Any idea what’s common between Flipkart, Ola, Swiggy, Zerodha and 6000+ other Businesses in India and South-East Asia?  They all rely on Exotel for their customer communications, no matter the size, scale, or industry within which the company exists; Exotel has the a product-solution for all of them.  In this episode, we talk with Shivakumar Ganesan, Founder of Exotel to learn more about his journey and challenges building and scaling the company. During the episode, Shivakumar talks about his experience with VCs & Angel investors, having Ola as a customer and much more. Notes –  03:48 – Early days, Family, background & career 06:40 – Entrepreneurial attempts before starting Exotel 09:51 – Initial Problem statement and solutions 13:50 – Raising money from Blume Ventures 18:30 – Scale and Customers at $1Mn ARR 30:21 – Cofounders leaving the company 37:30 – Dealing with thoughts about quitting 41:55 – How did A91 Partners chose to back Exotel? 49:38 – Current Capabilities & Scope for growth 52:15 – Proving naysayers wrong by building a $60Mn ARR SaaS from India for India 53:39 – Key lessons from his journey 55:56 – Advice for understanding market size   Read the full transcript here: Shivakumar 00:01 So I went to drop my wife off and I was taking a walk in Jainagar somewhere and then Ankit Bhati from Ola called up and then he said, Look, this is what we want to do, drivers want to call customers, do you have some API’s using which we can connect that to? And I was quite surprised because I was like, hey, both of them have their own cell phones, so why can’t they just talk to each other, why didn’t they put an API in the middle and then call the number I literally said, Yeah, of course, we have these API’s. And at that point, we hadn’t really exposed it because like I said, I was trying to build India’s first public internet contact center. So that was my goal, although we had these API’s inside. So Ola ended up becoming the first real user of our API platform. And they use it for number masking. Because privacy was a big deal. And we didn’t really know about any of this until the US days. I jokingly tell people that there was a period of about a year when we were actually making more money out of Ola than Ola itself.  So roughly they were doing about 2.2 phone calls per ride, because nobody knew how to use this app, some new flashy, shiny thing. And drivers will call up and say, are you for real, are you really going to take the ride. And then customers will call up and say I’m standing here, where are you? And so lots and lots of phone calls. And then our volume really skyrocketed. And so we were looking at about like two rupees per ride or something on ola. And so that was really the starting point for enterprise, our enterprise journey and the platform journey. Siddhartha 01:31 Dear listeners before we dive deep into the podcast, let me thank our sponsors, Prime Venture Partners. Prime is the first institutional check, in the category creating tech startups like Dozee Mfine, Mygate, Niyo. Prime is now investing out of its fourth Fund, which is more than 100 million dollars. Today I have with me Sanjay Swamy Managing Partner Prime ventures, Sanjay prime has played a key role in developing the fintech startup ecosystem and the financial services ecosystem in India. Can you elaborate on that role and how the next few years of FinTech look like for India? Sanjay 02:12 Siddhartha FinTech in India is a never ending opportunity. Because people are either unserved, underserved or poorly served. Whether you’re a small business or whether you’re a consumer, there is always a better way of accessing financial services. Three areas that we look at and they keep us still very bullish about the sector. One is just better customer reach, better customer service, better customer experience for laser focused FinTech solutions. Second is verticalization of FinTech, whether it’s for logistics, whether it’s for health education. And the third is infrastructure plays where companies are actually now FinTech enabling the incumbents, whether it’s a bank or an NBFC. So these are three areas that we are still very, very bullish on. And of course, not to mention the entire web three crypto space, which we see is going to be a huge opportunity here. Siddhartha 03:02 So let’s dive straight into this week’s podcast. Today, I have with me someone special, someone who had been dismissed a long while ago, someone who was not considered fundable a long time ago, and today runs one of the most hottest companies in SAS in India. VCs once said your company is not fundable. Welcome Shivku, Shivakumar Ganesan, founder of Exotel to the 100x entrepreneur podcast, Shivku, so glad to have you here. Shivakumar 03:40 Thank you. Thank you so much for calling me pleasure to be chatting with you. I never thought I would find myself in a podcast. So it’s cool that I’m here. Siddhartha 03:46 Shivku, before we begin, we’d love to learn about your background before Exotel, where were you born, your family, your parents? What brought you into entrepreneurship, the mindset? Shivakumar 04:00 I was born in Chennai to a private company manager, Father and House Maker mother and studied in some of the best schools in Madras. And I’ve always been academically oriented. And looking back, I tend to associate most of that to my middle class Tambaram societal culture where academics are highly appreciated or in general mediocrity was a big no. So whenever I did very well in school and got the first rank, everybody was very happy. And when I didn’t, then they were not. And I think that automatically puts me into a cycle of trying to be as successful as I can and achieve as much as possible in terms of achievements and I would say that that’s largely what put me in this, What’s the next big thing to achieve sort of a mindset. So from school, I went to BITS and then did very well in BITS, then I joined Yahoo as a software engineer and did very well there.  So the dream run actually changed a little bit for me when I actually wrote GMAT and GRE for some reason, I actually didn’t do very well with either GRE or GMAT. And so I automatically didn’t land up with an MS or an MBA abroad. And so this is really where I think my life story started diverging with some of my other friends. Unfortunately, my dad also passed away around about a time when I just got my US visa and internal transfer to go to the valley. And so I didn’t do that either. So I found myself here, I am going to be in Bangalore, and I was already following blogs from the valley, reading TechCrunch and those days, blogs like Yegor, reading books about Steve Jobs, reading lots of blogs. And also I was working with the apples, I was quite plugged in with what everybody was up to, Google was just going to go public.  So it was a great time to be in engineering.  In software, specifically the internet, I learnt a lot at Yahoo. And I would say that in about five years, I became what nowadays we call a full stack developer. By that I mean, if I had a laptop, and three months of time, I could churn out a product end to end myself without anybody else. I knew how to do wireframes and design and front end and back end and server, whatever else that was. So that was really the context in which I kind of got myself into entrepreneurship. Siddhartha 06:39 And what made you start Exotel? Was Exotel your first company that you started? Shivakumar 06:45 No, actually I attempted to start multiple times before I actually ended up starting. So there were ideas around creating a navigation device for India, there was a service that I wanted to create, which informs people about what they can see in TV channels, there was going to be a software meter for auto rickshaws. So there were many POCs that I’ve done in the past, sometimes with friends, but none of them of course, just from the ideas that I just told you, you could imagine that they’re not really going to take off anyway, I didn’t know that then. But I pursued them anyway. So what I was actually doing was a bunch of side projects even then, and I would famously call a bunch of people and try to pitch my idea and try to see if they would join. Of course none of them did.  So I quit Yahoo to start this so-called GPS navigation device, a hardware product that I wanted to buildit. So for some reason, they couldn’t actually perceive it because I was not really a hardware guy. So I didn’t really know how to do some of that. So Flipkart was around the corner. So I went to join them. This was still very early. But somehow my mind was not in. I was not very satisfied. They were doing very well, of course in a great company. But my mind was not really satisfied, because I promised myself that I would do a startup and I quit yahoo. So I started off with trying to recreate a C2C marketplace, a bazaar where people like you and I can buy and sell things amongst each other. So you could think of it as the New Age classifieds business. And so that was what actually started. And in those days, smartphones hadn’t been invented yet. So it was still the iPod genre. So voice and SMS were the ways to connect people. And then I actually created a voice SMS internet Interplay where individuals can buy and sell things amongst each other. And so that was actually the seeds of Exotel.  So I’m not really from a communication background or a telecom background. So it was my endeavor in trying to scratch my own itch that ended up with the company. So I’m actually its first customer myself. And that also explains the why Exotel question, because I knew very well the problems faced by business owners and entrepreneurs in trying to put together a communication system because I actually attempted to do that myself. And I was quite unsuccessful in doing that. And so I don’t want any of those guys to go through that problem. So when I pivoted, that became my mantra. That became my goal to ensure that people don’t go through the same kind of nonsense that I went through when I tried to put together a communicating system. Siddhartha 09:18 And you graduated in which year from BITS? Shivakumar 09:21 2004, Computer Science.  Siddhartha 09:24 And 2011 is when you started working on Exotel? Shivakumar 09:28 That’s right. So 2010 I was working on Roopit, which was my C2C marketplace company and in  2011 I started working on Exotel. Siddhartha 09:36 and you quit your job at Yahoo in 2010.  Shivkumar 0:940 That’s right. So I quit my job and I got married.  Siddhartha 09:942 Got it. Your wife didn’t know that she was on for a roller coaster ride. Shivakumar 09:44 She didn’t know, she certainly didn’t know. But fortunately for me, she loved me enough that she didn’t mind either way. Siddhartha 09:50 And tell us about the initial years. Let’s dive deep into the problem that you were trying to solve back in 2011, in Exotel. Shivakumar 10:00 Initially I wanted to put together a communication system, a phone number in which hundreds of people can call in, and the system would now connect them to other folks, buyers or sellers. And then they can kind of have conversations to do business transactions. So this was like a many to many remote bazaar, if you will read, all happening on like one phone number. And then there was also obviously search involved as well. So people could also send SMSs to this number, and then they can get back SMSs in response, and in which there’ll be a phone number, and then they can talk, so this was actually the original problem statement. There was actually already a company that was doing that in the US called Twilio.  So for a long time, when you searched for Twilio, in India, you would actually see that the question that I had posted in their consumer forums would turn up as the first link. So I would argue that I was perhaps the first person to ping Twilio and ask them, Hey, where are you guys launching in India? And naturally, as it’s been about 11 years, they are probably just about launching in India now. So, I couldn’t have made it for 11 years. So then I just tried to figure out what it is that I need to do to put it all together? So I spoke to telcos, bought some hardware, installed some open source software, hooked up a bunch of cell phones through Bluetooth and hacked them to receive and send SMS from a database. And then I had like this, a laptop like a Chromebook connected to a server with two, three cell phones connected, this was actually like Nokia phones, wrote some s40 s60 code, and then somehow got something up and running and working. This is really how I got started.  So it was a very beg, borrow, steal kind of a solution that I did. And then a few of my friends would turn up and then ask me, Hey, this looks like a cool solution. Can I use this for my company, and then a lightbulb moment happened. So I forgot that many other people also have the same problems that I had. So I had to choose between a company that wasn’t really making any money yet, which was my CTC marketplace, b2c idea. And then on the other hand, I had this communication technology API. Nowadays, people call it CPaaS, there was no name for it, I started. So now the industry is called CPaaS communication platform as a service. So people are willing to pay for it. They wanted API’s using which they can hook up and send SMS and voice calls and things like that. So it then became a no brainer. So I chose the one where people were willing to pay for. And so that’s what became Exotel. Siddhartha 12:32 And how did you find your co-founders?  Shivakumar 12:33 These are the same set of people with whom I actually, every time I have a new idea, I’ll go and pull people, take them for a cup of coffee and pitch them. So Ishwar was one of them. Siddharth Ramesh is another one, so Ishwar and I worked at Yahoo. So it was my sidey in college. And so they actually told me no many times before, and maybe because they were feeling guilty that they have told me no, so many times, or maybe the idea was a bright idea. When I went to them with Exotel, they actually said, Hey, this looks like a good idea and come and join. So these were just two of the, I don’t know, dozen people that I always fall back upon to pitch an idea because these are basically the two of the dozen people that I respected, whom I’ve always wanted to spend eight hours of my working life with.  So that’s how I got Ishwar and Siddhartha,Vijya was my junior, so he was another star, he ended up starting to belong to and all of that. So Vijay, I found him in a bunch of alumni meets in entrepreneurship events and found it to be extremely energetic. He was actually responsible for getting one of our first customers which was Practo. He was actually working in Practo. And then, at some point, there was nothing for him to do in practice. And there was a lot for him to do in Exotel. So he came on board. Siddhartha 13:50 And tell us about the initial first journey. When you started up, you’re really like, what can I say. Shining in the eyes of VCs, Bloom reached out to you many times. And that’s the story I would love to learn. How did you and bloom partner with each other? Or what was the initial phase of the first few years. Shivakumar 14:16 So I think it was quite interesting because many tech startups were just beginning to form at that point in time. And none of them had any intention of trying to figure out the communication piece because they had their own problems to solve. And I put it together like a drag drop engine and people could set up their contact center or phone system in a matter of a few 10s of minutes. And naturally, it’s a very attractive thing for anybody to see. And so many customers actually quickly lapped it up. We went from like zero or one with zero customers to about 20-30 customers in like a matter of a few months. And that subsequently increased my own self confidence that we found product market fit and in those days also First of all, they weren’t like lots of entrepreneurs. So it wasn’t a thing to start up yet. And many of the angel networks, Bloom was perhaps one of the early institutional investors, they were actually quite impressed with what we’ve done. So many of those guys were actually interested in investing.  I also thought of myself as a good storyteller at that point in time. And so I was able to present myself in a charming way that attracted many of the angel investors to come in and talk. And for a little while, it was a problem of plenty. We had maybe about three or four term sheets, which is unheard of in those days, actually. And I had to choose between them. And there was a bit of content that Karthik Reddy from Bloom has written online about how the original Shark Tank of India, that I was actually a part of. And then, in the side, I actually ended up taking a deal with Bloom and, but the producers of the toolbar preface that I’ve taken it because I was supposed to take it on the show.  So we did some Jugaad. And then we actually got Karthik as one of the judges. And then the event itself actually happened in Bombay Stock Exchange. And I very fondly remember that. I went and took a photo below the sideboard that says Dalal Street, and then I’d be signaling in that photo, saying one day, someday, one day sort of thing. That photo is still there, me. And I’m actually quite amazed that after a decade or so we’re actually talking about the possibility of taking the company public in India. And I’m afraid that actually that might come true. And in this sense, I’m quite literally living my dream of ten years. Siddhartha 16:38 Tell us about, if you remember which year which month you signed, that term sheet with Bloom. How much did you raise at roughly what valuation at that point in time? Shivakumar 16:48 You’re asking me for very old information, let me see. So this must have been 2012, sometime in March, maybe that’d be about a year after I started, I raised about two and a half crores little less than half crores at 10 Crore post money valuation. So they got a chunk, they walked away with almost 25% of the company for a little less than $5 million. Because these numbers look ridiculous. Today, the term sheet looked even more ridiculous, the kind of terms and conditions that I had accepted looking back 90% of that term sheet was nonsense. But of course, in those days, there weren’t too many people advising us and there wasn’t really a startup community or anything else. But it was lots of mistakes, lots of experiences. But that was the amount. So and for some reason, I thought raising that much is a big deal, so I actually threw a large party.  There are like some 30-40 people in the company by that point in time. And I thought while I arrived. Future had different plans for me. But at that point in time it looked like everything was rosy. Siddhartha 17:47 And if you remember what was the revenue of the company since you mentioned 30-40 people were already there in the company Shivakumar 17:53 It was tens of lakhs. I think it was, I think in that year, we would have done about a crore revenues. Siddhartha 17:58 And let’s move forward now, the party has happened, fundraisers happened. You were one of the first few founders to be funded in India at that point in time. We used to hear funding news a few times a month, maybe. Shivakumar 18:14 Yeah, in those days Economic Times was not going to write about funding news. So startup funding was not a newspaper story yet. And yeah, it was a very reasonably unique thing to raise money at that point. Siddhartha 18:27 So let’s not move forward. How did you keep on acquiring customers? And what was the point that you would have roughly between one to 2 million ARR? Shivakumar 18:39 So Vijay was actually running marketing. And he actually did some kickass work with inbound marketing, I would say that we were generating more leads and converting more leads than practically anyone at that point in time. So you’re probably doing about 10 or 15 conversions a month completely inbound using content, some of these numbers are unheard of. And most of these are SMB. And my goal was to build India’s first public Cloud Contact Center, completely from  where agents can sit on a browser and start talking and things like that. We’re actually continuously adding more customers hundreds of experiments, we did prepaid postpaid, 500 rupees for an account, 5000 rupees for an account, created a customer success team created an account management team created an onboard teams, crap the customer success team, played around with incentives, you name it, we’ve done it all.  So we’ve done all kinds of experiments, we landed up in events and this and that everything is actually coming along fine. I think we took it all the way up to about 350 Odd customers in about a year. One of the digital moments for me was that we went to the market, trying to raise at that point in time and most of the investors actually turned it down saying that the SMB market in India is quite shallow. I didn’t really have the wherewithal or the frame of reference to be able to claim that India was just a testing, we were going to go global eventually, somehow I never really twisted it like a global story, although looking back, I don’t understand why. So I just came back saying that okay, so it looks like there is no SME market in India. So VCs are not going to fund so we are kind of screwed.  So I went to drop my wife off and I was taking a walk in Jainagar somewhere and then Ankit Bhati from Ola called up and then he said, Look, this is what we want to do, drivers want to call customers, do you have some API’s using which we can connect that to? And I was quite surprised because I was like, hey, both of them have their own cell phones, so why can’t they just talk to each other, why didn’t they put an API in the middle and then call the number I literally said, Yeah, of course, we have these API’s. And at that point, we hadn’t really exposed it because like I said, I was trying to build India’s first public internet contact center. So that was my goal, although we had these API’s inside. So Ola ended up becoming the first real user of our API platform. And they use it for number masking. Because privacy was a big deal. And we didn’t really know about any of this until the US days. I jokingly tell people that there was a period of about a year when we were actually making more money out of Ola than Ola itself.  So roughly they were doing about 2.2 phone calls per ride, because nobody knew how to use this app, some new flashy, shiny thing. And drivers will call up and say, are you for real, are you really going to take the ride. And then customers will call up and say I’m standing here, where are you? And so lots and lots of phone calls. And then our volume really skyrocketed. And so we were looking at about like two rupees per ride or something on ola. And so that was really the starting point for enterprise, our enterprise journey and the platform journey. And then one day, we were sitting in one of my co-founders house, and we were all pulling each other, they’re saying why the hell is ola actually paying so much money? So what exactly is the benefit here? And it took a while but one of my other leadership team members said that it should be for privacy. And later on, of course, now, we know that phone numbers are a very important part of personally identifiable information. And drivers, harassing passengers, asking for their phone numbers and all kinds of stuff. So ultimately, it looked at that point in time it didn’t. But now we know that digital has actually played a pivotal role within the backbone of the evolution of the startup ecosystem in the country. Because the ability for individuals like you and me to adopt all of these systems without fear,  anything, any practically any marketplace startup that we currently use, comes on the back of the fact that you think that you can use the system and then after that, you can sign off and nobody is going to harass you for that.  So it becomes a given now, but we actually literally safeguarded 10 to 15% of the country’s phone numbers, that one day, they bought at 200 million for any phone numbers we had, from going into the hands of people who never really intended to give you a number. And that was a big deal. So for that, I got nominated for Fortune 40 under 40, the same gentleman who actually discovered the reason so we made him the focus on the enterprise platform business, he actually then went and got Uber and practically we created what internally called as the last mile connect market. So the name itself is just so bland, nobody even knows that this is a market. And so we literally identified, created and dominated a market that I think half the people didn’t understand for a good three to four years after we actually even created and dominated it.  So we’ve actually played a very big role. The only sad part about all of this is that I might have told you about this term sheet with a bunch of nonsensical terms, one of them was that there’ll be a clawback if it hits 500 customers. After about 350 customers, we shifted to enterprises naturally, the number of enterprise customers is not as important as the revenue itself. So we didn’t actually hit the numbers, the 500 customers. And then I went to Mumbai angels, and I told them that, hey, look, this is a strategic decision that we made, we’re actually doing better because we are now becoming more enterprise focused and SMB focused. And I demanded that they go ahead with the club, but they refused. And till date, I think of that as trust that was broken, I think of my own experience on what it means to be an angel investor. And what I thought angel investors did. unshakably got spoiled because of that event. And that resulted in a whole bunch of other ramifications around my inability to trust with investors, their inability to work with me, and ultimately, I think it was just a lot of wasted time and effort for everyone. Siddhartha 24:34 So the initial 2.5 Crore or term sheet that was put together by Mumbai angels and Bloom, participated in that. I think Bloom is one of the nicest investors in India, if it would have been the reverse, they would have let the term sheet this part could have been completely avoided. Shivkumar 24:51 No doubt. I also think that Blum is one of those investors that have really gotten their act sorted in terms of alignment, they truly do believe that their success depends on the entrepreneur’s success, and they align all of their interests to making the entrepreneur succeed. And hats off to them for that, actually. So they are actually one of the few true investors who really are looking out to make the entrepreneur succeed. I think it’s a big deal. I mean, it’s very simple. As an investor, you think  that’s gotta be like, ABCD of investing, but it’s not easy. Siddhartha 25:26 Let’s move forward to 2015, where the company was in 2015, 2015-2016 timeframe, they were the lull in funding at that point in time. People have started to dismiss India as a promising story which never ratified. Shivakumar 25:41 Yeah, I think 2018 was probably still, ecommerce was a big deal at that point in time. And I think before Tech was about to take off, and some foreign investors were beginning to come in. I think Tiger was around the corner at that point in time looking for more investments to do. So it was still through and through a b2c story. And I would argue that Exotel is also actually a b2c Internet story. 70-80% of our revenues were still coming from the back of venture capital enabled companies in the b2c space. So we were really supporting Flipkart and Ola, Uber and Swiggy, and Zomato, and all of these guys. So in many ways, the Exotel story is also actually the Indian consumer internet story. And it laid out exactly that way around about 2015-2016 is when I actually attempted to do another fundraiser because we were coming off the back of a really good year. But this time, I think that I failed miserably in conveying the essence of what we stood for as a company.  As I told you, my original vision was to build a Cloud Contact Centre for emerging markets. But we somehow ended up in an enterprise platform business, which I think I never really wrap my head around. And so I wasn’t really able to convey the story clearly to investors. So investors would now ask me things like, Okay, you’re doing all of this, what next? And then I’d be lost for words. Okay, we will sell more of this to more API’s to more technical companies to more marketplaces around the world. But I wasn’t really able to explain how this is going to be a once in a lifetime company. And I think that’s probably why we mostly couldn’t raise it the second time as well. So I actually failed, I’m actually now twice failed in terms of trying to raise funds. So that was what it was, in the meantime, one of our competitors’ Polarity. They actually, at least on paper, have a dream run, which is every 18 months, you were raising 5 million 10 million 20 million 40 million. And that’s exactly what was going on in Polarity.  And so I would argue that my own motivation levels were quite low. My employees, although they were asking me different kinds of questions in my head, in my mind, it always sounded like they were asking me, “How come we are not able to raise any money?” So it was, I think, somehow I pulled out a coup. I don’t know how but I somehow just kept at it. But now I do think I know how. So what we really had in the company was I created an environment where people could be themselves and enjoy working with each other. And so it was more like a family rather than a sports team. So exactly the opposite of what Netflix says. So what that helped us was to gel really well with each other and we looked out for each other and we had fun together,  things went up and down together. But they were all together. So they were a core team of about 15-20 people during that time that really gelled and we actually stuck with the company for a really long time.  Some of these guys were with me for almost eight, nine years. And I think that family type, tribe-ish sort of work culture really worked out. And so even though nothing really was working for us, I think we were just somehow focused on going and selling to customers, getting them on board and just getting on with life. And we’re doing about 40% Gather year on year profit. So I think that was one thing that really worked in our favor. The second one is I later realized that I’m actually quite persistent. At that point in time I never thought of myself as that but it looks like one of the strange things about running a 40% growth company is that you can’t shut it down and go home because it’s still growing, customers are still buying and you still know that you’re adding value. You’re even making profit so why would you just throw this good looking business into the dustbin and walk off so you can’t go home. But 40% is also not a hockey stick. So it’s also not going to become like this, which means not really still venture fundable. I wasn’t still able to explain why the market size was very Big and things like that. So you are probably not also going to go big in the venture capital sense of the word.  So I actually ended up with a business that was neither going to go home nor going to dig. And in this sense, I just sat on my ass. My team just sat on their ass, and we just executed and we kept on executing. Siddhartha 30:21 And what was the revenue back then 2015-2016 If you can recall? Shivakumar 30:26 Must be in the 40-50 crores sort of range. So, it was nothing non trivial, nothing trivial. So it was already very meaningful. And it was a company that was worth spending more time with. Siddhartha 30:40 And your co founders left, both the co founders, can you describe that feeling? And what were the events that led them to leave the company they co-founded along with you? Shivakumar 30:53 The first one to leave us was Vijay Sharma. So he actually left because back in 2014, we also got into a little bit of trouble without licensing. So we were actually quiet, like I said I’m not really from a communications background. So I was supposed to be an internet software person. And it turns out that there is a license that you’re supposed to take for the business that we are currently doing, which was, believe it or not, 25,000 rupees, which we hadn’t taken, about which we didn’t know. And there’s literally like no ramifications other than the fact that we have to just go and take this. And for some reason, they decided to come after us. And instead of just suggesting to us what to do, how to do this better and things like that. I think they just, I don’t know, I think they had experiences of working with lots of people, in telecom there is this thing about doing long distance calls over internet and the kind of siphoning of telco revenues. So I think that’s the background with which some of these officials were exploring us. And they actually gave us a lot of trouble, which I think was certainly not something that a 26 year old, 28 year old software entrepreneur should be put through. And we actually learned how to work with government officials. Many of my team members actually ran from pillar to post and it was literally like a dramatic set of events where we ensured that they didn’t pull down our lines. And then there are some 354 companies that are dependent on our existence. And somehow we saved the company from going down the drain at that point in time, it was just like there’ll be a couple of people sitting in government offices in Delhi, there’ll be one person sitting in a telco visiting Bangalore, there’ll be two people sitting in customers office, reassuring them. I think that also brought the team together. So this is the same team that went through all of that. But I think at the end of it, we all became even more strongly knit as a family. And that really went on, but this was the circumstances under which my first co-founder left. I think my own credibility as an entrepreneur, as a leader also was under question.  So it was my responsibility to have sorted this out and I didn’t. And I think more than anybody else, I questioned my own capabilities. At that point in time, I’m really cut out to be a leader to run to build another company. So that was co-founder number one, co-founder number two was a bit more objective. So my CTO then was, I think, more of an architect, and less of a people’s person, and we had to grow the team size. And I wasn’t able to at least coach and mentor him to try to be that person, like a people oriented leader or a technology leader. So it was, it’s more of, hey, we had to do what we had to do sort of thing. And so we wanted to bring in a people leader, sort of a person. So that’s really what happened with the co-founder number two. He is still with the company, the sense that he’s still sitting on the board, and we’re still good friends and stuff. So that was just, there was no, there was no drama, it was just a mutual decision that I took. Siddhartha 34:09 And let’s move forward. VCs kept on dismissing the company. And after two fundraisers, you literally gave up that this company is not meant to be funded at all. Shivakumar 34:22 Absolutely, we were like screw this shit. We will just build a company and then that’s it. Siddhartha 34:28 How big the team went before the pandemic hit. Shivakumar 34:33 Actually, before the pandemic there was one more series of events that happened. So by this time, we were almost six, seven years into the company, maybe eight. And obviously, some people started asking, So what are we trying to do here? How long are we supposed to keep running like this? And can we now sell the company to someone and then so that conversation took off a little bit and then we started chatting randomly with some companies and then there are about two, three companies that are quite interested in buying us out for the assets that we’ve built. One of them spoke to us and quite frankly, I think to call the information and recreate the entire stack in India, and stole one of our customers, or at least that’s how from my vantage point, that’s how it looks like to me when I look back.  And the second one gave us a term sheet. We even went to their annual Day celebrations and whatnot. But I think they kind of call back and give a few excuses, which didn’t seem like insurmountable reasons for calling a deal off. So that also happened. So if we failed, fundraisers were not enough, then we also had one failed acquisition, I was actually beginning to count the money and how I’m going to retire and whatnot. And by the way, for example, I would have been retired. And I don’t know, maybe my index data would have started. But none of that really materialized that way. So it was I think, maybe the fourth big round of hammering that the company got which demotivated all of us with. And then we were really like, I think, one of the darkest phases of the company. So I think, I would say that there are about four times when somehow the universe conspired to kill the company but we still didn’t die. Siddhartha 36:29 And you heard that the company is going to get acquired. Because the term sheet had been formed. Shivakumar 36:36 Yeah, many of them knew. In fact, the acquiring company and you interviewed a bunch of those folks, like I said, we even went to the park. It took them out for parties here. Siddhartha 36:46 And what was the revenue back then? Because I’m trying to read every single revenue because that I’m treating as a Northstar metric to the progress of the company.  Shivakumar 36:54 I think by this time, we would have been in the 75 crores range, Siddhartha 36:57 like more than 10 million back then, in terms of the dollar. And I believe that acquisition must have been what, above $50 million of cash? Shivakumar 37:06 No, it was a $30 million acquisition deal. And I think we must have gained maybe 60 crores. So it was something like 4x, 5x range.  Siddhartha 37:18 But enough for you. And to retire and core team members to get financial freedom? Shivakumar 37:24 Yeah, enough for most of us. Siddhartha 37:27 Let’s move forward. After you were battered, tis is the first time you think of shutting down or moving on, because like a person can only bear so much. Shivakumar 37:39 I agree with you. I actually thought of shutting down multiple times. I’ve also thought of quitting multiple times at least half a dozen times each. But every single time, I will always come back to the same that I described. So the problem is that I had a company that was growing at 40%. Like, what do you do with this company? You can shut it down. So like, you can set up a company with 60 crores of learning? So I think the way it really worked is that nobody really told me how to quit. What do I mean? I think there is lots of knowledge about how to start. I don’t think there is enough knowledge about how to quit, I certainly didn’t come across any. So I just didn’t know how to quit. I attempted to leave the company a couple of times, like nobody was interested in letting me go. They were like, maybe I can go but you can go right. So I could either leave or not gonna shut down. So I had to turn up. So I did. Siddhartha 38:39 After that, failed acquisition. And you’re deciding that I want to continue, or how did you survive to pandemic and, and Bipin till pandemic, you had almost grown to $20 million in ARR. From that 60 crores of revenue at the time of acquisition. Shivapuri 39:00 Yeah, so I think COVID was also in another parallel universe, I would have said, the company has been hammered five times. And it was actually so the first time was COVID. So, a lot of our revenues were dependent on things moving on the ground. And logistics third party logistics, supply chain, cabs, shared mobility. So these are the industries that we were really plugged into because of COVID. In the long run, all of that really crashed. So our revenues actually crashed by about 55% overnight. And so one of the things about the way I ran the business was that I always knew that there was more to build and more to do so. Although we were profitable, I actually kept the profits to the wire. So our DVD would be like sub 5% Literally, like we were making profits simply because, we had to make a profit Anyway, but I actually funneled all the money back into hiring into sort of calipers and development and things like that into sales and marketing and things like that. So just before the pandemic, we figured out that we were actually doing it too close, and there was going to be a cash flow issue. So we were spending faster than what we were collecting. And then there was quite a bit of drama, and quite a bit of pulling everybody’s hair. And then somehow we actually steered the ship and ensured that we didn’t crash land, and then he got out of that.  And then it was February, by the time we had done that, and then in March COVID, and we just didn’t have a choice but to let go of what 50 people. So with that, I think I’ve done everything in running a company, including a layoff. This was also a very stressful event for me, and for all of us. So like I said, this is why we were actually running like a tribe, and like a family. And it wasn’t easy to let some of my colleagues go. But we had to because, in a profitable company, the rule of thumb is that you have to be profitable. That’s it. So as long as you’re profitable, you can think about another day tomorrow. And so that was rule number one. And so I had to do what I had to do. So now, going to about April, May of 2020, we are now down to about maybe 150-140 people, our revenues are now down to about 55% of what it used to be. And things were looking quite bleak. And then we’ve just come out of a cash flow issue. I had reduced everybody’s salary to 80% of what it was. And I think I reduced the leadership salary to about 40% of what it was. So this is probably also one of the lowest points that you could have found me. Of course, from that point in time, I think the stars aligned. Siddhartha 41:52 And then what made the company turnaround, and also what love to discuss the story, how aA91 came into the picture. Shivakumar 42:03 So the one of the good things that ended the night it wasn’t before, long before the pandemic and actually reached out to Sutton Bhatia from Emile saying that we should merge. And I’d argued with him. So the reason why I started talking to him, because remember, I actually always had this hint that’s been India’s first public cloud context intervention. And then I’ve asked my team to put together a roadmap to build it, they actually can be mad, came back with a two and a half year timeframe. And I just didn’t have the patience to wait for 12 years. I said, Screw this, they already have a contact center. So let’s just figure out how to get them in and we’ll put it on top of the cloud. And that’s how we’re going to bring India’s first public Cloud Contact Centre. So I’d actually suppose started speaking to him in 2019, I think on paper, Sachin saw the point of it. So we then actually attempted to do complete stock swap based merger driven by entrepreneurs. I think that would affect pulling that off actually, that that would also be the case study in itself. I don’t think anything like that has ever happened.  And unfortunately, ours was also not going to happen. And you may be able to guess why that is. We just couldn’t get everyone to agree on the valuation. And so the outcome, we’re just not able to agree on the swap ratio, and then that just basically just died. Then briefly, we attempted to raise funds with this story, but that I mean, like I told you, I was not really interested in talking to anticapitalists anymore. I was like, screw this. Let’s just figure out a way to run these assets other things. So as I wasn’t really going to go and try to raise funds and stuff. Again, fortunately, I was speaking with Dr. Margo from a 91. I bumped into him and Lila looks like all good things happen to me at Lila for some reason I actually caught up a sudden, but yet Lila I popped into Margo at Lila, maybe I should get them on board as investors. So then Lila, Lila is on patrol. So then we started chatting. He’d actually also known me for a very long time, initially as part of psycho as an investment in polarity. And so in that sense, he was tracking me as a competitor for one of the portfolio companies for a brief while his ex wife was also working with me as one of my colleagues, etc. So he knows me and certainly he knows that we had overperformed compared to their portfolio company and after almost a decade, I’m still here, and I’m still kind of gunning to figure out how to make this work. He also told me once that with me, what he really liked was, what he saw is what he got. And so these were some of the reasons why I think he chose to pack X hotel, why he chose any company at all, of course it is a no brainer.  So because of COVID work from home remote, so engagement technologies, communication technologies naturally are going to play a much larger role. We’ve all seen how zoomed stocks zoomed. So basically we were in the same situation. industry. So from an investor’s standpoint, it’s just great timing, in fact, particularly excellent, because I think, as  investors are in the business of buying cheap and selling high. And so he has a company backed by a team and a founder who’s been at it for a decade in a segment that’s obviously going to blow up because of the pandemic. And they also found us at a timeframe and our revenues were rock bottom I told you like, so my revenues also keep your percent down. So it was, I think, the sweetest deal of the decade. So he came in, when I needed the money, I told you, he’s come off a layoff. So I think it was just a complete Win Win Win and brilliant move, in my opinion from in 91. And then I think they got a chunk of a company for a lot less than what anybody would imagine is the right price. But everybody was okay with it. I was like, I’m okay. But I’m still okay with it, because you needed the money. So the only good thing I did was that he actually wanted to invest a lot more. So I actually broke it down into two pieces. So I think I save a little bit of dilution because of that. But nevertheless, that partnership has been fruitful for everyone involved. And I’m actually grateful for them to have come on board. And right now I think they are the largest shareholders of that Siddhartha 46:14 Once The deal was between the two tranches, or after two tranches, after the two tranches? Shivakumar 46:21  So then I, it turns out that somebody had already spoken to another public company, and then they were about to seal a deal. And then I called him up and I said, Look, dude, at least we can have a conversation.” He saw that I’d actually raised only like, 40 crores, he’s like, boss, it’s not gonna work with 40 crores, because our company’s worth a lot more. What I didn’t tell him was that I could have raised a lot more, but I didn’t for some reasons. I didn’t I didn’t tell him that explicitly. He didn’t ask me that question explicitly. So somehow, due to miscommunication, we hung up the phone, and then they were about to go that way. But due to stars being aligned my way the acquiring company frustrated them a little bit. My own timing, nature, I think they’re their financial investors, I think I still had a decent opinion about who I am and my capabilities. And then when the time came, when they couldn’t bear the frustration anymore, one of their investors called me and said, Sorry, you are trying to say something. And then it just restarted once again. And then I practically pulled the deal out of the lion’s mouth and product Hall. So I would say that, I’m actually quite proud of a lot of things that we got the Ameo deal, and that we were able to pull together as actually, in my opinion, one of my biggest achievements, Siddhattha 47:37 and at that point of time, you were doing like, again, back to 20 million. Revenue, and ml was like 15 million in revenue. Something like that. Yeah. And together, the entire joining entity became 35 million. And all the power has been from that right in the middle of the pandemic, doing an acquisition becoming a $35 million entity, to raising a couple of more rounds today, being a 60 mil ARR company, walk us through the journey, she Shivakumar 48:06 I didn’t have the last calendar year. It was just the best work of my life practically the entire year. There are only two things that are going on in my life. A I was very, very busy doing a whole bunch of stuff and be when I go whenever everyday, when I used to go to sleep, I always used to think, wow, what sort of a place Am I finding myself in and my mind was just filled with gratitude that I can do the kind of work that I’m doing today, these are the really two emotions that are just going on. Very, very busy and full of gratitude. So we actually raised around every quarter of the last calendar year. So we went b one, B, one, b two, C and D. And then we also ended up doing two acquisitions, one in June, one in June, the merger with Amiya was in June and the acquisition of Cognito in November.  So even as we were grappling with the unfortunate events of the pandemic, my life was actually also extremely hectic and exciting in this manner. So what we now know is that further on, we ended up getting an operator license, and then we are now on our way to actually executing the original vision of bringing a public Cloud Contact Center for India. And I would say that customers are actually lapping it up in a big way. So it looks to me that that’s a bet that’s really working. And I think the fact that that strategic bet is working is what’s really bringing the team together. I think everybody’s seeing the point of why we are coming together. And so that’s  what is really exciting everybody. Siddhartha 49:37 and tell us about the capabilities Exotel has right now because it’s far more superior, far more diverse than what you thought that you could build. Shivkumar 49:48 Absolutely right. So very soon we will be giving away the name Exotel. l will be rebranded into something else which is waiting for the marketing aid to come in so that we can get that process started. Because it’s true that the current scope of exhale is much larger than much, much larger than what you originally had. So right now we are on our way to building emerging markets first full stack customer engagement platform. We believe that enterprises want to work with a single vendor for all of their channels, and also want all of these channels deeply integrated into all of their CRMs and systems. They don’t have the enterprise bandwidth, engineering bandwidth to put it all together. Most leaders don’t want to break their heads to figure out where to download the reports of different things. They don’t want vendors to point fingers at each other saying as to who is in doubt, government’s want data localization and more compliance, users want to interact with a company using multiple channels at multiple points in time.  So all of this really just points us points me to creating the full stack customer engagement play, which I think is very uniquely positioned is unlike any other company that the market that is there in the market today, we’ve actually gone as far to now say that we are getting our own telco license, will very soon be able to sell phone numbers, will be able to enable whatsapp on those numbers will be able to give virtual numbers to companies. So all of these are actually, first in the market, no one’s really no one’s really talking about any of these, no one’s doing any of this. So I think this is really what’s driving most of the excitement and the growth. Like you said, we’ve gone from about $35-40 million last year to about $60 million this year. And we anticipate the growth to continue, we will likely hopefully grow at another 70% this year as well.  We have access to about 400 large enterprises in the country and the biggest and the best b2c companies of the country. And many of them are actually really only using one of our services, either the contact center or the voice platform or the SMS platform or the Cogno Chatbot. And so we have the opportunity to now sell them. A suite of products voice, both IP and PSTN messaging, both SMS and Whatsapp, Video API’s, enterprise contact center, chatbot, voicebot. So this is a plethora of things canvas of things that they’re currently operating in. And so far it appears as though customers are loving it. Siddhartha 52:15 Shivku, I was saying you also proved naysayers wrong, that a 60 million ARR company can’t be built from India for India, most of your customers are based in India, can you share the customer split across geographies. Shivakumar 52:32 So I think about maybe 70% of our revenues is from India and the remaining 30%, 10%, maybe from the Middle East and percent from Southeast Asia and the remaining from the rest of the world. By the way, we think of ourselves as a SaaSter company. So this is actually a new terminology that we’ve come up with recently, we came up with it. The first time I heard it was in Bloom days, I think Sajith Pai used that phrase, but actually, in my mind, I’m actually building on that phrase a lot more. Sastre is actually both SaaS and transaction. So when you have recurring revenues and transaction revenues in the same account, and that’s a very different business to be in actually compared to just us as a business. So many of the rules of thumbs are different. And I believe that one of the reasons why we’ve been able to grow as big a top line in India is because we are a SaaStre company and not just us as a company. And so transaction based pricing models enable much faster growth. And in terms of top line, and that’s one of the reasons why we’ve been able to do as much. Siddhartha 53:38 Shivku, during all this If you have to point out some of the key lessons from your journey. If you had to do it again next time, what would they be that you would carry forward. Shivakumar 53:50 So ultimately, I think what I’ve learned is that it is very important for an entrepreneur to be a charming, social, fun person, for people to be with. You want to be a person that great talent wants to come in and work for. I think that the core of my learning is to be able to transform myself into a person that is able to be the kind of leader that intelligent people with great talent want to work with and work for. And is to transform myself to be able to lead them and unfortunately, many of the stuff that I hear in books actually go literally opposite of what I’m actually doing practically. We’ve all heard about how an inner person Steve Jobs was and how you have to be a hardball negotiator to get away with deals and this and that actually, none of that works. None of that stuff works for me. I don’t shout in aisles. I don’t push people randomly, I don’t create artificial deadlines and things like that, I actually want to make it a lot of pleasure for myself to work in this company.  And I want it to be the same way for everybody else as well. I want everybody to have a lot of fun. So that they can realize that they are the best they can be. And that’s the kind of culture and environment that I want to create. And I think that’s one one very big learning for me. Of course, needless to say, culture alone is not going to create a company. So you need to ensure that you develop a sense of what it is that customers actually want, and what the market trends are and where the market is blowing, and going. And based on that, whether you’re able to improvise your own story and ensure that you put the product and the service and that the customer wants to buy in front of them. And just don’t get that wrong. I think these are the two big learnings for me to understand the market and the customer really well and understand what they want and create an environment where people have lots of fun working. Siddhartha 55:56 And how do you advise about going to understand market size market problems, and developing solutions for it, especially in the context of SaaS companies. Shivakumar 56:08 There are two ways in which I do it, one is market size, you could use some rules of thumb. So in my case, how many contact center agents work in the company, how many white collars work there, what is the Proceed rate of each contact center seat and so, you will be able to now arrive at some sort of a time number. So this is one way you can naturally read some papers that people have written: Gartner, Forrester, whatever else and then you can get some numbers. You can also now try to find out indirect measures. How big is the ecommerce industry or look like how big is BFSI going to become ? How is the broking industry doing? And so you can now use all of these kinds of data and you can triangulate some numbers. So the idea is to come up with broad ranges, and use multiple dimensionalities to be able to corroborate whether the numbers are adding up or not.  So this is, I think, the top down way of arriving at tam which is not really useful beyond the fact that you want to just ensure that you’re working in a space that’s at least a couple of million dollars in size, so that you know that there’s enough market to go after. But beyond that is not really useful. What is however useful is to list down bottoms up, which is to laser all the logos, especially in the media, the enterprise context, figured out how many companies that there are there are only going to be a handful, not more than 500 companies that you can sell to and figure out how much is it that you can sell and how much money you can make from these companies? How much are they willing to spend, and my guess is something like 200 companies each giving you 10 crore ARR, resulting in about two thirds of gross off top line. So this is not Tam. So this is actually like literally the top line that we can get to if we want to. So I think these are the two numbers that at least I tend to work with. So long as my current numbers are orders of magnitude smaller than the number that I just calculated, then we are in business. Siddhartha 57:47 And what is your advice for not to do so because there are many things I believe that you would remember from your journey that are definitely and not do it again. Shivakumar 57:58 I’m not sure if that’s the way to say it. So I would say that every so Randy Pausch from the last lecture said that, whenever you get into an experience whenever you get into something. And then let’s say you don’t get what you want. You always get experience from it. So either you get what you want, or you get experience. And so I think that’s the better way of looking at it. So I would say that mistakes are really the stones, the dents that are going to chisel you into the person that you will become. And that’s the process of actually becoming a capable leader. So I would even argue go ahead and make your mistakes. But at the end of every mistake, just try to ensure that you’ve learned something. Siddhartha 58:51 Thank you so much. It’s been a fantastic conversation, working the last 10 years of yours and Exotel journey. And I’m getting so fond of it right just imagining what you have been through the highs and the lows. Placing myself there. I hope the audience goes through the same emotion that I’ve been through in the last 60 minutes. Shivakumar 59:12 I’m actually amazed that you got me talking for an hour. I didn’t think I’m capable of doing that. I think I appreciate the fact that you’ve brought me into getting all of these things out of my mouth. I hope everybody enjoyed listening **Sponsor** Prime is a high conviction, high support investor, backing star teams with differentiated ideas. All partners at Prime work actively with the entrepreneurs post-investment to accelerate building a great company. Prime focuses on building differentiating companies whose solutions are 10X better and are powered by technology and product. Prime is now investing from its fourth fund of $100M and is often the first institutional investor in category-creating tech startups such as MyGate, HackerEarth, Mfine, Wheelseye. To know more about Prime visit primevp.in

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