Siddhartha Ahluwalia 1:07

Hi, this is Siddhartha Ahluwalia, your host at Neon Show and also managing partner of Neon Fund. Today I have with me Nilesh Patel, co-founder of LeadSquared. LeadSquared is among the top 25 SaaS unicorns from India and one of the most talked about SaaS companies which has grown recently and come on the map from India to the US.

Nilesh, welcome on the Neon Show. So glad to have you here.

Nilesh Patel 1:32

Thank you Siddhartha. Thanks for inviting me. Really appreciate and really like to be here.

Siddhartha Ahluwalia 1:38

So you have picked up a very difficult category to build in. I think CRM space is a very deep category, very large category and going against the sales force of the world. Right.

So tell us about the journey of building LeadSquared, any pivots during the journey and when did you start it?

Nilesh Patel 1:56

So, you know, I think we started in 2011. Idea was to build a software first business, you know, me and my co-founder colleagues and along the way we figured after evaluating few ideas that the space around marketing automation and CRM, particularly marketing automation was gaining good attention during 2011-2013 time frame. So started working on one of those ideas and as we progressed in the journey, you know, we found the adoption of our software in India and some of that was basically in, you know, with businesses who are, you know, interested to do marketing plus some sales use cases and slowly but steadily the whole thing transitioned into more like a broad based CRM platform, mostly driven by what we saw in our, you know, in our journey with the customers. So that’s how it started and then it kind of transitioned and after that, you know, the customers took the whole thing to a different level altogether. So that’s how it kind of transpired.

Siddhartha Ahluwalia 3:24

What have been the inflection points in this journey?

Nilesh Patel 3:30

I mean, usually, okay, let me just think back, right? So you know, getting the first few customers always is important and I think I still remember the first 100 user deal we had in early of 2014. I was an education, multi-location education company out of Mumbai and, you know, that was the, you know, let’s just say the first large deal we had then, right?

 

And I would call that as a starting point for us. We were selling into other businesses before that, but not as scaled for us at that time. And then as we progressed in 14, you know, we signed up other education companies along the way in 14 and sometime during last quarter of 14, we had signed up Byjus as a customer and their growth was phenomenal, you know, from 14 till, you know, 2021, 2022.

And along with them, you know, many other EdTech companies also were growing at that time Vedantu was one and several others. And because we signed Byjus, it was an easier story for us to tell other EdTech companies and we signed up customers as a result of that. And that I would call as a important inflection point because the whole EdTech industry, which was attracting a lot of capital, you know saw Leadsquared as one of the solution which can help them grow and scale and that would be a second or other important inflection point which took us, took our growth from 14 till roughly 2020, 2021.

I think that would be the second, I would say. The third is, you know, the, as EdTech went into, you know, its own troubles, you know, during last few years, we were already venturing out into, you know, non-EdTech, you know, more traditional businesses, financial services and other areas. And slowly but steadily, we built our business in that to counter, you know, what we are seeing as a downturn in EdTech.

So, that was, I would not call an inflection point, but more like a journey from, you know, changing the revenue mix. And fourth is our getting into the US market, you know, in early 2020. I think that sort of again shifted the revenue mix for us and was able to help us, you know, tide over the EdTech, you know, downtrend.

So, these three, four points I would call from a business standpoint. And also, you know, product companies are created out of things they do for their customers, right? Along the way, we had several things we built, you know, which, you know, helped us scale some of our business, you know, in some areas of our business.

And so, those also contributed to the, you know, success, which we saw. So, that I think, these three, four ideas, I would say are what can be attributed to, you know, to sort of inflection point in the journey.

Siddhartha Ahluwalia 7:16

And do you remember when the company crossed 1 million ARR and 10 million ARR?

Nilesh Patel 7:22

I certainly remember, we crossing 1 million, probably in 15, if not 16, one of those. And I think 10 happened, it took us, I think, five years before the 10 happened, I think, four to five years.

Siddhartha Ahluwalia 7:41

Got it. I believe, you know, the last reported public number was in 2022, that when you were at 30 million ARR, you raised a massive 150 million around from Westbridge. And before that, you had only raised very little capital, from Gaja and some angels.

How has been the capital raising journey been of the company?

Nilesh Patel 8:01

So, we, interesting question. We raised a little capital along the way, starting 2013, from, you know, friends and family and such. And we also contributed some part of the capital as founders along the way.

So, our initial raise, which was smaller rounds across, you know, multiple years, in each round, somebody was sort of leading of sort. I think, you know, the whole angel concept was not that deep, you know, 15, 10, 12 years ago, as it is now. And, and so whoever was willing to invest in our circle, we would call them technically angel and then they invested.

I think that allowed us to continue to grow till, let’s just say 2016, 17. Then Jyoti Bansal of AppDynamics, he, you know, we got him in, in 17.

Siddhartha Ahluwalia 9:09

He’s a college senior, right?

Nilesh Patel 9:11

He’s, you know, a batchmate of my other co-founder Prashant Singh. So, that’s how we connected with him. And, and so that allowed us to sort of take to the next level.

And he’s a phenomenal entrepreneur, as we all know. And, and, and then the series A happened in 19. I think, yes, 19.

Siddhartha Ahluwalia 9:40

That was Gaja Capital?

Nilesh Patel 9:41

That was Stakeboat.

Siddhartha Ahluwalia 9:42

Okay. And when did Gaja happen?

Nilesh Patel 9:44

Gaja happened in December 2020. So, that’s when the Gaja round happened.

Siddhartha Ahluwalia 9:50

Okay. And how, how large were these rounds? Like Stakeboat, Gaja?

Nilesh Patel 9:54

Stakeboat was about 3 million-ish. And then Gaja was about 30 million, little bit over 30 million.

Siddhartha Ahluwalia 10:01

Got it. And these are unusual choices because they are like, almost like PE funds.

Nilesh Patel 10:06

Yeah. So, as you said, right, in the CRM is, is not a very, you know, very desired investment category. And, and there’s so many companies which come in CRM space, even today.

And it is very hard for anybody to believe that any company can scale in CRM space, or in generally, customer relationship space. And so, the, the private equity guys, I think were interested because our capital efficiency was reasonably good. And the business was growing and majority of our revenue still then was coming from India.

And because the business was growing, it was losing, not losing a lot of capital, was reasonably efficient. And there was a belief that India can, the company can scale in India to, you know, again, I would not speak on behalf of the investors, but I would believe that they would be willing to believe that, you know, the first fund would have believed that this company can do 10 million, the second would have believed this can do like 50 million, and so on and so forth. And I think that’s why, you know, the choice, you know, these guys were able to make that investment choice.

And also, you know, there was a belief, which is basically that this company, this product can go outside of India as well. And I think that allowed people to, you know, take the bet, I would think.

Siddhartha Ahluwalia 11:50

And I think that when you were at 3 million ARR, a Stakeboat came in?

Nilesh Patel 11:54

Yeah, roughly, less than 3, yeah, roughly 3.

Siddhartha Ahluwalia 11:57

And when you were at 10, then Gaja came in?

 

Nilesh Patel 11:59

Yeah, roughly 10, less than 10, yeah.

Siddhartha Ahluwalia 12:04

So, in between, you manage mostly with your own cash flows that the company generated and some angel money.

Nilesh Patel 12:11

Yes, yes, by and large, that’s right.

Siddhartha Ahluwalia 12:14

And this is very unlikely to other SaaS companies that have been built from India. I believe one reason is, as you said, CRM is a category, a very difficult category.

Nilesh Patel 12:23

Actually, it is not a very difficult category. It is, a lot of people get into, so it’s very competitive.

So, that makes it, you’re right, that makes it difficult. So, you have to find a space to, you know, maybe play. And, but the also good part is that it’s a large category.

Siddhartha Ahluwalia 12:40

A sticky category as well.

Nilesh Patel 12:41

It’s a large also, right. The TAM is…

Siddhartha Ahluwalia 12:44

Infinite.

Nilesh Patel 12:45

It’s not infinite, but it’s fairly large.

Siddhartha Ahluwalia 12:47

Salesforce is a 250 billion dollar company today, 20-30 billion dollars in revenues.

Nilesh Patel 12:54

More than 30 billion, yeah. So, that’s a large category. So, that’s why, so it’s attracting, it attracts entrepreneurs.

But can you find an area where you can scale? And I think with time, people should be able to find out where they can stand out and offer more value than others. But yes, it is, it is not super easy category.

That would, I would say.

Siddhartha Ahluwalia 13:20

And how big is the team today?

Nilesh Patel 13:23

We are about 1000-ish people now.

Siddhartha Ahluwalia 13:25

How many in India? How many outside India?

Nilesh Patel 13:27

I think majority are in India.

I think we have a small team in US, which is building our business there and maybe 14-15 people in US.

Siddhartha Ahluwalia 13:40

And during the building of this company, you have dispelled a myth that SaaS companies built out of India can’t have Indian customers.

Nilesh Patel 13:51

Yeah. I mean, I think there were other companies who have done that before us. There are many, I would say.

But certainly, we would be one of those companies. And yeah, I mean, I continue to believe that Indian customers will pay for, you know, quality software and they continue to do so increasingly now.

Siddhartha Ahluwalia 14:14

Yeah.

Nilesh Patel 14:15

So, that is true and this is going to grow.

Siddhartha Ahluwalia 14:21

Sure. And during the journey, these customers, were they paying you for the value they were receiving from the software? Or do you think like the market says that Indian customers usually underprice the software?

Nilesh Patel 14:36

I think like any other, like if there is competition, the prices go down and then the value also plays a role in it. So, I think it’s a combination. I think it’s a combination.

There is, Indian customers are, you know, not super easy to please for sure. But there is, they’re also tolerant. I mean, I think it’s not entirely, you know, true that they’re just one way to look about the customers.

I think they’re willing to partner with you to build use cases and things like that. So, I believe this is a great customer base we have in India. I love them.

And so, yeah, I think it’s just a way to look at it.

Siddhartha Ahluwalia 15:28

And when this EdTech obviously became a tailwind for the company and later headwind for the company, right? I assume at one point in time, EdTech would have commanded 40% revenue of the company at its peak.

Nilesh Patel 15:40

A little more than that.

Siddhartha Ahluwalia 15:41

Okay.

Nilesh Patel 15:41

Yeah. Yeah. But yeah, that was, that certainly was, I mean, in hindsight, it is 2020, right? But anything which is, which grows super fast will come down someday as they say, right? And so, that came true for us also.

But we were trying to spread our, you know, bets in other areas. And fortunately, that paid off for us and we were able to, you know, navigate out of the situation, you know, without much crisis, I would say. And so, because our US business, you know, ticked up, our non-education revenue grew well.

And so, because our software was, you know, even though we’ve been sort of known more for EdTech, but you know, our EdTech revenue is much lower than what was, you know, three, four years ago. And so, it’s more broad-based, you know, offering. And so, yeah, I think it was a good, you know, good that we came out of that.

Siddhartha Ahluwalia 16:54

And how have you set the CRM as a category where you have large market but immense competition? How did you build your own differentiation in that category?

Nilesh Patel 17:03

So, I think the, honestly, you know, some things I can say we planned and some just happened, right? A lot of that happened with us because, you know, if you grow fast, right, because on back of some customers, your user base also increases. And that helps you, you know, get some tailwind in terms of, you know, people getting to know your software, they know how to use it and things like that.

And then they’ll want more of that, right? So, that helped. The second is that, you know, if you focus in one area more, you’re able to, let’s just say, solve for those problems slightly better than others, right?

In some cases, slightly, in some cases, much more. And that also gives you the advantage and some of that goes back into the software and then you sort of build those functionality and features to, you know, help the customers and bring that value for them. And because you’re a smaller company, you’re able to do it, you know, likely better than the others.

And that helps you, you know, so as long as, as long as you’re able to find more and more such customers for the use cases, which are solving, you know, it’s likely that it’ll work out. But there’s no guarantee. But it’s likely that it works out, it will work out.

And if the size of the customers, if you’re sort of, you know, average revenue sort of keeps growing in the base, then that worked out for us, to be honest. But it could have been different story, you never know.

Siddhartha Ahluwalia 18:43

And if I can ask, how did customer perceive the differentiation? Like, how were they comparing you to other softwares in theory? And what stood out for you?

Nilesh Patel 18:51

See, I think one was that in the beginning EdTech did, you know, stood out, right? Because, you know, some of our reps will go to the customer and they say, well, because everybody in EdTech is using LeadSquared. So you don’t even have to take a demo, basically, right.

And so that was helpful. People would just buy LeadSquared. So that was one.

And I would say, the second was the number of people who are using LeadSquared got accustomed to how the software is, you know, helping them. And while everything looks outside very CRM like, right? When you go in the software, the way we’ve designed some functionality in our product, which is relevant for high velocity sales, especially when you’re selling to consumers.

So when you’re used to that process, it will be difficult for you to then go back to a B2B type of system and try to do the same thing there because you lose efficiency in that. And I think anybody, I won’t say everybody, but a lot of people who have tried to switch out of LeadSquared and gone to other B2B players have seen some of that efficiency drop for them.

Siddhartha Ahluwalia 20:19

Have they come back?

Nilesh Patel 20:20

Some have. Some people have gone to Salesforce and have come back and that happens. That happens.

I won’t say a lot, but it happens.

Siddhartha Ahluwalia 20:31

And in the journey of LeadSquared, you know, what has been the highest annual contract value that a customer has paid?

Nilesh Patel 20:41

I would say less than 10 million would be more accurate.

Siddhartha Ahluwalia 20:48

Wow. A single customer paying a 10 million?

Nilesh Patel 20:51

Yeah. Not 10, but less than 10. I would not go into specifics, but yeah.

Siddhartha Ahluwalia 20:55

That would have been both, you know, an excitement as well as fear.

Nilesh Patel 20:59

Yeah. It became fear, you know, later.

Siddhartha Ahluwalia 21:01

I think that was Byju’s.

Nilesh Patel 21:03

Yeah, that was Byju’s.

Siddhartha Ahluwalia 21:06

Yeah. Without Byju’s, what were the next set of top customers who were paying? I think we had many customers in a million plus category. Okay.

Nilesh Patel 21:13

So you were selling to the top end of the enterprise. So it’s interesting, right? I mean, we started from the bottom, but then rose through the ranks and now serve the top end also.

But, you know, the flavor of our software continues to attract, you know, young companies and mid-sized companies too. And it works equally well for them. Since we have served some of the large volume customers on the planet, right?

Like, you know, you don’t have companies who have, you know, 50, 60, 70, 80 million leads and, you know, tens of thousands of reps selling to them. And so in that sense, it’s a very scaled system, right? But at the same time, you know, you have scale, so you operate and you serve those sizable customers.

But at the same time, the software, you know, was created, was adopted by a lot of, you know, young companies and mid-sized companies and they continue to benefit and we continue to serve them while our aspirations are, of course, to increase our ACVs and things like that. And because, you know, larger deals take time, some deals, some customers grow into large deals, start small. So there’s a variety which comes along, but we’ve come a long way and I’m happy to share that, you know, there are few companies who can, you know, support the scale which is now demanded, at least in the country, India, country like India, where, you know, you have to operate at scale if you are a consumer tech company or consumer oriented company and that’s where, that’s how those are the companies we serve.

Siddhartha Ahluwalia 23:02

It is said that when people put that in India, you can’t sell enterprise software. Salesforce commands 100 million dollars a year from Bajaj Finserv. Is that true?

Nilesh Patel 23:16

I don’t know if it is 100 million.

Siddhartha Ahluwalia 23:18

But might be somewhere on the 50 million side of a range?

Nilesh Patel 23:22

Possibly, maybe less, but I don’t think it is 100 million, but it could be. Look, I don’t know the details. Yeah, I mean, I think, you know, they’ve been a great partner to them.

So, you know, they would have continued to make the investment there.

Siddhartha Ahluwalia 23:41

But do you think that Indian enterprises like HDFC, ICICI bank…?

Nilesh Patel 23:45

They spend a lot of money.

Siddhartha Ahluwalia 23:46

They spend a lot of money on CRM?

Nilesh Patel 23:48

I mean, they spend a lot of money on tech. Yeah. Right.

I mean, CRM also, they spend a lot of money. I mean, CRM is a broad category, which we should not just sort of bucket it into, you know, what a Salesforce does or or Microsoft does, right? And anything which connects to a consumer, you know, could be messaging, it could be communication, you know, telephony, you know, a lot of things sort of comes into that, you know, space.

And towards that, I think a lot of spend happens from all of these companies. So, and it is increasing. So, it’s not that it is stagnant, it is increasing year on year.

Siddhartha Ahluwalia 24:29

And if we take CRM as a category, how much does India as a country would spend on CRM? Any numbers on that?

Nilesh Patel 24:37

I mean, I can, I think it will be anywhere from, you know, 600, 500 million to a billion dollar.

Siddhartha Ahluwalia 24:44

Wow.

India’s, I was head of Amazon Web Services, SaaS ecosystem in India before.

Nilesh Patel 24:51

So, you would know.

Siddhartha Ahluwalia 24:52

So, I don’t know the CRM category, but I know cloud spend.

Nilesh Patel 24:56

That’s huge.

Siddhartha Ahluwalia 24:58

AWS revenue is $2 billion in India. Microsoft, Azure is a billion.

And I think GCP is somewhere close to a billion. So, total overall India spends roughly, including the small players, $5 billion a year on cloud.

Nilesh Patel 25:13

Which is phenomenal, right? So, like, if you really compare that to, I mean, CRM, you know, there are so many players, there’s Zoho and Fresh and like so many others, right? So, I would think an Oracle, like you don’t see Oracle everywhere, right?

But they’ll be selling in many enterprise customers and things like SAP. So, the spend would be, is not less. It’s a lot.

Siddhartha Ahluwalia 25:38

But ultimately, it proves that India is a market for enterprise software.

Nilesh Patel 25:44

I think it is already there. Like at what size and scale would be, of course, depending on the interest of the party who wants to build a business here. But there is revenue to be made in India.

Siddhartha Ahluwalia 25:58

And what’s the current composition by sector?

Nilesh Patel 26:01

So, I think financial services will be close to 30%, a little bit less than 30%. Education would be another 30%, including US because we sell in US education. Then the healthcare would be about, you know, 10 to 15%.

And then remaining would be more, you know, large companies, enterprises, you know, which is growing now, by the way, that segment of our business is actually really taking off now, where people are like in automotive and manufacturing, in building materials, right? I think people are liking our product and field sales and stuff like that. And I think that I believe is going to take off really well for us now.

Siddhartha Ahluwalia 26:44

And you still have today customers paying in BFSI or in automotive?

Nilesh Patel 26:49

Yes.

Siddhartha Ahluwalia 26:49

A large million dollar ACV contract?

Nilesh Patel 26:51

Yes. Yes, we do.

Siddhartha Ahluwalia 26:53

So, as an Indian company, I think one of the biases that Indian founders that have observed, as a first founder myself and then as an investor, we are shy of asking the right price.

How did you overcome it?

Nilesh Patel 27:04

So, it was a learning exercise, right? I mean, I think there was, you know, I’ll share a story. So, when we sell our software, we will, you know, also, you know, in cases where we do the implementation, which is majority right now, and we’re changing that.

But so then there is an implementation fee also will allow the customer, right? And and one of the ways to find out what is that the customer is willing to spend is to probably quote something which is higher than what they were willing to spend. So, if you do that, then the customer themselves will come and say, this is my budget.

So now they you know what their budget is, and then you can work around that if you can, if it works for you. But I think to your question on do we price less, I think, generally, I’ve seen that tendency to price lower and get into the deal. But over time, as the business grows, right, the flexibility for you to price anything doesn’t exist.

That is only true for two kinds of companies. One who’s desperate to get the deal. And young companies were just starting about or, you know, absolutely want to have a deal so that they can build right. And I think there you end up, you know, having you lose or, you know, you’ll see a price competition. But other than that, I think, as the market matures, I think most, you know, companies would price right. And you can do that as well.

Siddhartha Ahluwalia 28:44

You started your US journey quite late. What were the challenges?

Nilesh Patel 28:49

We tried a little in between to be to be candid. But I think the capital required to be do anything meaningful in US was never available, right? We formally raised the first round in 19, right?

While we raised, you know, a little capital amounting to maybe roughly two and a half, three million before that, but that was not enough for us to have any meaningful, you know, US presence. And that to, so to, so in between what we tried was mostly, you know, do some campaigns, online campaigns, and, you know, some people working in the night shift to, you know, do some, you know, calls and take demos and things like that, but nothing major happened. As we took the first round, we started putting more capital, now started going to some events, you know, hosting some events, you know, shows and things like that.

And that sort of started trickling, you know, new customers for us. So I think that was the key reason if you ask me, for us to not sort of venture. And then the other thing was, you know, that while we are seeing customers coming in India also getting attracted to what we’re offering to them, that also was sort of kept the momentum going, right?

Our growth rates were, you know, north of 80% every year, then 80 to 90%. And so that was enough. I would, I mean, we could have been more greedy, but that was sort of, because we’re growing and scaling with right capital efficiency.

So, you know, one thought was why to sort of, you know, spend more money and not figure out, you know, whether it will land or not, right? So I think that maybe occupied us to not do anything else, which is to do India.

Siddhartha Ahluwalia 30:44

And right now, what’s the composition as of today, India versus outside India revenue?

Nilesh Patel 30:47

So outside India is close to 25%. And India is about 75%.

Siddhartha Ahluwalia 30:54

And I think majority of that, as you said earlier, is 20% is overall revenue is US.

Nilesh Patel 30:59

Yeah, more than 20%. Yeah. Maybe 21%, 22%.

Siddhartha Ahluwalia 31:02

And what are the things that worked for you in the US?

Nilesh Patel 31:06

I think focus helped us, you know, we picked one or two segments and..

Siddhartha Ahluwalia 31:11

Like BFSI or EdTech?

Nilesh Patel 31:13

So we have in education, we are doing right now and in healthcare, even though our software has a broad based appeal, it can work for other industries also. But we started with one, we built some scale there and then looked at the other and starting to scale that also.

And so I think the approach is to sort of go vertical by vertical and build the right use cases in those verticals and basically serve them. And I think that is what we are trying to do. And it’s a different, I would not say different approach, it’s approach we think is going to work for us versus kind of going broad horizontal.

Siddhartha Ahluwalia 31:56

And right now, your focus is that you spend six months of your time in India and six months in the US.

Nilesh Patel 32:01

Yeah, I’m spending some time in India and rest in US.

Siddhartha Ahluwalia 32:05

But it’s usually what I’ve observed is if your US revenue has to grow at a scale, one of the founders traditionally has always moved out from India.

Nilesh Patel 32:14

I think the template has worked by and large. And I think I, you know, for us, we’re also built a team in US and found right capable leaders, some of our team members from India also moved. So that gives me that question to, you know, sort of work at both places.

But you’re right, I mean, that in early stages, there is no other choice but to do that.

Siddhartha Ahluwalia 32:42

And which regions in US are your primary customer basin?

Nilesh Patel 32:45

They’re actually across, but yeah, but I think, you know, large states like California, you know, Texas and Florida and places there we have, but they’re sort of, you know, across not like, because they’re not like serving any big companies kind of thing. It’s like education, healthcare is all around the US. So there is no particular, you know, one area where everybody exists.

Siddhartha Ahluwalia 33:11

So your customer I assume are colleges?

Nilesh Patel 33:13

So they are like, yeah, you know, schools, trade schools, and you know, some online schools, and, you know, vocational schools and things like that.

Siddhartha Ahluwalia 33:29

And if you have to reflect back and say, if I could go back in time and change some things, what would those things be?

Nilesh Patel 33:35

A great question. First, I won’t do the other countries, I will just do India and US.

Siddhartha Ahluwalia 33:42

You’ll still do India?

Nilesh Patel 33:43

Yeah, I mean, I think, because the US came after India, so like, it’s very hard to change that order. And I look for reason for that, because India gave us the opportunity to learn the use cases, which we can serve, helped us figure out a category, which is all this high velocity sales, you know, B2C sales category, because this is a unique market, you know, it offers that ability. And it allowed the product to scale, and make it more mature and all of that.

So I think, if I remove that step, then it will be very different, because it will be very differently built business if I just focus on US. So I think this, you know, would, I think what I could have changed is, if I would have figured out how to tell a better story earlier, right? Maybe I would have raised capital a little bit earlier, and gone to the US a little bit earlier.

So I think that would be the other.

Siddhartha Ahluwalia 34:47

If you have to rate yourself on a storyteller basis, 0 to 10, where would you rate yourself?

Nilesh Patel 34:52

I think I’m less than 5.

Siddhartha Ahluwalia 34:53

Okay, but why is that?

You have raised so much capital.

Nilesh Patel 34:56

Yeah, so I think a lot of things came together. But I think the storytelling also requires, you know, some prep work, I would say, right. And so I think I’ve learned over the years, I was not, I couldn’t tell a good story then, many years, like 5-10 years ago, but I think I’ve improved over time.

So I was, you know, maybe, you know, two or three and sort of taking steps to become better. So maybe five, six, you know, is where I would be right now. Because there are so many great storytellers, right?

Siddhartha Ahluwalia 35:35

Who in your opinion that you know, personally, are the storytellers that you look up to, especially in business world, or startup world?

Nilesh Patel 35:42

I would have to think on that because, you know, so I’ll tell one person, you would not have heard his name, maybe you would have, there’s a product called Talisma CRM. The founder of Talisma was Mr. Pradeep Singh. He’s also an investor in LeadSquared, by the way.

And so whenever I’ve spoken to him, right, the way he’s able to narrate the same thing I’m saying in such a refreshing way, and give the whole thing a new, you know, new look, has always amazed me.

Siddhartha Ahluwalia 36:21

And did any point of time, you thought of, you know, when before, you know, you started raising from institutional investor, you thought of exiting the company or you had acquisition offers also in between?

Nilesh Patel 36:32

We, I never had a formal offer. There was one offer which we had post Series A, I was told by one of our investors then. But then I did not double click on that offer, so I would not know if that was for real or not. And so, because I felt that we have room and headroom to grow. So, you know, if we can grow the business, then we should continue to, you know, own and grow the business.

 

Siddhartha Ahluwalia 37:04

But not even during tough times, you thought of exiting the business?

Nilesh Patel 37:09

Yeah, I mean, see those thoughts come, right, like some days you are not super happy of some reason, and you feel that, you know, it’s better to, you know, not do this. And like, that’s very human, you know, it happens to all of us. But yeah, I mean, I think, like what we do, I like what is happening, right, what we do here in the company, where we are headed.

So, I think the future is, you know, there’s more growth for us, the economy is growing, you know, our product is doing well. And so, I think with that, it makes more sense to continue to invest and grow in the business.

Siddhartha Ahluwalia 37:52

We are sitting in a new world where everything is getting reshaped by AI. What do you think, you know, the point where you’re sitting at? How are you taking a journey with a new world?

Nilesh Patel 38:01

So, in the first, when the whole ChatGPT thing came out early, right, in 2022, I wanted to wait for some time before, you know, we see how it is going to pan out. And how the customers are going to adopt, what is their take on it? I think we have gotten good clarity on areas where people would be willing to invest and the cost of doing so, etc.

So, I think we have figured a few areas in where we operate with our customers where this will be utility and important for the customer. And so, we started investing in those areas. And again, fundamentally, things will be measured by the same metric, what customers were measuring earlier, right?

I mean, people want efficiency to go up, cost to come down, right, productivity to increase. So, I think the same metric will be used and the customer experience to be better. So, if you have tools and, you know, systems you can offer to your customers, as a result of that, using that they can offer better experience to their end consumers and, you know, and reduce the cost or increase the efficiency.

I think those metric is what, you know, the AI systems will also have to follow. And so, if your tech, which you are building in AI, you know, meet some of those criterias, people would buy.

Siddhartha Ahluwalia 39:35

And do you think, like Satya Nadella commented a few months ago that SaaS is dead? But what does he mean by that? And what’s your interpretation of that?

Nilesh Patel 39:44

I don’t know. I mean, there’s a lot of interpretation people made out of that. I think maybe he was more referring to his own stack is what I understood.

But I don’t know if SaaS is dead, right? It doesn’t look like it is dead right now. Like, maybe there’s a time period when it is going to be dead.

Like, for example, if you go back, you know, even the classic host, you know, self hosted, you know, enterprise applications, they are not dead.

Siddhartha Ahluwalia 40:16

Yeah.

Nilesh Patel 40:17

I think there are still systems running on COBOL. So like, in, you know, what is the meaning of dead is, of course, a growth, maybe saying growth will come down and things like that. And I think, but, yeah, I’m not subscribing to that worldview yet.

Siddhartha Ahluwalia 40:35

But do you think the per seat based model pricing is changing?

Nilesh Patel 40:39

That will, that will be challenged.

Siddhartha Ahluwalia 40:41

But you are still on per seat based pricing.

Nilesh Patel 40:43

We have per seat and variable pricing to both. Yeah, we have, we have been have, we’ve already, I mean, before, you know, last few years only, we have already had some part of a product in variable pricing.

And I think as and when customers get more comfortable, you know, the variable pricing would, would also be there. Look, I mean, in larger deals and larger customers, right? People want fixed budget also, right?

They say this is what I budgeted for that. So like, there the variable pricing generally is not super exciting for those customers. I think where we found models where the variable pricing would be attractive is when the variation is linked to the outcome to the business.

 

For example, in lending, we have a loan origination system we offer. So there is a connection of that to number of cases you are processing, right? Then the customer can see, okay, now I can see that it moves, that it is attached to a metric, and I’m willing to sort of pay for that.

I think there as you become closer to the business metric, people will be more comfortable in the variable pricing.

Siddhartha Ahluwalia 41:55

How do you start charging based on some person…

Nilesh Patel 41:58

Some transaction which is connected to their business outcome. It may not be exactly outcome, ideally outcome. But if not outcome, it is, you know, somewhere close to the outcome.

Siddhartha Ahluwalia 42:09

So would you term this all the hype in the AI world that SaaS is dead, everything is moving to AI as a FUD?

Nilesh Patel 42:18

No, no, no. I mean, see, AI is real, right? So there’s nothing, there’s no fad there, right?

It is real. The application of it has to be what, where’s the innovation and thinking and where the companies will get built, right? So I think you have to adopt AI and make it useful for the customer.

Siddhartha Ahluwalia 42:40

And we discussed offline, right? That before the conversation started that the initially Indian founders were building tech teams in India and then selling in the US. Now you’re saying that Indian founders are hiring everywhere.

Nilesh Patel 42:52

Yeah, look, I mean, Indian founders are hiring in India for sure. Like I have met people who have hired, you know, who are in India hiring outside India, because certain type of talent is not available in India, right? So that, that is happening.

I know founders who are Indian founders who have, who are working with companies or have offices in Eastern Europe and places, right? So I think, you know, that variability will continue. But also the fact that India offers the vast majority of developers in the ecosystem continues to be the truth.

So that will attract, you know, many companies to come here. But at the same time, the price question will also play a role, right? Like, if the price of talent in India, if that increases beyond a point, you know, then it’s not there by the way yet, but then the competitiveness would suffer as a result of that.

Siddhartha Ahluwalia 43:50

One question, which I want to ask you is, you know, did you interact with Mr. Byju Raveendran one on one basis a few times?

Nilesh Patel 43:58

Yeah, I have met him a few times.

Siddhartha Ahluwalia 44:00

What’s your perception of him as a leader, as a person?

Nilesh Patel 44:04

Look, I’m not, my interactions have not been very deep. It’s maybe, you know, a few minutes conversation. I mean, I met him early in 2017 time.

Siddhartha Ahluwalia 44:17

And then he was not the Byju’s, right?

Nilesh Patel 44:20

Yeah, I mean, he was very confident person. And he knew what he was talking.

And, and, yeah, I mean, I had a positive experience.

Siddhartha Ahluwalia 44:34

But could you see the spark even that he could make a company worth 22 billion? Back in the day?

Nilesh Patel 44:39

I would not like it. That was hard for me to say. Honestly, I would not be able to say that then.

But then happened. But it was, I mean, one thing was possible was visible that they’re, they’re definitely smart people. They’re good people on their side and who are driving the business.

And, and they were doing the right things to grow the business, at least then, or at least what we understood or I understood of that route. I mean, there are many things which happen in a business, which you’re very unlikely to kind of learn and figure out.

Siddhartha Ahluwalia 45:13

Nobody could have predicted the EdTech market would go so fast and would come down even faster.

Nilesh Patel 45:18

See, I mean, in history, I mean, every time people, things go up fast and come down fast.

Siddhartha Ahluwalia 45:22

Dot com and so many examples.

Nilesh Patel 45:25

But, you know, people find ways to avoid that also, right?

Like, it’s unfortunate that didn’t happen in this company, but, you know, many companies went up and, you know, have declined, but some continue to find growth again also. That also happens.

Siddhartha Ahluwalia 45:44

And my last question is, right? Besides the, you know, the process of growing the company, what do you enjoy most as an entrepreneur?

Nilesh Patel 45:55

Learning. Yeah, I mean, I enjoy learning. Yeah, that’s the most interesting thing.

Siddhartha Ahluwalia 46:04

And still there are things on a daily basis that you think you are not, you have not figured out?

Nilesh Patel 46:09

Yeah, there are many things. In fact, you know, you know, so little, actually.

Siddhartha Ahluwalia 46:15

What are some other things that are on your table that come in that bucket?

Nilesh Patel 46:20

No, there are many things, right? Like, you know, building a great team is still a question, you know, I continue to, you know, find, right? You know, some people are amazing at finding, you know, potential in other people.

I’m still learning how to, you know, so there is one is that when you get somebody and you know, okay, this person is capable of doing this, but then, you know, it’s very hard for me to figure out what shape someone else, somebody can take into, right? Like, like, like how we see things, right? Like, this company can become that someday, right?

I’m yet to figure some of those things out when dealing with people and things like that. And so that area is learning. And yeah, I mean, I think the tech trends and things like that, right?

Like, you know, so fast, things have changed and continue to change. I don’t think I would have figured out, you know, myself, like most people. So you continue to learn and figure out what could be next.

All right. So I think that’s an area of active learning. So many areas to learn.

Siddhartha Ahluwalia 47:39

Got it.

Nilesh Patel 47:40

As I said very little we know.

Siddhartha Ahluwalia 47:42

Thank you so much Nilesh for being so candid and it was a great conversation.

Nilesh Patel 47:47

Yeah. Well, thank you so much for inviting me again. Thank you so much.

And, you know, and kudos to you and best luck to your fund.

Siddhartha Ahluwalia 47:53

Thank you.

Nilesh Patel 47:54

Thanks. Have a good day.