Gupshup With Beerud Sheth: Decoding The SaaS Giant’s SMS-To-AI Journey

For millions of Indians, social media and instant messaging dominate their daily lives. This is where the debates and discussions happen, and often buying decisions.

More than 655 Mn are active users of social media and messaging apps, and in contrast, only 30% of Indian internet users shop online. Clearly, there is a gap between how consumers use social media and how they shop online.

That’s where Gupshup came in, looking to help brands engage with, acquire and retain customers through structured and targetted communication over social media and IM apps.

From starting as an SMS-based social network in 2004 to then moving on to WhatsApp and IM-based messaging for brands, and now adapting to conversational AI in 2024, the SaaS unicorn has continuously shifted itself to align with new paradigms in app-based communications.

This adaptability has allowed Gupshup to build a significant moat over the past two decades. And now the company is ready for the next step.

“In the early days, it was all about survival,” recalls Sheth. “I was involved in everything – from building the product and talking to the customer to hiring and fundraising – whatever it took to keep things moving. Back then, decisions were made on instinct, and we had the flexibility to experiment and fail fast.”

That instinct paid off. Today, Gupshup is a $1.4 Bn company, backed by Tiger Global, Fidelity and a host of marquee VCs and private equity funds, and is charting its route to the stock exchange. Besides India, the company has a strong presence in the US, Europe and the Middle East.

At the group level, Gupshup’s consolidated revenue grew 55% YoY in FY23 to reach $300 Mn, and the company is on track for 2X growth in FY24.

With the wave of IPOs now hitting the Indian public markets, Gupshup is also eyeing an IPO soon, but like in the case of Razorpay and others, there is the matter of redomiciling to India.

“Gupshup has received strong indicative interest from public market investors. However, as a US company, we are trying to figure out the legal, tax, and financial issues around the reverse flipping to India, before an Indian IPO becomes feasible,” Sheth says.

In this edition of Griffin Dialogues, Inc42’s new series featuring conversations with India’s top startup leaders, we sit down with Beerud Sheth to discuss what it takes to meet consumer demands while scaling, how to build a thriving organisational culture, and why agility is the secret weapon for long-term success.

Edited excerpts

Inc42: Gupshup’s journey has been full of bold pivots – from an SMS-based social network to a global leader in conversational AI. You had earlier cofounded Elance. What were some key leadership lessons you learned that shaped your approach at Gupshup?

Beerud Sheth: I had a front-row seat to some of the challenges that come while scaling a company. With Elance, I quickly realised that growing a business isn’t only about the product or the market, but more about managing the people, building a culture of excellence, and figuring out how to keep everything moving. The lessons I learned about building a strong team and adapting to change were foundational for me when I transitioned to Gupshup.

Fast forward to when Gupshup began to scale, the challenges became more complex, and the lessons from Elance became even more relevant. We hit a critical point where we realised our business model wasn’t quite working.

We initially started as a consumer messaging platform, but quickly realised that monetisation was a challenge. That’s when we pivoted towards an enterprise-focussed approach, one of the biggest strategic shifts in Gupshup’s journey. If we hadn’t experimented and adapted quickly, Gupshup might not be what it is today.

Inc42: As Gupshup scaled, how did your leadership evolve? What were some of the biggest shifts you had to make as a founder?

Beerud Sheth: As Gupshup scaled, I had to unlearn a few things. For one, I couldn’t be in every decision anymore.

Another big shift was communication. When you’re 10 people in a room, everyone knows what’s happening. But at scale, alignment isn’t automatic. We expanded rapidly across markets like Latin America, Southeast Asia, and the Middle East, and suddenly, different teams had different priorities.

That’s when I learned the importance of over-communication, repeating the mission, reinforcing priorities, and ensuring clarity at every level. One thing I always say now is ‘if you’re tired of repeating yourself, you’re just getting started’.

Most importantly, I had to get comfortable making bigger, more irreversible decisions. Taking the risk is one thing when you are small, but when you have hundreds of employees and thousands of customers relying on you, the stakes are high. One of the hardest calls was making an aggressive expansion in international markets.

The investment was huge, and there were moments of doubt, but it paid off. It taught me that you don’t always get complete clarity before making a decision. Sometimes, you have to take the leap and trust your instincts. It wasn’t easy, but those moments defined our growth trajectory.

So, if I had to sum it up, I started out as a builder, became a problem solver, and now, my job is to set the direction, bring in the right people, and make sure we’re always thinking long-term. To me, leadership isn’t about doing everything, but making sure the right things get done, with or without you in the room.

Inc42: As companies grow, it gets harder to keep up the risk-taking mindset that fuels early innovations. Gupshup has, however, continued to push the boundaries. How did you retain the spirit even while scaling?

Beerud Sheth: Innovation is in our DNA. It’s never been something we just talk about. This is who we are, what we do, and how we think. From the very beginning, we’ve always been willing to take risks, experiment, and push the boundaries. Scaling only meant that we had more resources, a bigger team, and greater opportunities to keep that spirit alive. If anything, scaling gave us the chance to amplify the spirit to take risks.

One of the things that has worked really well for us is making sure that everyone, across all teams, feels like they have the freedom to experiment. Whether you’re in product, engineering, customer support, or sales, innovation is encouraged. It’s not just top-down. We’ve made it part of our culture so that everyone has a voice, and that’s how we stay ahead.

We believe in empowering our people to trust their instincts and judgment. Everyone at Gupshup, regardless of role or seniority, is encouraged to speak up, share ideas, and challenge the status quo.

Inc42: Many leaders talk of innovation, but fostering it within the team, especially at scale, is altogether different. What principles do you follow that ensure that the ideas stay afloat?

Beerud Sheth: We believe in healthy debates because they lead to better, more thought-out solutions. Different personalities bring different perspectives to the table, and that’s crucial for innovation. We’ve all been in those discussions where everyone agrees and the conversation just ends. But when we challenge each other, it sparks new thinking, makes us question assumptions, and pushes us to see things from different angles. It’s this culture of constructive tension, where we disagree but respect each other’s views, that drives us forward.

Our approach to innovation is built on freedom, trust, and the belief that everyone has something valuable to offer. More than having the freedom to experiment, we offer the freedom to challenge ideas, explore alternatives, and even fail. If we’re not failing, we’re not experimenting enough. That’s how we’ve maintained our innovative edge as we’ve scaled, and it’s something we aim to continue as we grow.

One of the most important aspects of our culture is that leadership isn’t a top-down authority. It’s about empowering people to bring their best ideas forward. We encourage creative conflict.

If someone thinks there’s a better approach to a project, I want them to speak up. That kind of open dialogue keeps us fresh and allows us to evolve as a team. This is what helps people take ownership of their projects and lead them with conviction.

Inc42: How do you identify and assess potential leaders within the organisation?

Beerud Sheth: I can’t help but think back to my experiences with people who shaped my perspective on leadership. There’s one person who stands out in particular – my professor, Deepak B Phatak, from IIT Bombay.

He was one of the most dynamic I’ve ever known. He was equally demanding, not just to his students, but to himself. He had this unique way of blending rigor with genuine care. He’d work incredibly hard during the day, fulfilling his academic responsibilities, and at night, he’d hang out with us, the students. We’d spend hours talking, asking him questions about our work, life, even just what we were feeling at the time. It was never just about academics with him. He cared about us as people. And that’s the mindset I carry with me when I think about leadership at Gupshup.

When we’re looking for leaders, it’s not just the resume value alone that we look at, but the attitude and the mindset as well. They should be willing to take risks, to experiment, to not be afraid of failures. Those with an entrepreneurial spirit who approach challenges as opportunities, and not obstacles. A lot of this is rooted in curiosity.

I live by the mantra, ‘Be humble, be hungry’. Humble enough to listen, learn, and recognise that leadership is about serving your team, and hungry enough to constantly drive innovation and push for excellence. We look for leaders who are hungry to learn, to grow, and open to new ideas.

Inc42: Leadership needs to evolve with the company’s growth. How do you balance the mindset shift and the nurturing process as you scale?

Beerud Sheth: I’ll give you the analogy of scaling companies in the defence forces. In the early stages, you need commandos, the people who are versatile and comfortable with ambiguity. They’re the ones who’ll get their hands dirty and figure things out.

As the company grows, you bring in the army, who are specialists in operating in a more structured way, with clear roles and support systems. But as you scale further, you need the police force, the people who make sure everything runs smoothly and efficiently, ensuring that the operations are streamlined.

What I love about this analogy is how it highlights that the mindset required at different stages of growth is entirely different. At Gupshup, we need leaders who can operate in all these stages, depending on where we are in our growth journey.

In interviews, we look for people who are resilient and adaptable – those who’ve faced setbacks, learned from them, and come out stronger. I love diving into their career journeys, hearing about the tough moments and how they handled them.

Once we identify the right people, the next challenge is nurturing that talent. We create an environment where they have the room to take risks, experiment, and to fail. We want our leaders to be entrepreneurs themselves, whether or not they have the title.

We also make sure they have the structure to fall back on when needed. As we grow, we’ve got to balance that creative freedom with a system that keeps things running smoothly.

Inc42: What has been the toughest decision you’ve had to make as a leader? And, of course, how did it shape you as a leader?

Beerud Sheth: The dotcom bubble burst was a defining moment in my entrepreneurial journey. It taught me that some things are just out of your hands. In 2004, I cofounded SMS Gupshup, which allowed users to create interest-based groups and receive SMS updates, much like the early versions of social media.

Our growth was explosive. By 2010, we had 70 Mn users in just three years, making us the largest social network in India at the time. We raised $12.3 Mn in 2008, just days before the global financial crisis hit, and followed that up with $12 Mn in early 2010 and another $10 Mn in mid-2011.

Things were looking good. By 2011, we started burning through cash at an alarming rate, subsidising SMS costs for all our users. We had expected SMS prices to drop, but they didn’t. Our attempt to monetise by placing ads in SMS footers ran into regulatory roadblocks.

Inc42: That sounds like a high-stakes situation…

Beerud Sheth: To save the company from potentially shutting down, we had to decide whether or not to pivot from being a consumer-facing messaging platform to focussing entirely on enterprises. There was no clear path forward, and frankly, the pressure was immense.

The decision to make this shift was huge. It meant changing our entire direction, investing heavily in a new strategy, and, most importantly, taking a gamble on the long-term vision for Gupshup. There was a lot at stake – people, resources, and time. It wasn’t just a business move, it was personal. As a founder, I had poured so much into the consumer-facing side of the business, and suddenly, I was asking everyone, including myself, to leave it behind and move on with something different.

What made it even tougher was that there wasn’t a perfect answer. We were in uncharted territory, and there was no guarantee it would work. Looking back, I feel grateful for that moment because it taught me some valuable lessons. First, I learned the importance of trusting your gut and being firm even in uncertainty. You don’t have all the facts or a perfect plan, but you have to make a call based on what you believe is right.

Second, I realised how crucial it is to have a team you trust. That pivot would have never happened without the support and belief of the team around me. It was hard to ask them to take that risk with me, but they did, and we made it happen together.

And finally, I learned that leadership often means taking tough calls that won’t be immediately understood or appreciated. You have to trust your long-term vision, even if it feels uncomfortable or uncertain.

That pivot, as tough as it was, ultimately led us to the success we have today. It’s a decision I’ll never forget, and it’s one that shaped the way I approach leadership and risk.

Inc42: From the early, chaotic startup days to leading a unicorn – how has your approach to leadership evolved? 

Beerud Sheth: In the early days, it was more of a hands-on approach. I was deeply involved in every aspect of product development and operations, driven by the need to rapidly iterate and find market fit. It’s now more about making strategic focus, setting the vision, fostering innovation, and scaling the business. Part of this shift involved empowering teams, cultivating a culture of agility and customer-centricity, and anticipating market trends.

Inc42: Moving on to regulations, Gupshup operates in diverse markets with varying regulations. How do you navigate this complex landscape?

Beerud Sheth: Regulations are always changing, and when you’re operating in multiple markets, you have to stay on your toes. There’s no one-size-fits-all approach to it. We work closely with local experts who understand the nuances of each market. Also, more than just following the rules, we believe in transparency, and being upfront with our clients about how we handle data and security is one of our first priorities. Since compliance is always evolving, we make sure our teams and technology evolve with it.

Inc42: How do you keep the organisation compliant while innovating in areas like conversational AI, where regulations are still evolving?

Beerud Sheth: At Gupshup, we’ve integrated compliance into our innovation strategy by staying informed about evolving regulations and implementing robust data protection measures. We monitor legal changes across jurisdictions, ensuring our practices align with the latest standards. Our commitment to data privacy involves advanced encryption and adherence to global standards like GDPR. By embedding compliance into our innovation process, we maintain trust and deliver conversational AI solutions that respect user rights and regulatory requirements.

Inc42: Did regulatory hurdles ever influence the direction of your product roadmap? 

Beerud Sheth: Regulations have always played a big role in shaping our journey, and our pivot in 2011 was a perfect example of how we had to adapt. At the time, our strategy was to offset the cost of SMS by placing footer ads in messages. But regulatory constraints didn’t allow for that.

So, despite our rapid growth, sending billions of messages, we found ourselves stuck without a viable way to monetise. It was a tough situation, and one that forced us to rethink everything, and ultimately led to our shift towards enterprise messaging, which became the foundation of Gupshup’s success.

Regulatory shifts are still a big influence on how we approach product development. For instance, take the recent anti-spam measures. The governments and telecom regulators are getting stricter with rules to protect consumers from unwanted messages.

We saw this as an opportunity not just to ensure compliance but to rethink the way we’re building our products. Instead of just focussing on one-way communication, we made a deliberate shift towards more meaningful, two-way interactions.

This has helped us align better with what consumers actually want, allowing businesses to deliver more personalised, engaging messaging, and in the process, improving the overall user experience.

Inc42: How do you approach financial planning after reaching success? 

Beerud Sheth: Financial planning after success is tricky but crucial. Once you’ve found your footing and the business is scaling, it’s easy to get swept by the growth, but staying grounded is the key.

Here’s what I’ve learned from my own journey, and it might help others navigate this stage: Build a solid financial foundation. When you’re in the early days, you’re scraping by, chasing revenue, and taking on whatever funding you can get. But once you’ve reached some level of success, it’s time to get strategic.

Setting up strong financial systems is essential, and this isn’t only to track day-to-day operations but to make informed decisions down the road. Work with trusted financial experts who can help structure your financial operations, whether it’s tax planning, or managing cash flow, or understanding how investments may impact the business in the long term.

Next, you must diversify your revenue stream so that you are hedged against market volatilities. You should expand your product line, enter new markets, and form partnerships. Such moves help you combat business uncertainties. You must also manage your risks wisely – take calculated risks, not blind ones, to protect your company’s financial health.

Inc42: How do you see the temptation to cash out after success? How do you balance it with long-term growth?

Beerud Sheth: You must prioritise reinvestment in the business. One of the best moves I made early on was reinvesting profits back into the company. Scaling often requires significant capital, be it for talent, technology, or expansion. The temptation to cash out can be strong, but reinvesting strategically in growth, product innovation, and talent acquisition has a bigger long-term payoff.

Inc42: As we wrap up, can you say how do you stay true to your core mission while managing the finances?

Beerud Sheth: By not losing sight of your purpose, simple! As businesses grow, it’s easy to get obsessed with revenue targets and market share. But, in my experience, true success comes when you’re constantly aligning your financial decisions with your values and the mission of your business. Your focus should be on building something sustainable, and not just chasing short-term wins.

At the end of the day, financial planning post-success is about playing the long game. You should keep an eye on profitability, invest in growth, manage risks carefully, and remember that financial success should be a reflection of the positive impact your business is making. So, focus on building a strong financial base, diversify, and reinvest in what’s meaningful for both the company and its people.