Capital Efficient Entrepreneurship: Venky Balasubramanian, CEO of Plivo (Part 6) 

Sramana Mitra: However, your per minute numbers are a premium over the carrier’s per minute numbers that you have to turn around and pay, right?

Venky Balasubramanian: Technically, yes but not really. In practice if you go to a carrier directly, what you do in effect is a service running more than 10,000 minutes. Our price points are much more lower than what you get from a carrier directly.

Sramana Mitra: So you have volume discount. Because people are riding on top of that volume discount, they get that discount. What you’re charging those customers is still a mark up over the price that you are getting from the carriers.

Venky Balasubramanian: Right.

Sramana Mitra: In 2012, you have about 800 paying customers. You are profitable at this point. You raised $1.7 million. Where did you raise that money from? What kind of investors did you choose and why?

Venky Balasubramanian: At that point, there was a lot of incoming interest. We were quite profitable. We wanted investors who had background and also interest in the space. We chose our investors. We said no to a good amount of investors at that point. The investor that we chose was Andreesen Horowitz, Qualcom, Battery Ventures, and Conway Fund.

Sramana Mitra: In the $1.7 million round, you had that many investors?

Venky Balasubramanian: Yes, because it was a seed round. This was a super seed.

Sramana Mitra: I see. You said you did a convertible in that second round?

Venky Balasubramanian: Yes, even the first one was a convertible.

Sramana Mitra: Convertible is good. At the early stages of investment, convertible is good. I would probably have responded differently if you told me that you did your angel investment on a convertible round. You’re not giving up equity early on. That’s very much in tune with the best practices that we espouse. You are starting off 2013. What happens next?

Venky Balasubramanian: 2013 was a year of good growth. The business scaled up and customers came in.

Sramana Mitra: Where are you doing all this? Are you in the Valley? What is the configuration of the company at this point?

Venky Balasubramanian: I would say both. Our US office is primarily focused on sales, account management, and marketing kind of roles. Now, we are also starting to build out our infrastructure team in both places. In our India office in Bangalore, we have different sort of teams. Back then, we had our engineering team which was called the product team. We had engineering, product support, and dev ops kind of a team.

Sramana Mitra: What is the customer acquisition model?

Venky Balasubramanian: Till today, it’s been pretty much the same. It’s all been an inbound, self-service model. It’s primarily based on word of mouth, customer referrals, and inbound interest. Recently at the end of 2014, we started a lot of inside sales. Since then, it has been inbound.

Sramana Mitra: What happens in 2013? What are the major milestones in 2013?

Venky Balasubramanian: On the product side, we released a lot of other things. One of them being the concept of Web RTC. We were one of the first ones to release that in 2013, which basically is having voice pre-embedded in your browser and connecting that to the API where developers can control access to the browser. There were a follow-up of product releases in 2013. We realized that now we have to be pitched differently. It’s not just a small four to five member team, now it’s a 15 to 20 member team. We needed ways of working for that team size.

Sramana Mitra: What happened to your friend in France? Did he move to either the Valley or Bangalore?

Venky Balasubramanian: Basically, Mike and I moved to the Valley in 2012 when we started Y Combinator. Both Mike and I moved back and forth from the Valley to Bangalore office. We were not based out of Bangalore. We were both based out of US since 2012. 2014 was a good year. We grew 4x. We launched a few things and RTC was one of them. We also pushed into aggressive US and Canadian SMS offerings. That took off well. I think our customers base was around 5,000 to 7,000 in 2013. At this point, we didn’t want to focus too much on profitability in a short period of time. We wanted to focus on growing the company more aggressively because we had good cash in the bank at that point for us to push the pedal.

This segment is part 6 in the series : Capital Efficient Entrepreneurship: Venky Balasubramanian, CEO of Plivo
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