Capital Efficient Entrepreneurship: Venky Balasubramanian, CEO of Plivo (Part 7) 

Sramana Mitra: What, specifically, in terms of levers were you able to push by investing more aggressively? What could money buy you?

Venky Balasubramanian: This was around technology at that point because we were in a market where we had to move fast in terms of what we were going to be releasing. Things were changing fast in the market. We had to move our way into this market. Money helped us hire faster and build our team faster. If we didn’t have the money, we would have waited out a bit. We did have the money, so we invested.

Sramana Mitra: In 2013, mostly the financial lever was in broadening the technology footprint. What about 2014? Was it still technology or was there something on the customer acquisition side that you were able to also do by using a financial lever?

Venky Balasubramanian: 2014 was an interesting year. One of the key highlights of 2014 was being profitable during the July timeframe. In late 2014, we put a lot of push in the marketing side of things. There was minimal focus on marketing from our side till that point. It was all running through word of mouth and incoming referrals. We put a lot more aggressive action plan and a lot more interest into a few things. One, obviously, being marketing and cleaning up a lot of online demand to make sure that we have a good incoming funnel. We also invested and started building out our sales team. Till then, we only had a sales team in the US.

Then we built out our sales team internationally in the Asia Pacific and Europe. We set up account management teams because we had a large number of customers who had grown and scaled up. We basically set up dedicated account management teams to work with our premium customers. Obviously, 2014 was a different focus in terms of investment but, clearly, being profitable again helps in terms of the overall style of how you work. As you grow the company in terms of revenue, a lot of things start to become critical. We didn’t have a Finance function for a long time. Now, when you do a good amount of revenue, things like cash flow, margins, and profitability start to come in place. When you have a dedicated function to look after that, your numbers improve quite fast.

Sramana Mitra: So far with the story that you’ve discussed, you did all of this with the $2 million with two convertible notes.

Venky Balasubramanian: That’s right.

Sramana Mitra: Did you raise any more money beyond that financing?

Venky Balasubramanian: No, we decided to not raise any more money at this point.

Sramana Mitra: Fantastic.

Venky Balasubramanian: We are healthy in terms of our profitability right now and cash in the bank is pretty good. We’re adding to it every month. Now we have a team size of 70. By first quarter next year, we should be upwards of 100.

Sramana Mitra: How is that split between India and the Valley?

Venky Balasubramanian: Majority of the team right now is in India. Our US team is about 15 members strong, and the remaining team is in India because a lot of it also comes from engineering and product support. As I said, US is more sales and account management. We don’t need to hire as many folks as in India. Today, we serve more than 26,000 customers across the globe. That has grown over the last four years including Netflix and Mozilla.

There are a couple of other big brands who are working across the globe. Foodpanda started in Europe and they have their arms and legs around the globe in terms of the food delivery vertical. These are the kind of customers we work with and a lot of other large messaging apps. I don’t want to name anyone but your guess is as good as mine. The largest messaging app acquired for billions of dollars is also a customer. We work with customers of all sizes – startups, medium enterprises, large companies, and even fast-moving fast-paced companies.

Sramana Mitra: I love your story and I love the fact that you’ve been able to do it very vigorously and in a very cost effective way. You’re definitely in a zone where you don’t seem to need a lot of capital. You’ve just been able to, more or less, bootstrap the company.

Venky Balasubramanian: I wouldn’t say bootstrap. We’ve also been lucky with the team we have. It wouldn’t have been possible for Mike and me to come in and do all of this.

Sramana Mitra: I have no conflict with bootstrapping. Bootstrapped entrepreneurs build teams. I have friends who are building $300 million bootstrapped companies like eClinicalWorks and Zoho. That has nothing to do with not building teams.

Venky Balasubramanian: I agree. I heard this term before. It’s called pseudo-bootstrapping.

Sramana Mitra: In your case, you’ve raised some angel money. That’s not a huge amount of angel money. It’s still capital efficient entrepreneurship and we really like capital efficient entrepreneurship stories. They tend to return a lot better for the founders. There’s no question about that. Also, they have better sustainability. Right now, we are going to have a bust in the next 12 to 18 months. This is a point where all these companies who have big burn rates and are not generating enough revenues or, let alone, profits are going to go bust. They’re going to die.

Venky Balasubramanian: I completely agree. Our perspective has been doing it with a different style. There are companies out there who’ve raised more than a hundred million dollars to be in the space where we are now. We consistently decided that we don’t want to raise more money till we need to. We will focus on what we have to do right now.

Sramana Mitra: Which is the question I was asking your when I asked you the question of financial levers. Is there anything that you could do to grow substantially faster if you were to raise money? If the answer is no, then there is absolutely no point in raising money. You don’t raise money for the sake of raising money. At least, you shouldn’t. People do, but you shouldn’t.

Venky Balasubramanian: If  you raise money, it should be for something more strategic and not just for raising money.

Sramana Mitra: When the story was pitched to me, I was told that you are above $5 million at this point. Is there any other metrics that you want to share like how many customers will you be by the end of 2015 for instance.

Venky Balasubramanian: We are much higher than that number but we have not spoken publicly about our exact revenue numbers. In terms of customers, the last we checked, we were close to 26,000 customers. By the end of this year, it should be close to 30,000 customers. Just this year alone till about June timeframe, we have done over a billion voice calls and SMS messages. That’s a huge key milestone for us internally. That’s a huge number.

Sramana Mitra: Absolutely.

Venky Balasubramanian: Just this year alone, we have doubled our revenue from January till June. By the end of this year, we should be able to do something similar in the second half of this year. We are focusing on growth pretty aggressively. We are still putting in all efforts to grow as much as any other larger venture-backed companies.

Sramana Mitra: Excellent. Fantastic story. Thank you for your time.

This segment is part 7 in the series : Capital Efficient Entrepreneurship: Venky Balasubramanian, CEO of Plivo
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