“There’s no problem with starting small. The bigger problem is remaining small.” ― Constance Chuks Friday
2015 has been a momentous year for the Indian startup ecosystem. No, I am not referring just to the huge amount of funding that was pumped in Indian startups. What I am referring to is the fact that now India is one amongst the first five largest startup communities in the world with the number of startups crossing 4,200, a growth of 40%, by the end of 2015. According to the Nasscom Startup Ecosystem Report 2015 titled ‘Startup India – Momentous Rise of the Indian Startup Ecosystem’– in terms of providing a conducive ecosystem for the startups to thrive, India has moved up to third position and has emerged the fastest growing base of startups worldwide.
This is further expected to receive a boost with the PM’s ‘Startup India, Stand up India’ initiative, specific details of which were unveiled in an event on January 16 at Vigyan Bhawan. No wonder, given the slew of measures being rolled out to bolster the ecosystem, it is changing fast. As per a report by Microsoft Ventures, the number of startups is expected to zoom from 3,100 in 2014 to an expected 11,500 startups by 2020.
As Indian startups continue to gain traction at home, it is but natural to ponder how many of them are also equipped to gain traction outside India? Is Indian ecosystem producing such startups which could make products suited also to Western audience? If startups are tasting success at home, can that same success be replicated outside? If yes, then in what way and if not, what is that which is stopping them from doing outside? Why is that world class enterprise products and platforms originating from India are still in low supply? Or are there outliers who are bucking this trend and slowly gaining traction outside?
To understand the opportunity and the challenges better, we spoke with Ravi Narayan, Director, Microsoft Ventures and couple of startups i.e. Appointy, SignEasy, Table Grabber, WebEngage, Helpshift, Freshdesk and Wingify which are among those few who have been gaining traction and customers outside of India. Through these conversations, it was revealed that there is a huge opportunity in markets outside India as favourable policies, untapped markets, and a quality conscious audience more comfortable with technology, favour quick growth of particularly SaaS-based startups.
Ravi Narayan, Director, Microsoft Ventures concurs that Indian SaaS companies have a unique opportunity to encash, made possible because of their cloud based offerings. Says Ravi, “We have a unique opportunity as we can go to global markets without even establishing a presence there. The Saas model companies are extremely well suited to leverage this as they can put their products on cloud and iterate quickly with the initial set of customers.”
This is much in contrast to the earlier way of how IT companies use to operate – while building a product, they would have to fly a sales guy to establish credibility and business, then land a contract, and then service it from home. The new-age SaaS model startups are not encumbered by these restrictions. Also, with their specialised services these companies are targeting a slice of the market which is a big opportunity in itself.
The added advantage these companies have is that these services are well understood by the audience and there’s a need for them. Take for instance, the online reservation service provided by Table Grabber or the digital signature service provided by Sign Easy. Both these services are well understood by the technologically comfortable Western audience; hence, there is no need per se to educate the market or create a need for it. Same is the case with the online scheduling software provided by Appointy.
Additionally, these SaaS companies can be available 24/7 to make the customer experience positive and smooth. More so, Western audience is now much attuned to talking to Indian accented guys, gaining business and servicing requests is no hurdle at all.
While opportunities abound to understand which one of these will work is the first challenge these companies face. Even through the startups may well understand the gap, the challenge is in bringing down the cost and lowering the unit economics. Startups need to understand how to deliver services in a cost effective way and provide very targeted services.
Ravi adds that it is both a market opportunity and a product opportunity for Indian companies. And success will be determined by the fact as to how capable they prove themselves to be to grab market share in a foreign market. He adds, “Challenges are more of the mindset. And to overcome them, startups need to have an eye for detail. One thing they need to assure is the customer experience should be really good. If they fail at delivering on that count, they will falter in comparison to the competition.”
Additionally, the UX experience matters a lot. There is a huge gap in the sleekness of the interface and products of Indian companies vis-a-vis their foreign counterparts and this needs to be addressed by Indian startups to provide a better user experience and gain traction. As first impressions are important, interfaces need to be clean and unsophisticated. One things Ravi recommends is that startups should go and make themselves familiar with the marketplace, in order to understand better the nuances of the user experience and customer expectations in these markets.
Another big challenge that startups face while trying to set foot outside is in marketing their products. They might have built the best of apps, but the downloads might not be commensurate with the usefulness of their apps due to insufficient marketing efforts.
The Table Grabber Story
Online restaurant reservation service and deals site TableGrabber may have started out with its journey in New Delhi in 2012, but has quickly expanded to gain traction in Chile, Brazil, US and Europe. The brainchild of co-founders (and siblings) Sonia and Pawan Marwaha, Table Grabber offers a full content management system, so it can use a restaurant’s photos and digitized menu to create a presence on the web and on mobile. The startup also launched a new platform called RezGuru in 2014, to help restaurants fill their empty seats and enables them to adjust things like pricing and reservation availability in a way that maximizes revenue.
Co-founder, Pawan Marwaha told us that since Table Grabber offers a fairly straightforward proposition, it found it easy to make inroads in the foreign markets and on the contrary found India challenging. With Indian businesses, Pawan & team realised that these are not mature for an enterprise SaaS product. Because, here, the restaurants run a parallel economy of cash and credit, he explains. “So, while they wanted our analytics, they did not want to be completely forthright about the data. On the contrary, foreign markets being more stringent with respect to tax evasion rules, doing business was fairly easy and transparent. Plus they were perfectly open to enterprise SaaS products and are not as price sensitive as the Indian market.”
No wonder, it is not hard to believe that Table Grabber does not have a single paying customer in India, with 100% of its revenue coming from outside India. The startup plans to keep it that way for the foreseeable future, having built a strong pipeline of over 2,000+ restaurants in the US & Europe.
For startups keen to gain traction in foreign markets, Pawan feels that it is a much easier proposition if the founders are aware of what the foreign audience needs. It is necessary to build inroads in the market. Given the stringent and transparent regulatory environment, Pawan thinks that mature markets are easier to crack into as they do not run a parallel system of correct and incorrect books, a practice followed by many Indian businesses. He advises employing an enterprise salesman when cracking these markets.
For Table Grabber, the fact that it’s platform RezGuru was featured at the Techcrunch’s Disrupt SF startup battlefield, much helped it to gain mileage in these markets. Meanwhile, government incentives and networking facilities provided by foreign governments are also a crowd puller. For instance, Pawan enrolled in the Startup Chile program in 2012 which helped Table Grabber in gaining traction in the South American market. The $40,000 equity-free grant, free co-working space and help with launching the service in new markets offered by the Chilean programme was a huge draw for Pawan to take Table Grabber to yet another market outside India.
The SignEasy Story
A pioneer in mobile e-signatures since 2010, cloud-based electronic signature platform, SignEasy, allows professionals and companies worldwide to electronically sign, collect signatures and fill documents from smartphones, tablets and web. Founded by Sunil Patro, this five year old bootstrapped and profitable startup was formed with the aim of reducing costs due to paperwork. It now counts North America and Europe as its main market. With over 3.5 Mn downloads, half of them in the US and Canada, it is one of the top 10 downloaded apps worldwide. SignEasy has been featured as a Best Business App by Apple consecutively in 2014 and 2015 and has also been pre-installed by Apple on its demo devices across 10 countries.
As SignEasy started as an iOS app in 2010, the early mover advantage helped them get noticed by Apple and thus crack the US market which was majorly an iOS market back then. Sunil says, ” Foreign markets were easy to penetrate as people are much more comfortable doing business online. Also, they are happy to pay for a high quality product if it has a strong value proposition to them. In India, we faced the challenge of the audience not being much compatible with technology. Also, India being a price sensitive and majorly Android focused market with the smartphone penetration still increasing, accessibility is a challenge for us.”
SignEasy’s another challenge stemmed from the fact that it was primarily a consumer centric B2C solution in the first 5 years. However, when employees of companies started using it and it came in the notice of businesses, selling directly to them was what became the company’s main concerns. Even today, 90% of its revenues come from B2C users. To add to that, 80% of its revenues come from countries like United States, Canada, United Kingdom, Australia, South Africa, France, Germany, Italy, Brazil and Mexico. With digital signatures being a norm in more than 37 countries, SignEasy did not have to face any regulatory hurdles so to speak. He said, “The challenge for us lies in developing countries – how can we make it more accessible there?”
The challenge for us lies in developing countries-how can we make it more accessible there?
For those wishing to gain traction in foreign markets, Sunil’s advice is to focus on the product quality as one cannot hope to sell the audience merely on price. Further, he added that founders must have some familiarity with what goes on in the life cycles of the foreign audience. It helps to check into which platform you are solving the problem for them, whether is iOS or Android, as this too impacts sales. He advocates that collaboration is the key gaining a foothold in newer territories and one should focus on partnerships and key integrations.
The Appointy Story
Online scheduling software has scripted its success story right from the echelons of Bhopal to almost 110 countries. Founded by Nemesh Singh in 2007, Appointy, allows small and medium sized businesses to help them grow exponentially by helping them scheduling online and fill their open times by reaching their customers faster. The software provides support over 100 verticals such as salons, spas, yoga classes and many others to sell their services. Today, Appointy has more than 80K customers using their platform for their scheduling needs.
Nemesh said, “Everyone in the US works on appointments and there was this gap of a scheduling plug in. Before developing Appointy, we were an outsourcing company, and had received hundreds of requests to develop an appointment system. We realised that every business had different requirements and from here we got the idea to come up with a scheduling software. Given the culture of appointments in US, for us acquiring customers in US was easy. In India, it was a challenge. Also, in US, if businesses don’t like your product, they will say a straight no. In India, they will never say no on your face.”
In order to gain traction outside India, the startup not only focussed on developing a good product, but also stepped up its marketing efforts to be available in online marketplaces and the Google app store, and thus remain visible. When the team created another product – a free plug-in to add Facebook ‘Like’ support on a site – they used this plug-in to advertise Appointy plug-in as well. The Facebook plugin saw 10K downloads in no time, thus proving an effective marketing strategy for Appointy. While Appointy did not face challenges in customer acquisition, however, it faced regulatory hurdles to recurring payments. Consequently, the startup established a sales company in the US to tide over this.
When you are just focussed on funds, you lose focus from the long term strategy of your product.
For startups wishing to gain traction outside India, Nemesh advocates knowing the market well. In the case of Appointy, he points out that they were not trying to create a market, but only targeting people who needed scheduling software. Similarly, he states that most people focus on enterprises rather than on small businesses which makes them miss out on a huge opportunity.
We focus on the customers in the $800-$2,000 bracket, going for smaller companies, which has allowed us to capture more markets.
Additionally, he stressed that founders should focus more on strategy rather than funding because focussing on funding takes one into a separate direction altogether. Adds Nemesh, “I haven’t seen companies grow by focussing on funds alone. When you are just focussed on funds, you lose focus from the long term strategy of your product.”
The WebEngage Story
Onsite customer engagement suite WebEngage which enables ecommerce companies personalised engagement with their users across mobile, web and email started its journey in 2012 from Mumbai to gain traction in more than 50 countries now. Founded by Ankit Utreja and Avlesh Singh, WebEngage, in its current avatar has morphed into a multi-channel user engagement platform allowing ecommerce companies personalised engagement with their users across mobile, web, and email. It completely automates communication and engagement across the user life cycle, builds enriched profiles of users, allows customers to send richer emails and text messages to users. It also goes in depth into the data stream for its customers, allowing them to target users more effectively. More than 30,000 websites have now integrated with WebEngage.
Says Avlesh, “Selling outside India is hard not easy but one thing you need to be very sure of is that your product is a perfect DIY (Do It Yourself) product. The discovery and the fulfilment of the product needs to be online. The moment it is human aided, it becomes difficult, you might be able to sell to a few but you won’t be able to scale.”
He added that most people who want to sell to global audience go wrong at the point that their products do not fit the bar of a DIY product. They always need human assistance, and that’s why they are gaining traction outside difficult. Given the fact that WebEngage’s first customer was a random guy from UK who still is their customer, it’s no wonder that WebEngage has been able to fully leverage its DIY capability to make inroads in global markets.
The Helpshift Story
Customer support platform Helpshift that helps companies retain and engage mobile users now has a foreign customer base of 93%! Starting in 2010 from Pune, Helpshift is now helping many global companies to engage their customers with their apps. Founded by Abinash Tripathy and Baishampayan Ghose, Helpshift, sits inside of their customers’ apps to ensure that their new expensive users remain engaged (through targeted push campaigns), and proactively avoid any in-app frustration through native FAQs and In-App Messaging. Happy, engaged users spend more money in-app, and are more loyal to the app.
Abinash adds, “The rise in smartphones and the realization that we were spending 90% of our time in apps forced us to look at how companies were providing help to their users. When we looked into this for all the top apps we were using in 2012, it became clear that there was a clear whitespace as none of the apps we were using had any ability for their users to start a conversation with their publishers/developers.”
“Another key insight was that short form text messaging like Whatsapp, iMessage, etc. was the preferred mode of communication for mobile users. We then put 2 and 2 together and announced the first in-app support product that enabled apps to deliver that exceptional experience to their users. Fast forward to 2015 and we are now deployed on over 1.3 Bn devices and used by 1000s of the top apps in the world that include companies like Microsoft, Supercell, Target and Honeywell.”
In order to gain traction outside India, unlike many Indian SaaS companies that start by selling to customers in India first, Helpshift set up a US office and started selling there. The reason for this strategy was the US was the largest market of Mobile apps and Helpshift had decided that they had to win key customers in the US market. Being first in the market with a great product, made it relatively easy for them to get traction in the global market.
However, they had to face their own set of challenges. “The biggest challenge in gaining traction was in educating customers on why they needed to do this when there were established models in the web era (email support, phone, etc.) which our larger competitors like Salesforce and Zendesk were selling already. The strategy we adopted was to go after the largest apps in most categories in the app store and win them which would make other notice of what we had to offer and this paid off,” he said.
Thus, when Helpshift closed Supercell and was embedded in games like Clash of Clan (100s of millions of people play every month), then two things were validated for the team. First that Helpshift’s in-app experience was powerful and compelling for their customers and was indeed better than the email and web support model for mobile apps. Secondly, Helpshift’s platform could scale for very large publishers like Supercell and was ready for enterprise customers. Thus, its “Go Big” strategy worked wonders for it though it might be considered risky for other startups in their stage of life.
Most startups go after smaller companies when they start off as it is easier to sell to them. Helpshift’s working theory was that it was creating a new market with some real innovation and the best way to demonstrate it was to be powering the largest apps.
On how the foreign audience and markets are different from Indian markets and audience, Abinash stated that the global market for SaaS is very mature in comparison with India. He adds,
The buyer is a lot more educated, discerning and has a lot of choice (so many me too companies). They are not as price sensitive and are willing to pay a premium for products that have depth and solve problems elegantly. The Indian buyer is less sophisticated and obsessed on low price and not value in terms of how adopting tools will reduce their human costs. We have run into well-funded startups operating their CRM from excel spreadsheets in India which is unheard off in the western more mature markets.
For those wishing to gain traction in outside markets, Abinash advocates that they should find a real white space that is crying for a solution and be the first. He adds that startups should not build “me too” products (most Indian SaaS businesses are just me too products of a famous the US company). Also, it is important to tell one’s story in a compelling way to the market.
He adds that one should start with the hardest market first.
Go set up in the US if that is the addressable market with a majority of your potential customers and start winning a reference base. Once you have references it is easy to show others why someone decided to use you.
Additionally, one should focus on building an in-market support/success team that can work closely with the customers and make them successful. Most Indian companies based in India try to save $$ by doing it from India but this strategy backfires eventually. Lastly, he says, one should focus on branding, PR and telling one’s story using local resources. It is tempting to do it from India but there are deep cultural issues that will be missed.
The Freshdesk Story
Cloud-based customer support software provider Freshdesk is one of the leading startups in its domain and is counted among the successful global SaaS companies from India. Launched in 2010, the flagship product, Freshdesk, allows organizations to support customers through email, phone, websites, forums and social media. Freshservice, the second product from Freshdesk, is a cloud-based service desk and IT service management (ITSM) solution launched in 2014.
Founder and CEO, Girish Mathrubootham, got the idea to build a SaaS based customer support tool with focus on social media platforms, after a personal experience in his life where traditional support channels like emails and phone calls failed him, but with a single post on a forum, he was able to get the attention of the president of the insurance company which was creating an issue over his broken TV. With a business idea in mind, he approached his close friend and colleague, Shan Krishnasamy and they decided to quit their jobs and start Freshdesk in October 2010.
As far as gaining traction outside India is concerned, Girish says it was never a problem. “We have been global from day one. Our first six customers were spread across four continents. Fortunately, we have been able to increase our sales uniformly across the world.”
However, the challenge he faced was with recurring payments. He explains, “In India, the RBI does not allow companies to store credit card information of their customers. This is a big obstacle for recurring payments, and that’s a problem faced by all SaaS companies in India.” Then there were a lot of European countries whose first language is not English. However, language was one barrier that Freshdesk turned around into an opportunity. The startup now has a strong reseller network in these countries now. These reseller partners help them sell their products to the respective local markets.
People from different countries are culturally different - some like to meet in person before closing deals, some close deals over phone. There is no 'one size fits all' approach to selling.
On the difference between the foreign audience and markets and Indian markets and audience, Girish stated that one cannot club all 150+ countries under one ‘foreign’ category. He added that people from different countries are culturally different – some like to meet in person before closing deals, some close deals over phone. According to him, there is no ‘one size fits all’ approach to selling.
And that is what he advises startups who want to gain traction outside. “Each market is different, and you will have to understand your demographic before you start selling. What works for one market need not necessarily work for another.”
The Wingify Story
Founded in 2010 by Paras Chopra, Wingify, is a SaaS-based company whose flagship product, Visual Website Optimizer (VWO), is said to be used by more than 4,300 brands across 87 countries to analyse web activity and increase conversions. The VWO is such a hit with the foreign audience that 99% of its customer base is outside India.
Though the startup recently launched another new product PushCrew, it’s VWO that still remains the flagship product, enabling businesses to determine which version of the landing page of their websites works best for them.
Speaking about the challenges Wingify faced, Partner and CTO Sparsh Gupta said,
When we launched the product in 2010-11, we realised India was not the best target market for us. Ecommerce was still upcoming, and our product was not for those starting out, but is suited more for last mile customers. To put it simply, it’s not a necessity but cherry on the top kind of service that we provide. So, we were clear, we won’t be targeting them and designed the whole product to target last mile customers. Of course there was that time when a stigma was attached with buying a product from a 2-3 team member company in India. So for a long time, we had the UK address of where I was living as our address on the website.
However, what worked in their favour of targeting foreign audiences was the fact that people outside were comfortable doing a $100-$200 ticket size transaction online. Hence, the startup never needed to establish a physical presence there.
On startups looking to go global, Sparsh says that they should focus most on the product and quality. He adds, “People are accepting now that good products are being created globally, so being based out of anywhere is not an issue now. Geography is no more the limiting factor.”
Additionally, startups need to focus on their marketing efforts, SEO and social media efforts to gain traction far and wide.
As can be gazed from the stories of the above mentioned startups, having a sense of the market is a priority before entering them, as seconded by Ravi too. In this regard, Microsoft Ventures offers opportunity to startups to work in San Francisco, immerse in those markets, understand the consumer experience, and establish themselves. The accelerator also helps them actively seek connections to potential customers and channels while lending infrastructural support as well as aiding their marketing efforts. In addition, it appoints success managers to provide them continuous support. Also, the global alumni network of the accelerator provides these burgeoning startups support through mobile/online/ peer mentoring.
To sum it up aptly in the words of JC Penney,
Growth is never by mere chance; it is the result of forces working together.
As the above mentioned startups have proven, gaining traction in foreign markets is not a function of mere luck. A perfect DIY quality product, an incumbent need for the product in those markets, an innate understanding of the consumer life cycles, combined with the mature audience open to technology and a fairly transparent regulatory regime, are some of the factors which make these markets penetrable for Indian startups. So while foreign startups are coming to India riding on the wave of increasing smartphone penetration, Indian startups, especially the SaaS based products, already have the groundwork laid for them to increasingly gain traction in foreign markets.