Scaling to Over $10 Million From Delaware: Ye Zhang, CEO of Katabat (Part 2)

Ye Zhang: Very quickly, we found that it’s a very tedious job to set up a collection agency because of a lot of compliance rules. Compliance rules are very different in different states and cities. We were required to acquire licenses at individual state level. Doing that would take a lot of manpower. It was really heavy on the operation side. We pivoted.

My strength was on the technology side. We felt that we should sell software instead of running an agency. At that time, SaaS just started. Salesforce is making a big name in the cloud computing industry. We figured that SaaS domain is a very hopeful domain. If we can build a really usable product and platform and license that to bankers using the subscription model, that would be the best way to monetize that product. We pivoted to that. In 2006, we raised the money based on that product. Since then, we have raised four VC rounds.

Sramana Mitra: Can you talk a little bit more on the product. Especially talk about the positioning. Would it be fair to say this is a cyber security product now?

Ye Zhang: No, its not a cyber security product. It’s omni-channel management.

Sramana Mitra: Omni-channel retail or marketing?

Ye Zhang: Omni-channel marketing.

Sramana Mitra: MarTech is very crowded space. Help us position your product in that complex market ecosystem. Who are the competitors? Where exactly did you identify this gap?

Ye Zhang: We didn’t compete with marketing companies. Our company was called CMC. It stands for Collections Marketing Center. We used the technology from marketing to effectively collect the money from people. We choose a different vertical. By doing so, we’re not competing with Adobe Marketing Cloud and all the big marketing providers.

Sramana Mitra: Your target vertical was collections?

Ye Zhang: Yes.

Sramana Mitra: You were using marketing technology on the collections vertical and then you were enabling people to pay what money they owed to collections agencies.

Ye Zhang: That is correct.

Sramana Mitra: Is that still the business of the company?

Ye Zhang: We have evolved since then. When we started, the major collection technology is you hire a bunch of people. All they do is pick up the phone and make phone calls. At that time, we have a lot of digital channels that just evolved. We have been running omni-channel communication and optimization for many years until two or three years ago. The company still makes a very good omni-channel communication platform. We are still very much focused on the collection side.

Since about five years ago, we have been doing customer service. We found that the integrated management benefit is not just for collections although we’re still very focused on the financial domain. We still offer product software solutions for alternative lenders and the banks. We found that you need the same type of technology. Not only can it help collection become more efficient, it can also help customer service be more efficient.

This segment is part 2 in the series : Scaling to Over $10 Million From Delaware: Ye Zhang, CEO of Katabat
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