
[00:37:04] Satya Prabhakar: Businesses both large and small, have to contend with this fundamental behavioral change. A lot of people think this is a marketing exercise. It's not, it's a hygiene, If you have a restaurant, would you say putting a sign board, nice sign board about that tells who you are, your brand and what you do, and it is properly visible to the traffic on the road. Do you consider that a marketing exercise or an operating exercise? It's essential, right? But you can't do it because a listing has got 70 variables. A simple GMB listing has got large number of variables,
[00:37:40] Akshay Datt: And GMB is Google My Business, which is how you list yourself on google Maps.
[00:37:44] Satya Prabhakar: But GMB is not the only show in town. There are others. And being present on others actually influences and accentuates your ratings on Google, the reviews on Google,
[00:37:54] Akshay Datt: who are the others? Like there is
[00:37:55] Satya Prabhakar: GMB is there Microsoft big Facebook pages, Locofi, Sulekha is a listing platform. So what search engines are saying is There are hundreds of millions of small businesses, I can't potentially be talking to all of them to know, which is a good business, which is not. I will use proxies, signals to find out, which is a good business. And the proxies are, if you are been in business for long, if you are also listed on other platforms, if you have a website, if you have a social profile, all these things add to the score, right.
[00:38:28] Akshay Datt: How many people are reviewing you?
[00:38:30] Satya Prabhakar: How established you are, there is authority, then there is love. There's positive love, where there are reviews of ratings and so on. So Searchings look for all these things and like, a lot of businesses don't know, and let us say you are a, one of the large financial banks. You have 5,000 locations, So 5,000 locations times 60 variables there is three lakh variables. Let's say you want to be present on different five different platforms. There is 15 lakh data values that you ought to manage. How will you do it? You tell me you can't do it. So you need a technology, And every profile has got a unique problem based upon the competitive landscape that particular branch is located in. So you need AI to compute the score of this, which is a proxy for how well it gets visible. When people come looking for you and to you they say on a score of one to hundred, you are a score of 60 or 55, you need to move to 70. What do you do to move to 70? You don't know that's not your gig, that's not your expertise. You need help. So that's what we've done is we went and created Pro Manage as a platform. It's got integration with all the major distribution platforms with GMB and and all things. So we have, we can write to the platforms, we can read for the platforms in real time. Plus we have an AI software that analyzes every profile and ensures that the representation of this profile on multiple platforms is in sync.
[00:39:59] And if there are reviews in multiple platform, they all come to one place from where you can respond. If you have enabled chat in all these things, all the chats will come and sit in one place. So it's all a, a sense, unified, extraordinarily powerful and sophisticated air traffic control for your decision results. There are at least about 28, 28 criteria or factors on which Google doesn't allow you to do certain things that, especially when you have multiple locations, branches, right? It won't allow you to do things that by building software on top of it, we are able to do it. There's one unique property that no other audience of no other medium has. That is lead forward purchase intent. If you're watching, let's say, even when you go to Instagram reels, right? Or you go to Twitter or you are watching an Amazon Prime video, or you are listening to your podcast, right? At that point, I'm sitting back, I'm listening to Akshay talk about, to talk to Satya he is making some sense.
[00:41:03] So let me listen to it. At that point, Satya or let's say one Ruby, one girl who is listening to this podcast, Ruby has no purchase in it. She's not looking for anything. She's just enjoying Akshay talking to Satya, hopefully, But that is not the case with search. When Ruby says weight loss clinics near me, that girl is in the market for a weight loss. And 70% of the time, within three days, she'll make a visit. 40% of the time it'll convert into a sale because it's an inside out purchase intent. It's a strong one right ? Now, if I am watching let's say on TV show on ZeeTV, right? There's an ad for Enfield bike. I'm not really looking for to buy a new bike. It just goes by, it looks very nice, it looks sexy. Maybe I should. It's a very weak purchase. It was imposed on a guy with no purchase intent from a advertiser. But the search is not easy, it's inside out purchase intent, so you cannot ignore it.
[00:41:59] Akshay Datt: You essentially do a ranking of leads for a brand and say that this is a high purchase intent lead. And this is a low purchase intent lead.
[00:42:08] Satya Prabhakar: So the Pro Manage is a digital marketing SaaS platform. It is not a lead generation platform. incidental byproduct of that is inquiries, because by optimizing your profile, by improving reviews ratings, by enabling challenge, responding, and by taking care of all aspects, a hundred percent of the time, you'll see a dramatic lift in visibility in terms of people visiting your profile. The conversion also improves because the profile suddenly is rich, is enticing. So it'll happen. But we are not, unlike in Sulekha, we are not holding ourselves to I'll give you 80 leads. We are saying boss, it's a new world. You gotta get your act straight. You, it is impossible for you to do it on your own. Log into Pro Manage, everything will happen for you. The inevitable byproduct of that is engagement opportunities with your prospective customers.
[00:43:04] We have an exciting roster of corporate clients, which we never had before, right? We have people like actually DHL, right? Apollo Pharmacy. We have
[00:43:15] Akshay Datt: anybody with a large offline detail presence essentially would be
[00:43:19] Satya Prabhakar: Yes it is, right? We have over 25 of them and it's all, so that's one good thing that happened cause of Covid. And we are super excited because Sulekha will continue to be a leading platform and Pro Manager will be a marketing SaaS platform. They both can serve customers very well.
[00:43:35] Akshay Datt: What do you see the revenue split between these two platforms to be like, I- I'm sure right now Pro Manage would be small.
[00:43:41] Satya Prabhakar: We believe that this Pro Manage will be close to between 60 to 70% of the total revenue.
[00:43:46] Akshay Datt: Okay. Because these are enterprise clients and,
[00:43:48] Satya Prabhakar: Enterprise clients is one. This is a more the target group is a much wider target group than service businesses only.
[00:43:57] Akshay Datt: Because now product companies like Apollo Pharmacy, they also come .
[00:44:00] Satya Prabhakar: Because we previously, we couldn't sell to product companies, yeah. They didn't want leads. They never, unless it's a high value product, for example, five kilowatt power generator he would be interested. But a guy who sells some mobile phone says, boss, I don't want leads that I ask the guy to commit it for.
[00:44:18] Akshay Datt: You do have a competition here, right? I believe there's this company called Single Interface. They offer something similar, right?
[00:44:24] Satya Prabhakar: Yeah. Yes. Similar.
[00:44:27] Akshay Datt: What is the differentiation between you and Single Interface? Is it like very, very similar or like,
[00:44:32] Satya Prabhakar: In things such as this, Akshay, I don't think either of us are constrained for opportunity. There are thousands of companies , millions of SMEs. I don't think Sulekha is uniquely equipped to serve SMEs at scale. Cause that's what we're doing. Plus we also bring a certain tech innovation is our part of our DNA and the customer success obsession is also part of our DNA, it's like a phone. You can compare two phones and decide which one. A very involved, tech-based SaaS service offering, you can't compare very easily. Oftentimes, because oftentimes what we do is that we we have a connection with the head of the CEO of the company. We have conversations about how to evolve, we are not a ad agency. We are not a BPO I do stuff that you hate to do. I don't wanna do that. That's not my that's not what we thrive on. What we thrive on is I will be your innovation consultant powered by technology and partnerships, of course. And we will also give you tech that makes manual work unnecessary. That's what we do. Yeah.
[00:45:39] Akshay Datt: And how is pro managed priced is it fixed subscription or
[00:45:43] Satya Prabhakar: per location per month.
[00:45:45] Akshay Datt: Okay. Okay. And what would that number be? Or how much do companies spend, like average order value or something?
[00:45:51] Satya Prabhakar: It's about anywhere from, from, $15 to $50.
[00:45:56] Akshay Datt: And this you're saying is like the per location price. So what is the difference? Which one would be 15, which one would be 50?
[00:46:03] Satya Prabhakar: we have layers of services, service offerings. We know we have basic listing optimization, reviews, chat integration with their internal systems, a whole bunch of things that they can pick and choose.
[00:46:13] Akshay Datt: And this would be like a more customized solutioning approach here, right? It's not like a self-service thing where an SME can come in, sign up, and just start using off the shelf?
[00:46:23] Satya Prabhakar: We will plan to do it that way.
[00:46:25] Akshay Datt: Okay. But right now it's more let's say a Salesforce or an Oracle, which you buy, which is-
[00:46:30] Satya Prabhakar: for enterprises, it's a little bit more involved sale. It requires presenting to the CEO, CMO and explaining it. And yeah. It's not , but for SMEs it'll be that Akshay.
[00:46:42] Akshay Datt: You'll have a more easy UI stripped down version for SMEs because they would just manage one location, I'm guessing. Yeah. Like for an SME, they would just need to manage a single location. So your product could be a lot simpler, less complex for them, which they can do with self-service.
[00:46:57] Satya Prabhakar: Even that, I think only half will do that. Other than half, we still have to talk to them. But see, it's hard to communicate to an SME convincingly digitally, unless it is a tangible value payoff. I want to buy a ticket to go see a movie. That 200, he won't question the 200 rupees paying or 150 rupees. He'll pay, because I know I'm getting a ticket or I'm buying a ticket. It's a very well understood value prop.
[00:47:24] Akshay Datt: Yeah. You're not asking him to change his habit. Yeah.
[00:47:26] Satya Prabhakar: Ah, here he has not purchased anything like this before, but you are also not answering the question, Hey, what will I get for it?
[00:47:34] Akshay Datt: Yeah, . Yeah. Yeah.
[00:47:35] Satya Prabhakar: So he has to understand the need for it and the long term payoff.
[00:47:40] Akshay Datt: You, you'll probably need to do some freemium model where they can use for free up with some limited features so that they see the value and Yeah. Then the power users can upgrade and pay. Okay. So what plans for the IPO now ?
[00:47:53] Satya Prabhakar: We don't know yet.
[00:47:54] Akshay Datt: But you are still profitable.
[00:47:56] Satya Prabhakar: Yes, Yes.
[00:47:57] Akshay Datt: Like even during covid you remained profitable or
[00:47:59] Satya Prabhakar: Yes, we have except for a maybe one, one quarter or so. So otherwise we have been profitable. Maybe at break even, let's say. Yeah.
[00:48:07] Akshay Datt: What are like some of those lessons from entrepreneurship that you'd like to share with young founders?
[00:48:12] Satya Prabhakar: There are many, I would say the most important thing is success in entrepreneurship is an AND condition. Whereas failure is an OR condition, for success to happen, multiple things have to fall into place. They all have to fall into place. You gotta have the right business idea and you got to have the right team and you gotta raise capital and the market has to be ready and you got to have the right revenue model. You know, all these things gotta fall into place, and they have to fall into place and hold together for a sustained period of time. Failure can happen if any of those links fail, It's in OR condition, in the sense you can have a great team, you can have a great business model, market is there, but you can't raise capital. You can raise capital. Market is there, but you are an awful manager. You can't get, you can't hold the team together. You are great, hold the team together. You can raise capital, but you are chasing the wrong business model, right? You are, you continue to dig in place where there's no oil, , nothing left.
[00:49:10] Akshay Datt: That's why success is successful startups are so rare, like.
[00:49:13] Satya Prabhakar: Second is I would say ambition is cheap, but actually resolve is difficult, You pick any guy off the street, who doesn't have an ambition, right? Everybody wants to be something because ambition is founded every heart, but actually resolve is not.
[00:49:27] The third one is the resolve should also become stapled with some amount of malleability or adaptability, right? To be organic and to be able to move, flexibly.
[00:49:42] Third one,
[00:49:42] Akshay Datt: yeah. You should be agile enough to pivot if it's not working and
[00:49:46] Satya Prabhakar: yeah, it's, it is hard because the idea that you started with because you were inspired by something. and that inspired by something idea doesn't make money, you ought to find something else.