India's Newest Unicorn LeadSquared on Opportunities and Challenges in SaaS Here are the edited excerpts from the interview with Nilesh Patel, CEO and founder, LeadSquared
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This week, Bengaluru-based sales automation SaaS platform, LeadSquared announced that it has joined the unicorn club by securing an investment of $153 million from WestBridge Capital, in a Series C funding round. The startup was founded by Nilesh Patel, Prashant Singh, and Sudhakar Gorti in 2011. The SaaS unicorn aims to make high-velocity sales execution software a growth engine for companies all over the world.
In an interview with Entrepreneur India, Nilesh Patel, CEO and founder, LeadSquared spoke about his journey so far, opportunities and challenges in SaaS and more.
Here are edited excerpts from the interview:
From what I gather from the internet, you did your engineering in New Delhi, worked with IBM for four years and then founded a startup called Proteans, which was acquired by Symphony in 2010. Could you please tell us a bit more about yourself and how your entrepreneurial journey began?
I hail from a farmers' family in Indore. After completing my schooling there, I pursued my engineering from Delhi in instrumentation controls, but I used to program a lot. I was lucky to get a placement at IBM. They allowed a non-computer science student to also participate in their tests. At that time many companies would not allow that. I got selected and joined IBM Pune in 1999. I was a programmer there for a few years, then from Pune, I moved to Bangalore, as many of my friends were in Bangalore and a few who were in Pune also shifted to Bangalore when I joined IBM. Since then I have been in Bangalore.
Me and my co-founder Sudhakar had joined IBM together. So, he too moved to Bangalore and after sometime he switched jobs from IBM to another company. However, we stayed in touch. During weekends, I would meet him and Prashant and Neelam. We all wanted to do something different from what we were doing. We were not really thinking about doing high-quality business. We started with the basic idea of doing software services. And within a year, we came to a point of doing specific software services which were to work distinctly only for software product companies, including many small to mid-size software companies. We helped reduce their development cost, cost of quality assurance, testing, etc. That's how the journey of Proteans started.
How did the experience of founding Proteans help you with LeadSquared? Tell us a bit about the genesis of LeadSquared.
The idea was to build a software-first business. So we were there with Symphony for about a year and then decided to do something on the software side. And what we wanted to do was to basically look at our own experience and see what can we do as individuals. We realized we all were passionate about sales and marketing.
We took that as a concept, and we did some consulting work in the earlier days in 2011 and 2012 to figure out what kind of software to build, more specifically in sales and marketing landscape. And then we started working for some of our friends and their companies as consulting partners and started learning about the challenges and the tools they're using and how effective or not useful they are, etc.
We then decided to do a combined offering of sales and marketing together, a simpler version of that, which was suitable for small to midsize businesses early on. That was the initial hypothesis with which we built LeadSquared.
Please throw some light on how your offerings have evolved over the years.
Absolutely. I think this part is very interesting. So when we started, we had a concept and we took the product to the market. Some worked, some did not. I still distinctly recall meeting BYJUs in around October 2014 and within months we were selling to a few dozen customers in education such as training institutes and colleges.
Our product was more suitable to education for some reason. So, that took off for us. That is the time edtech grew rapidly and we were lucky we were already established by then. We were solving some of the basic problems for the customers and our system was simpler to use.
What's the competitive edge you have today?
When we started, we catered to high-growth businesses that grew very fast and changed frequently as well. What they needed was flexibility. Due to this, flexibility came into our DNA. It's not easy for everybody else to do that.
The segment we are positioning our product is also a high-velocity sales segment, meaning the customer is selling a reasonably high-value product to an individual consumer or SMB. And all of them are operating at a high speed. It is not like the six-month cycle, which is what most other competitors offer. And, they offer CRM for B2B mostly. Whereas, we do B2C or B2B2C.
Thirdly, every country is unique in itself and each country would have some or the other uniqueness around its sales model. In India, there are a lot of offline and online combinations, which happen when you do any kind of transaction. Of course, more and more digital is happening, but still, there are parts of the process which are physical in nature. It's not easy to separate the two. So we also made a product that could be deployed in X scale in field situations as well. And so that became another unique idea because using one system for the entire customer journey, instead of buying two or three different systems.
And finally, when you run a business on a massive scale, it becomes important to have a mission-critical system because if you lose one day of sales, you are losing around 3 per cent of revenue for that. So these companies cannot afford to have a system that can go down. They need a robust system, which we offer.
The appetite for SaaS solutions is increasing. Many startups in the space have joined the unicorn club. This year, we have you, Amagi and Darwinbox so far. What are the challenges for SaaS startups today?
I think at an early stage, the challenge is about finding the right product-market fit. The second challenge is if you have the product-market fit, you need to find differentiation and the third is the market size. Sometimes you have the product-market fit, and differentiation, but the market may not be large enough, so you may have to pivot out of that market and do something for the larger market. Raising capital will also depend on how large the market is.
And once you have all this ready, then you need to grow the ability to scale and distribute your offerings to the world. There you will face challenges, but that's what many who are second-time entrepreneurs usually do better. Distribution is a big area where people face challenges as they continue to scale.
Having said that, opportunities are huge. If I have to give any one example of the correlation of opportunity size, I think the current time which we are living in is very similar to the 1995 to 2000 time window when IT services companies started to fly. If you look at the growth trajectory of some of the large companies, you will know that they were really tiny versions of what they are today. In 25 to 30 years, you can see a similar story unfold in SaaS. I'm not a fortune teller, but it appears that it will be very similar or may also happen in a shorter period.
In your LinkedIn profile, you say 'Hiring Fearless Sales Rainmakers and Marketmakers.' Talk to us about your team. I suppose you plan to double the headcount in the next 18 months from the present 1,200 employees. What are the things you look at when bringing people into Leadsqaured?
If you've seen that movie, Ratatouille, it says that anybody can become a chef, right? So many people can also become salespeople. You don't have to have a chip on the shoulder to sell software. Of course, there are specialized skills. So you need to measure the skill, but it's fun to talk to people, especially when you are hiring for sales as we hire from diverse backgrounds. So, it's very interesting that you can find amazing people in places you would never imagine them to be. Also, each of the three of us founders have a different style. We have our own nuances when we look at a candidate. So depending on which team they are going to be part of, there will be some additional requirements. For me, if people are funny, I definitely hire them. But, yes, we are very flexible in general.
Lastly, how do you plan to deploy the newly infused capital, and what are your growth plans for the next 12 months?
We will be building our North American presence and we are starting some of the new markets in APAC, Africa and the Middle-East. We have a good story going for us in India. We'll continue to build on that here and see how we can scale even faster here. That's Part A of the growth investments. Then as we grow, we will also be expanding our product portfolio and then continue building support functions. Then, if there are other like-minded companies who fit into our growth vision and have the right offering, we would partner with them. So we may have some acquisitions and some kind of partnership strategy. So that's how we'll be deploying the capital.