Rajesh Jain (Netcore Cloud) on How to Bootstrap a SaaS Company to $100M Revenue

Speaker A: I failed at everything I tried.

Speaker B: You had like one of the biggest exits in Asia for India World. Set of properties, 115 million acquisition.

Speaker A: Sifi paid me 115 million for India World. That same night, their NASDAQ listed stock went up by $700 million. More important than knowing when to enter a business is knowing when to exit a business. Rajesh Jain started one of the country's first Internet companies in the 90s. And today he runs Netcore business. He's grown to $100 million in revenue without outside money. On this episode of Found A Thesis with Akshay Dutt, they get into the dot com deal that put him on the map and why he thinks 60 to 70% of the marketing budgets are being wasted. Companies are not democracies. Think of them more like North Korea or China.

Speaker B: There were a lot of people making a lot of money on Vaas. Why didn't you explore that?

Speaker A: Never build a business where you can be shut down by the government by a regulation change overnight.

Speaker B: Are you the man responsible for the election of Prime Minister Modi Foreign? Welcome to the Founder Thesis podcast. It's an honor to interview you. Not many people would know you are a pioneer in India's Internet space. Um, before we get into that, um, you know, what kind of India did you grow up in? How did you end up in the us? Just take me through a little bit of your origin story.

Speaker A: Sure. So I was born on the 15th of August, 1967.

Speaker B: Oh, wow.

Speaker A: When I was a little old to understand, my mom said that the nurse who was there in the hospital had told her that in Marathi that effectively translated was that this boy has been born for the nation, uh, for lots of people on the 15th of August. Um, so I grew up in, um, in Mumbai and we were, I would say, a middle class family at that time. My mom used to tell me stories later how she would walk, uh, with me in her arms from one bus stop to another because she could then say 5 paise and the bus fare. Uh, uh, early memories are essentially growing up in Mahim, um, uh, in Mumbai. And, um, that India was effectively, if you see the late 60s, more like the 70s. India, uh, you know, where there was a struggle for a lot of things. Ah, scarcity. Um, but what I do remember is that my father always tried different things. He, uh, had spent a few years in Dubai and that was the heyday of Dubai, construction of the first iteration. If you leave aside what's happened in the last few years, um, uh, he was a civil engineer. I Would walk with him to buildings. He was, uh, the structural engineer for many skyscrapers being built in India. Was a unique tech that he had brought back from his stint in the US So early days, I always thought I would be like my father, a civil engineer, build bridges. Those are the types of books I would see at home. Um, the school was St. Michael's in Mahim, and then we moved to Napinsi Road in Mumbai. Um, my father did, I think, a couple of smart things. Uh, he, uh, in the buildings and the office buildings that uh, he was constructing, he, he took a flat and an office in lieu of his fees.

Speaker B: And that appreciated a lot more.

Speaker A: Absolutely. Uh, so, um, since Xavier's was the school where I spent eight years and Xavier's college after that. But this was an India where it was, you know, there was always this um, uh, uh, angle around. You never had enough actually. So the late 70s, early 80s, uh, your options as a kid growing up was primarily either an engineer or a doctor. Um, you had to study very hard because education was the only way you could sort of scale, uh, up in life. Uh, my father had grown up in a village in Rajasthan and he got a Tata scholarship to go to the US and that's how he pulled his family out from sort of very low income poverty, that kind of stuff. He's the only person who really got educated in his family. Um, and so for us, when I was growing up, he would get a lot of magazines, international magazines from abroad because he always felt that education and learning, constant learning is what got him out. And that's the sort of gateway or a passport to a better future. So that was the 70s, uh, early 80s, academically focused, um, I would study a lot. Not much of extracurricular activities in life other than perhaps quizzing, which I had got interested in in my school and a little bit in college math standard tech in, uh, engineering interests at that

Speaker B: time, how did you end up in

Speaker A: the U.S. so four years at IIT Bombay, um, uh, undergrad, um, everyone there was aspirational, um, of course in that era. Um, and what was interesting was also that, um, a lot of kids at that time, I mean all of us really the only thing was that of course jobs available in India, but everyone aspirational was to get to the U.S. uh, so I think in my batch, pretty much everyone of electrical engineering, almost everyone except a handful, would have gone abroad. Many are of course still there. Very few came back. So 84 to 88 was um, IIT Bombay. And then I applied, then I got into two universities. And I chose Columbia, uh, for my masters. And when I left my father told me that look, you are going to finish your masters in nine months, work for two years in the US and come back. Because that is exactly what he had done in the mid-60s. So for me the decision to come back to India was already done. So the education in Colombia uh, offered a nine month. You uh, could finish actually in nine months because they didn't require a thesis so you could just take courses, finish it.

Speaker B: And this was a computer science, it

Speaker A: was actually double E electrical engineering. But I took a lot of courses in computer science because I had never learned computer science before that. And uh, uh, in fact in IIT the only programming course was fortran, which everyone had to learn at that time. But what I had done was in when I was in 11th and 12th, um, my father had bought a computer in his office. Now if you think back, it was such an important, that was a game changing decision in my life. I think till that time I was all civil engineering, build bridges and buildings and whatever else. Um, but after college, 11th and especially uh, 11th standard, I would go to his office and he had no idea how to use it. Uh, so I taught myself basic programming and then I would spend time on it. It was like this computer which took up a whole room at that time. Um, um, uh, I just fell in love with programming because it was not much else I could do. So I would make various games. Uh, but I fell in love with the idea that you could write software and control actions of a machine. Uh, but iit I never got the option to actually learn uh, in this. So when I went to us um, I was very clear that I wanted to take up at least some courses in computer science department. And that was the flexibility that many of the US universities actually give you. And um, one of the first courses I took up uh, was actually Operating systems. And my advisor, they had told me that look, it requires uh, a prerequisite in C and Unix and you don't have that, I can't let you take the course. So I told him, I said look, give me two, three weeks, I will learn it. But I'm going to only be here for two, um, uh, two or a little bit more semesters. I've got to take this because then this is a prereq for some couple of other courses in CS which I wanted to do my first test in the OS operating systems course. I got two out of 20. This is not going to work. I said one more test I mean, let me, give me, give me a little bit of more time I spent in that semester. I would have spent 80% of my time on a single course. And I ended up number two in the class in that course. Um, and I think that was sort of the foundational step stuff for me to move away from civil engineering to more towards computers. Um, I think my dad's computer plus the experience at Columbia I think was very, very helpful.

Speaker B: And where did you work? You worked there for two years, right?

Speaker A: I worked for two years. Um, it was a very tough time actually getting a job. This was 89, um, summer in the U.S. um, I remember, I mean there were not many jobs, especially on. And when you're on a foreign visa, it's that much harder as it is now. Um, so um, I applied a lot. It took me three months. Um, I would go to all sorts of places for interviews, but I only got one job, which was at 9x, which was the Bell operating company, one of the regional Bell operating companies. So telecom basically. Uh, so when I got. And those were the days of voicemails, um, so I got a voicemail from 9X, uh, that uh, my uh, manager to be said that, uh, please call me back. And I had been struggling for three months to get a job. I called him back and he said, look, we are delighted to offer you. And I said, I accept. Don't you want to know your, your compensation and the package? I said, no, I don't care what it is. You tell me when to start work. So that was sort of those days. I mean, um, choices were limited, but in a way, you know, each of these then becomes sort of turning points in your life. And those two years that I spent at 9X in White Plains, about uh, 30, 40 miles from M. New York were I think just fantastic. It was a science and technology center. So a lot of R D. Um, I started off doing writing software, but they realized I could speak well. So they would then send me to meet various companies for doing partnerships. So for, to Cisco to uh, Lotus. At that time I got to travel a lot. I got to do presentations, I got to be at conferences, events. So a lot of learning happened. Unlike a lot of colleagues or my classmates who ended up doing a desk job. And I would see others, in fact, even at 9x, doing just a desk job. But I got the external facing world, external facing work, which I think was very exciting. Otherwise, you know, you end up just being on front of a computer all the time. And that helped a lot. That made me Much more outgoing also. Uh, and I got to travel quite a bit before I was coming to India. Um, my, one of my dreams was to take the train coast to coast. So I had gone to my manager and said, look, you know, it's going to cost the same, but if you give me one day off for the meeting in um, California, I can leave on Thursday evening and I'll reach there Sunday evening, but I can do one of my dreams. Uh, uh, he allowed that, of course. So it was a fun time, a, um, lot of learning. But I would say it was more of the learning outside, um, the office than inside the office.

Speaker B: Like you got to see the ecosystem of technology companies in the US I

Speaker A: mean going to conferences, uh, just being in presentations with senior 9x people at companies, I mean you've got to see how they present, how they talk, how they converse. Otherwise was very rare for an engineer at that age at uh, 22, 23, 24, to actually get in the late uh, 80s.

Speaker B: So you came back to India and you didn't look for a job then. You wanted to just an entrepreneur. You were pretty clear on that?

Speaker A: Yeah, so that I was clear on because I had seen my father through multiple ups and downs, uh, being an entrepreneur. And I was pretty clear I didn't want to work for anyone else once I came back. So there was a friend of mine, Sanjay, uh, Jain. He and I had connected in the U.S. he was a year senior to me from ID Bombay, but we had not known each other here. A couple of friends had put us in touch saying that, look, both of you want to go back to India. And that's how the entrepreneurial journey sort of began. Just around the time when I was leaving the U.S. we did some work for a U.S. company. We had connected in order to bring that software development back to India. That didn't pan out much after that, but the entrepreneurial journey began. So in mid 92 I was back in India, um, all set to be an entrepreneur.

Speaker B: And uh, like, what were the lessons from that? Uh, like, you know, the, the, those early attempts.

Speaker A: So in the first, uh, two and a half years, everything I tried failed. So uh, we tried to do software development, we tried to resell American software in India. We created a multimedia database. We, I spent a lot of time building an image processing software to sell to doctors and metallurgy, um, companies, uh, but none of them worked. I realized that the software we had built, um, called Image Workbench, that the, at that time I didn't understand tenders, but all these Purchases had to happen through government, uh, tenders and tendering time used to be two years. I can't survive two years without an order. So, um, that didn't work out. Um, and then sort of it hit me that I know when I came back from the US I was God's gift to India in that sense. You know, that, um, great education, India abroad. Um, and what really hit me was, um, when people in the extended family would tell my father that, look, your son educated in the US he's not earning any money, he's just losing you money. And our son may not be educated, but at least he's making money even if he's sitting in a shop or running on the shop floor. Now, Father, to his credit, never brought any of these things up, never said I should try and be with him. He had a small, uh, civil engineering consulting unit. He said, do what you want. And late, uh, 94, I realized that the last venture imaging venture that I was doing has to die. It's not going to work. So then I. And I had also got married, just got married, arranged marriage. The first year I would barely talk to my wife because I was struggling at work. I hardly knew her. Um, it's almost like everything that was going wrong was going wrong in life. Then I went late 94 to the U.S. um, I spent a couple of months at a friend's place, uh, in California. I had a few ideas. So one of the good things was that because my father would get a lot of magazines at home for International magazine. It would be expensive, but I would get to read the Fortune and the Business Week and those kinds of publications, if I remember correctly. I got a good sense of what's happening globally and I could see the Internet stories starting to come. So this was mid m to late 1994. And I connected that then with some of my, uh, uh, stay in the US where I was struggling to get information on India. I wanted to come back to India. I would get my parents to actually send me some of these computer magazines by courier to the US So I could understand what was happening in India. And I realized that the Internet could actually connect Indians worldwide. Could be this bridge break, uh, geography, you know, uh, the death of distance, as was called also at that time. And what was, um, interesting also is that this connection that NRIS Worldwide had a common problem. They had no idea what was happening in India. I mean, you would go to the library at say, Columbia University papers, New Times of India, etc, would take 10, 15 days to come. India today was Published only once every fortnight. By the time you got it, news already 15 days old. So the only option at that time was some of these Usenet, uh, news groups, uh, which were there but very sketchy in information. So I combined the Internet emergence along with my own hunger for information on India and my belief that there would be many others like me. And I spoke to a few friends saying, you know, what are the kinds of things you would like? What are things you miss about India? And that then became the sort of genesis for the ideas which, uh, helped me build IndiaWorld. But the real game changer, I think, in my life was at that time when I was struggling also in the U.S. uh, September, October 1994, I came across this book, Competing for the Future by CK Prahlad and Gary Hamill. And when I read the book, I could almost see the business plan forming in my head. Even today I have a copy of the book with probably hundred post its outlining the India world ideas. So I would read something, ideas would come, I would just stick it in the book. And that sort of was the business plan being formed right there. And then, in an amazing coincidence, I had gone to meet a person who had been introduced to Professor Ramesh Jain in San Diego. So I go to him and, um, uh, I had that book with me. I was reading it on the flight, um, and I showed him the book and he said, rajesh, guess who was sitting here three hours ago. C.J.

Speaker B: okay.

Speaker A: So I mean, they were very good friends. And it was almost like, you know, destiny prodding me in a direction with this whole idea of competing for the future that you have to imagine there are multiple, uh, visions of the future competing, and you have to imagine that future and make that happen. So for me, the ideas sort of germinated there. I came back to India. I had to reduce staff, um, at that time. And I started on the India world journey. It was nothing to do with computers in that sense, nothing to do with tech. It was a media company. I didn't realize it at that time. I think it was good because I would have been probably very scared, obviously, building a media company. Uh, the two things I knew that I wanted to have on IndiaWorld were Lakshman cartoons and India Today. That's what people had told me. That's what they missed most. I wrote out probably a hundred letters to media owners in India, just physical letters. I got a letter back from R.K. laxman. I met him and Times of India. People were very surprised that, I mean, I. Who's Like a, I mean, random person he was meeting. They said, we sit close by and we don't get to meet with him. Um, and actually when I went to meet with him, I told him, look, your cartoons will appear like this on the Internet. Arun, uh, Puri and Raj Chingappa from India Today met with me at that time. And I think I'm, um, eternally thankful because some of these really became the content pillars. I mean, Amach Katha comics, which were also there. So a lot of small, small things put together at about 25, 30 sections became a portal.

Speaker B: And these publishers were expecting some revenue.

Speaker A: Initially, everyone gave it to me for free. Um, the good thing was I would basically show them, look, this is how your content will appear on the Internet. Global, globally, people can access it. And, um, at that time it was the time of TV channels. So for many people it was like yet another TV channel opened up. Satellite tv, basically, version was the only one till of course that time in India. And you know, later on, of course we had to start paying some of the content providers. But, uh, the good thing was that early on I could begin with, because I had very limited money. I mean, I had lost some money in the two years.

Speaker B: This was your, uh, U.S. savings that you were using.

Speaker A: Exactly.

Speaker B: I have a question. So the, uh, image processing idea, uh, which you had was also a vision of the future. Uh, why was this vision of the future more compelling to you? Was it just that, uh, with image processing you knew time to revenue is long?

Speaker A: Very good point. Actually. Um, when I think back now, I think the attraction of a B2C business, of course we didn't know all these terms at that time. I think also the fact that I was building it for people like me, the imaging process felt like building for something else for someone else. A hospital, a metallurgy firm, um, X rays. It just seemed very exciting that you could take images, enhance them, count objects and images. Um, but at the same time, the challenge was also that I was selling to people I did not know here. These were Indians. I mean, just like me.

Speaker B: You understood the problem area better.

Speaker A: Absolutely. Understood the problem very well. And it was early days and, um, very early days of the Internet. Commercial Internet access in India came six months after I actually launched. I launched in, um, March 1995. Commercial access in India came in August 1995.

Speaker B: What does that mean? Commercial access, like to consumers? Is that what you're saying this is?

Speaker A: And consumers. So till that time, till August 95, the Internet Access in India was largely through Ernet, the Educational and research. Net.

Speaker B: You found some way to access the Internet through Ernet to publish.

Speaker A: Yeah. But then the government realized they had some clause of, um, not allowing, uh, Education and Research network, the ER Net, to be used for commercial purposes. They deemed that I was doing it for commercial purposes, so they stopped. They cut my connection.

Speaker B: Okay.

Speaker A: The next day, I had to now start dialing the US to upload the information on a US server. So essentially from like 10 rupees a day, it went to like thousand rupees a day. Tried to persuade them that, look, there are many other institutions in India using Ernet, but of course you couldn't get through to anyone there.

Speaker B: And even buying the domain would have been impossible from India. Right. You would have probably had to buy it from the U.S. yeah, I had

Speaker A: to connect with a person in the U.S. um, uh, and. And get the Indiaworld.com domain at that time, which became a problem later on.

Speaker B: As in, it wasn't in your name. That's why.

Speaker A: No, it was in the name of the US Person. So we lost later on. I was not very. At that time, M. I had to restart. So we started with, uh. But that's a story. Comes about a year and a half afterwards.

Speaker B: Yeah, just take me through that journey. Okay, so you launched it. Uh, you started getting traffic, I assume.

Speaker A: Yeah. So I realized I had to make money. So I had priced it. So I had kept a few sections free.

Speaker B: Okay.

Speaker A: So we had. I put a price of 59 a year for, uh, access to India World.

Speaker B: And how did that money reach India? That's again, something I'm curious.

Speaker A: In the US Right now for SO hosting purposes.

Speaker B: Okay.

Speaker A: There was a entity I was working with in the US for this. It would cover at least their costs. Um, so two things happened. One is I realized that, uh, feedback came very quickly that, look, we are going to pay you $60 here. I dropped that down to $20 a year. And I started. We started getting subscriptions online, people paying by credit card.

Speaker B: How did discovery happen? Word of mouth.

Speaker A: Word of mouth, absolutely. So we never did. I put up one ad in India Today, International, and I put out, I think, one press release through Business Wire, and that's it. And that was one very big learning for me, Akshay, that, uh, because even later on, as people would spend a lot of money on their prop portals, which they would launch in India, for me, the learning was that, look, paid money can get a person to the side once, but it's only the content which will keep that person coming back again. And Again and again. I wanted India World to be a habit in people's lives. So we would update it every day. News headlines. Uh, we had a email, uh, uh, service which would send out morning and evening. So my wife and I, my wife Bhavna and I, we of course built all this together. Uh, we couldn't go out together because one of us had to be sitting watching Doordarshan, listening to All India Radio at night, and then from the computer, basically send out the news. But this rigorous discipline effectively endeared us to Indians in the us so it was absolutely right. It was all word of mouth.

Speaker B: I'm wondering how you managed to get married without, uh, an income like that itself was a challenge in those days, I'm sure.

Speaker A: Yeah, this was. Luckily I got married before I was doing India World.

Speaker B: Okay.

Speaker A: And my wife, we have worked together for 30 plus years. Uh, and everything that we've done, she's an equal partner, actually. So early days, the, the news headlines, the comics, there were updates every day which were happening. So there was a reason for people to come back again and again. And because we were the first, I think for about a year, we were the only ones. Rediff launched in, uh, 96, early 96, we were the only one. And the interesting thing was that on every page I had this button which said if you read anything, send us feedback. I would read every email, I would reply to every email which came. The best ideas on what people wanted actually came from, from them themselves. So some short stories on India. So then I went to Katha. At that time, uh, Katha used to publish stories. So I would then, depending on the inputs which would come, I would then find equivalent content providers who would give me that. So people wanted stock, stock, uh, market updates daily. So I got the stock market update from DSP Merrill lynch out here on a floppy, uh, end of the day, and then you would upload it, but they would still get it when they woke up in the morning. I mean, if you think about it, the gap was between not having anything and what, what service we were providing.

Speaker B: Yeah, yeah, yeah, yeah. It was a different time. Yeah.

Speaker A: And of course, cricket scores, cricket updates, all of those things started coming in. So other source of revenue, um, in India that I generated was doing websites for companies.

Speaker B: Okay.

Speaker A: Services. Exactly. So I would persuade companies that, look, the Internet is the next big thing. You need to have a presence on the Internet. So, um, onm Ogilvy and Mehtar and Boyden were my first two customers. So we randomly charged 5,000 rupees. A page did three pages for them. 15,000 rupees sounds crazy right now. Um, my first big customer was Kotak, uh, Kotex Securities. We got a full platform, we did a personalized portfolio for them. Imagine 1996, you could have a personal portfolio with all the software, etc, all done. So lots of these things then started happening. Um, and then the advantage also was that I would then in the early days I started then taking, telling them that look, you've created the portal but you need to publicize it. So we started running small ads for them and we started charging for them. Amul was another one in the World cup in um, 96 I think, uh, if I'm not mistaken. And uh, I said look, your topical can be seen by everyone globally. So they actually paid for being present. So a lot of these small, small things helped get us get the revenue stream going in India. Uh, the US side got funded with the subscriptions in the early 18 odd months.

Speaker B: Okay, so you said after 18 months there was that problem of the India world domain.

Speaker A: Yeah, uh, um, we lost the domain so I had to restart almost. Uh, I tried Indiaworld.co.in uh and that didn't really work very well. That co.in thing was not there. I had to host a server in India.

Speaker B: Even today co.in will not work.

Speaker A: Um, so we had to host a server from India because we lost access to the US server. So um, yeah, so now look at how things work out actually. I mean this is like there are so many people, I mean thankful to life for making this happen. Now I keep saying as an entrepreneur there are hundreds of moments in your life when you are one, uh, little tiny second away from failure. A million things really have to go right for you to succeed eventually. You know, people think it sometimes overnight success, no, it's like you avoided failure probably more than others to have succeeded.

Speaker B: So true, so true.

Speaker A: So uh, when I wanted to host in India, I tried, I contacted Dr. Uh Ramani who was head of NCST, who uh, was uh, NCST used to host uh, or run um, Ernet. He said look, we can't allow servers, but why don't you go and talk to VSNL Vidhishanchar Nigam Ltd. They were a government owned entity at that time and there were two people there who were instrumental in getting my server up and running within I would say less than 24 hours. That is incredible. I mean they didn't have a policy. This is a government institution. They had to give me a domain. They had to um, give Me, Space. I was the first customer for a server. Really. Uh, there was Neeraj Sonkar and uh, Amitabh Kumar.

Speaker B: When you say space here, you mean physical space, not cloud space.

Speaker A: No, no, no, this is you. I had to take a computer and put it in their premises.

Speaker B: Yeah, ah, yeah, yeah.

Speaker A: They didn't have any policy, but they did all of that. Um, they said, we'll figure out the policy later. You need, you have a problem. I mean this is like when you think about, I'm just a random entrepreneur, um, going to them, the government institution, going out of their way to actually help me get, continue as an entrepreneur. Otherwise it was the end of story for me.

Speaker B: What domain did you use then?

Speaker A: So this was late 96 now. Uh, so we got the site up and running. But then I realized, you know, this indiaworld.co.in is not working. I tried indialine.com as a portal name. That also did not work very well. And in a way, you know, many times out of adversity, uh, comes some positive things. So Bhavna and I were um, uh, uh, uh, she's quite religious. So we had gone to a temple in early 1997 in Rajasthan. And on the way back from the temple to Jodhpur airport in the car, we were just discussing, you know, this domain problem. Um, no one's coming to our sides. And in that sort of two hour drive we said, why not try Indian names? So samachar.com he thought of all of these names. So it was a very contrarian idea because Yao was the big daddy at that time. Yahoo, uh, had yahoo.com and everything else was a subsection under Yahoo. And here we were saying that let's break our sections up into separate sites. So samachar.com, coach.com, kale.com, that's how we started thinking. We registered I think about 30 domains after we came back into Bombay. Then I started launching these properties separately. And Akshay, that was the best thing to have happened for us. So out of probably the worst adversity of my life came the best decision.

Speaker B: Why was it so great? Like why did it turn out? Well?

Speaker A: So a, it eliminated one click. People didn't have to come to indiaworld.co.in and then go to a specific section that they wanted. And these names became very memorable. Even today, people of my generation, I mean probably 60, 59, 60 or those, uh, I'm 59. But when people meet up, some of them still remember samachar.com, k.com, coach.com, bachi.com we had 13 portals like this. Four worked, nine did not. But uh, before that worked, did extraordinarily well. So Samachar became the news homepage for Indians. We made a lot of money from advertising there. It was a single page site. We aggregated News links. Um, kale.com was the cricket site.

Speaker B: So the model also changed to ad supported instead of subscription.

Speaker A: Yeah, so after I lost the domain, I could not take money anymore. Uh, we had to just drop the subscription bid. We made everything free. And by late 96, early 97 also ads just started picking up. Yahoo was making money from ads. So I would just. So what? One thing I used to do is to go to all these Internet conferences. Singapore, us, uh, Hong Kong, and I would learn from what people are doing there. But there was very limited learnability in India. I mean we were pretty much uh, the only entity doing things. So, uh, advertising started picking up there and we tried a lot of experiments. We tried a gifting service, we tried to make money from transactions. Uh, we also became a sub broker for banks for their new issues. There was a resurgent India bonds, uh, thing which had come at that time and we had done a tech tweak which the RBI had agreed at that time that we could change the form number in a PDF on the fly. So everyone who downloaded the form, uh, could actually, um, uh, the form would be accepted because not a physical form, it was a PDF which was being sent across. Now I realized if I just did a software thing, I would get maybe 5,000 rupees from different, uh, brokers or finance companies for this. I, I got the idea that um, to become a sub broker. So I said in the form, give me a code which makes me a sub broker. So we got a percentage of the money that came in. So instead of making maybe 50,000 rupees for, from 10 companies we made about, I think, I don't know, I forgot now. 10 or 15, 20 lakhs at that

Speaker B: time, uh, how were people investing online payment or like a bank transfer or swift?

Speaker A: Yeah, those nre, NRO accounts, if you remember at that time, all those letters still exist.

Speaker B: Right, right, right, right.

Speaker A: So NRIs because the whole idea of Research in India Bond was to bring in NRI money into India. I think we had some problems with the rupee dollar rate or something like that, if I remember. Um, so all of those things actually worked out ah, very well in hindsight. Um, and these are all small, small decisions which may seem Inexplicable. Now I don't even remember how I would get the idea to make a decision like this. But as an entrepreneur, I keep, you know, saying it's never about aiming for success. It's about, uh, one more day that you live. You're one day further ahead from failure.

Speaker B: Yeah, yeah. One day closer to success.

Speaker A: Yeah, one day closer to success. So, you know, you don't plan for success. Most startups actually fail, so. But we kept trying. I mean, I would keep trying out things. Um, we were 20 people in our company at that time running 200 corporate sites, 13 of our own sites, all packed in one small office in Riven Point.

Speaker B: So, you know, for listeners who may not be aware. So you had like one of the biggest exits in Asia for the India world. Set of properties, 115 million acquisition. Uh, when did that happen? How did, what led up to that?

Speaker A: So that happened in late 99, um, 1999, about five years or so after I had started. I was constantly trying to raise money. Everyone else in that time, 97, 98, 98, 99, and the Internet boom had started in India. A lot of capital started flowing in.

Speaker B: Like there was capital, uh, like VC money flowing into India.

Speaker A: Yeah. There was investments happening. Yes. So I think there were a few VCs at that time who were investing. Rediff had raised quite a bit of money.

Speaker B: Ah, ah, Rediff. Yes, that's right. Okay.

Speaker A: Um, There, uh, was India.com which had been launched. So a lot of different sites are getting launched at that time.

Speaker B: Yeah, I remember India.com had a Times of India front page. Yeah. Ind ya India.

Speaker A: Yes. And, um, so while I was trying to raise money, one advantage I had was I was profitable. I was not burning capital. Even though we were very small, probably, um, uh, two, three crores or so in revenue at that time.

Speaker B: And how many eyeballs? So I guess money raised would depend on eyeballs.

Speaker A: Right. All that multiplication used to happen in terms of eyeballs. Samancha had about 4 million, uh, page views a month, if I'm not remembering correctly. It's a great question.

Speaker B: Okay, okay. Which is pretty good. 4 million page views is pretty good.

Speaker A: Yeah. And for us, what happened was Samajar was a single page site. It became the default start page for Indians. So morning, evening, you just get the headlines all together on a single page updated round the clock. And it was a bot which, which would do it. So in fact, think of it as a precursor to Google News. I had no human being doing any of the updates then. A lot of page views of course on Kale.com, codes M.com, kale where every um, all the updates basically you could do a reload. You are updating it in real time. Scores were updated in real time.

Speaker B: Was a search engine. You launched a search engine.

Speaker A: Yes, so I copied Yahoo. Coach was a complete directory and a search engine so you can crawl sites and then do the search on. So then um. So I was trying to raise money but uh, where we had got some

Speaker B: offers but uh the reason, the motivation to raise money was purely peer pressure. Like you saw Yahoo is raising money and all these dot com companies are raising money and because if you were profitable the pressure to raise money was not an internal pressure.

Speaker A: Correct. So the reason to raise money was I realized two things. A lot of them were spending on advertising and I realized that maybe we also need to spend uh you're exactly right. Peer pressure. Others were doing it so maybe I had to do it. Also I realized that if I have to even hire some people no one will just join a small company without external funding. At that time if I had to add, I built professional management. So at that time um, I started talking to a lot of uh potential investors in India and outside. So I got a couple of term sheets also um, they didn't eventually materialize but then what interesting development happened was in I think September 99Sifi had gone public on NASDAQ. So they were in ISP, uh they were connecting Internet connections, dial up connections. These lines have started happening in India and SIFI was very keen to do a AOL like play. So content plus connectivity.

Speaker B: So one question. SIFI is Satyam infofay. This was connected to the Satyam uh software company uh Hyderabad based uh incubated

Speaker A: as it were or initial funding came from Satyam but then Satyam infobay was an independent company. It had its own um CEO MD Ramraj completely delinked in a way from Satyam's computer services at that time. Okay, okay, so Satyam Infoway was the one which went and listed on Nasdaq because we there the Chinese companies had done very similar, many many Chinese um Alibaba. No Alibaba came later. It was Sina. Sina Sina Sohu Netis were all listing uh on the American on Nasdaq.

Speaker B: This was like peak uh.com euphoria.

Speaker A: Absolutely. They were like um so they uh had raised um 80 odd million dollars and uh their banker was DSP Merrill lynch or Merrill lynch but the Indian arm was DSP Merrill lynch and Coincidentally, I had got a banker, uh, DSP Merrill lynch, to help me raise capital. So they were trying to help me with HNIs raising about 10, 20 crores at that time. And then SIFI had raised money. Their stock was going up every day on nasdaq. That's what, what you said, uh, the euphoria and the boom, which was happening. And also, um, I had got another offer at the same time from a US company, mail.com which owned the domain India.com so proper India indi. So they wanted to do a India play and they were looking to acquire a portal.

Speaker B: Ah. And this was also NASDAQ listed. Mail.com?

Speaker A: yeah, I think mail.com was NASDAQ list. I think that's how everyone was getting the money, I think.

Speaker B: Yeah, yeah, yeah. Those are crazy days.

Speaker A: Yeah, absolutely. So, going from nowhere and struggling to raise any capital in the space of effectively 10 days in October 1999, I had two competing offers. And in the space effectively of probably two or three weeks, the valuation went up from 13 million. 13 million to 40 million, then 70, 80 to 115 million.

Speaker B: Oh, my God, that is phenomenal.

Speaker A: Sp, right. And, uh, the entire deal then got done in about, uh, effectively 15 days. You, I mean, what due diligence do you do when you're paying 115 million for a company which was probably less than a million dollars? Yeah.

Speaker B: Oh, my God. Uh, what do you think, uh, led to this kind of decision making? I mean, this is not isolated decision making. A lot of people burnt a lot of money on, uh,.com's, uh, like, uh, I think the most famous, like the pets.com or whatever those names are there, which burnt billions of investor money. Uh, what was leading to this, uh, euphoria? I mean, you've lived through it. Uh, I think you might have an interesting take.

Speaker A: So, effectively, uh, if you look at the AI scene a little bit like now, it was somewhat similar at that time. AI is being backed up, of course, by solid revenues now coming into companies. The Internet at that time was on belief and hope, as many bubbles are. That's how you get the good outcomes eventually from every bubble. Now, at that time, the metric really was traffic. NASDAQ was the place where companies were getting listed. So there was lot of capital available to companies. SIFI paid me, uh, or paid 115 million for India World. That same night, their NASDAQ listed stock went up by $700 million.

Speaker B: Oh, my God. Incredible.

Speaker A: Okay, in the two months after the India World deal, uh, SIFI's valuation went up from about $1 billion to nearly about 7 or 8 or close to probably $10 billion secondary to raise money to pay me. So it was future money. So they effectively diluted probably 1 or 2%. People think they paid a lot, but look at what the markets were willing to, to fund at that time.

Speaker B: Yeah, it was a extremely good deal, uh, for them. Right? I mean, pay 100 million and get, uh, a couple of billion bump in valuation.

Speaker A: Yeah. And also I have to say this quote by, uh, Hemendra Kothari, who was the head of DSP Merrill Lynch. Um, and I had, I mean I went to him, they were my advisors. I went, I remember talking to him saying that, um, look, my wife and I have built this company for five years. You know, we don't want to sell it. This is like our life. And he said, rash, more important than knowing when to enter a business is knowing when to exit a business. He said, you will never get this kind of valuation again. You are a creator. You have ideas, you have imagination. Build some new things in life. This money will give you the freedom to do what you want in life.

Speaker B: And this was an all cash deal?

Speaker A: Yeah, it was started as an all cash deal, but later as the markets fell, SIFI converted a part of it into stock. Uh, so I got some stock later on, but was largely an all cash deal.

Speaker B: Amazing. When did the markets turn? Like how much time after the deal closed?

Speaker A: Very quickly. So my deal happened in November 1999, I think. Sifi, I think the peak was February, March of 2000 if I'm not mistaken. And that's also when the AOL and Time Warner deal happened. And I know my second tranche got paid in, uh, June 2000. And by that time the markets had started falling fairly steeply. The correction had already started happening. So it was that small window which was there.

Speaker B: Yes. Amazing. You couldn't have timed it better if

Speaker A: I had missed that window, Akshay. I mean, you think about it, we were a 3 crore revenue company and we got a deal which was 499 crores, 166 times revenue.

Speaker B: Wow.

Speaker A: I think it would have been very difficult to get even probably a fraction of that amount and that. So that's the story of the India world deal. Yeah.

Speaker B: Amazing. Amazing. So, uh, why didn't you become, uh, a VC after that? Uh, a lot of people in your position might have thought that, okay, let me invest in startups, etc. Etc. Uh, uh, uh, maybe it was not a done thing then or what.

Speaker A: Like I'm curious actually in early 2000s there was not much of VC yet being in India. I mean there were a few global funds. I don't think there were too many Indian funds at that time. And I did try investing in companies a few years later, 2007, 8, 9 in about 15 odd startups. But then I realized that I am not the VC types, I am the entrepreneur. For me the thrill and joy of building things from scratch, solving problems irrespective of the outcome. I mean I've probably failed 40 times in my life trying to solve different things in life. But then I realized I'm not the investor types. Even now I don't do direct investing in startups. It's just a single company. Um, but I love doing different ideas experiments forever. Um, um, in netcore which is what I'm involved in now.

Speaker B: How did netcore start?

Speaker A: So netcore started. The interesting story to it, uh, just uh around the time I was selling IndiaWorld we had this small side business in India world in the company where we were setting up Linux mail servers for companies. How that started was again listening to customers. When we started putting up websites they started getting emails from NRIs and they said look, we need to now route these mails internally, we need email IDs and Microsoft Exchange was the only option at that time and very expensive of course. So we started setting up Linux based mail servers for companies, open source mail servers for companies. But then when I tried to raise money in India world at that time I would get this question, okay, so you got this Portals business and you got this site tech business. This is too confusing. I would then end up getting defensive very early on in the conversation. Then I decided okay, maybe best to separate the uh, Linux business out. No one was interested in it anyways. And that then became the genesis for Netcore after I had sold IndiaWorld.

Speaker B: So uh, like Netcore today is a lot more than a company setting up mail servers. Take me through that evolution.

Speaker A: Sure. So for the first seven or eight years after I sold Navigator, about 2006 or so we were only doing mail servers and I tried a lot of different ideas in there.

Speaker B: This mail server I just want to quickly explain. So this would like people who had Microsoft Outlook software on their desktop so they would configure Outlook so that the mails uh hit on their Outlook software

Speaker A: will operate many internal operating. So at your domain you would get a mail ID and then the mails would come to your mail server and then get routed to mailboxes. So Linux had a uh, Equivalent to Microsoft Exchange on the mail server side. And so we would start deploying that commercially for companies. So that's how we started getting some money.

Speaker B: Uh, there was no UX layer in this, uh, like an inbox where you log in.

Speaker A: Yeah, the UX could be or same Windows. Windows I think had Outlook. So you could use it with the mail server. Absolutely. So what Microsoft would charge is for the server licenses.

Speaker B: Okay.

Speaker A: So the first seven odd years netcode, um, just did not grow. We tried many different things. Thin client, thick server. Um, I also invested in a company where we tried to build $100 computer with um, IIT Madras. So lots of these ideas and uh, of course none of them really worked out. And then in 2000 why didn't they work?

Speaker B: Is there some through line?

Speaker A: Uh, I think uh, if I were to paraphrase it in the book title, which came out a few years ago, um, essentially I was focused on the solution and not the problem. When I look back, every time that I've been enamored and excited by the tech side of it, tried to create tech in search of a solution, I failed. Image Workbench was enamored by the tech trying to find an outcome. A lot of these products. We tried to create a single uh, small business server for um, small businesses. For small businesses at time called Pragati. Lots of these things. 2000, 2007 I think failed. And then a friend of mine sat me down one day saying Rajesh, look, you're good at coming up with ideas. You're completely lousy at trying to commercialize any of them. You need to get a CEO for your business who thinks very differently from you. And he had a recommendation, uh, of a person I should at least meet. The first idea shocked me. I thought I was, I had this history of one of a big success behind me of course, long time ago, passing days passing by. Um, and then uh. But I did meet the person he recommended, Abhijit Saxena. And we hit it off quite well. I realized he's very different from me. And what we needed at that time was a way to take some of these ideas to commercialization. We need a business sense. So 2000, so you know the story is great success in 99 next seven, eight years. I failed at everything I tried. So I was uh, 2007, 6 7. I was probably a 21 or 2 crore revenue company. But then we did start spotting new avenues at that time. So that's where the net core growth story begins with a new CEO. I was involved in the Company of course, but I was very clear that the decision maker is only one. You can't have two co leaders. I keep telling people, I said companies are not um, are not democracies. Think of them more like North Korea or China, but authoritarian basically.

Speaker B: Okay,

Speaker A: uh, so that's where then we start. We started with enterprise SMS services and enterprise email services. Now these were different from the mail server because we had the mail server. Now companies like India today, others used to collect email ID, subscriptions, etc. They said look, we want to send out newsletters of our own and there was no easy way to do that. So then we created a simple solution at that time we called it emm. So email mass mailing. So they could then send out email uh, emails at bulk without um, uh, crowding their own internal server which was used for their enterprise uh, traffic.

Speaker B: This was a managed service or a

Speaker A: product we didn't know at that time. But these were all operated from the cloud. We didn't know the word cloud at that time. They were all operated from a server on the Internet, that's how we would call it. But it was basically the early days of the SaaS. Uh, so they were all operated as services where we would charge, not on our maintenance fee but we would charge per email which was being sent or per SMS which was being sent. So these then became sort of the monthly recurring revenue businesses Mr. Type Services. So email and SMS, uh, we still do both of them now. Uh, they are great uh, revenue generators and profit generators for us.

Speaker B: How did the idea for SMS come again? From customer needs? Like you started with email, uh mass mail and then SMS is really interesting

Speaker A: actually email started more from the customer need. SMS was growing in India at that time. So we created a uh, service called My Today SMS which was actually a consumer service. So we told people that you set up a, you send a message, start news or start um, ah, cricket and we would send you an SMS. 160 characters with updates. At that time SMS cost was very tiny and we also had up our own SMS server at one of the telcos. So for the fraction of a paise at that time to send an SMS corona for a telco it's basically zero cost literally or zero incremental investment. And I thought I could replicate the India world type model of running an ad and then making revenue from attention. So the service grew virally. So in less than a year I had 4 million subscribers to these SMS services. Um, and we had 30 channels. So news, cricket, jokes, Shairi Gita, ah Bible, all kinds of things.

Speaker B: Was this the time when those four five digit, like you know there was some four four, four four you send a message there for. And these, these would typically be like, this was like the vast era of telcom value added services. There was some premium pricing you would pay uh, and that's how the people who are sending the content, who are running the pipes would earn through that.

Speaker A: Uh, but there was a difference here. People only had to send us a message once, start and or stop stop for unsubscribing. So they would only pay the premium pricing once. After that we were sending it to them for free hoping to make money from the ad. But then what happened was two things happened. One is some of the telco started realizing that this was competing with their VAS services. So they started blocking our access to the shock code codes. We had to use what were called long codes, 10 digit codes at that time. But more devastatingly the government then effectively put a uh, they increased the SMS pricing for businesses literally overnight from a fraction of a paise to 10 paise. So I was sending out 1 crore SMSs every day for these uh, subscriptions that we had. Now the problem became that what would actually be 1 lakh rupees a day now became 10 lakh rupees a day. And I had to stop overnight. And that is a big learning. I learned in my life that never build a business where you can be shut down by the government by a regulation change overnight. I mean it was, you know when you spend year and a half building out you have people uh, just spreading every day new subscriptions on their own popular subscription was actually bible. You send out a bible every morning at 5:30. It spread through churches. I mean you can imagine in churches people saying okay, remove your phones, send a message, start Bible. God will speak to you every morning at 5:30.

Speaker B: Almost exactly like that, like true virality.

Speaker A: It achieved true virality. Absolutely. So for me both India world and my today SMS at that time were virality were actually word of mouth, uh, focused on the product. Um, and once we stopped that I realized, I mean I had to do something else. You know we had this SMS infra etc. We had expertise and then we started looking at few companies already started looking at corporate services. Corporates wanted to send out these messages. So we built, we repackaged or we uh, focused our consumer platform for corporates. So that's how the SMS businesses started. Now it's very interesting when you ask the stories, it's never a linear for Entrepreneurs. It's never a linear path. It's not like I sat down one day, built a business plan and I'm going to create this thing. No, it's always you. Some listening to customers, some problems that I keep thinking many times in life if my India World, if my image workbench product had worked, I'd got like 10 orders for those imaging platforms. I would never have done India World.

Speaker B: If you hadn't lost the domain, you, uh, wouldn't have created all of them.

Speaker A: Absolutely. All the others. Absolutely.

Speaker B: Yeah. It's the uh, constraints which define our journey. Uh, at the end of the day. Yeah, uh, that era was pretty interesting on the VAAS side. Right. There were a lot of people making a lot of money on VaaS, which was generally a rev share with the telcos. Uh, uh, why didn't you explore that

Speaker A: telcos would pay very little. Okay, that was one. And I was probably more fascinated with the India World model that advertising could actually work. So um, and we have started to get a few ads at that time. So the 160 characters would get split into 80 characters content, 80 characters ads. And my belief was that every company would have to build hotlines, you know, broadcast hotlines on SMS with their customers and the opt in would be the great way to do. And we could do all of this bypassing the operator. I think in hindsight that was also a mistake because this was a proprietary in a way, operators controlled the platform. It was not an open platform like the Internet.

Speaker B: Although WhatsApp is enabling this today, right?

Speaker A: Yeah, but WhatsApp goes over on the data, so it's over the pop as it were, the way, uh, it's working. Yeah. Um, so WhatsApp did a phenomenal job. Um, I wish I had thought of that. It's one of those items. I mean I think we wanted to do these uh, SMS groups. I think I was too caught up with this whole SMS thinking. Think of the data side of it and an app side of it. So maybe, um. Yeah, in a different universe I would have done something like that.

Speaker B: Yeah. Okay, interesting. Uh, and uh, like, you know, what kind of revenue started happening through the EMM service, the SMS Service. Like by 2010 or so, what kind of revenue were you doing?

Speaker A: Uh, it was a few crores. I don't remember the exact numbers now but um, the revenues were starting to grow quite rapidly and so was profitability. So these are very profitable services. And email, I mean gross margins would run at 80 to 90% because all you had was data center costs. SMS. Once you had the platform ready, of course you had to pay for the SMS capacity. So the margins were typically not more than 25%. But at scale you could actually do quite well where you, you could do very well. So those businesses uh, started working well. Um, we were doing I think a few crores, probably about 5, 10 crores at that time, by 2010, 2012 or so. But we were profitable. Most important.

Speaker B: And these were transactional messaging or promotional messaging?

Speaker A: Mix of both.

Speaker B: Okay.

Speaker A: It was a mix of both transactional promotional messages in email. A lot more promotional, uh, SMS cost had started rising. But email costs of course for the last, I think 20 years have stayed at roughly in the one paise range.

Speaker B: Right? Yeah.

Speaker A: Uh, that worked out very well. Then of course all the other problems started coming in. SMS, spam, then you had of course WhatsApp. Then you had all the other telco restrictions, all the restrictions on the government which came in. So industries have evolved. But the good news is even today, when you look back, I'm considering that we started all this in 2000, um, six, seven, eight, about 20 years ago. These are still very, very good businesses to run. I mean email, uh, while we are big in India, we've got a small footprint globally. Email today is probably a 7, 8 billion dollar market globally for uh, uh, the transactional and marketing messages. Uh, we do about 30, 35 billion emails a month uh, globally. So almost a billion emails every day. And um, SMS is in India, of course, I've grown tremendously. You have RCS now you have WhatsApp also. So the power of all of this is because of one simple idea which is push messaging. When a brand has a customer, how does a brand get a customer back to its properties? Either you remember, so it's phenomenal branding, but otherwise you need the push messages and there are a handful of channels for push. Email is there, SMS is there, rcs is there. WhatsApp is there. WhatsApp is of course a lot more expensive and if your app is, if the app is installed, it's app notifications for every brand. The power of push messaging is required to bring people back to their properties because that's where the transactions happen. So I don't think push will disappear, the channels will keep evolving. Channels will change and have changed to a certain extent. But these are very solid revenue generating, profit generating businesses globally.

Speaker B: When did that uh, evolution happen from CPAAS to Martech? And let me just break this down for our listeners. So CPAAS is communications platform as a service. So like a Twilio sendgrid. These are CPaaS companies which are providing the pipes through which brands can send uh, out emails and messages to customers. Uh, Martech is more like say uh, Clevertap, Moengage. These kind of businesses where the problem uh, they are solving is what you just described. How to retain customers, how to reduce churn, how to get repeat, how to increase the lifetime value of a customer that you have already acquired. So when did that pivot happen from Netcore being CPaaS to Netcore being MarTech?

Speaker A: So 2014, um, and I just uh, finished off about six, about three, four years working on the political side, um,

Speaker B: which we'll come to next. Uh, that's another chapter I want to

Speaker A: get into, 2014 effectively. I uh, was thinking of what to do next and a colleague of mine, uh, Veer, he came up and said, you know Rajesh, I was meeting a customer and uh, then she mentioned this word Martech. And then I tried to understand a little bit more and I looked it up, uh, this is the next big thing. So we are doing the channels. What Martech lets you do is to orchestrate all these journeys, creation of segments so you can automate a lot of these sending of messages. And August of 2014 there was a first martech conference in the US which both veer and I went to, was organized by Scott Brinker. Uh, and that's where the genesis of the fact that uh, Martech is something which can become the next layer on top. Because we were always worried every time we would go, what if SMS goes away, what if email goes away?

Speaker B: And especially you would have seen the WhatsApp kind of apps, uh, like today for consumer to consumer, uh, communication. Nobody uses sms, right? So that would have, uh, you would have seen that change happening.

Speaker A: WhatsApp started coming a lot later.

Speaker B: Okay.

Speaker A: Uh, this is 2014-15. So I think it was very early days even for WhatsApp, if I'm not mistaken.

Speaker B: Okay.

Speaker A: I mean meta for Facebook of course was the big thing at that time. And then we started, uh, once we came back then Veer actually led the creation of the Martech platform and that began netcode's journey into marketing automation. So for us it was that you had the communications layer, of course, you have the data storage which is happening, the data layer, there's the communications layer and there's the journey orchestration layer, the automation layer. You could create segments, you could um, um, create segments based on people's interests, demographics, actions, behavior. And then you could not just broadcast to them but you could also create journeys based on trigger. So I left an item in the shopping cart. If I have not completed the purchase, then automatically, say in three hours or three days, a journey can be triggered to send me a specific message. We all are recipients of these messages, but this is the back end of how all these things work. That's the world of marketing automation.

Speaker B: Uh, what are the different uh, stacks within Martech? So one is of course the communication layer, which you explained. So by data layer you're talking of like the, the CRM, uh, or the cdp?

Speaker A: Uh, yes, absolutely right. So it's the cdp.

Speaker B: So CDP for my listeners is customer data platform. How is CDP different from CRM? M if you could just explain.

Speaker A: CRM is the category, it's a customer relationship management category. So Martech, Web personalization, app personalization, all of this broadly comes under the CRM category. So if you just back up a little bit, if you think about marketing, digital marketing, it's essentially just two elements. It's about acquiring customers, which is largely done through the ad tech platforms. So Google Meta, the ads that you see all over the Internet, that that's acquisition. Now once a brand acquires a customer acquires here would mean getting some sort of digital identity, either an email id, a phone number or an app install, in which case you have a direct relationship via the app. That is where the world of CRM and Martech comes in. So what you're doing there is building relationships with existing customers. And of course to build relationships you have to have some identity information. So this is the retention side of it. So I get the acquisition done, I'm paying money to ad tech, uh, platforms to get a person in and then I have to maximize my lifetime value of that customer. And that is where the combination of push messages. So you have the stack is, you have the cdp, which is the data stack. Then you have the orchestrations stack, which is the marketing automation part comes in. So you have the um, you have the journeys, the segmentation happening there. Uh, then you have a uh, personalization layer. So how can I, when you come on the site, if I know who you are, I can actually show you the right message so that you are more likely to do a transaction. Uh, so that's where the personalization piece starts to come in. The more the data, the better the personalization. Then you also have something called product experience, which are nudges. Uh, everyone would have seen those inside apps where the a spotlight comes on a specific action. You are supposed the brand wants you to actually look at in kyc, you have to complete the KYC process. You have to put some small money in there so they will nudge you in that direction. So a lot of these now become elements in the broader CRM play. So there's one CRM which is the B2B side. What I'm describing is the B2C side. B2B side, of course you have the likes of HubSpot, Salesforce. Salesforce is everywhere. But Salesforce's original thing was on the B2B, uh, customer relationship management, where market brands, essentially the sales people are handling the marketing relationships for their uh, point of points of contact at brands, the buyer side. But this is the B2C side, which is somewhat different and much more exciting because you're dealing with millions of customers at any point of time. How do you personalize messages? How do you break them up into segments, uh, and so on? The goal in marketing, in fact I think is, is very simple. How do I reduce as a marketer, how can I reduce my acquisition cost, which is called cac, customer acquisition cost, and how do I maximize the lifetime value LTV of every customer? But that is really the spread which is the most critical element which drives profitability for any B2C brand. On the digital side, all other costs are impossible to control. It's your, it's how much you're spending on marketing, decides how profitable you are, where the repeat behavior comes in, maximizing lifetime value comes in. All of those elements start to play up there.

Speaker B: Okay, so uh, the reducing CAC part, how does uh, like a Martech stack help in that? Uh, I think CAC is a function of like say running ads on Meta, Google, etc. Uh, and then optimizing those ads or what else is there for.

Speaker A: Yeah, so this is my pet peeve in the world. So that what's really happening is that brands spend a lot of money on acquiring customers, but they don't spend enough on building the relationships with them after they are acquired.

Speaker B: Right, the ltv, basically they don't spend enough on increasing the ltv.

Speaker A: Okay, so what's happening here? What the outcome of all of this is that the customer who is there becomes inactive, dormant and churns. The relationship is not being built by the brand. All we are getting are effectively offers. Buy this, buy that, 2010% off, 20% off. Uh, in many cases the messages are not even relevant for us, not even personalized, uh, to us. So now if you put all of this together, what's happening today, and this has sort of changed of Course, through the years, 90% of marketing budgets are spent on acquisition, 10% on retention. And 70 of the 90 is actually spent reacquiring the same customer again and again and again because brands are uh, not building deep relationships. And for me, this 70 is actually ad waste. So of the ad industry's Digital ad advertising, $700 billion, my estimate is that $500 billion is being wasted. This is money which should actually be on the P Ls of brands, which is on the PNLs of the ad tech firms.

Speaker B: I should point out here, uh, there is a vested interest uh, that you have here in this calculation because Netcore is serving the LTV increase.

Speaker A: Netcore is completely on the CPAs martech

Speaker B: side and of course the LTV boosting side of the business.

Speaker A: I'll be happy by the way, if it becomes more 5050 instead of 90. 10.

Speaker B: Right, right, right. Okay, uh, okay, that's interesting. I did not know it was so skewed. Uh, is this just lazy marketers?

Speaker A: So if you think about Martech, and this is, I'm going to quote back what marketers have told me. Martech is hard work. You have to collect data from customers, you have to collect digital identities, email, mobile number. You have to then create campaigns on a, literally on a daily basis. Then you go to execute the campaigns, then you have to analyze what has happened on the campaigns. Redo the whole content creation process. This is in their words, drudgery on the other side. Now compare the world of ad tech. M, you call up an agency, here's my budget, here are the clicks I need. Deliver those to me. Very simple. This is becoming even simpler now where Google and Meta are actually doing the, even the content creation for you. AI is helping create the content, doing all the a B testing at scale, massive scale, beyond what humans will ever be able to do. So give us the budget, tell us what you need, we will deliver it. Everything, everything. And you just sit back and relax.

Speaker B: So there's that dopamine hit of uh, like you turn on the tap of your putting your card in and you start seeing revenue.

Speaker A: Absolutely. Ad tech delivers revenue from the next second onwards. Tech is a slow process. You have to build relationships, outcomes take a fair amount of time.

Speaker B: You have to set your organization up from an infrastructure perspective, from a data collection perspective, uh, in order to make it uh, work.

Speaker A: Absolutely. And the challenge also is that in many of these cases, CEOs want growth right away. So for a marketer is uh, profitability is then not the question. You want growth? I'LL deliver the growth. The easiest way to get growth is just increasing the budgets spent on the ad tech platforms. Now, what I tell marketers is that, look, this is like you're paying a tax on every transaction. You're literally paying a 20, 25% tax to the adtech platforms on every transaction. Doing it once is fine, but doing it repeatedly will not help you on the path to profitability. The market has response, but I'm not tasked with profitability. My goal is growth, and this is what I deliver.

Speaker B: So what size of business, uh, should start thinking about, uh, Martech, because it is not cheap. Uh, you need, at the very least, you need somebody who understands it, and that talent cannot be cheap. I'm sure this would be like a 30, 40 lakh, uh, annual salary kind of a resource at the very least that you would need. Uh, so what size of businesses does this make sense for to invest in Martech?

Speaker A: I, I think if you have. See, there are two challenges for any startup. You will need some element of a Martech play, um, because it's a given. I mean, you may still do just broadcast campaigns. You may not do that.

Speaker B: That could be as simple as Mailchimp, uh, where you are.

Speaker A: You start with Mailchimp or a SendGrid marketing platform. So you can get going. It'll cost you maybe, uh, tens of dollars, up to $100 a month. So it's not a very large out in the beginning. But what you said is correct that you need a one. You need at least one resource to get this thing going. But as the business starts growing, say beyond, say, um, a crore a month for a D2C business, then what happens is you have to remember that now you're competing for your customers in an auction against every other D2C brand to get them onto your platform. So the way I like to phrase it is think of two nevers. How do you never lose customers and how do you never pay twice? What the never lose customers means is what we talked earlier. How do you maximize the lifetime value of every customer who's coming in? That means when I get a relationship going with a customer, can I ask that customer a few questions? Can I get to know that customer a little better? Male, female, where they are, uh, where they stay? What are their interests in travel? Do they like hills or do they like the beaches? Ask these questions. Very few brands actually ask us this. They're not building the hotlines with us,

Speaker B: but there's friction in that, right? Like you. You want to, you want to give that Dopamine hit to your customer also. Right, that uh, I just go to Amazon and I click buy and the product next day reaches or what like in quick commerce, that dopamine hit is even more uh, instantaneous.

Speaker A: Yeah, but how is the customer coming to your property? See, in number only if you think back. Either you're on marketplaces where again you're paying a tax to the marketplaces for your transaction or you're putting them in from ad tech where again you're paying a tax. So the best D2C businesses are the ones who have very high retention rates. Recurring revenue is very, very important.

Speaker B: Right, right. That LTV over CAC is how any VC evaluates D2C businesses.

Speaker A: Uh, so over time. My belief is that the importance of Martech and especially now with AI where a lot of the frictions. So the frictions I spoke about earlier are all going to go away in the coming months with the use of agents, AI agents. So you'll have segmentation agent, content agents, decisioning agents, what to send, uh, to what, to whom, at what time. Actually it's the messaging is very simple. What's the next best offer? So right message, right person, right time, right channel. All of this is these core ideas have not changed. In fact, 30 years ago there was a book which came out, the one to one Future, which talked of one to one personalization. I think finally now we can see that future coming up, that marketers now should be able to spend more on the retention side of things. And when I talk to marketers, I keep saying, I said very few marketers, CMOs actually become CEOs. This is your moment in time. If you can think of yourself as the chief AI officer and the chief profitability officer of the company, you can become the next CEO of the business. Because you are the custodian of the customer anyways. But today you are seen as more of a cost center rather than a profit center. Become the profit driver of the company. And now you can make that leap

Speaker B: to the corner office for uh, SMEs. Uh, will like will this happen what you're saying of an agentec, uh Martech stack or is this more of an enterprise product?

Speaker A: No, I think it will start with the enterprise side because of the AI, uh, uh, tech which has to get. But eventually it will flow down. Absolutely. Today if you look you can run an entire acquisition side, the ad tech side of it with effectively one person. You set up parameters uh, on the ad tech platforms and you're done. Martech will be similar where effectively the way I think of it is that you'll have a, uh, co marketer helping the marketer and the co marketer, it's a net core term that we use. The co marketer works with multiple agents so that you are not just giving inputs, but you are telling the goals. I want my sales on Rakhi or Valentine's Day or Mother's Day to go up this m much who are the best customers to target. And AI is, uh, the agentic side of it will do is already doing actually a much better job on the decisioning side than what humans ever can. So in a way, what's very interesting is when I, when I talk to marketers about AI, I said, look, there are two sides of it. There's the faster, better, cheaper, where you can automate some of the easy functions which are there in your marketing team. So content creation, copywriting, all of those things. But take up the impossible things. Let's say you have a million customers. How many segments will you create? If there was humans managing this, you'll create 10 segments, but you probably need a hundred segments. And every segment then needs its own content. This is where the agentic layer will come in. And I genuinely believe that in the next year we will be the beneficiaries as consumers, as customers, because we will get relevant messages coming to us and that's really, that will help the brand because then we are not going shopping around all the time. We are not switching ourselves off from brands, which again forces them back into the world of ad tech, which leaves more money with brands for them to do product innovation. If EBITDA goes up, um, 5 to 10 percentage points more, that's money which stays with the brand rather than going into ad waste.

Speaker B: Okay, uh, what is the tooling needed to make this work? For example, you said it all starts with data, uh, to understand your customer. For example, if I'm on Zomato, do I generally order vegetarian or do I generally order non vegetarian or whatever, uh, pizza versus biryani? Um, how is, uh, all of this data, uh, captured and stored? And is netcore providing a product to do this? Or do you integrate with other products, uh, and capture or like, how does that happen? The tooling.

Speaker A: So this is exactly what Martech platforms do. So what happens in the app is there is a piece of code, what we call the SDK, which essentially gets into the app and that then captures all the data and all the actions that you are doing, which gets stored along with your demographic data and other data that you may be Giving through forms and so on, which gets combined on the website. Similarly, the JavaScript, a small piece of code on the website which captures all your actions. So what's happening is the CDP at the back end actually not only has your sort of static information, but it's also got your demo, your behavioral, uh, data. Now, if you take this little further, imagine now the future systems actually can create twins of each. Each one of us. They know where we stay, they know the weather. So they can in fact even target messaging to us based on time of day, on the weather outside. Raining, not raining, uh, Bangalore versus Mumbai. You know, different messaging can be done, but this is beyond the capacity of humans to do it. And this is where I believe the future of Martech lies in these AI twins, where each one of us as consumers will have a AI twin. I call them brand twins because they're in a way controlled by the brand. It's not us. It's not like a agent on our side of it. But that twin M becomes the interface between the brand and us. It knows about us. We can talk to it in natural language. Today, on most sites, you can't still type. You can't still. I mean, you can speak, but, uh, you, uh, still can't do it in a. You still are doing keywords in most cases. I still can't say, hey, you know, um, I'm in the mood for a, for a legal thriller for two hours. I don't want to watch. Don't, uh, give me a long series. Ideally, I want a legal thriller set in India. Now, what are my options? You know, what I watched in the past, don't give me those options.

Speaker B: Right, yeah. You cannot do this as of date.

Speaker A: You can actually do some of this on, uh, a ChatGPT or a Claude.

Speaker B: Yes.

Speaker A: And they'll give you better recommendations sometimes than what a Netflix or an Amazon prime does. But this is where the opportunity is, I think. So this is the future, I think. And my belief is that the better the recommendations are, the better the relationship building is. The better the relevant content that they can give us, the brands can give us. The less we will be prone to moving away to others, and the less they will then be spending to bring us back to their properties. So I think this is the inflection point really, in the world of marketing. For most marketing is now digital, that the brands who execute this well, I think we'll see a disproportionate increase in their profitability and their retention rates, which earlier it was sort of a level playing field for everyone and therefore the more data that you collect the more you are profitable and all the investments that you can make on new products etc start to happen. And this is where the marketer becomes critical.

Speaker B: So a customer of netcore does not need anything else you provide the cdp. There is a CDP product of netcore, there is a orchestration product of netcore. These have different names or what like internally. Can you tell me what are the product offerings?

Speaker A: Effectively it's all seen as a, we call it CE customer engagement and experience platform in that there could be separate modules say for app personalization, web personalization. Uh so all it's the, the core idea is simple, it's basically journeys segments, the cdp. So most Martech platforms have a basic CDP already in place. The challenge happens when you have offline, you have uh, offline stores also in which case you got to these, then they become siloed because you typically have a separate system for an offline um, uh system offline stores. And therefore you go to then integrate the data together you go to match that these are two of the same customers. So that becomes a little more complex. But for pure say D2C brands, um, uh Martech companies will provide the full stack. The one additional piece which uh we have added which we did it through an acquisition four years ago. Unboxed is which enables uh product discovery. So when you search on say E commerce websites, how to make the search results relevant, how to make the browse pages relevant, how to do better recommendations, that is a search and product discovery platform comes in. So broadly if you see the layers are there's the communications layer which we discussed earlier, the CPAAS layer, email, WhatsApp, SMS, RCS notifications. Then you have the Martech layer, marketing automation, journey, orchestration. And then you have the search and product discovery layer which is more relevant for uh, B2C type companies, E COM companies, E Comm and retail companies rather than the BFSI segment. For us the two large categories of course are bfsi, banking, financial services and insurance. And then you have the ecom. They are the two entities with the largest basis. Then you of course telecom, travel, all those companies start to come in. The key thing is we need for companies like ours to work we need an identity. So FMCG type companies who do not have identity information because they're operating through distributors, they don't become large customers of ours of Martech. They will do it for their B2B base, the distributors, the wholesalers and the retailers which are there. But for us we need the end customer identity information.

Speaker B: Okay, got it. Okay, uh, how are you different from a Clevertap? And why I'm asking is because I've interviewed the Clevertap founder previously. Interestingly they also came from a media company. They were in Network 18 before they started Clevertap. Uh, uh, so uh, some paddles there. But uh, help me understand, uh, is it very, very similar to what they offer or are there some fundamental differences?

Speaker A: So the Martech layer that I spoke about is identical to say a CleverTap MoEngage, WebEngage Globally, companies like Braze and Klaviyo and so on. Where netcore focus uh, really has been is to integrate the other two elements also into a single stack. The data flow becomes easier. So we also control our own channels. So email, sms, we have direct telco relationships. We are our own email service provider. So which enables a lot of uh, interesting things, uh, send time optimization, uh, how do you get better primary inboxing happening and so on. Which is um, because others then have to. Other Martech players have to rely on third party uh, platforms. And then of course when we can bring in the search and product discovery, it helps with recommendations. So our belief is that the customer is the same. They are coming at you from multiple different angles every direction, that every channel that they come in from is a, is a data channel and a uh, action channel. So you're collecting data, you have to get it all in one place and then in that split second what is the best action? What is the best offer that I can give to a customer? The greater the uh, control that you have across the stack, the better can be the recommendations and the messaging that can be done. That's really where we stand out.

Speaker B: Okay, okay, okay, understood. Okay. Uh, you I uh, believe spent almost $100 million on the unboxed acquisition.

Speaker A: Yes, about 100 million. About four years ago. Yes.

Speaker B: Okay. Uh, can you help me understand the. You must have rationalized it internally to the board that this is why this investment is worth it. This is how it's going to boost our revenue or whatever. Just if you can help me understand.

Speaker A: So Unboxed basically had two advantages. Number one is that it was an adjacent product. So uh, basically did search, uh, product disco like I explained just now. So it effectively leverages the relationship with the same brand, the same um, customer, um, the, I mean our customer, not the end, our client as it were, not the end customer number one. So that was a, that we realized that that could be a good add on product to be able to sell into the same buying center. And the second was that a lot of unboxed customers were in us and a few in Europe. Now we have been trying to also get into these markets for a long time because they have much bigger markets than India. I mean us I would say is overall for the spaces that we have discussed is probably 50 times bigger. Um Europe would be at least 10, 20 times larger. And in US Europe, the developed markets it is very hard to build organically. To build a presence organically requires either a ton of money, the spending on marketing, etc. Or a good way is to look at an acquisition. You get a footprint, uh, you get some brand recognition because Unboxed had been at uh, had been around for a long time, a few years at events, people knew them and so on. So you could then build on that they are the Gartner Forester relationships also which are very important for enterprise buyers. Um, and that is where for us that was the rationale for the acquisition that you get a adjacent play plus you get a starting footprint, a better starting footprint and you save time for the developed markets.

Speaker B: Okay so like new customers plus increase in your average contract values uh because you're selling an additional product, how much has it contributed revenue wise? Like what's been the lift?

Speaker A: So Unboxed um, uh is roughly about uh, uh um I'd say about 12, 13% of our revenue today. So that's a significant contribution. More importantly it's very high quality revenue because it comes from developed markets. We've also been successful in taking Unboxed to some of our customers. So netcore has a large footprint across India, Southeast Asia, uh, gcc, uh Africa, Latin America. So we've also been successful in cross selling from our purposes. But for us that was the third objective that we can actually also get more business. But the first two uh, actually have worked out quite well uh for some very good brands in the US Perhaps where we have not been as successful is in doing more of the cross sell of the net Core products into unboxed customers. Um because we realized later that the buying center is slightly different. They both under typically the marketer or the product person. But Unbox sells more to merchandisers, Net Core sells more to the CRM teams. But eventually now what we are seeing is more and more uh, brands now in the US want fewer vendors to deal with. So that is helping us a lot. Otherwise it's finally it's a data play. You don't want your data siloed. The more the data is together that is where the real magic of AI starts to work. There's friction dealing with many different providers. So in a way when netcore and Unboxed um, come together we can replace four different entities with just us. And that is helping us a lot now in, especially in RFPs now for the larger enterprises in the U.S. okay.

Speaker B: Okay. Uh, how are you doing? Uh, the like the cultural integration, you know Unboxed is I'm assuming a US incorporated business versus uh, netco or Indian incorporated business. Uh and that too a bootstrap business. No influence of VCs. Uh, so how does that uh, cultural integration work? How do you make the merger successful?

Speaker A: Actually it was very easy because Unbox almost entire team was in Bangalore through the India. So it was a good example of an Indian company. One of the co founders was in the US Pawan, we had a small sales team in the US and we are organized very much similar. So we got a large footprint uh, in Bangalore. Um, so that worked out quite well actually. And so integration was much easier. So we actually bought a ah, uh, India incorporated company with a significant US presence. So it was quite smooth.

Speaker B: And this was a cash acquisition or they also have equity in.

Speaker A: Netcore was largely cash, primarily all cash.

Speaker B: So uh, how uh, like netcore had enough like 100 million worth of surpluses in the bank? Uh, yeah, ah,

Speaker A: we had saved up a lot of money.

Speaker B: Wow. Incredible.

Speaker A: So um, just for a small plug, both IndiaWorld and Netcode are what I call Proficons. This is the book I wrote uh, three years ago. So Proficon, uh, is a company which is a startup, which is private, which is bootstrapped, which is profitable and scaled. So the other way to frame it, as um, a friend of mine put it recently, is that um, many businesses are funded by venture capitalists, VCs or PEs. Netcore is funded by its customers.

Speaker B: Yes, true, true, true. But I uh, mean you spent 27 years, so somewhere there is a trade off. Like uh, Clevertap is also about 100 million ARR. You are I believe also about 100 million revenue. Uh, they did it much faster because of that VC money. Right, so there is a trade off. Right. Like as an entrepreneur you may not have the patience to spend a decade and a half building something uh, that is uh, I mean that's also a consideration.

Speaker A: Yeah. So there are two trade offs. You've described. One of the trade off which is of course speed in terms of money gets you speed, uh, you compress time. The second trade off also is in ownership. Yeah, in most so When I used to talk about the Proficon, I would say that for a unicorn you need to get to a billion dollar valuation. For the founders to make maybe $100 million in a Proficon, assuming you own much of the company or the founding team owns much of the company, you need to just get to 100 million in valuation. Yeah, true, true trade offs. Absolutely correct. But when I look back Akshay, what I like is the fact that um, and when I go to, when I see many VC invested companies, especially in times like these where SaaS is under a lot of pressure, valuations are falling. At least in the SaaS space, um, we have freedom, we have decision making freedom. There is um, I mean I said this when I mentioned uh, this on my blog, uh, during times of crises I was writing about co Covid unicorns fire proficons higher.

Speaker B: Right.

Speaker A: Well there's a lot of pressure to, you know, you got to cut cost 20% or just fire 20% and then effectively the, the founders are working for the investors. If you've done three or four rounds of capital raising, the founding team has not more than 20, 25% left. The destiny of the company is in the hands of investors. So it's a trade off. Absolutely agree. Depends on what the long term uh, mission is. I've sold a company once so I've been on the other side of it. Um, here. My hope is that netcore can become in the words of Jim Collins, an enduring great company, a built to last company. So that's what I want. But it's been a slower journey. I fully agree with you.

Speaker B: Are you planning more acquisitions?

Speaker A: We have done a few smaller ones uh, prior to Unboxed. Also um, see the challenge, what I've seen now we've seen in acquisitions is that the next acquisition we'll have to do because we don't have a valuation set on us, has to be all cash number unless we raise capital or um, whatever number one. So that limits and unbox was a reasonably large sized deal and that that context. The second is that uh, with AI now coming into play into the mix, one has to be very clear of what is the value that you're going to get from the acquisition because there are verticals being disrupted dramatically. Uh, uh, and from a coding perspective today coding can be done fairly quickly especially for new products in weeks rather than say uh, months to the extent of a year or so. Um, at the same time what I also think is that is our space so crowded that I have to now look at adjacencies now my belief is that Martech actually has looked at the world wrong. See, we have looked at selling entirely based on inputs, number of messages, monthly active or monthly, transacting customers entirely based on inputs. And that in itself has constrained the size of the Martech industry. I think the shift that Martech needs to make is to effectively go to outcome based pricing. So we are actually selling Ferraris, but the operator on the other side is like a taxi driver. Complex systems, but the operator there is a person, like you said earlier, maybe a person with 12, 18 months experience in industry who is very enamored by the ad tech world because that's where all the money is going. Martech is basically a place to spend 18 months, 24 months and then get out from there. Now if we can shift the uh, focus from um, just input based to output based, I call it alpha, it's effectively exactly the way hedge funds work. There's the beta which is the baseline. So if markets Sensex gives a 10% return, the base is not 0 but 10%. Alpha is what the hedge fund has to generate over the 10% and then take a percentage, a carry that. I think that is the future of Martech. And if we can do that, the tam, the addressable market, the total addressable market actually is bigger by a factor of 10 or more because now we can actually deliver value based on percentage of revenue that we are able to generate. Generate. For me this is the most exciting part. I think all the elements which are required to do this are there. It requires us to shift our thinking from input based to outcome based pricing. And now with AI, I think it is absolutely the agent AI we have, we have built a lot of the agents now, the orchestrator and the uh, specific individual agents. I think we can actually make this thing happen. This is my big focus going forward. Because if we do this, we go from the red ocean that is today. Every Martech player, every CPAS player, okay, uh, very competitive markets, you go from there to a blue ocean where you're effectively telling brands there's no competition. I'm on your side of the table. I've got skin in the game to deliver outcomes. So the one phrase I like to use is progeny agency. It's product plus agency combined together. That is what I think the future is. I don't think we need more acquisitions. I think we just need to make this thing happen. I would look at acquisitions more for adding specific product capability where it compresses us time or maybe geo expansion in specific markets where it's harder for us to build organically.

Speaker B: Uh, is there organizational uh, alignment on this kind of pricing? Because there is a certain inertia. Your sales team would get their incentives based on the average contract value which they know from day one. Um, it is easy for them to sell that because that's how they have been selling so far. Um, there is a lot more risk in selling outcome based pricing deals. You don't know whether you'll actually make money on it or not. Even your CEO might have a certain uh, like resistance to this. So, uh, is there an organizational resistance to this? Uh, and I suspect this outcome based pricing is more likely to come in through a disruptor, someone new entering the space rather than an incumbent.

Speaker A: Very, very good points. Okay, so how I think we have to look at, so we have to disrupt ourselves. It's very clear. Okay, that's number one. I mean the uh, other way someone else is going to do it for us, better we do it number one. Second is I think it will come in sort of there are two tracks so I call it Alpha 1 and Alpha 2. In existing customers, can we go in and link some part of our um, revenue to outcomes? So maybe it's 70% fixed and then there's an upside linked with the outcomes that we are able to deliver. So that's track number one. The other way to do this is also there are newer customers who are not existing customers. When we are acquiring, we can go in and can offer alpha as the pricing. Now, uh, to make this happen there are two teams which need to get aligned. One is the sales team and the second is the customer success team because eventually it's the customer success team of course with the help from the product team which has to deliver. So there's a very interesting idea from Palantir which I want to just borrow, which I've been telling my team we

Speaker B: have to now do that forward Deployed engineers.

Speaker A: I said customer success teams have to become martech growth engineers. They actually understand the business very well. But today they are sitting and analyzing campaigns and giving recommendations which are many times ignored by the end customer. So there's one more framework which I want to just bring in and this will help uh, uh, give an idea on how I think we can make the inroads with this pricing. So I like to look at that, uh, a brand. Their customers are what I call best rest. And next there are 20% best customers who generate today maybe 60, 70% of revenue. There are the next customers who are the ones they are acquiring. The New customers, and then there are the ones in between. The rest customers are drifting or dormant and they are constantly in flux. Today's best customer could be tomorrow's rest customer. A good place to start for alpha pricing is actually in the middle with the rest customers. These are customers who have, who are drifting, who, if you don't do anything, will end up as a cost center in the next bucket, where after say two or three months, the brand is going to end up spending on, um, ad tech to reacquire the same customer again. So today, if I can go to a brand and say, you know, give us a percentage of these customers, a portion of these customers, let us work our magic. We know the industry, we know you are maybe doing 20% of the journeys which need to get, get done. You are doing segmentation through intuition, through some manual, uh, knowledge or whatever manual process you have. We have got the full power of agents, we have the power of cross of deep industry knowledge. Now if I can go with such a proposition and say that don't pay me anything, but pay me on outcomes, and these are people who are already leaving you or have gone. They will never give us our best customers upfront. But this middle category, I think is a great opportunity. I mean, I call it this middle that Martech has forgotten. In fact, in Martech, I also use this phrase sort of that it's anti Martech. Martech has become its own biggest enemy because Martech's job was actually retention. It is because Martech has failed that the ad tech business has grown so big. Ad tech delivered the customer. Martech's job should have been to build a lifelong relationship with that customer. But that did not happen. And you're forcing the brand to go back into the world of ad tech. So if we can now, through the mix of, I mean, these two models, the agents for automating a lot of the functions and the alpha pricing, I think it can be completely transformative in the coming era for Martech, I mean,

Speaker B: you know, like Netflix disrupted, uh, Blockbuster. Uh, it was not Blockbuster, which should have, I mean they should have done it, but they didn't do it. Uh, so there is that little bit of question, uh, mark here. But I see the beauty of your approach, the elegance there is that, uh, you're not in any way sacrificing existing revenue. The existing revenue is untouched. You're just supplementing existing revenue. We're saying, okay, these, I'm risking a

Speaker A: small part of the fixed existing revenue. The good news is that there is inefficiency we know that. Inefficiency in the fact that, that because martech is failing, 70% of um, our marketing budget is spent reacquiring the same customer again and again. This is fact. So for me I'm not asking for an additional outlay. In fact I'm coming in and saying let me help make this more efficient. And I also know that if I don't do it, someone else is going to do it. My advantage today is that I have deep customer relationships and thousands of customers already new for a startup, they have to go in and build these relationships of trust and access.

Speaker B: Right, right, right. Yeah. There is a data access mode that you have. Uh, true to true. Okay, I see your point. Yeah. Help uh, me understand uh, how netcore uh, acquires customers. You know, how. Are there any lessons you'd like to share on B2B sales, uh, acquiring these large enterprise customers? How does that happen?

Speaker A: Okay, so we do it pretty much every how everyone else does it. There's no. But I want to change that also. So I'm like netcode's internal disruptor by the way.

Speaker B: Okay. That's a good role to have.

Speaker A: I'm one reporting to me I run sort of small experiments internally. It's the best thing I like uh, small or mini startups. Most of them fail but gives me ability to experiment. So um, the standard acquisition, I think there are three of, I would say broadly three methods that we are using to acquire customers. One is of course uh, marketing at events, uh, and LinkedIn and all of those things which basically bring in some traffic. Not very different from the way the world of ad tech also works today. The second is um, the inbound which happens organically. So through a mix of write ups, webinars, I write every day on my blog on new ideas and marketing. Um, some of that also comes in through requests on LinkedIn, uh, for me. And third is um, uh of course uh, the referrals which happen from existing customers. Now what is default which I've not mentioned with the obvious one is of course a large sales team that is a personal one to one selling. I don't think that has gone away because these are all mid to large sized companies. We can't do the pure online PLG product led growth kind of ideas. But what I want to change um, is um, and I call it the base and the chase. So I would say say we have say uh, a company and every applies to every company M. The base is the customers you have. So there the question is how can you retain Them how do you grow the nrr, the net revenue retention? If last year they paid X, can you get them to pay more than X this year? So that's our growth. That's one track of growth which happens. But then there is also a large segment of customers you don't have. That's what I call the chase. So you're chasing these customers. Now one of the things which we've been looking at and I've been exploring personally is can we create simple landing products where today the uh, typical sale time is about 90 days to 120 days. Many times 3 to 4 months. But can I get a foot in the door in 10 days? Can I get access to some billing relationship in 30 days? Can I become the second ESP or the second SDK in 90 days? So without selling my core product, can I use other methods to effectively get a foot in the door? Because what I've seen is once you have a, if you see a good salesperson actually builds a relationship. Because in our cases many of the contracts are annual contracts. So you are waiting average six months before you get an opportunity to break into an account to switch and also frictions in switching. But with every product there are pain points which are there with our product, with our competitors products. Everyone is always, I keep saying, you know, the first year is the honeymoon period. Everyone's happy at the customer end. Second year doesn't matter which product they buy. They're always wanting to see what else is there new in the market. Um, so that is where if we can get a foot in the door. You will now start listening to the customer on what are the pain points. See we have in a way a thali of solutions like a Swiss army knife of answers. We know. What I don't know is which are the specific pain points. Every customer has slight different pain points. If I can build a relationship of trust and get to what the pain point is, it increases my chances of switching when the time of renewal comes in. So that is where I think the best example of the landing was done by HubSpot. Many many years ago they had this website, it's still, I think they're called website grader. So you could actually come in there just type your website. Even you can go there today and do it website, uh, URL and an email ID and it will then send you what is wrong with your website, what is right and wrong with your website.

Speaker B: Everyone uh, will do it like loading time or SEO or stuff like that

Speaker A: and HTML challenges etc. Which are there this I think has been the single most powerful inbound lead generation that's been there ever in the history of B2B selling. M. Can we create something like this out?

Speaker B: Was Salesforce, uh, acquisition of Slack for a similar uh, goal?

Speaker A: No. Okay. I don't know much about uh, the um, backdrop to the acquisition I would say for Salesforce. And they have done many large acquisitions. So Salesforce has been acquisitive through its history. I think for them it is more of the fact that you can sell more into the same buying center, increasing the relationships, average contract values, average contract value goes up. Uh, you can get some more efficiencies out there. Uh, I don't think they can use the data that's flowing. So it was definitely not for data that is out there because all those are confidential conversations out there. And also I think for Salesforce, at some point of time when the core business growth slows, market is expecting a certain growth at the EBITDA level for sustaining your stock price high and the multiples which it, which it has historically been. So you need to have the constant acquisition play, um, for sustaining your price also.

Speaker B: Why haven't you gone public so far? Profitable 100 million revenue.

Speaker A: Yeah. So I wanted to go public maybe three, three or four years ago. Um, and I got all these, I spoke to all these bankers. I got great inputs on of course what we would be worth when we would go public. We have 25% E in the company. Another very important reason to go public soon for liquidity for employees. Though we have an internal buyback program. I can't wear the same price at which the market would value us. Uh, one of the bankers I met, he said rash. Look, getting you a listing is very easy. How confident are you of your earnings or your numbers for the next two years? It'll take nine months for you to do a listing. That's the process and it'll take. And at least for the next four to six quarters you have to be very confident otherwise the stock price will not sustain. Because people are valuing you on forward multiples.

Speaker B: Right. Some future expectations.

Speaker A: Future expectations. Right. And what I had started to see a bit of a slowdown in marketing spends at that time.

Speaker B: Why was that happening?

Speaker A: See partly VC funding has started coming down. I think during the COVID era people over spent on marketing in the whole for customer acquisition. Uh, especially in India, um, which is one of our largest markets. So we saw some rationalization starting to happen. And also competitive activity keeps increasing of course. Um, and brands unfortunately try to Optimize Martech expenditures rather than optimize ad tech expenditures. That's the other tragedy that I see in our space. Anyway, so that I could not say yes to that question. How confident was I of forward looking earnings sustaining? So then I said let me not get into that. Uh, because until I am very confident, uh, it's a very difficult um, um, I mean bet to make m. Because you don't want to have a listed company and then have the quarterly pressures also and a falling stock price. Um, that's ah, a very toxic combination in my life. You know, my father had told me this long time ago, even before I started, he's saying be very careful when you're taking other people's money. If possible, avoid it.

Speaker B: Right, right.

Speaker A: At that time he meant more in the context of a loan rather than equity in our, in a, in a listing. Um, but I'm always that much more careful when you're, when you, when one has to take outside capital.

Speaker B: But is it on the roadmap?

Speaker A: Yeah, IPO is definitely, I think, uh, if we can get. Now, so now the challenge of course is that there's the AI, uh element also in there that we have to. SaaS valuations have fallen 50, 70% in the last year.

Speaker B: SaaS apocalypse as they're terming it.

Speaker A: Yeah, absolutely. So what I have to be very confident about is that we have a very powerful AI story, we ah, have a retention story and we have what I call the sort of four M's um, uh, along with the Blue Ocean part. There's some parts of our business are at least in the Blue Ocean where we have a moat, we have a monopoly in that particular segment, we have a way to multiply. There are multiple paths for us to make more money. And of course the fourth Ms. Money there is a secure or there's a reasonably well protected cash flow coming in the future because that's what markets are valuing uh, companies on. So my belief is that this, what I spoke to you about on this alpha, outcome based pricing is one. There ah, are a couple of other ideas like this that I'm working on. Um, uh, I had written a essay on my blog, by the way, I write Every day on Rajeshchain.com hundreds of essays on marketing. So one of the essays I did on B2B SaaS saying that SaaS or uh, B2B software companies need to look at two new revenue streams. We spoke about outcome based pricing. But the second one, second track is actually also if there are, if you're selling to B2C companies. Can you create ad ads as a revenue stream? Can you monetize attention? So I'll give you a simple example. We send out zillions of emails. We charge people on per email. What if the emails were free? I call it 0 CPM. And what if we could run third party ads? So make email into a attention and monetization surface rather than just a uh, sell and notify surface.

Speaker B: Uh, let me quickly wrap up with one chapter of your life we haven't spoken about. Are you the man responsible for the election of Prime Minister Modi?

Speaker A: I think I was one of many people who worked. Okay, so I'll tell you my role and I've written about this, I've spoken about this earlier, um, but not as much uh, uh because in the political space it's better to be quiet about what you have done rather than talk a lot about about it. And I'm not in the business of politics. So um, between 2011 and 2014 I had set up a separate team uh to work from the outside for Narendra Modi when he was during that time was chief minister of Gujarat.

Speaker B: What was the trigger? How did you like discover this space or this problem to go back a

Speaker A: little bit in time. Uh 2008, nine, uh, there was a slowdown. We were also very small. Um, we were doing our SMS business. Um, and um, uh the BJP was looking for an SMS vendor at that time. That's how I got connected um, with at that time it was Piyush Goel. Um, he had come to Vetas and I just happened to talk to him saying that there are a lot of people like me who are unhappy with the direction of the country and who would like to help out in some way. We are middle class people, you know, attend your rallies and all. And that's how he said, you know other people have spoken to me also along similar lines. So in a few of us professionals got together and created friends of BJP for the 2009 elections. So we organized events for uh, what we called middle class India effectively. I mean who would not attend rallies at say large grounds and all that bust in whatever. Um, first time you know you could actually ask questions directly to the politicians across the table, um, in groups. Of course BJP lost the elections quite badly in 2009. Um, but that idea that people like us can perhaps be engaged in politics, have no background in politics at all. Um, sort of got triggered in my head. Uh, in 2010, um, I wrote a blog post or uh, publicly in May uh, uh, May, June 2010, saying that the BJP can win a majority on its own in the 2014 elections. This was what I called Project 275 for 2014. And I only analyzed data. I analyzed the, uh, outcome of elections. I realized that the BJP had won 299 seats at least once out of the 543, and that if they needed to win a majority in 2014, the election had to be not a summation of state elections as had started to happen in India with the coalition governments which were getting formed, but it had to be a wave election. It had to be a very different type of election. A national, A, uh, national election, not a summation of state elections. And if they got a, uh, 90% hit rate, they'd be home. So, uh, I wrote this publicly on my previous blog@rajeshchain.com at emergic, sorry, emergic.org and um, uh, around that time, someone had connected me with, uh, Narendra Modi when he was CMO Gujarat. So I met him a few times. Look, you know, I'd love to see a different future happen. I mean, um, Gujarat at that time was seen as the model of development. Also, uh, I mean, when you could actually see the difference in road quality as you drove from Gujarat to Rajasthan. I used to go to Rajasthan very often. You could. You don't need a border sign to tell you that the state has changed, uh, now, now. So, but what I told him also at that time is I want to work from the outside. I don't want to become a vendor. I don't want to work from the, uh, inside, where I knew that a lot of the politicians, I'd seen it earlier, did not value people from the incident. I said, I don't want to be alone. Otherwise I'm just like two hands, two legs, one brain. That's it. I said, I will. And I, I'll do what I do best. I will create a startup to work for you, but from the outside, I will fund it myself. I will not take your money. So that's where I created a startup, uh, called Niti Digital. We did four things. We did media. We had a portal, um, for pro BJP news, pro modi news. Because, um, that was not the case. What was happening in India at that time. Uh, if, to go back to that period, it was analytics, so data aggregation. I built a site, India votes.com, which is still active. I think it's still the best elections data website in India. It's, the design is very old because I'VE not updated it, but it's still one place where you can get election results, uh, uh, since independence, um, in a nice manner, queryable manner. Then we did analytics and a volunteer.

Speaker B: So India Votes is a site for analysts, not for aam. Um, Janta.

Speaker A: No, no, it's for analysts, people who want to figure out what happened in past. Uh, so the traffic peaks at election time or the elections data I think should have done this job, but they still put out PDFs from election results.

Speaker B: Okay.

Speaker A: You would take the PDFs and then digitize those and all of those things. Analytics, uh, was about, uh, using ideas from the Obama campaign on how to build a better ground campaign, how to figure out who is supporting you, how to get out the vote. So lots of interesting ideas. I brought a tech and sort of media perspective in there, but I ran it myself and I was very clear that once the 2014 election gets over, I'm back to netcode. For me that was that 2011-14 period.

Speaker B: Staying with what you did there. Sorry, can you repeat the name of the initiative you said? Niti.

Speaker A: Niti Digital.

Speaker B: Niti Digital.

Speaker A: Niti was New initiatives to transform from India. This is a precursor to the Niti Aayog word which was used. Niti was a very nice word, uh, acronymized.

Speaker B: So this personalization that you were attempting, how did it actually benefit, uh, the bjp? Like were you able to give them data that your people should call these voters? Or like how did it actually impact.

Speaker A: We ran multiple things but one of the initiatives we ran was that, look, if you supported the bjp, um, uh, send an SMS with your voter ID or specific number and then we had mapped the voter ID to the polling booth. So we had done some data, uh, analytics work at that time. So this way, on election day. And this is exactly how the get out the vote. What they call GoTV in the US US get out the vote works. How do you identify your supporters? How do you make sure on election day they vote? Because it's eventually not the support base that you have, but how many of the supposed do you get out of the polling booth? So there was a very good book called Victory Lab by Sasha Isenberg which had come out, which actually had. It was a political science book and I'd read that book, uh, amazing ideas on, on, on electoral politics. And I had seen some of that in 2014. Oh, sorry, yeah, 2014. And uh, sorry, 2009 when I was Obama.

Speaker B: Okay.

Speaker A: With first, first work that I done and very little actually. It was all sort of um, they don't be the parties would not know who their supporters were. Um, um, and therefore it was all just uh, whoever voted, sort of voted, voted. And with the Obama campaign I realized that it was very, very scientific. They knew the supporters. They would make sure that they voted on election day. Um, and we tried to do this in many of the polling booths because BJP has a very good ground presence but to bring out to vote was a bit of a challenge. So that's the sort of element that we brought in.

Speaker B: Uh, and post uh, election, uh, you were continuing that journey.

Speaker A: Post election I was very clear that my job is done. So I had no interest on that side. But then I also there was one question. You know a few of us used to talk about why is India poor? And I had no background in economics. And um, a friend who actually educated me on some of these ideas atano day he ah, educated me on many of these ideas on why is India poor. Apat Shah from CCS center for Civil Society also helped. I attended a number of conferences in the U.S. i taught myself some of these basics in economics. I never learned any of this in my life. Um, and then the key idea basically boils down to what's called, we use it very lightly, the word freedom. Individual freedom, economic freedom, political freedom. Um, and then when m we analyzed a little bit more. The root cause is effectively the constitution of India know, which is effectively a uh, hand me down from the British Government 1935 Government of India act meant to enslave, not to free a people. So then I tried to do a few things. I tried to create a movement to try and change India's constitution. Col didn't go anywhere. That was very naive. I tried to free the Indian cities, you know, from the clutches of the chief ministers, uh, because urban people are migrating to cities and then cities are sort of, you know look at the infra and look at the state of many of our cities to other cities. The money is sucked out but not enough comes back for building the urban infra at the level at which it should be done. Um, then I tried to create something called Naidisha, a new direction for India. Um, one of the ideas in there was Dhanvapasi, that there's a lot of wealth in India which actually belongs to the people of India which if you can hand back to the people and let them decide what they want to do rather than these stupid zillions of um, uh, welfare programs, lot of where corruption also happens. Um, um. I mean the idea was that you look at Ludhian's Delhi. You look at defense, uh, land in

Speaker B: cities or even railways.

Speaker A: Land, railways, land, PSUs. I mean the government, finally. It's also what Modi had said in 2014. The government has no business of being in business. Um, so there were these ideas and I thought I could educate people on some of the core ideas of classical liberalism, which is what helped America become what it is. That American Constitution is something you can carry in your pocket. Of course I was too naive. Like I said, uh, I couldn't change any minds just by making a few videos and writing some things. I couldn't do anything. So then come 2019, I said, look, this is not going to work. So I shut that down and then back to netcore full time.

Speaker B: But do you think this is a chapter you will open again?

Speaker A: No.

Speaker B: No. Okay.

Speaker A: So see, I was very clear to me. I mean I've seen politics at reasonably close range than most people of our types of, uh, it is not for us, um, uh, in India especially, it is a very different ball game when it comes to the political process that is there, even the electoral process that's there. Um, and um, uh, uh, it's very hard for people like us actually to make any sort of difference. So I said, I mean I could. I mean I didn't lot of essays at that time on what we need to do at an AISHA manifesto. And I read it. Even after all these years, I think it's a good one. Dhanvapasi, uh, is still a very good idea. Um, but I don't think they're going to get any, uh, they're going to make any progress. I said the best that I can do is as an entrepreneur, if I can do well in my life and then if I can give back in some ways through philanthropy, uh, that's a great chapter. Like in ID Bombay, two of us have set up a fund for converting, helping professors take faculty research to ipo. So we call it IP to IPO or lab to listing. So it's so things like this where I think I can use my, my out of the box thinking my entrepreneurial skill sets in fields which are not linked with government. But I think there's plenty of things which you can do in life. Everyone looks for, I think, uh, what David Brooks had once called, had called in the title of his book, the Second Mountain. So when you're in the 50s, you look at what's coming up. Uh, Jim Collins's new book that's coming up, what to make of a Life talks of very similar things. Um, in the. Ask this question late in life and how do you sort of keep the fire going? Of course, for right now, it's all net core. Uh, but at some point of time, what are things which I can do beyond Net core is absolutely what I want to look at, but politics is not one of them. I think entrepreneurial linked, um, for prosperity is how I would put it.

Speaker B: Amazing. Amazing. Thank you so much for your time, Rajesh.

Speaker A: Thank you very much, Akshay, for inviting me. Wonderful talking.