Capital Efficient Entrepreneurship: Venky Balasubramanian, CEO of Plivo (Part 5) 

Sramana Mitra: If I were making that decision, I would have made a different decision. If I had $15,000 to $20,000 coming from two customers, I would not raise angel financing and part with equity at that point.

Venky Balasubramanian: I agree, which is why I’ll get to what we did a year later. A couple of things happened. It was also about timing. By the time we closed that round, we got the money from the customers. At that point, there was not much going on in terms of our customers. It also stems from the fact that, at that point, we were more focused on figuring out how we can go a little more aggressively. I agree with your view that raising money isn’t always the best.

At that point in time, we were pretty happy with the decision we made. Using that money, we hired a few more people within a month. We also applied to Y Combinator in 2012. What’s interesting is we had apply to YC in 2011 as well but was rejected. Like I said, I was fascinated with the startups that my friends were going through at YC. We applied again in 2012. We now had revenue and traction. In 2011, we didn’t even have a product. We had a completed product in March 2012.

We did a public launch in 2012 during our time with YC. Till then, we were in private beta. We launched in the US and Canada in July, 2012. In August, we expanded our coverage to different countries with our global launch. There was quite a bit of attention. When we went global, it helped a lot of customers who were waiting for coverage globally.

Sramana Mitra: What did you have to do to go global? Was it to create carrier relationships? What’s different about being global? For a software company like yours, what’s different?

Venky Balasubramanian: I should mention that in 2011, that open source framework that we had held us in the market. Plivo.com is now a cloud-based offering. We still have the open source framework with all the source code on GitHub. Coming up to the next question, what do I mean by launching globally? When we launched in July, we only had coverage in US and Canada. If a call center wants to run services, if it were to use Plivo in July, it can only use it in Canada. Operating globally meant that we had local numbers in 50 countries. That came out with our work with partnerships with carriers across the globe. At that point, we took an approach of not tying in with every carrier directly, but we went to a known hub of carriers. These were large ones. This allowed us to go fast and launch in 50 countries.

Sramana Mitra: When did you first have revenue-generating customers? That was 2011 or 2012?

Venky Balasubramanian: 2011. From month one, we were generating revenue.

Sramana Mitra: How much revenue did you do in 2012?

Venky Balasubramanian: We have not disclosed our revenue numbers for the last four years.

Sramana Mitra: It’s hard to do an interesting story without metrics.

Venky Balasubramanian: I can give you some metrics but not the actual revenue numbers.

Sramana Mitra: What metrics can you give me?

Venky Balasubramanian: A couple of things. It was the first year. Just in 2012 itself, we did 25x in terms of growth.

Sramana Mitra: How many customers did you have at this point?

Venky Balasubramanian: 2000 plus and we had about 800 or 850 paying customers.

Sramana Mitra: At this point as a cloud service, what is the business model? Is it a regular SaaS business model and the carrier fees are extra?

Venky Balasubramanian: It’s not really SaaS because SaaS is subscription. We don’t charge any subscription fees on our model. On the cloud, we charge per minute. It’s pay-as-you-go. People call it different names like Platform-as-a-Service. It’s essentially a pay-as-you-go service where if you want to do just one call, you pay for just one call. If you wantdo 10,000 calls, you pay for that. Obviously, when you do 10,000 calls, we have better volume discounts.

This segment is part 5 in the series : Capital Efficient Entrepreneurship: Venky Balasubramanian, CEO of Plivo
1 2 3 4 5 6 7