Capital Efficient Entrepreneurship: Venky Balasubramanian, CEO of Plivo (Part 4) 

Sramana Mitra: Your business model was in providing consulting services, training, and support?

Venky Balasubramanian: Back then, we had no plan to monetize. This was still a project for us. We had no business model.

Sramana Mitra: You were based in Bangalore and Mike was based in France?

Venky Balasubramanian: Yes, I was in Bangalore back then. Mike was still in France.

Sramana Mitra: Where is Mike from originally?

Venky Balasubramanian: He’s from France.

Sramana Mitra: You just met online. This is a collaboration that came together online. It’s not somebody you knew for a long time.

Venky Balasubramanian: Yes. We were working online for the first year. We never had any video calls or any video meetings. Our first year was just text chat. That’s the work we did for the first year. The first time we met was in August 2011. This was for a conference in Chicago where we were speaking about this framework to a developer conference. That’s the first time we met.

Sramana Mitra: Interesting. Mike is your co-founder for this business?

Venky Balasubramanian: Yes, absolutely.

Sramana Mitra: I think the virtual company model is becoming more and more popular. I, certainly, run a virtual company myself. I’m very much with you on that one. Let’s go back to when you were starting to get traction and people were interested in replacing Twilio’s technology with your open source code. What did you do next?

Venky Balasubramanian: In August when we were at this conference, we basically drew a lot of interest from folks out there. They were saying that they would need more of a hosted model. With open source, we would just consult them with the technology part of it but somebody had to run and maintain the servers. Apart from the existing interest we got, there were three or four large customers we met at this conference who were using services like Twilio.

They came to us and said, “If you have a cloud service with carriers bundled in with the price model that I would get from carriers, we would move to you tomorrow.” That’s the offer a lot of customers came up with. Mike and I sat down and spent a couple of days on that. We decided that we were going to go full-time into this and make it into a business. We started the company in early September. At that point, I was in the US. During this time, there were friends of mine who were in YCombinator. I was in the Bay Area spending time with them. At that time, we raised our initial angel round. Phalom Navani was one of our investors. An angel investor was Vijay Shekarsharma from KPM.

Sramana Mitra: How much did you raise in the angel round?

Venky Balasubramanian: We raised about $250,000 in our initial round. To be honest, at that point we thought, “What are we going to do with this money?” We already had customers who were willing to commit to us. At that point, we still were not sure whether we should be raising money or not. In hindsight, it was a good decision because it helped us spend on a few things that were critical. Even before we closed the round, we already had two paying customers paying us about $15,000 to $20,000 a month. This was in late 2011 around November to December time frame.

Sramana Mitra: How much equity did you give to your investors for $250,000?

Venky Balasubramanian: We’ve not spoken about that publicly and I’m not sure I can get into that detail at this point.

This segment is part 4 in the series : Capital Efficient Entrepreneurship: Venky Balasubramanian, CEO of Plivo
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