Bootstrapping a New Age AI Services Venture: Anji Maram, CEO of CriticalRiver (Part 3)

Sramana Mitra: In this niche, did you have customer relationships?

Anji Maram: Yes. Especially in the Bay Area, there were several customers who needed this business process to be implemented. Due to my consulting experience and my prior company’s experience, we already had a trusted relationship with the industry.

These customers encouraged us to start this business because they trusted us and gave us projects and opportunities to demonstrate our capabilities. These were our stepping stones.

Sramana Mitra: I think what you’re highlighting is something really important in building any kind of services business: having an expertise. Services businesses begin with the founder’s expertise and, ideally, not just expertise, but also customer relationships, both of which you had at the beginning of this journey.

So then let’s talk about implementation. How many of these customers were you able to bring in, and what were the deal sizes you were working with?

Anji Maram: That’s a great point. I think the way you summarized it is spot on. For anyone starting a services business, having either expertise or customer relationships will make the journey smoother. The good things I’ve done in the past helped us get a good start.

Sramana Mitra: Yes, domain knowledge is invaluable. Whether you’re building a product or a service, domain knowledge is premium. You had esoteric domain knowledge, which was a gap in the market where the bulk of the consulting world wasn’t focusing. This allowed you to enter a niche where there was a need, and you had the expertise. That’s brilliant.

Anji Maram: In addition to domain knowledge, I want to highlight our long-term approach with customers. We are long-term greedy, not short-term greedy. This means we do the right things for our customers to help them in the long term. Even when I was an individual contributor as a consultant, this approach helped build strong relationships. These relationships led to initial opportunities, and when we did a good job, they expanded. The same customers would refer us to others, leading to a lot of inbound business.

Services is all about scaling. The valuation multiples for services are much lower than for products. If we don’t grow revenues faster and bring value for our efforts quickly, we’re not doing justice to our work.

Sramana Mitra: In the traditional Silicon Valley thought process, services have always been seen as second-class citizens compared to products. Even though very large services companies have been built, whether it’s Infosys, Wipro or, later on Persistence and the companies like that. It has always been second-class citizens because it’s not high enough margin, it doesn’t grow as fast, it’s people-based scaling and not intellectual property-based scaling or product-based scaling that has a lot of repeatability. So these have been the pushbacks against services businesses.

Your point is very correct that how you mitigate these issues is critical for building a high-value services company.

At the moment, we’re sitting in 2025 and having this conversation. Of course, a lot has changed, and services is going through its renaissance because of the introduction of AI into the process. But we’ll get to that in a moment.

So that’s ten years before. In the 2015-2016 time frame, you are starting this services company with the niche expertise. Take us back to that phase and help us bridge to 2025, and then we will talk about what happens in the future.

Anji Maram: When we started, our goal was to stabilize for the first two years, which we did. After that, our goal was to scale and grow fast. If a product company grows at a lower percentage of revenue, we aimed to grow five times more than a product company grows so that we are creating equal value in the company. Whether it is employees or shareholders, that’s our math. So, our goal was to increase the revenues faster. If we can grow multiple digits compared to a product company, then we are doing justice to our efforts and then growing the same value.

Sramana Mitra: Your logic at that time was what you lose in margin, you make up in velocity.

Anji Maram: Exactly. To achieve this, we realized that focusing on one ERP service would not bring us to that level. We wanted to expand horizontally and offer more services. We started with Salesforce CRM services, then moved to custom cloud applications, mobile applications, portals, and data-related applications like data warehouses and data analytics. We also found a niche in the utilities industry, helping with billing and meter applications. Our focus was on expanding offerings, which naturally led to growth.

This segment is part 3 in the series : Bootstrapping a New Age AI Services Venture: Anji Maram, CEO of CriticalRiver
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