1Mby1M Incubation Radar 2011: QuadMo Solutions, Bangalore, India

Rewards programs have been around for a long time. Gartner reports that systems that leverage social and mobile concepts have seen rapid growth recently, and increasing global adoption of employee recognition systems is expected over the next three to five years.

Gartner also observes a shift in the recognitions systems market as SaaS vendors continue to grow, encroaching on territory once dominated by on-premises offerings. Gartner also expects to see “tighter integration between recognition systems and talent management applications and growth in tools that support informal feedback and recognition, and collaboration and innovation applications [that] have added analytics to track employee actions.”

Such changes are good news for companies like Bangalore, India–based QuadMo Solutions. QuadMo focuses on providing companies with enterprise-based social rewards, recognition and incentive solutions. The company’s goal is to deliver social technology to the rewards and recognition (RnR) space via adaptable online and mobile solutions, starting with its premier product, Spotl!ght. As a core philosophy, QuadMo intends to revolutionize corporations’ and individuals’ outlook on rewards, recognition (RnR) and gift giving.

Spotl!ght has been described as the first comprehensive 360-degree social RnR solution that allows corporations to design, customize and implement their RnR programs while engaging their employees, managing talent and fostering corporate objectives. With Spotl!ght, all employees get a social platform for peer-to-peer appreciation backed by powerful workflows. The talent recognition software is based on three principles: amplifying employee motivation, simplifying the rewards and recognition process, satisfying employees with genuine rewards and recognition, and giving them the freedom to choose their own rewards.

CEO Rohit Rawal has a bachelor’s degree in electronic and communications engineering and an MBA from the India Institute of Management (IIM) Calcutta. Before pursuing his MBA, Rawal worked for Infosys in the telecom division. Prior to co-founding QuadMo with co-founders Vivek LakshmiNarayan, Priyank Kharge, and Shubhapradha N S (Shubha), he also worked for Cognizant in business development. Later, he worked for IT product firm Subex in customer service management, customer community building and was also involved in deploying the company’s SaaS-related offerings.

Chief Innovations Officer Vivek LakshmiNarayan oversees the company’s technology and project management. He has 10 years of experience working in software development and has worked for such companies as Wipro, Nortel, and Aricent.

Kharge oversees the company’s finance, marketing, client and merchandise supplier relationships, and Shubha oversees professional services and handles all customer integration projects.

Priyank, Vivek, and Rohit had studied together in high school and college. About two years ago, a chance meeting between Priyank and Vivek at a coffee shop sparked a conversation about doing something together. They then invited Rohit to join the founding team. After much brainstorming over countless cups of coffee, the idea for QuadMo emerged.

QuadMo’s first customer was Subex, a $125 million telecom product firm with 1,200 employees in 10 countries. Subex wanted a centralized RnR platform for its global workforce in order to showcase award winners from around the world on a common platform and connect all employees. QuadMo worked with Subex’s vice-president and head of HR to create the reward programs, flexible workflows, and reward nominations and approvals in line with Subex’s policies, budget tracking and reporting. The metrics from Subex’s use convinced other corporations of the benefits of QuadMo’s solution, and the company added four new large corporate customers in quick succession. Within a few months, close to 25,000 employees were being covered by QuadMo’s social recognition and incentive platform.

As interactions with corporations and HR teams increased, the founders received invaluable feedback. When it came to rewards, recognition and employee motivation, gifts or gift vouchers didn’t do the trick. As a result, Spotl!ght became an interactive, centralized and social 360-degree solution that would enable real-time showcasing of employee rewards and enable peer recognition regardless of an employee’s location.

QuadMo wanted to increase the importance of a socialized platform for rewards and recognition within an enterprise and to show that RnR comprised more than just gifts or merchandise. The founders wanted corporations to do more than use static displays of award winners on their Intranets with which employees couldn’t interact or engage. So, QuadMo set about building a centralized platform for employee recognition and engagement, comprehensive administrative and workflow features to allow for corporate policies to be configurable per corporate, as well as social media components.

In an effort to engender employees’ constant involvement in their corporations’ rewards and recognition programs, QuadMo has introduced game-changing channels such as personalized video and voice citations, mobile-based citations, real-time peer recognition, systems integration, and icons, badges and e-certificates. QuadMo believes it is uniquely positioned in the rewards and recognition space as compared to firms like eYantra, Jivity and GiftLinks, which primarily have a merchandise-selling platform. These firms do not offer full-scale RnR systems, especially not with the wide range of social media capabilities of Spotl!ght.

Another important differentiator is that QuadMo’s roadmap consists of combining the best of an interactive social media platform, workflow/gamification engines, video/voice, administrative, reports and analytics all on a central platform. QuadMo aims to be a thought leader in the evolving field of social recognition where it interacts closely with the corporate world, helping it to formulate new RnR methodologies to encourage, empower, and engage employees.

Spotl!ght’s modular plug-and-play solution design allows each corporation to choose modules for its own implementation purposes. As an end-to-end platform, it offers dedicated modules for both employees and HR and RnR administrative personnel. It integrates with a number of third-party applications and existing enterprise applications in the area of talent management.

Some of Spotl!ght’s employee features include automated photo showcasing, peer comments, and  “like” and mobile-based recognition. On the corporation side, HR or other administrative professionals can use the rewards management, multiple currencies, budget tracking, employee and team management, reward points, and several other features. QuadMo also provides 24/7/365 after-sales support for both corporations and employees with respect to feature enhancements and merchandise-related queries.

QuadMo targets firms with 500 or more employees in the Indian market and currently looks at industries with workforces that spend most of their time in office environments, such as the tech, BPO, and financial industries. Companies with the majority of their workforces in factory or shop floor environments have not yet been targeted.

Annually, recognition spending in India ranges from .002% to about 1% of payroll costs, with the average and median both around 0.5% of payroll costs. So, if a company has about 15,000 employees and an average employee salary of $4,500 (INR 2 lakhs) per year, then that company would be spending around $350,000 (INR 1.5 crores) annually on various recognition initiatives, according to Rideau.

A corporation’s RnR spending can be divided into two categories: software solution and program administration and reward merchandise. With software solution and program administration, the typical spending is around 5% of the total RnR spending. So, for the 15,000-employee firm discussed above, the typical annual spending is around $16,500 (INR 7.5 lakhs).

If the top ET 500 firms in India fulfill these criteria, that creates an annual figure of $8.5 million (INR 37.50 crores). Assuming the next 1,500 companies have similar budgets (i.e., INR 37.50 crores), annual spending on software solution and program administration is around $15 million (INR 75 crores).

The total spending from the top ET 500 companies in India on various recognition initiatives, including merchandise, is around $150 million (INR 750 crores). Assuming that the next 1,500 companies have similar budgets, annual spending on recognition initiatives, including merchandise, is around $300 million (INR 1500 crores). Therefore, in terms of revenue, the potential from the top 2,000 companies in India is around $315 million, since Quadmo also intends to sell RnR merchandise through the platform in collaboration with relevant vendors.

In the next phase, QuadMo plans to promote Spotl!ght in the U.S., Canadian, and U.K. markets and compete with companies such as Rypple, Give-a-Wow, and I Like Rewards.

According to Rawal’s calculations, the total addressable market (TAM) in the U.S. alone is $911 million. The monthly subscription pricing assumption for the U.S. market (drawing from competitor data and applying a substantial discount on their pricing) is as follows: $400 for companies with 2,500–5,000 employees; $350 for companies with 1,000–1,500 employees; $300 for companies with 500–1,000 employees; $200 for companies with 100–499 employees; and $100 for companies with 20–99 employees. Of these, the small business (20–499) segment is the largest, at $847 million, and it can be serviced over the Internet from India without a large direct sales force in the U.S. That opportunity resembles the strategy followed by Zoho to disrupt the CRM market in that country.

As part of its growth strategy, Quadmo plans to offer Spotl!ght as an add-on application to enterprise social platforms like Yammer, Chatter, Jive and SocialCast to take advantage of existing platforms and offer a ready-to-go version of Spotl!ght to customers who have already signed up for those services. These partnerships, especially Salesforce.com, could open up attractive channels for Quadmo. In the future, as a standalone IT product, QuadMo also plans to target the Southeast Asia and Australia–New Zealand markets.

QuadMo is a bootstrapped product company with global aspirations. Now that the customer validation phase is complete and Quadmo is generating revenues, the founders are ready to look for funding to help the company scale.

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This segment is a part in the series : 1Mby1M Incubation Radar 2011