Karthik Jagannathan, after working for more than two decades across cross-functional experience in Telecom and Internet businesses, with a specific focus on SMBs, decided to build a solution to help SMBs scale faster with Gallabox.

In today’s episode, Karthik shares the backstory of what led him to starting up at the age of 50, building something for SMBs, and more.

Notes –

01:36 – Serving a business like it’s your own

04:10 – Where do the roots of ownership come from in his life?

06:27 – What other significant events in his life lead him to here today?

08:58 – Building and growing sustainably in crisis

12:06 – India wasn’t a place of – “Grow fast, Break fast.”

18:34 – Landscape out there in Small & Medium Businesses in India

24:33 – Zoho Sponsored – Prashant Ganti on Where do founders struggle with Payroll and how can they fix it?

26:44 – Zeroing down on an idea to solve for SMBs

36:22 – Leveraging Whatsapp with Gallabox

39:06 – Themes that he wanted to solve for

40:49 – Scaling to over 500+ business

49:39 – Learnings from their journey so far

51:50 – What helped them grow faster?

57:49 – Advice for entrepreneur building for SMBs

Read the full transcript here:

Karthik 0:00

I think it all starts to answer this question, do you take ownership for what you’ve undertaken? So I think once you’ve taken ownership, everything else kind of falls in place. The organization is actually not only going through a loss, but it’s going through a loss of what it could build and deliver with that particular individual who may have been super smart. She is just supremely well qualified, and has demonstrated the ability to be able to create magic and miracles, and then you’re going to part ways with that particular individual. And then after a point of time, sometimes, you wonder, how is this person so lowly paid so loyal to the organization that he’s serving? Like, the joke is, who did the digital transformation of your company? Is it the CEO, the CTO? No, it is COVID.

 

Siddhartha 0:43

It became the channel for abuse where everybody’s trying to sell me a credit card.

 

Karthik 0:51

Yes. Absolutely, absolutely. And the joke is that when WhatsApp was down just a day after Diwali, they said it was down because people in India send Diwali messages. And then it came back for a few hours. And then people said it was back and then it went down again. So that’s the power of the India users of WhatsApp. assign an agent for every conversation. I mean, there are some things that I can automate. They didn’t use the word automate, they didn’t use the word bot. They didn’t say I want to have this sophisticated, something that others have.

 

Siddhartha 1:32

Hi, this is Siddhartha Ahluwalia, your host Welcome to 100x Entrepreneur Podcast. Today I have with me Karthik Jaganathan, founder of Gallabox. Before we dive into Gallabox. Karthik, you have tremendous industry experience, if you don’t mind, what’s your age today?

 

Karthik 1:48

So thanks Siddhartha for having me. Oh, as we stand today, I think I’m a little over 50. Okay. And in January, I’ll touch 51.

 

Siddhartha 1:56

And we recently recorded a podcast with a big basket founder Hari Menon. And so one thing which Nansi and I learned from there is that there is no age to start up. And I believe you started just at 49?

 

Karthik 2:10

Absolutely. I think the common trait that I’ve held across my last several years that I’ve been working is, I’ve tried to be entrepreneurial as much as possible. Like they say, I work like my family name is on the building. So which means that has helped me become entrepreneurial in every job that I’ve held, a couple of jobs that have held in the last few years. And I think this was a calling in some sense. And like they say better late than never. So this was a calling in the sense that I made sure that no way there was no way that we would go back at some day to regret as to why we didn’t do it.

 

And in fact, the truth is, we jumped at it at the peak of the pandemic. So that’s another dimension. So when the world was very fearful, we said, it’s time to be greedy. We actually decided to start this up at the end of March. And that’s when the lockdown was imposed. So age time frame, lockdown pandemic, I think several things are going in our favor now.

 

Siddhartha 3:02

And you mentioned a very interesting thing that , which is akin to very high ownership, sure that treats a business, even if you’re an employee, that’s your surname on the building.

 

Karthik 3:12

Yes, absolutely. So I think it all starts from In fact, I was reading a post yesterday, what is more important loyalty or efficiency or how well do they deliver? I think you don’t need to ask those questions. If the question to ask is, do they take ownership or they don’t? So as an employee, as a business owner now and as an employee business owner, at this point of time, and in everything that we do, even as a parent, as a father, as a husband, as anybody for that matter? I think it all starts to answer this question. Do you take ownership for what you’ve undertaken? So I think once you’ve taken ownership, everything else kind of falls in place, how hard you work, and how well you manage your work life balance and how much of your intellect do you invest behind it? And how much do you go back to learning, unlearning, learning new things, , some things that you’re not comfortable doing, you’d want to start doing all over again, I think it all starts from taking ownership. And there’s something that we truly believe is the single most important trait of a successful individual.

 

Siddhartha 4:10

In your life, where does this ownership come from?

 

Karthik 4:13

Well, I think it comes largely from the fact that at a very young age, I had to take on certain responsibility for the family. So, I lost my father, I was at a very young age, I was 26, we lost our father in a very unfortunate incident, we lost him in an accident. So that meant that, a whole lot of the responsibility was on the very small families head. So I was 26. I had a sister and a brother after that. So I think what also meant really is that some crisis like this, I also believe brings a family unit together. I don’t mean wishing for a crisis for everybody around me. But the point is when you are pushed to a corner and when you have to take ownership responsibility, and when you really have to do something about the situation. I mean, you don’t really have a choice really but to rise up to the occasion and do What it takes to do it.

 

So I think that’s if I trace it back inadvertently, at least today, if I think back, I think I can trace it back to some of those events in my life, personal life, or events in my career where, for instance, I joined this company called Sulekha, I was the one of the first founding members of the organization. And I joined in 2007 and 2008, the great financial crisis happened. And it was terrible all around us, there was just mayhem. There were layoffs of all kinds, bad news of all kinds all around us. So we really had to figure out a way to come out of it in one shape. So some events like these really have really, I think, characterized this particular trait in me, let’s say, and this also helps, really in a way, Siddhartha now that I’m an entrepreneur, I think it automatically attracts people of a similar kind.

 

So we get comfortable with the others who take ownership who take responsibility, like Jeff Bezos says, complaining is not a strategy. So which means you got to live with what you have, you got to create a plan from the available resources. So I think that’s, that’s really the way I think I would look at it. The other thing is, I think, by nature, being frugal is another characteristic feature that really helps build the ownership personality. I’d say, being frugal is just amazing. I mean, by nature, they feel you have to live with what you have. And I think those are some of the ways in which these have formed the personality in me, I’d say,

 

Siddhartha 6:27

And what are the other events in your life that led you to where you are?

 

Karthik 6:31

I’d say that the most important reasons why we are where we are today. I mean, I’ve turned entrepreneur, recently, I’m turning entrepreneur at an age when my peers, my friends are discussing retirement, they’re discussing corpus and figuring out, which college should the child go to? And how much do they need to set aside and so on and so forth. I think the leap that we’ve been able to take, and we go back to Genesis as to where it may have started. I think it started really, from being able to attach ourselves to something to a script, or being able to be an author to something that we could create from scratch. I think that’s been one of the innate urges that has never gone away despite the fact that personally, I don’t come from a business family, nor do we have somebody supporting us if there’s no parachute. There’s no golden parachute, for sure. There’s no parachute of any kind, but the urge to start off something and to be able to build something from scratch.

 

And I think if I ask another question as to why do I want to do that? I think it is because I’ve been a problem solver for a long time. I mean, why do we start a business? I mean, you can talk about wealth and the fact that you can employ any number of people you want. I think those are all really the means to the end, I think the end in itself to starting a business is that there is a problem to be fixed. And I think to be considered fortunate that we can take a problem and be able to solve it and be able to go after it. I think that’s truly a gift that entrepreneurs have. And I think we should cherish it as entrepreneurs, because very rarely do you get an opportunity to be able to solve a problem and look back and say, Hey, this is how it was. And look how it is today. I had a very core goal, I think, to solve a problem. And I think that’s the reason why a business exists. And therefore to start a business has been something that there’s been an innate urge for a very, very long time. And I’d say these are the reasons why I’m where I am today.

 

Siddhartha 8:26

So one thing which I have observed common in all people who have made it big or on the path to make it big is a dialogue from the Ranbir Kapoor movie Rockstar, dialogue is “Toote hue Dil se hi sangeet nikalta hai”. So the meaning of it is that an extremely broken heart can produce true music, when the heart is completely shattered, then only the music starts within your soul. So I can see how early crisis in your life and how taking ownership of that and not blaming the circumstances, shaped you as a person.

 

Karthik 9:06

Absolutely Siddhartha. So I think it’s fascinating to see some of the humble beginnings of very successful entrepreneurs that I respect. I mean, these have become household names. And I’m also grateful to the fact that today in India, it is no longer considered taboo to become, profit is not a dirty word anymore. It is no longer taboo to be an entrepreneur, it is just fine. In fact, I remember somebody telling me, You’re going to become an entrepreneur, you’re not going to war. It’s not like you got to go get into a war and get into a cash you’ve become a casualty. The wheels have been lubricated today. I know in India and several parts of the world today that it is possible today that you can become an entrepreneur.

 

Of course, not everybody, I think, can be designed to become an entrepreneur. I mean, you can be by default, an entrepreneur because you’re born in a certain environment, that you become an entrepreneur by default. But to be designed to be an entrepreneur, I think I’ll borrow what you just said. You should have felt it. Something where you would have had that struggle. And I remember going through those struggles individually, personally, as a business leader in another organization, wherever I had to figure out a way in which I can protect the next 10 People from not getting laid off. So which means it’s very easy to cut costs after a particular point of time, how much you can cut, you can cut to the bone. But it’s very hard. And that’s the hardest thing to do is just to really grow your business. It is to grow, to be able to support not just those 10 people, but also maybe a few more people and then build it sustainably over a period of time.

 

Siddhartha 10:37

And businesses, as you usually say, just not the 10 people, the 10 families that you are supporting.

 

Karthik 10:44

Absolutely. I would say that’s a very traditional view, of course, that we are supporting 10 families. But today’s view would be that, I think we are all equals in some many forms that are fair. So I’d say that the opportunity that we lose to work with another very smart individual is another opportunity loss. It’s an incalculable loss that we may have to live with for a long time. So while I see all around us, there is a lot of gloom. Every day you read news of some layoff or the other happening. It’s just amazing that the organization is actually not only going through a loss, but it’s going through loss of what it could build and deliver with that particular individual who may have been super smart. She’s supremely well qualified and has demonstrated the ability to be able to create magic and miracles and then we’re going to part ways with that particular individual. So actually both parties are suffering in that particular situation.

 

Nansi 11:37

Hi, everyone. Before we begin, I would like to share that this podcast is brought to you by Prime Venture partners, an early stage VC fund led by Amit Somani, Shripati Acharya and Sanjay Swami. Prime is often the first institutional investor in category defining tech startups in FinTech, SaaS healthcare and education, such as Markit Quizzes, Planet Spark, Bolt and Glip to know more about Prime visit https://primevp.in/

 

Siddhartha 12:07

And if I see traditional businesses in India, they were built in such a way that though they are hiring a person they know that they are taking care of a family, never in India, I have heard a story of a business over hiring. What we’re seeing today, we’re sitting in 2022, just at the end of 2022, massive stories of recession layoff all around in India, it never happened. Because the concept was that if I take care of a person, they take care of my business. And I’m also taking care of the family. And thereby, they are not pieces in a machine which I can replace anytime or I can throw away. And thereby the frugality mindset was even that if I’m hiring a person, if they do, will they be with me for the lifetime. So there was never a concept of moving fast and breaking things.

 

Karthik 13:00

So true. In fact, I was just going to write a post on this yesterday that, after I heard about the several layoffs, the next time somebody says break fast and fail fast and break things, and so on, there’s a culture, and there is a time and space for some of these concepts and thoughts. I mean, if you take the true meaning, I truly appreciate what you’re saying. So there are people, for instance, our own parents, if they have been employed, they’ve been employed in the only job for their entire life, or maybe they have changed one or two jobs, and then over a period of time, we see that people are counting the number of times the amount of time they spent in a company in maybe a few weeks, few months, few quarters. Now, I don’t have anything against it. I mean, it’s possible that you can learn a whole lot in a few months, it’s possible that you can, you can really contribute.

 

But if you look at the other dimension, which is the fact that businesses, they don’t employ just people, I think what they do is they don’t just help out a family or kind of extend, I think what they do is they invite this person into the tribe, then they become part of a family part of a tribe. And then after a point of time, sometimes you wonder how this person is so lowly paid, is loyal to the organization that he’s serving? It’s because at a very core, at a very fundamental level, I think some things have been, it’s not just the rational. It’s not just like Maslow’s theory, it is not just the basic needs that have been taken care of. I think certain other needs have also been taken care of, maybe something that the entrepreneur, the business owner has discovered, that can put the employee to greater use than money can buy. I think the whole Indian traditional way of employing and being able to leverage talent is very, very different from the way we’ve seen that is happening out in the west.

 

Siddhartha 14:46

So I think in today’s startup world, most of what we are copying is American capitalism. But nobody knows what are the faults in where American capitalism breaks apart?

 

Karthik 15:00

Absolutely. I think American capitalism has a certain Genesis, It has a certain history to it, which is that it’s a welfare state in many ways. So for instance, during the pandemic, when $1200 $1,500 were doled out to every household, and that meant that there was so much money for people to spend, that created another problem: there was a lot of demand, but very little supply. And that led to another problem, which is inflation. Of course, that’s a point for a different discussion. But we are not such a large welfare state. I mean, we do have another government that takes care of several things. But at a very fundamental level, we are two different economies. We are two different cultures, we come from an agrarian economy, we’re not an immigrant population.

 

So if you look at America, it’s built on the back of immigrants who moved from Ireland and Italy and the rest of Europe and everywhere else, there’s a lot more transactional to the relationship. When in the US, it’s very unusual, it’s very common to think of people saying, I’ve seen college kids say, I’ll drop you just pay for my gas or I’ll take care of this, just pay me for it. But in India, I think the culture is, I’ll do it first. Let me do this. I think our hospitality, our culture is a lot different. So I think in that sense to blindly ape the west or for that matter, the US economy, I think it was just a disaster waiting to hit us, I think we need to blend it. There are several things to learn, of course, and I think they are creators. They are individual contributors. They’re inventors, and they’re builders of certain. In fact, that’s where the technology hub is.

 

I think there is a lot to learn from the US product market, for instance, or some of the technology companies that we see in the US, but blindly follow everything that happens there. I don’t think it makes any sense for us, especially in India today, it is still not common for somebody to say I got laid off, there is still a certain level of trepidation. Maybe a certain level of humiliation deep within to say I laid off nothing wrong to get laid off. I think somebody made a bad decision. And it seems to me that its people are willing to go out and apologize and say that, I took responsibility for this. Yeah, I told you, I won’t do it. But I still did it. I still take responsibility. I’m still very sorry that it seems to be the common narrative of a business leader. What else can anybody do at this point of time?

 

So I would say that they’re a lot different, I think, having worked in largely India run companies. I worked with the Tatas for about two years. And there’s a wonderful book called creation of wealth, written by the Tatas, it’s a wonderful book to read and to understand how the Tata has permeated, and one of the largest corporate houses, which has kind of kept itself outside of the mainstream politics and so on and so forth. But it still has been very, very socialistic about the way they go about it. There are entire towns in different parts of the country, which owe their existence to the Tatas. I mean, that’s one example of how there’s a public private partnership happening in a very informal manner. And if you look at the other examples all around us, we see that, there’s a lot of servitude, there’s a lot of ways in which companies contribute back to society. So another example I would say is that, if you take the list of people who give charity, in India, that number will not be so high, whereas in the US, you’ll see a lot of people giving charity to universities, to grants and to build libraries and so on. I think companies in India do charity in different ways,

 

Siddhartha 18:33

Coming back to India, and capitalism. So in Indian geography we study business. A large part of it is enterprises. But the biggest part of it would be small and medium businesses which drive the economy. And they are very different from what we have seen in the US, the small and medium businesses that thrive here. And I think we can close the lid to small and medium businesses in South America. And that’s how the communication between the both is the same. So want to dive deep into this, what has been your experience in your previous gigs regarding small and medium businesses? What are their needs? What is the landscape out there?

 

Karthik 19:19

So to begin with, the definition of a small and medium business is very fluid. It depends on which dimension you’re coming from, for a company selling servers, small and medium business is very different from somebody who’s, let’s say, for instance us, so I think one definition that we can kind of get comfortable about is that it is not a solopreneur it is not a household business, nor is it a large enterprise. So it’s somewhere it’s really in the middle of the map pyramid and therefore it’s a pretty wide swath of the pyramid in itself. And if he were to describe it in other ways, it we can describe it in revenue terms in turnover terms in the number of employees, but various reports, I think the Ministry of Commerce, they have released Reports, there are private researches that have been done, the number of SMBs in India is hovering between 63 million to about 75 million SMBs.

 

And if we were to filter them down and build like a funnel of it, we see that about, at least 20 million of them are in that particular cusp, where over the last few years, they’re ready for technology, they’re ready for the next leap. They’re now available on other digital channels, and they’ve embraced payment systems. And in fact, the pandemic, and the lockdown the last couple of years only just accelerated this whole process, like never before. Like the joke is, , who did the digital transformation of your company is the CEO, the CTO? No, it is COVID. I think the same thing as trans has happened across small businesses as well.

 

And we see that in the last couple of years, and that is in the last 12 to 18 months, my heart just warms up to look at how well and how beautifully the SMBs are migrating to the next level. They’re able to, they know, very comfortable buying software. They’re embracing technology in multiple different ways . But if you do a flashback, and if you do a pull back of where it all happened, and over the last, I’d say 2007-2008, when I started working with SMEs in India, which was in Sulekha, so we decided that we will help SMBs in India, with the discovery process. So which means that one of the biggest challenges SMBs then had and the truth is, even today, that is one of the biggest challenges.

 

So discovery of the product or service continues to be one of the biggest challenges for them. It was then at that point of time. So they were not savvy enough to go digital to be able to spend on Facebook and Google and so on. And any other advertising medium was ruled out for them, they could not take out holdings or go on TV or do print ads. So digital very interestingly became the, in a kind of the whole SMB space, SMB segment just leapfrogged into digital, and was able to start experimenting with multiple ways, and whereas, marketing managers in large enterprises said, I will go to digital only after I have experimented with all the other channels. And it was very interesting to see that they were willing to go out and try new things, and the appetite for risk was significantly high. And we started looking at the fact that these SMBs wanted to go out, and, of course, they wanted to get leads, and they’re not in it for building a brand yet.

 

So this is what really the large enterprises want to do to advertise, to build a brand and to be able to deliver activations, if you may, SMBs, are focused only on that, which is to generate business. So they were experimenting on different channels. And one of them, of course, was the aggregator like Sulekha. So at some point, in fact, at the peak, we would have served about 75,000 SMBs in India, and generated leads for them being able to manage their leads, if you look back to be able to see the journey of an SMB of a typical SMB. And if we were to contrast that with that of an enterprise, I think there’s a significant set of differences. Maybe it’s a long list of them. But I think the most important one is that, I think I felt there is very little difference between company money and my money. It’s not like there are several line items that are competing for the cash. So that means that they are much more frugal, which means that they are much more result oriented, and that they are much more frugal, therefore, and therefore they need to make sure that they are able to deliver this using whatever channel that can work for them.

 

And once the channel works for them, and once a medium is something that they are comfortable with, then they stay on with it for a significantly long period of time. So the SMB space today, I think, if we go back to numbers that are at least between 63 to 75 million SMBs. They reportedly contribute about 35% of the GDP, and they employ a significant part of the population today. And that’s a space that I’m particularly extremely passionate about. And it’s a space that, it’s a segment that we have worked very closely within from the past. And that segment, now we’re seeing over the last maybe a generation has happened with today, we seeing them mature beautifully, where they’re now using CRM, they are very comfortable with payment system, several of them have, Calendly calendar systems in place, and they realize that there’s no more you can work with a pen and paper, there’s no more you can just work with Excel sheets. So it’s pretty great to see the whole segment move up.

 

Siddhartha 24:33

Dear listeners. Before we dive further into the podcast, I would like to welcome Prashant Kunti, Head of Product Management at Zoho payroll as Zoho Book. Prashant, What trends are you observing in the payroll and HR space?

 

Prashant 24:47

Thanks, Siddharth. So, first up with the pandemic induced remote working. So that’s something that has caught on and hybrid working a distributed workforce is here to stay. So this affects the way a company’s HR and Payroll departments operate. And so this introduces some complexities while a distributed workforce is good. It introduces payroll and HR complexities as well. Secondly, we are going to see more and more in the emerging area of compensation and payroll analytics. Next, what I’m seeing is more and more embedded banking embedded banking, payroll systems connecting with banks, more and more banks, more and more banks coming forward to integrate with payroll systems. And so do insurance providers so that the convergence between banking insurance, FinTech and payroll that’s going to happen.

 

Also expect more AI and ML going to be incorporated into payroll as well, that’s not something that comes to your mind at the very beginning when you think about payroll, but we are going to see payroll assistance that employees can interact with to understand their compensation details better. And finally, we’re also going to see a lot more payroll being more deeply integrated with various other systems, not just from the transaction point of view, but to help better decision making across organizations.

 

Siddhartha 26:35

Thank you, Prashant. Dear listeners, you will find more about Zoho payroll in the show notes. Now, let’s further continue with the podcast.

 

So when you were thinking of quitting your job and becoming an entrepreneur, what are the various ideas there in your head? And how did you decide that I want to solve a problem for SMBs?

 

Karthik 26:56

So one of the ideas that I was very passionate about is being able to make digital marketing accessible to small businesses. And, of course, they are the definition of a small business maybe slightly, maybe up the pyramid in some sense. But the challenge that I really saw at that point of time was that the Facebook meta today and the Google alphabet today, the ecosystems were built on the back of SMBs. So I remember this data, I mean, this particular part of statistics, that there was a boycott Facebook campaign a few years ago, where Coca Cola, Samsung, Nike several of them got together and said, We’re going to ban advertising on Facebook. What they know is that the top 50 advertisers of Facebook contributed less than 4% of Facebook’s revenues.

 

So which means it’s not really a long tail, it is really the tail in itself. So the advertisers on Facebook and Google are really the they form the large bulk of the revenue for them. So my thesis was that in India, this is something that is going to happen and in several parts of the world where businesses will need a way in which they can build their business and build the GTM motion on the digital channels. And the fact that they were relying on other aggregators like Just Dial, Sulekha and Indiamart to kind of signified that there is demonstrated evidence of that. And we also saw that several of these businesses were starting to bid on Google, sometimes we would see them compete with Sulekha and some of the keywords that we would meet them.

 

So that was my thought that in order to be able to build something, a product, a tool that can help businesses, small businesses, be able to manage their advertising campaigns, and be able to optimize campaigns and deliver value for themselves on. But we saw that there was a more fundamental problem, even more fundamental than discovery. And that fundamental problem with data is that there was absolute chaos on the part of an SMB organization after the discoveries were made, so we plotted some of the businesses in Sulekha on a graph. And we saw it was like a nice bell curve. So there was one part of them who would be supremely successful because they had an order to the chaos, they had a way to go about managing this because they had some process, they had some system, they had somebody to take care of things. And the other end, just looked at the lead and said, I called it was busy, it was engaged. So I didn’t call after that. And the large majority was really distributed in the middle.

 

So we went back and analyzed really what was going on, as to how they manage to succeed on the same lead, and we realized that the enterprise and the energy and the way in which they go about addressing this really sent us some signals. And we realized that you cannot depend on an individual’s enterprise and energy and enthusiasm for long. You need to do it in a manner in which it can be replicated across. So we built a thesis that technology can solve this. Because there’s a lot of conversation that goes on in such a discovery process. That stage where the prospect is talking to an agent or to somebody in the sales team or somebody in the customer facing team, I think that’s where the magic can happen. And if you leave it to the agent or to the prospect at that point of time, it is you just leaving it to a human intervention. And then anything can happen after that, and you really can’t do much to control the process.

 

So we believe that a tool is a powerful tool that can manage that particular point, that conversation that is happening between the prospect between the customer and the customer facing team is where we can solve for the big problem that exists today, where post discovery, there’s really no visibility on what happens to the lead. The only question that the business owner or the sales leader or the marketing person would ask is how much happened today, okay we’ll do it tomorrow, or I will definitely achieve my target this month. And a lot of it is dependent on CRM hygiene where you have to go back and make sure that any status update should be available on the CRM. I think that’s one of the big discoveries that we saw.

 

Siddhartha 31:07

And you believe that technology can play a large part in solving that layer of business communication between the customer who’s about to purchase the product of that business, and the business of not just treating that customer as closed or not close. But building a relationship with that customer and ability to scale that relationship across 1000s of such customers. Just a business owner?

 

Karthik 31:31

Yes, I’ll refer to one of the old ads that I remember from Airtel, “ Baat karne se hi baat banti hai”. I think the power of a conversation is very rare, as we have become automated in our dealings. And then when you see, we are ordering food, we are hailing a cab, we are ordering anything for that matter. We rarely talk to somebody at this point of time, when I say talk, I don’t really mean talk on the phone, but be able to communicate to an individual to be able to communicate in a way in which you can get your stuff done and your job done. So we believe very strongly that it is possible that you can build a lifelong relationship based on a conversation and not just treated as a transaction. And when we say conversation, it doesn’t necessarily have to be two people talking to each other.

 

Necessarily, it is a way in which the prospect is made to feel at home made to feel that she’s talking to a real person talking to an entity, and that they have an understanding of what she’s looking for. And that there is a product at the service will be offered to her at the price. And that she will be taken care of. I think that’s what the prospect or the consumer or the customer wants at that particular point of time. So the power of a conversation platform is really very, very, very high. And I think we sell them attention to that. I think that’s the part that we’re focusing on.

 

Siddhartha 32:49

And for consumers to not, India became a country where a consumer got used to the behavior that I had to call customer support and wait for 20-25 minutes to get anything resolved. That’s the default behavior that everybody assumes that Indian consumers will do.

 

Karthik 33:07

Yes. So there was a point when, it was possible that you could have an army of people as far as your eyes can see, BPO became the largest industry. Exactly. And then we became the sweatshop of the world. Yeah. But I think over a period of time, as a nation, we also started maturing, and we said, we don’t want to do the job. Similarly, I think technology also reached a particular point within the graph, where it was able to not have to do the same job again, I mean, if you take some of the traditional communication tools, like SMS, or email, or now even call centers for that matter, I can guarantee you, you can open your phone and you’ll see hundreds of unread messages, and you will only open your SMS for OTP. And in email, if you were able to go and search for an email, in your Gmail or anywhere, for that matter. And if you’re able to find the email, you can get yourself an award. Okay, it’s very hard to find and call center calls are just unbelievable, I mean, as a business owner, I know that I don’t have any more faith in it. Because people don’t answer phone calls anymore.

 

Siddhartha 34:13

It became the channel for abuse where everybody’s trying to sell me a credit card.

 

Karthik 34:18

Yes. Absolutely, absolutely.

 

Siddhartha 34:22

Also what happened in the last 10 years. Every business started blasting a customer with an SMS. This is an offer available and each customer is getting 100 SMS a day. There is no option to unsubscribe from massage, email.

 

Karthik 34:37

Absolutely, you’re 100% right. It’s a one way street, you subscribe to it. There is no way you can get out of it after that. And then there are multiple ways in which I’ve tried to go and unsubscribe some of the brands that were sent to me because I just bought one shirt one day, and I think I made a big mistake that day, it is impossible to go back and stop them.

 

Siddhartha 34:56

So it’s interesting how this was involved in the first businesses. They didn’t have a channel of communication, then they started blasting for the last 10 years, as SMS became cheaper, the consumer with SMS and now consumers didn’t open their SMS folder like everyone that I know in my vicinity.

 

Karthik 35:12

Here’s a bit of statistics for you, Siddhartha, I didn’t know that this is fascinating to know that even today, there are 40 billion, billion with the B 40 billion app to use your SMS that gets sent every month. And Reportedly, SMS around the world is a $90 billion market in dollar terms, annually. So which means that somewhere somebody out there is still using SMS to, like you say, either to spam a user or to establish a communication. But I think we’ve moved on from a very analog world to a very digital world. I think from a digital world, we are even moving to a digital plus plus world. I think the fact that we are still holding on to some of the things of the past, like SMS, just doesn’t make sense.

 

I mean, because it was cheap to send an SMS. And maybe it was cheap, because people didn’t care whether it arrived at their inbox or not. And that’s where they were, therefore, it was cheap. So brands and businesses in a large company have just started bombarding people with SMS. And it got to a point where the only thing that you need it for, of course, the OTP is very, very strong functionality. But there are new technologies that are now trying to replace that as well.

 

Siddhartha 36:22

And now you enter with Gallabox. Through your shot, you leverage WhatsApp, that’s become the communication medium for 500 million Indians.

 

Karthik 36:31

Yes. It’s, in fact, growing at a frenetic pace, one of the ways in which the joke is that when WhatsApp was down just a day after Diwali, they said it was down because people in India send Diwali messages. And then it came back for a few hours. And then people said it was back and then it went down again. So that’s the power of the India users of WhatsApp. And we’re talking about out of 2-2.25 billion WhatsApp users in the world. I mean, 550 million of them are from India. And they’re very, very active users. I think, even if you check the number of times, I mean, you see WhatsApp. And if you were to see that from your battery, the amount of battery that is being used, WhatsApp will rank the first. And honestly, from data that we’ve seen from Facebook, the open rates are significantly high. People see this several times during the day.

 

So in many ways, Siddhartha WhatsApp in India is the WeChat of China, to a large extent, because it’s really where we are conducting our lives. And this is another interesting story. Another interesting aspect that I subscribe to, which is that there is the internet that we all have grown up to, we all have grown up with the internet in many ways. So the internet has hundreds of things that you could do, you could browse, you could consume news, you could transact, you could do hundreds of things on the internet. But within the internet, there is a subset of the Internet, what we call as the conversation internet. And WhatsApp is part of the conversation internet and conversation internet is where you have ultimate trust, I mean, your co workers, your family, your friends, everybody is residing within the conversation, internet. And sometimes you don’t have a problem even sending out a picture of your credit card within the group. But you won’t do it anywhere else, obviously.

 

So I think the trust that it kind of attracts, it is able to maintain over a period of so many years now, I think WhatsApp has become truly the number one channel. And it cuts across ages, it cuts across the diaspora in geography and in economic strata. So everybody is on WhatsApp today. So it made sense for us to build a business that was going to leverage the power of WhatsApp to be able to help businesses improve the quality of the conversations with their customers. And like I said, the power of a conversation is really something that we want to help the business empower their businesses to be able to leverage that thing. That’s really what we’re building on through.

 

Siddhartha 39:06

So tell us about, so there were a few teams in your mind, there were SMBs you wanted to solve for and you wanted SMBs to do better business by helping them with digital channels. And the third part of it was WhatsApp became the medium of communication between consumer to consumer in India and also business to consumer in India.

 

Karthik 39:26

Absolutely. 100% Correct. As a generation now, we prefer to text than to talk. And that behavior between consumers has bled over to businesses. And similarly, when I have sent a message, I’m checking whether you have seen the message because I know I have a way of checking that in many cases, I have a threshold of how soon the person to whom I’m sending a message will reply. So there is an instant reaction that we expect from each other as friends, family members, and co-workers. The same behavior is exhibited. They are expected of a business as well. So they consumers want to be able to text a business. They want to be able to browse things that they want to buy or evaluate or shortlist. They want instant response. And they also want a 24 by seven availability, they want to be able to talk to the business at any point of time.

 

So they want it to be asynchronous. They don’t want it on your face. They don’t want somebody to call and say, Okay, give me your mobile number or OTP, verify this, or download this app. How many apps can I download on my phone? I mean, there’s no more real estate left on my phone. And even if I do have real estate on my phone, there’s no real estate on my mind and I have no real estate anymore left. So it’s eventually coming down to being able to communicate with the business. And there’s no better way than being able to message a business at this point of time.

 

Siddhartha 40:49

Now, once these trends that you leverage, tell us about the law books broken, how you’re skilled up to a period of time to listen to more than , 500 plus businesses that are dependent on Gallabox.

 

Karthik 41:01

Here’s what happened. We launched this product in about 100 days, and we got our first 100 customers.

 

Siddhartha 41:05

When did you launch?

 

Karthik 41:07

We launched in September 2021. Yeah. And within 100 days, we got our first 100 paying customers.

 

Siddhartha 41:12

How was this, I would like to know. People usually take it very slow, but you got 100 paying customers in 100 days.

 

Karthik 41:18

We didn’t even know it was a big deal, by the way, because we were truly looking at the big picture, we were looking at the large SMB diaspora and the large opportunity, we talked about some of the trends of how this can potentially replace SMS and email call centers. It can help become another sales agent for small to medium sized businesses, I mean, look at the number of things that it can potentially solve for. It can also become a marketing agent. It can be a catalyst, as you run a campaign on Facebook or Google, it can take the lead and move it down beautifully to WhatsApp and be able to convert that lead in a very asynchronous manner. So we were looking at all of these and we said, wow, these are some of the larger denominators, if you may have an opportunity that exists for us.

 

So we didn’t even celebrate the first 100 customers. Okay, so we said, Okay, this must be normal. So we got them really when they discovered us. And I think there’s enough credit to be given. Also to those businesses who chose a no name brand, . And I must also give you a heads up here that we did not use any of our network to acquire those first 100 customers, because we want to acquire them unbiased, we want them to hit us when there’s a problem. We want them to give us feedback, and be able to grow with us that much longer. But of course, what we did do with the first 100 customers is we worked with them very closely. We in fact, we even had WhatsApp groups with some of the first 50 of them, we understood their requirements well enough, and we were able to understand that, hey, so these are some of the use cases that make a lot of sense for us.

 

So this, the standard that we held was also, WhatsApp is like email 15 years ago, it’s like a mobile app,10 years ago. So it can do any number of things it wants. It can do sales, it can do support, it can do no marketing, it can do anything you want. But we said no, it cannot be that, , you could go with a channel or a medium and say you go figure it out. I think we understand the SMB, the small and medium sized business so well, that you can’t just give them a cloth and say, Go stitch it yourself, I mean, they need a way in which you could help them. So we built some of the use cases. And we said, hey, so why don’t you use this, to be able to convert your prospects faster? Why don’t you use this to be able to validate your leads, so that, before you hand it over to your agent, you’re not just giving something, but you’re giving something very valuable? Or to be able to validate some of the existing customer feedback, be able to see what is the feedback, what is the complaint, what is the query and be able to go back and say, okay, here is something that we want to offer you because you’re a repeat customer.

 

So, we build use cases around some of the most fundamental requirements of a business , which is you have to grow sales, you gotta keep your selling costs low. And you gotta keep your support costs low, because if you do your support, well, it means the same customer can come back and repurchase the product or service at another different point of time and a happy customer can get you another reference. So if you singularly focus on ensuring that the prospect converts to like you always say the lead converting to a deal or the first time customer converting to a lifetime customer, I think those are some of the core goals that we took. And we worked with the first 100 customers and we helped them and in terms of the way we built these use cases and how we went about building features for that we solved for the first problem first so we realized that there was already chaos when there are about 20-30 members in an organization. There was chaos of people using the same cars as the personal WhatsApp numbers to contact a business, I mean to contact a customer, I’m sorry. And when they contact a customer, the customer is talking to an individual and not talking to an entity.

 

So you can imagine, it can sometimes be unprofessional, it can sometimes be risky. And at some level, it is inelegant. Because if the person switches off the phone, like I’m doing now, there is no way anybody else can access the conversation unless I inform them of it. I think the key is, we saw that the big problem to solve is that a business wants to have conversation coming to a central number. Because a number becomes an extended entity of the brand, or of the business and be able to have multiple agents have access to a customer conversation ? And customer conversations. And thirdly, to have other people be able to transparently see what’s going on between an agent and a consumer or a customer, we saw that these are some of the use cases immediately that we could solve for, and that we solve for immediately.

 

And then they may very, very soon, in about a few months after that, and we were actively talking to prospects, and in fact, we were doing the demos, we were using Gallabox for our prospects. Okay, we were dogfooding. And when we as founders, we as the initial, the first founding team members or doing the demos, I think it was a source of enormous amount of insight, wisdom, if he may. And we started discovering new use cases, where the business would say, I don’t want to assign an agent for every conversation, I mean, there are some things that I can automate. They didn’t use the word automate, didn’t use the word bot. They didn’t say I want to have this sophisticated, something that others have.

 

And that’s when we realized that there was an opportunity for us to truly democratize some of the tools in conversation, commerce that were affordable only by a few large enterprises. And then it was like a revelation for us that these 20 million SMBs and not just in India, and in several parts of the world, actually can benefit when we democratize.

 

Siddhartha 47:11

The communication layer between them and the end consumer.

 

Karthik 47:14

Absolutely. So in truth, the way they said what was affordable, by a few cannot be made available to many. And only the wall is how much you can imagine that you can put that to use. So then we started rolling out the automation capabilities. And we also realized that India’s really not a very strong do It Yourself market. So therefore, we had to build to solve for the next level, or being able to build out certain deployable, easily deployable recipes. So we built out the first 100 recipes, and then we opened it now to the community for them to contribute. And so which means very soon, a business can come up with what they want, and then they can form a library of bot recipes, workflows, they can just deploy it and start working.

 

And the other angle is India SMBs. Were slowly maturing, like I said, they were now on larger ecosystems, like many of them were on Zoho, several of them were on homegrown CRM systems that they built out custom built out. Payment Systems had to adopt payment systems, thanks to the pandemic. And they were on several other software as well. And then several other CRM, like we even saw air table and HubSpot, Zendesk as well, in India, truth be told.

 

The next call really was, hey, so a conversation on its own is isolated. And a bot or an automation, when married with conversation, can best do its job only when it’s integrated with any of the software that exists. I mean, we have a thesis, which is that the CRM is a dumb box, which is just sitting out there, Unless it speaks, it doesn’t do anything. So what Gallabox does is by integrating with the CRM and with the other other systems that exist there, it kind of infuses life. it infuses life into that box into that machine. And then the conversation starts after that. So the organization starts conversing with the agent, up until then, the CRM, I think, I’d say that the CRM was built for internal purposes, for a salesperson for a support person to optimize their time and effort is when the CEO is how the CRM was built. But now we are able to then infuse life into the CRM and today have, this active, vibrant conversations between the people of an organization and the prospect or the customer,

 

Siddhartha 49:38

Tell us about the 100 to 500 plus customer journey, what worked, what didn’t work out? And what are the learnings from those, the journey to scale.

 

Karthik 49:50

The first 100 customers really came to us from pretty much several organic means that we put out or maybe they discovered us through personal profiles on LinkedIn and Twitter and other ways on Facebook and so on. And then we started evaluating certain other channels where they could discover us. And we saw that they were all available digitally. So we deployed a whole lot of work on the digital side to be able to acquire them from early on one of the channels that we really insisted that we would make it work for us, really Siddhartha is the referrals. So we realize that a customer is your friend and somebody who can mean NPS. And all of that is very sophisticated for a segment, all internal users. But when a customer says, I have a friend who may benefit from a product like this, it’s really like tattooing the brand name on the forearm . So that’s another channel that worked for us.

 

And we also started working with some of the developer community. Interestingly, the developers that we’re building on our sites, or maybe building out some software and helping other businesses help, helping other businesses with their software, and so on, I think those became our developer partners, we started working along with some of the marketing agencies, digital marketing agencies who could benefit from a product like this. I think these were some of the sporadic channels that I think are clearly a path going forward, really. So data is where the product becomes its own Ambassador, the product becomes its own marketing agent in itself.

 

So the product leads to growth, that particular motion is something that we are very excited about. And we think that by making it available to the hundreds and 1000s of businesses, where they could use it, try it, be able to kind of get comfortable with it, and then start using it even more and be able to that becomes kind of part and parcel, it kind of becomes part and parcel parcel of their overall offering. I think that’s something that we’re very excited about.

 

Siddhartha 51:50

And in this journey, what are the things that accelerated you? What happened in 2022, any event that accelerated your journey to 500 customers?

 

Karthik 52:01

One of the surprising facts is that we got at least 10% of these customers today from about 12 or 13 Different countries of the world. And we were very surprised that they found us in some form, but of course, they found us on.

 

Siddhartha 52:16

That means they’re looking for you.

 

Karthik 52:17

Exactly, so they’re looking for us, or they’re looking for somebody like us. So they found us on G2, they found us on several of the blogs that we put out, they found us on some of the ads that maybe we rolled out on Google and Facebook. So I think that’s one very surprising fact that gave us the impetus that this has feet that can take it beyond.

 

Siddhartha 52:39

It can be designed and made in your product, but be perhaps used by SMBs around the globe.

 

Karthik 52:43

Yes, absolutely. And the opportunity for something like this is so enormous, because we have the capability of, I mean, it’s like really like, like a thali or bill or actually cooking up a biryani. I mean, all of us can come together and do a little bit of what’s something that we can do and build something like this year, but it can really be fascinating for somebody across the world. And the timing seems to be like super opportune for a company like ours, because there is consolidation happening, people are worrying about, should we build or should we kind of protect what we have, should we expand and I think large tech companies, large companies, product companies around the world are really asking some really existential questions that companies like us from India, we are nimble footed today, we seem to have this courage from nowhere and we have the all the gusto in our we have the spring in our step. So, which means that, we could certainly make this product’s gala box significantly. I think we have potential to be able to go not just grow in India, but different parts of the world as well.

 

Siddhartha 53:52

And big congrats on the 1.2 million fundraise.

 

Karthik 53:57

Thank you. And if I were to convert that to Indian rupees, and that’s something that I’m most comfortable with, I think that will be about closer to 10 Crores. I mean, we respect capital, as people who have seen companies grow from scratch as people who have as individuals who have come from modest upbringings and modest backgrounds. I think there is enormous respect in the founding team for capital. Because it’s not just what it comes with it also it What responsibility it brings along with it. So thank you very much. And we intend to put this to very good news over the next few months.

 

Siddhartha 54:33

And 100x Entrepreneur fund and I are really glad to become part of the Gallabox journey. I’m so glad to become an investor in Gallabox, along with Prime Venture Partners, and to see the SMB dream getting fulfilled via you.

 

Karthik 54:49

That’s wonderful of you to say that. So in fact, we we’ve been thinking about really how well , we make ourselves so we’ve been thinking really about the fact that the Prime Venture Partners is a solid rock solid VC fund they like they say they bring Valley style investing to India, operator VCs who have understood who who believe in the Bharat opportunity thing, they bring a certain, aspect to this relationship and 100x Entrepreneur fund with you Siddhartha, Sudarshan and others, Kshitij, I think you guys bring in real life action. As I can just pick up the phone and I can see the way you can really convert a strategy to execution to plan. I think that’s something that we’re super excited about. And we bring a certain understanding of the market and I think a certain humility of being able to bring the knowledge of how that can be put to use, I think the three of us and with the others, like Pallav, and Abhishek and Shiva of Ever stage, these are the other, angels who can who can come together. And I think we can have a lot of fun here, as we build out the India, small to medium business market.

 

And I think when I say small to medium business, I think we should also qualify this a lot more, because we also see that as we democratize conversation, commerce, it is really remaining, as we see this, it is remaining really at the very top of the pyramid. And for it to come down. We are working with some 200-300 member organizations as we speak, like CreditMantri, VakilSearch PVR cinema, And they are not SMB in that sense. So they’re like mid market clients who are very happy to work with us. Because now they’re seeing that a product like Gallabox can be a painkiller, because it solves a problem. It can be a Vitamin over a period of time because it helps kind of leverage their marketing spends their sales efforts. So in some sense, it becomes like a sales catalyst.

 

Siddhartha 56:53

So the movie ticket data book on PVR today and will be delivered to me on WhatsApp is through Gallabox?

 

Karthik 57:00

Very soon. Very soon. Yeah.

 

Siddhartha 57:02

That’s like simplifying a business.

 

Karthik 57:05

Absolutely, So if you look at some of the use cases, if you look at the way CreditMantri has been serving the consumers in India, CreditMantri came back and said, Hey, so I can give out a credit rating on WhatsApp. I don’t have to move them to the web and get them to fill a form and take all of this information. So I can just do it on WhatsApp. We said yes, you can. And in about 10 days, they got on board, we had to do some integrations for them. And today, they’re super happy customers. And all of the credit ratings today go on WhatsApp.

 

Siddhartha 57:41

And I think there are like 1000s of use cases for businesses available and the SMB market for entrepreneurs are so open right now, what are your learnings if you had to, let’s say, give it to a friend who is starting up an SMB, what works for the SMB segment in India?

 

Karthik 57:57

I think the fundamental one is you have to help an SMB succeed with the top line. I think they are not in it to build a brand.

 

Siddhartha 58:08

And neither are they here to save time.

 

Karthik 58:11

Yes, I mean, if I go and tell an SMB or an entrepreneur that I’m going to save the cost. I think that’s a lower order priority for them. Of course, they pretty quickly graduate, didn’t they before you can think about it very quickly, they can graduate to seeking out sophisticated tools for let’s say, customer experience. Hey, that’s fine. But how do I take care of my existing customers? Very quickly, they will ask you that question. But I think at a very fundamental level, my advice would be focused on enabling the sales top line, because that’s, that’s really where the biggest challenge of SMBs is and do it at a lower cost. Because over a period of time, it needs to scale. And it’s not just a one off wonder that the idea can be, it needs to have faded, it needs to run for a long period of time.

 

Siddhartha 58:57

And you are building out of the SaaS capital of India Chennai, we have three large SaaS unicorns from Chennai, Zoho the $1 billion, like flagship beer $1 billion revenue company, the first one from India in SaaS, yes, the second known as the FreshWorks, which is like the first listed SaaS company, from India, or NASDAQ, and third is Chargebee, which is like $3 billion in valuation, and is powering other SaaS companies all throughout the world. So how does it feel to sit in Chennai and build it?

 

Karthik 59:31

Oh, very interesting question. Really, I didn’t think of it. But if I were to think of it now, by the way, our offices are on the second floor of a building where the third floor was occupied by chargebee. So that doesn’t escape us. Okay. Freshworks is not very far from where we operate. And Zoho is, of course, slightly far, but that’s geographically. In a mental framework, the field is both small and proud, we feel small in the sense that there is so much to learn from In many of these behemoths many of these people who have really built out playbooks, and I think there’s, , they should all take a bow from us. So there is a lot to learn from them. And proud of the fact that the ecosystem is so open, the ecosystem is open to allow for somebody like us, we don’t have any prior SaaS experience. But I think if you were to ask me that question, are you a SaaS company? Maybe maybe not. Because we just use subscriptions as a way to reach out to customers and have them pay us. But we’re solving a problem .

 

And if there was any other way of solving the problem, we would have solved it that way. It just so happens that, , this is a better way of solving the problem through subscription. So if that makes us a SaaS company, so be it . But going back to the question, I think there is a lot to learn from any community meet that I go and attend, and the playbooks are out, they’re all out in the open and people are willing to share, people are willing to talk to you. I think we are super fortunate to be born as an organization in this time of the, in this time and age, super fortunate to be born and be bred and raised in Chennai, which is really the SaaS capital. I think there’s also a cultural aspect to the Chennai founders where there is a lot of humility, and I think that that doesn’t go unnoticed at all. There’s a lot of them, they’re very helpful. And I think in general, nice folks to consult nice folks to take help from. And as a rule, I always ask for help. You can always say no,

 

Siddhartha 1:01:38

Thank you so much, Karthik, this has been a very wonderful conversation with you. Going back to your roots, the roots of Indian SMBs, how they got formed out there adopting technology, and the problems to solve for them, which are open for entrepreneurs to solve.

 

Karthik 1:01:55

Thank you Siddhartha I mean, I also never expected this conversation to be this wonderful, it was free flowing. And I was able to kind of stitch many of these things together. Thanks for your wonderful questions. Wonderful chatting with you. Thanks for having me over.

 

 

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