Building a Founding Team Financed Business from Omaha, Nebraska: InfoFree CEO Rakesh Gupta (Part 6)

Sramana Mitra: In terms of customer acquisition, what customer base did you go after? There’s a bit of a subtlety in that question. Typically, in data services like yours, you tend to have richer data in one particular area or a few particular areas. What was that segmentation that you went with at the beginning?

Rakesh Gupta: At the beginning, we went after the insurance and financial services segment. They had the paying capacity and they had a serious need. A lot of them belonged to larger companies but they had local authorization to spend money. The price of our product was such that they didn’t even have to get approval in any way. They can just pay it from their own pocket. We used every form of marketing that you can think of to get to them, including direct mail. That worked really well for us. That’s where the early success came from.

Sramana Mitra: Were your customers looking for B2B or B2C sales leads?

Rakesh Gupta: Both. In terms of ratio, we probably have 60% B2B and 40% B2C.

Sramana Mitra: These are financial services selling into both businesses and consumers. You had leads that you could deliver to those two segments?

Rakesh Gupta: Absolutely.

Sramana Mitra: What size customers did you find your sweet spot in? Were they larger customers?

Rakesh Gupta: We found two sets of customers. One is B2B. B2B has become a generic term. We had B2SmallB is really our customer. These are large companies also selling to small businesses. We had lots of success in large B going to small B. Then we had SmallB2SmallB. In that, the commercial real estate agents are good targets for us.

Sramana Mitra: What did 2012 look like for you in terms of metrics? How many customers? What kind of revenue levels were you reaching? Did you raise more money?

Rakesh Gupta: We ended 2011 with around 1,500 to 2,000 paying customers. We had the product ready. 2012 was all about putting fuel into the fire and spending money on advertising. We did that in 2012 and reduced our technology and product cost. We took that money and moved that to advertising because we thought we had the core offering.

One of the key things that I’m sure you’ve heard from other entrepreneurs is you have to get the cash flow going. You have to find more people that are willing to pay a dollar for your product because there is nothing better than a feedback mechanism from people paying for the product.

Sramana Mitra: What modes of advertising works for you from a customer acquisition point of view?

Rakesh Gupta: What we have found is email is very effective for us. Word of mouth is good for us. Print advertising hasn’t worked for us at all. We have done a lot of TV ads in the last two or three years. It brings in a lot of traffic but traffic that is looking for instant gratification. Sales and marketing is a methodical process. There’s no instant gratification. It’s not like buying a steak knife. There are a lot of impulse buyers that show up but they don’t turn out to be productive buyers over the long haul. We learned the hard way after spending half a million dollars on TV advertising. We also do Internet advertising. Digital marketing has been very profitable for us.

This segment is part 6 in the series : Building a Founding Team Financed Business from Omaha, Nebraska: InfoFree CEO Rakesh Gupta
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