Bootstrapping a Technology Product Company from India: Sachin Bhatia, Founder of Ameyo (Part 5)

Sramana Mitra: The thing that strikes me from a methodology point of view is that you didn’t validate the second business. You had validated the first business that was scaling, but you didn’t validate the second business, but you tried to grow it.

Sachin Bhatia: Yes, it was too fast. I knew that the product validation was there. I remember the beginning of this company. It had been growing positively. The moment that we sold to our customers, we were making money. It was a bit of a hurry on our part when we were doing our planning.

What we didn’t realize was the cost of customer acquisition. You actually pay upfront to acquire the customer. It was killing us. We were acquiring customers and we were unhappy about it as it would take about a year to recover it.

What is the customer churn? All these models on churn happened much later. After a year, the business went up to about half a million ARR. This was okay, but we were still burning money on the product. We were not used to it.

The other big thing was when we cracked the multi-million-dollar deal with HDFC bank. We went back to the drawing board and asked ourselves, “What are we trying to do?” Here is a business and a market that we know well.

We didn’t pick up million-dollar deals in that market and here is a business that we are trying to create because it is considered sexy. It would eventually pay off in valuation, but here is a million-dollar profit business.

The other trigger that happened was the leadership of our core business did not do well. The VP of Sales we’d hired was not successful. We said, “There are too many moving pieces right now. We have our core business which is getting large deals. There is something there. The VP of sales is failing and the core team in our first business is trying to increase a $500,000 ARR business into a $1 million ARR business. It’s just not making logical sense.”

By 2016 and 2017 after two years of business, we said, “We’ll come back and focus on the mid to large businesses and emerging deals and build the sales leadership again.” That was when I moved back into this business. That’s the third phase of our growth. Revenue grew by small percentage points for the next two years. Since 2017, we have grown by over 30%.

Sramana Mitra: Did the million-dollar trend continue?

Sachin Bhatia: The one million deal didn’t happen, but we still got four or five deals which are worth a quarter-million dollars a year. 

Sramana Mitra: You went back to your old business. What did you do to the customers that you had acquired for the new product in the US? Did you keep them?

Sachin Bhatia: We continued to service them but we stopped new acquisitions. Some of the customers gradually churn. We were able to move some of them on the Ameyo platform because it was still a calling solution on the cloud.

It was a hard burn, but I think it was a rational decision that if you know how to track enterprises, you can continue cracking the market and still have a lot of headroom in that market. In March 2020, we did $1.5 million in revenue.

Another big thing that we have been able to do in the last three years is that 50% of our business is recurring. Imagine that you are growing 30% year on year and shifting your revenue from fixed to recurring. That’s an incredible feat to do. This came naturally to us.

We once got an inbound email from Mongolia. This email said that this is the CPO of the largest telecom company in India. It was unreal, so we got on a call with him. We realized that he was the real deal. I tell my guys to figure out how to get to Mongolia. In ten days, we were in front of the customer.

From that time until now, we have done about $1.5 million worth of business in Mongolia. We did business with the largest bank, the largest Telco, and now the second largest telco in the country. These stories are not catching on. There is enough market in the emerging market enterprise.  

This segment is part 5 in the series : Bootstrapping a Technology Product Company from India: Sachin Bhatia, Founder of Ameyo
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