About Founders Speak: A series of conversations with our founders on the journey they’ve had so far.
We spoke to Sreevathsa Prabhakar (Founder & CEO, Servify) about his entrepreneurial journey, their evolution from being a fulfilment business to a full-spectrum platform that solves for all after-sales inefficiencies, advice to founders starting up in 2021, and more.
You can watch the full video here. And read the full transcript below.
Vinay Rao: Hello and welcome to the Founders Speak Podcast. Founders Speak is a series of conversations with our founders where we deep dive into their success story and their process of building a company. In this episode, we have the founder of Servify, a device management company that provides services like product diagnosis, queue management, warranty, and prediction plans to its clients. In 2019 Servify was featured in the Red Herring Asia Top 100 technology company list. Extremely thrilled to be talking to Sreevathsa Prabhakar, Founder and CEO of Servify. Sree, hello, and welcome to the show.
Sreevathsa Prabhakar: Thanks Vinay. Pleasure to be here. And thanks for inviting me.
Vinay Rao: Fantastic. So Sree, as first question, would love to understand your early journey in the corporate world. And if I could backtrack a little; so you grew up in Mangalore, right? So if you can just walk us through what your growing up years in Mangalore were like it would be a great start to the conversation.
Sreevathsa Prabhakar: Sure. Okay, going back, almost 25 years, right. So, I’m from a very small city, even not in Mangalore, but near Mangalore, place called Ujire. I don’t know how many people know that place. But I can give you a reference of a temple called Dharmasthala, which is like Tirupati, for Karnataka, it’s a very, very popular temple. So very close to that place is where I lived, I studied also until my 12th. So that was the place but never, ever, at least as a child did I imagine that I would work for a corporate first, and one day start a company. But I think I always wanted to be a cricketer, maybe, but forced to be an engineer because those days you either became an engineer or a doctor. And obviously, I didn’t want to deal with blood. So engineering was the only choice or rather, the only option, I would not call it a choice then. But I think that’s how I started, did my engineering. And I got selected in the campus with BPL, which was then Apple of India, one of the largest electronics manufacturers and came to Bombay and that’s how I started my carrier. But yes, even for the first couple of years, I always thought I’ll go back and probably become a cricketer again. But I think you had to build a career in those days, I think playing or anything other than working for corporate was not a choice. And in fact, I was the first person in our family actually, at least in the direct family that worked in a corporate setup. We were all farmers mostly till then.
So of course, we had like property and everybody in the family – my dad was a lawyer, my brother was a lawyer. So they were all pursuing their practice. And I was the first one who went to work for a corporate and that’s how my journey started. So that’s a little background. But yeah, it was fun, I definitely had a lot of fun. And growing up, college days, is so different than what it is now. I think. In our days, of course, we didn’t have those gadgets, so we were playing all physical games. But I think all that has changed now, which is definitely good, but had a fantastic time growing up, enjoyed a lot, did my engineering and came to Bombay and that’s when I really realized life is not so easy being part of such a large city. So for us, Bombay was as good as a foreign country, right, coming from a small village of 3000 people and suddenly you come to Bombay; and those days, 1998, I came to Bombay. You didn’t know anything about Bombay, other than the underworld and the gang wars and all of that. So that was a time I came to Bombay and suddenly realized such a big city, you’re not an important person where in the village everybody knew everybody. So I think that also was a good beginning to, I would say, be practical, be humble and I think that was a great platform for me as an entrepreneur.
Vinay Rao: Fantastic. That’s a great segue into my next question. Sree, would love to better understand your early journey in the corporate world. I was reading this anecdotal piece about how in your first job, your first sales constituency was actually in Dharavi, Mumbai, right? And you almost ended up getting house arrested. So would love to understand this early journey in the corporate world and how that set you up for your entrepreneurial journey.
Sreevathsa Prabhakar: I will tell you one story even before that. So I joined BPL and joined in Bangalore, which was headquarters. So we had our office in a place called Lemmas. I mean, that was at Lalbagh, but that place was pretty popular. And I mean, obviously, BPL, big company, and we all joined there and came to Bangalore from a small city so I was already happy, and Bangalore was as good as a hometown, right? Because it’s Kannada and local. At that time, I didn’t even know Hindi. So, obviously, I always thought I will be in Bangalore. But after the end of two months of training, the posting was declared and I got posted in Bombay. So obviously, it was not a happy moment, but you had to start your career, so came to Bombay. But the way BPL operated those days was every branch would have a graduate engineer in-training and they will hire like, you know, youngsters, trainees, in every branch, or because the company was growing and they had this policy of hiring trainees and then put them in branches and then that’s how they will kind of scale. So I came to Bombay to a branch called Tardeo, which was where BPL originally started its business. So BPL’s registered office was that office, which was a small 300, 400 sq.ft. office, that’s the starting office, and of course, they scaled, then they expanded that office, but that was where I was kind of positioned and four of us came. So three of us, me, the only BE engineer, and then three, diploma graduates. So that’s how the BPL structure was. So you will have a GET, which is a graduate engineer trainee, and then you have a diploma trainee. That’s how they used to hire. So they will always have 1:3 ratio of GET to Diploma trainees when they hire each year and kind of place them in different branches.
So I came to Bombay, via Udyan Express. I remember, I didn’t know anything and joined and the very first day; we came to office, and we had our boss, I will not obviously name him at this moment. But first day was fun. And the second day, he said, ‘Hey, I have some work for you’, on second or third day and he sent us to Bhiwandi and that was to do some electronics, some modification because we are all engineers, right? So in a BPL monitor, where we had to kind of sit and change some component for some 5000 monitors, because that was a quality modification the factory had recommended and the stock was already laying in the warehouse. So we were sent four of us all new guys, because we were the only ones probably who were willing to do that. And when we first went obviously, we didn’t know anything about the trains, we were staying in Tardeo, which is on the western suburbs to this office in Bhiwandi, which is like another state altogether and we have to change two trains and then take a shared rickshaw and all that. We went, we realized after reaching there over here even hotel is not there nearby, water also is not available because the godown was in a very remote area and everybody carried their boxes and water bottles and we were like stuck. So we said, Okay, this is the first experience for the four of us, so it was still okay. But then we discussed amongst us saying day and night we have to sit together and complete this because 5000 or some big number means 10 days here, we can’t survive those 10 days here. And we worked I think, without even having lunch, we worked day and night. There was a small jig that we carried from our office, because you had to open the laptop or the monitor and keep it on the jig. Four of us and then did some soldering and all of that. So which is like, you know, very, very initial days, but the reason I’m telling you, I’ll tell you why. So we did that in, I think three or four days we completed and we came back.
And we came back to the office the next day and he said why did you come back? So we said, because work is finished. So he said that’s impossible. We said yes, it is we completed. So this person seemed to have problems with trainees. Somehow he was always feeling threatened that the trainees will take away his job because they’re all coming from headquarters and different places and that generally they will get positioned as the subsequent leaders in the company. I mean, these are the HQ hires. So, he was probably worried that we will become brand service managers and we will eventually uproot him. So, this we didn’t know. So, before us, I think, five years in a row, all the graduate engineer trainees left the company in a year, less than a year, and I’ll tell you, he made our lives miserable, too, obviously. So this was, I think, first experiment he did with us like sending strangers to Bhiwandi. We came back, and when we said sir, all this is done and he said, that’s impossible. Then he asked, where is the jig? So we said, we left it in the warehouse, and he screamed us to go and bring it immediately. So, these are all first things, first time in the life that’s happening. Somebody is shouting on your first job. And we said, so if it is so important, we can send the office boy to kind of get it. So the office boy also says he is’ not going to go and bring it because train is overcrowded and at that time, we said, Sir, we are engineers, we are new here. Why can’t an office boy instead. So obviously, this resulted in some shouting and that is how my career started.
So of course, I feel disappointed with all that that happened but what happened was, while we did all of that, the whole office came to support us saying you did the right thing. So that was how I started my career. And obviously, we apologized, and he apologized and all of that happened. And that’s how my job started. And I think the immediate action or a outcome of that was assignment of Dharavi to me. And that’s the reason I was giving this story. So he said you will manage Dharavi. So I didn’t know anything about Dharavi. I said, okay will manage. And that’s how my area was Dharavi and all that story of Dharavi where I got house arrested happened.
Vinay Rao: Very interesting. So, Sree great. So post your corporate stint, you started out. So your first entrepreneurial journey was not Servify, it was a company called TSS, and that also was in the after sales business. So just wanted to understand how that set you up for the Servify journey.
Sreevathsa Prabhakar: So, I think there’s one more little background or story behind this and since it’s a conversation, which is free flowing, so 2008 or 2009, I started TSS, but in2004 I almost quit my job and started a coconut business. So this was again, you know, obviously, when you are working also, you always work as if it’s your own company; and I mean you do everything that you should do for your own company right. And obviously we were working day and night; and I was unmarried and working in a different city so I had nothing else to do but to work. So, at that time, somebody said, ‘Hey, there is a coconut powder manufacturing facility that is getting on sale on a distressed sale.’ And so he came up with some math and said that this is the sourcing cost, this much needs to be sold, so on and so forth. So we did some math and it was a massive opportunity and we said we are getting everything at a very good rate and we almost started that. In fact, we did due diligence, we visited this factory somewhere close to Ratnagiri, travelled there, stayed there in the factory for two days and told my boss, I was with Samsung at that time, I said I am quitting my job and I am going to start my own company. He didn’t allow obviously and then he said take one week leave and go and understand everything, if you still want to do it, please go ahead. But we did the due diligence and almost finalised the deal. But we eventually didn’t agree on certain aspects where the old owners wanted to be part of the new journey, etc., etc. so we didn’t start. I spent a lot of money at that time you know, one week in a hotel in Ratnagiri, and then going to the factory, appointing lawyers to see the documents etc. was a big, big investment, because I didn’t have much savings and I was not earning a lot. So I think that is probably my first trigger to be an entrepreneur. 2009 I started TSS obviously; again, that entrepreneurship bug was always there and out of passion started the company. Like I said before also, I became an accidental entrepreneur; I wouldn’t have started but the trigger point was I lost my dad and obviously, you know, I wanted to go back be with family and do something on my own and things led to me starting something immediately and that’s how TSS happened. In TSS, it was more about setting up my own network, setting up my own facility, running it ourselves. So obviously, it’s in a similar space as Servify. But technology has evolved a lot, the customer expectations have changed, the products have evolved a lot, they have become smarter. So obviously, it’s a bigger opportunity that we’re going after and in the same space, but in a different manner. So it’s almost like if you have to compare Croma in the past to Amazon in the future, so that’s TSS to Servify, if you ask me, and it’s been almost 12 years now, it has been a fantastic journey and I enjoy every day of work, even today.
Vinay Rao: Fantastic. And you also had a very successful exit, right? It was acquired by B2X, which is a Germany based customer services and outsourcing company.
Sreevathsa Prabhakar: Yes. So in fact, to be honest, when I started, I didn’t know anything about startups, I didn’t know anything about the venture ecosystem, I didn’t even know what was exit. So we kept building and obviously, you know, there were times where you didn’t know how your next day will be. And money was, of course, you know, when you look at the Excel, you have contracts, you have money, but the actual money comes after 45 days. So you don’t have working capital you know; when you work for a corporate, you understand because it’s adequately capitalized, you can take decisions, but here you need actual money to also work because it’s all about cash flow, right? So I learnt a lot. But to be honest, I didn’t know anything about venture investment. And moreover, at that time, and to be very, very honest, taking money from someone is not good; that’s what we were all taught right, that you won’t take money from anybody, unless it’s like, emergency and avoid taking money from anyone. So venture capital or taking money from anyone was itself never a thought.
So we didn’t even raise any capital. But I think the business was sound on fundamentals, so obviously, it was a profitable business, whatever cash flow requirement we had, initially, it was like 50,000 is required for a month, 2 lakhs are required, 10 lakhs are required so from home you can arrange, including my wife has helped a lot. I mean, she was working so obviously that was a great support. And to an extent where, you know, not so proud but obviously, she helped by even pawning her jewelry and ensured that the company runs. So I think that’s the support that I can never forget in my life, which obviously helped me fulfil my obligations, my promise to our people. So we didn’t delay salaries to any of them because I think that was the promise that we always had. And that’s the culture that we came from, right? That you can’t run a company and not pay people, or whatever is the compliance and all of that. But those were the days, which obviously was great. And then we were scaling up and this German company wanted to come to India, and we met and the founder and I connected immediately. And they were very, very well respected. And we knew, of course, smaller industry so you know each other from a name. So I knew very well about them because even during Nokia days, they were consulting for Nokia. So I knew the company, but never knew the founder. But they reached out and I think it was fabulous first meeting where whatever I was thinking he was thinking, and he was doing, and at a much, much larger scale, obviously.
So it was almost like the you fall in love the very first time you meet. And he said we should become one company. And that’s how the journey started. I didn’t know what that one company meant. So then he said, ‘Hey, you know, let’s do a 50-50, we’ll merge’. But I think what happened was, so I didn’t know, what is a merger to be honest, appointed some lawyers and experts, but that’s when really the idea of a merger acquisition started. But within about six, nine months, of course, they were a larger corporate and while the founder had ideas of merger, but the individual executives running the company were running it like a professional company where you know, you’re just another employee. And while I still had 76% of the company, I didn’t want to be treated like an employee. So then we had a very heart to heart chat with the founder and I said, if you really want to run the company, the way you want to run, you’re free to take it, let’s price it and that’s how the exit happened. But again, fantastic exit, no regrets whatsoever. And I think more than the money that I made, I made some decent money definitely. But I think those who joined me when we were nothing in 2009, where people joined from good jobs, leaving good jobs for no salary. I mean, highest salary that I paid to people back then was like 25,000 monthly to a person was drawing like 3 lakhs a month right? But everything was on the back of equity and you will get rich one day when we make money and all of that, but I think we could achieve all of that. Lot of people made money in that deal. And I think we didn’t have any outstanding, we didn’t have tax liabilities etc., we had run the company very efficiently, because they were very foundational, fundamental items for us. So it was a good deal. But we ended up selling and that’s how I had the so called Exit, not really wanting to sell, but ended up selling.
But the beauty is the founder, he and I still are great friends. And when I told him, you know, let’s call it off, and I will do something on my own and he said, I will come in as a partner. So whatever you do, I am going to be either an investor or a partner, because this is a relationship that we continue. And that’s how he came in as an angel investor also in the next venture, which is Servify. And we are great friends even today. But from then to now learnt a lot, understood how to negotiate probably on a deal. By the way, I don’t know whether you know this, I also did a little bit of law while I was doing my engineering, so I could read agreements well, and which is what I do even today, but I think it was overall a fantastic outcome. But I think learnt a lot in the process of how do you exit. More importantly, those who supported I mean, not as investors but some people, friends and family who said you are doing very good, you take little bit of money from me, and feel it is good because I was travelling, some project is going on in Dubai, US, in India – lot many things were going on, we were running 50 service centers of Apple. So those who invested like there was a guy who invested, I think about 12 lakhs back then he got an outcome of close to three and a half crores in three years. But I think I’m extremely happy that he trusted me when I had nothing. He just trusted our genuineness, but what we also learned is those who back you, you need to take care of them. I think that’s the journey. And at the same time, I also learned to grow a business. So a lot of learnings, it’s not just the outcome / exit, which really mattered but I think how do you really take people along and grow the business where capitalizing is important, timely capitalizing, getting the right people to grow is important. So a lot of learnings I would say, which is what I think, very, very proud of. And that’s what is being used now at least at Servify I can tell you.
Vinay Rao: This is great. Such great lessons in enterprise building. Thank you, Sree, for sharing this. Fantastic. Sree it will be great if you can help me better understand the after-sales event. I understand that there are multiple touch points, there is the call centre, a customer can either walk into a physical location, or he can interact with the product like app, he can interact with the brand or capital via an app via a website via social media; there are so many avenues and so many touch points. So it’d be great if we can just help me better understand this after-sales event.
Sreevathsa Prabhakar: Sure. So I’ll probably, you know, to make it easy to understand let’s take the Amazon’s example. So what Amazon did, or is doing. So they integrated the whole ecosystem on a common platform, right? So when you’re ordering on Amazon, and this is a digital side of it, obviously, I’ll come to the other side, which is physical and offline. But think of it from a conceptual standpoint. You don’t care who the seller is, you don’t care who the logistics provider is, you’re just ordering on Amazon, some seller will sell but Amazon is controlling that experience. And then the logistics provider is delivering the product, the payment gateway; you don’t care who the payment provider is, but you’re making the transaction. So I think all of that is how an ecosystem play kind of evolved. So if you look at it historically, if you had a problem, I mean, I’m probably partly responsible being part of that ecosystem for a long, long time; service was limited to the warranty that the brands offered, at least in electronics and appliances category. So you sell a TV, you have one year of manufacturer’s warranty responsibility because legally it’s a necessity. So the mindset of most brands was, it’s an obligation that we need to manage because only 1 or 2% products fail and therefore for any issue keep one call center of that, rest everything we will manage. So it started with just having a touch point and then of course when you have personal products like a phone, etc. obviously you need a walk-in centre etc. But again that one touch point is also a necessary evil to have. That’s how it all started.
But unfortunately, while the products become smarter, and the entire ecosystem in the last 10 years, the products have evolved so much right? They have become smarter, they’re always on, the consumers are now digitally connected, there is social media, but the mindset unfortunately when it came to delivering after-sales experience never changed. There are two things – one it’s not just the manufacturer’s failure alone, there are also customer induced damages like you drop your phone. Now that’s not covered under warranty, but the customer is willing to pay and get it serviced, you need to deliver that experience, right? So it can be a profit center and you don’t think even about it.Then you have a lot of third party apps that can really kill the performance. Like there are some battery consuming apps, maybe because of that your battery is draining. Now, there customers have many interventions. So for example, if I have to give numbers, let’s say 2% of your installed base wanted support earlier, 10 years before, if you’re talking about a warranty installed base, now you may have 15% of them, 10% of them, 12% of them. It’s just multiplied by five, eight times, like because the product is always on the phone. 2009 when I was with Nokia we used to sell 5 million phones, that phone was used only for calling right other than that you will play games, probably and what else do you do? You don’t do anything else. And the phone is used hardly for one hour a day or two hours collectively, if you see.
So now can you be without a phone for even 10 minutes, even probably during this interview, we both will look our phones at least five times to check whether someone messaged. So I think for one the products have become smarter. Second, they have become delicate, because the looks and the physical appearance also are important. Then they’re always on because it’s not just a phone, but our laptop, everything is multifunctional devices, I think they can do a lot more. So a lot of this has changed, but the service hasn’t changed because the brands always thought we are manufacturers, we need to design, we need to market, we need to sell the product services, only two, four customers will come – so why do we invest in an after-sales event. So it’s a service executive’s problem. It’s not a company problem. Service was always a presentation topic nobody invested in. That’s why you don’t have an ERP for service. You don’t have a Harvard graduate, you don’t have a Stanford guy, you don’t have a IIT, IIM guy joining service. I can tell you when I started my career, South Indian engineer, even in my family gatherings when I would go attend, when I was with BPL, people would ask me what do you do? And I would say I work for BPL. They would say:’ Great, big company, very good. What do you do? Are you a software developer?’. And I would say, ‘No, I’m a service engineer. I fix TVs.’ They would look at me like I do not have a good job. Just think of it, that’s the reason why service was never a strategic priority for any brand, most brands until social media became popular, until Apple really said customer experience is a necessity, or an Amazon came into the picture.
So I think that’s the reason there are so many disparate systems, call centre does not know what is happening at the service centre, service centre doesn’t know when is the part coming, if there is a part requirement, the parts guy doesn’t know what is the customer’s wait time. So everybody operated independently and customer experience suffered. So even today, many brands still continue to work that way – if you call the call centre, it will take you five minutes to get on a call because you know, IVR will say, thank you for calling, please press one for English, two for Hindi and all that; then press 1 for TV, 2 for AC; then press again 1 for installation, 2 for repairs. And after that, after you select AC installation in English as a choice, the guy will talk to in Marathi because he is the guy who’s available presently. So that’s unfortunately still the reality and after that, he will still ask you a question, ‘Sir, tell me the TV serial number.’ Otherwise how will he get to know whether it is in warranty or not. How will you check at the back of your TV to see the TV serial number it is hung on the wall. And after that again when you call to check when the engineer will be coming, he will say that we don’t know take number of this service center and will ask you to enquire elsewhere because they are all operating as independent entities. I think that’s what needs to change. And that’s exactly what Apple did, right? Whether you go to apple.com, Apple app, Apple store, anywhere in the world, the experience across channels, across product categories, across your needs, whether it is for selling, buying, trading, warranty, service, it’s the same experience. So that’s exactly what being customer first is right. I mean, there are cases where I can give you an example, this is just about three weeks ago, there is a WhatsApp group msg that’s now being forwarded between some of our service colleagues, one brand, actually a customer escalated on Twitter saying, ‘I’ve been trying to reach out to your call centre for the last four days and the number is always busy. Somebody please reach out to me my product is not working XYZ product.’ The response to that tweet was, ‘Thank you for reaching out, please call on this number.’ And it’s the same call center number to assist you further. Just think of it and that’s the reality still.
So I’m so happy to be building this business because there is so much opportunity right. I think that’s the unfortunate part about the after sales ecosystem which is that a platform like what we have built is bringing all of that together; and again our belief was the companies will invest only when they see this from an obligation, a cost centre to a profit centre mindset. And we said, this can only happen when you start selling services. And that’s where the protection and warranty and all of that came. And just to give you some sense on this industry, it’s a $150 billion opportunity – product protection alone for electronics. And Apple runs an Apple Care business, which is close to $11 billion. So there is enough money if companies invest. So I think it’s just the approach, it’s just the platform that’s required. Of course, it’s a heavy lifting, because you need to get compliances in place because many a times when you are promising future service, it comes under insurance regulations, then you need to build the technology platform, you need to connect multiple ecosystem providers, you need to get multiple technology systems within your own company, ERP to retail system to service system, to activation system to manufacturing systems. So a lot of this heavy lifting is what is required. And that’s where we built the kind of layer that connects all of this, and brands can plug and play and start delivering that seamless experience. So that’s the background of Servify. And like I said, it’s such a large opportunity operationally intense, painful, not so sexy so that’s where the competition is also very minimal. And that’s why I think it’s a huge opportunity we are going after.
Vinay Rao: Fantastic Sree. Thank you so much for this context. So as a follow up question to what you’ve just walked me through, help me understand this evolution from being a fulfilment business, to a franchise to now a full spectrum platform that you are right? How does it solve for after sales inefficiencies?
Sreevathsa Prabhakar: Perfect. So when we started, obviously, like I said, I started with a lot of passion, and when I was working for Nokia, that was the time when the large format retail evolution happened, and I could relate to a Croma advertisement, I don’t know if you still remember, I mean, it’s long ago, probably, I’m old enough to probably give that reference also. So Croma even had these billboards that said they will help you buy the right appliance. So nobody knew what was that and then Croma came, right. So obviously, the large format retail consistent experience across multiple outlets, you don’t have to, I mean, India is a distributed country where you have 1000s of mom and pop stores. But in a Croma or in a Reliance Digital, you get that consistent experience, irrespective of the store. So almost like an Apple store experience, or a Samsung store experience.
So, I think the whole idea was why can’t we replicate that for service. So in Nokia, we had 700 odd service centres managed by 700 odd partners. Obviously, that means 700 different experiences for a customer because processes were not standardized, technology was not standard, everybody did planning differently, everybody got trained differently. The engineer in service center A didn’t have any clue about engineer in service center B. So that was the idea we hah. We said, ‘Hey, why can’t we build a consistent Croma like Reliance Retail like service chain’. And that was how TSS was born. But we soon realized that this is a massive investment, because you need to really invest in capital to get the service centre up and running but the recovery happens over a time. And of course, that’s how we got into our franchise operations because it was in that sense a satellite, but again, we had to still invest in getting the people trained. But I think the objective even back then, it was keeping customer at the centre right, because the consumer deserved that consistent, great predictable experience. And of course, when we scaled from one service centre to almost about 385 odd service centres, when I sold the company on the back of a platform that really helped us manage our own 385 locations.
So we had even control centre. In fact, Karthik (Reddy) visited our control centre back then, I think, after the acquisition, when I was with B2X, and in that time between TSS and Servify. So, in fact, we had the Uber like, you know, you remember the Uber control room, they had maps where they could see all the cars being driven in a city, so, we had something similar across all the 385 locations. We could see live service status on some 25 odd screens in our central control tower, including how the customers are being treated because they were all CCTV feeds coming to our central location. We had built all the KPIs, so at the click of a button, you could see the SLAs by service location, by product category, by brand, all of that. So there was a lot of technology that we developed ourselves to manage our own operations, but at the end of the day, my business was still dependent on number of customers that I serviced; so which meant I didn’t really care if product is falling more or less. I would kind of pray that the product fail more because I would get more money right. If more customers walked in, I could get more money, right? So that is how a fulfilment business works.
But in Servify, this is completely a platform play where my interest is aligned with that of the OEM in the truest sense where I want to reduce operational activities. Why should a customer walk into the service centre? Can I enable updates? Today, customer walks in even to know the status, not just for repairs, or call a call centre to know the status. So with technology you can eliminate all of this. So, if I run a call centre, obviously, I want more number of calls. But if I work like a brand, if I think like a brand, I want less number of customers to call the call centre because every call costs me, but also is probably the only chance to have a good experience, right? Can I consistently deliver through technology? Can I give him service options? So we said, hey, this is a business where we can’t own fulfilment, and therefore Servify is a platform that ensures the fulfilment providers do the job of fulfilment. And that’s exactly how Servify aims to change the whole game. Of course, in TSS we brought a lot of standardization, brought some technology, but that was only one company servicing for a few brands. We said – ‘Hey, to make this entire experience seamless, you have to get different fulfillers also on a common platform and that’s exactly how Servify was born. We power almost 45, 48 locations for Apple, Samsung number of locations Motorola, Xiaomi, OnePlus, multiple companies.
Now, can I as a service provider, brand says for Apple use Apple system, Samsung says for Samsung use Samsung system, for Xiaomi use Xiaomi system. How do I run the company? Which means should I use 5 systems in the service center? So there was a need to consolidate and bring that view on a common platform even for one single service provider. So that’s the opportunity that I think was very clear. And obviously the why of our business is consumers. Customers, in my opinion, deserve service experience from the brands that manufacture them. They have an obligation. I mean, OEMs have an obligation if I buy an Apple phone, I want apple to service me, if I buy a Samsung TV, I want Samsung to service me not Gafur or Thoude right. But that’s how it was earlier. So why can’t Samsung own this? Why can’t Apple own that experience? And that’s exactly what Servify is after. And I think we are well on a journey that is looking to change this.
Vinay Rao: Fantastic. Fantastic Sree. Since you referenced Apple and since you referenced all of these other brands, I just want to understand, get a sense of how have these partnerships evolved right in the context of Servify? So you started out with Apple first and then I think OnePlus happened sometime around 2016, and today you work some of the best consumer appliances and mobile brands today, right? So, I just wanted to understand how has that evolution of partnerships happened.
Sreevathsa Prabhakar: So I think when you’re genuine with your approach, of course, it’s a small industry, people almost know each other. And when you’re coming up with something where it’s a win-win for everybody. So I’ll tell you, in service, with service centres, this whole thing looks like the call centre is getting less calls, because the technology is bringing lesser calls no, it’s not. I think what we said is there is a lot of inefficiency, like in the financial services play, right? If you have more collection people because you have bad customers that you’re onboarding, obviously your cost of finance is going to go up. Ensure credit to only good quality customers, obviously you can lend at a better price, and you will not have collection challenges. So similarly in our services also, I think the whole inefficiencies really kind of increased the cost, and that’s why the OEMs and everybody who were kind of owning that whole service piece were not really ready to invest and make changes.
But what I’m trying to say is, you know, people understood there is a challenge, because they all faced it every day. Second, there is this company, which is really helping, not really kind of doing anything against us doing anything which is competing with us, like the warranty and protection business, right. We said, we will never do anything direct to consumer, we will only do enterprise, which means we will only sell an Apple Care Services, or Apple Care Plus, or an Samsung Care Plus or an OnePlus care. And we said, we will never sell anything called Servify, because consumers deserve OnePlus to sell OnePlus Care or Apple to sell Apple Care, not Servify. And I think that really again clicked. Of course, getting these big brands is not easy, because the decisions are not taken locally in many cases, and multiple teams are involved, because you’re kind of going into the sales side of it to distribute using their sales teams. Therefore, sales team has to give a go ahead, service is done at the service centre, so service teams have to really kind of participate in this. But I think when we spoke to the right folks, within these companies talking about the opportunity that they are missing, like I said, Apple Care is a let’s say $11 billion business, I will not quote the number, but it’s seems to be negligible for others, because they never really spend time to really go after that opportunity. And I think when they really see that, and when they see the potential, because service can be a profit centre, they can make enough money. So the beauty is it’s a no-investment business, right? There are no raw materials, there is no inventory. It’s a virtual business where you collect money upfront from the customer on the promise of a service of future, and you actually have money to really then deliver service. So everybody loved the idea. And it was just about how do you really make it a consistent experience that what you promise is delivered. So it takes a lot of time. So for us from lead to sales conclusion to contract, execution to going live is almost simultaneouly in some cases. That’s the reason I mean, you are an investor, obviously, you will have access to our finances. So first three years, our numbers are not great, because we were building the platform, we were building these relationships; but the moment we signed acontract and went live after integrations, the scale just became 4X. Right? I mean, year on year. So that’s what you’re seeing last year, that’s what you’re seeing this year, also.
So I think, in our kind of business, it’s just the perseverance that’s required. But I think the brands really understood the opportunity. And like I said, there is no conflict. Our interests are aligned, I think it was, in that sense, easy to convince. And the beauty is, since we are working with large brands, it also gives us land to expand opportunity. You do well in one country and you’re the only one I mean, globally, I think we are the only company that promises brand protection, and work only with the brands and not go direct. All others who kind of are big companies in this space, are direct to consumer entities, and therefore they have lot of customer acquisition costs, but they are also selling against the OEM branded plants. So obviously, those people also are considered now competition by the brands, because you’re selling against your own product. But I think that’s where brands see us as their partner in the journey and we are able to scale with them in multiple countries.
Vinay Rao: That was a great overview into how your partnerships have evolved. I was reading someplace, I think it’s in June 2020 is when Samsung tied-up with Servify to launch Samsung Care Plus that provides protection service for Samsung Galaxy smartphones. So every time I see a Samsung ad, or I see an Apple ad, I instinctively look for ‘fulfilled by Servify’ line. So I just thought I’d let you know.
Sreevathsa Prabhakar: We actually signed a contract in the beginning of I think February 2020. And we launched like I said, in our case, one there is a long sales cycle because from lead to sales to contract there are large companies, they go through a long contracting process. And then we don’t do anything, which is without technology. And then you need to get different people within the company on your side; large companies, again, have this challenge of getting the right folks because their priorities need to be aligned. So we went live on samsung.com, which is the easiest channel. So our entire business model is, wherever the product is sold, the services should be available to be sold. So it’s not just only in select places. So samsung.com was the first channel and we started in February, and I think COVID hit hard, and everything got stopped. Then we restarted in, I think, mid of May or end of May, and then started scaling to Samsung exclusive stores, and then brought it on the large format retail, like Cromas of the world, and then to third party general trade, then to Amazon. And so we have a long rollout cycle also. So it’s generally 12 months or 6 months thereafter. And that’s when you touch the full potential, which is the total TAM. So June is when we announced obviously I think Samsung announced our partnership, but we actually didn’t have the full year. So that’s the beauty of our business, right. So like last year itself, luckily, we could grow 4X, despite COVID; and this year, again, we will grow close to 3x on the back of already big, you know, reasonably big numbers. So I think that’s the beauty of our business where scale comes with these partnerships. And yeah, Samsung is one of our most prestigious partnerships like Apple and many others but yeah, fabulous engagement. We are now working with them in multiple countries, India, Middle East, Saudi, Europe, US, and also soon in Canada. So yeah, fantastic, fantastic growth with them.
Vinay Rao: Great Sree, great to know that. Sree I was actually reading someplace about this terminology called consumer happiness ecosystem. So in a couple of your previous interviews, you’ve spoken about how you over index on the TPI versus the KPI. It is not so much the KPI that you look at, but a true performance indicator that you look at; and how everything that you do at Servify needs to have a customer angle into it, both operationally as well as strategically. So I just wanted to get your thoughts around what exactly is this consumer happiness ecosystem that you have?
Sreevathsa Prabhakar: So you know, I think it’s no more a secret, it’s no more gyan only because a lot of this, I mean, for example, Zomato, right. I am a great fan of Zomato. Because even the delivery guy wants to make sure that it’s great experience that you have not just great food. So earlier the whole consumer services ecosystem was like if you eat in hotel, food was important, not the experience, right? But now with every delivery instance, one is making sure that your experience of even ordering and everything associated with it is great. So I think, coming back to our industry, logistics guy historically wouldn’t bother that over there maybe 10 customer cases would be pending, so I have to deliver the parts on-time. Parts supplier wouldn’t even bother how many you ordered and how soon you may want it. Service rating, I mean today, unfortunately, it’s still not probably fully evolved. But if your delivery experience also was bad, you will rate it as bad while the food could be good. I am saying why can’t it be an integrated experience? Why can’t every piece of the puzzle own that outcome? In our case, if there is a service incident, there is a call centre in play, there is a service engineer in play, there is a parts supplier in play, there is a logistics provider in play, there is probably a payment provider in play. Why can’t everybody be responsible for that outcome? Generally, what’s always narrowly looked is your experience. If your call centre experience is bad, then you’re only saying call centre was bad. Why can’t you say that everything didn’t happen together.
So I’ll give you one example. You call a call centre let’s say at 9AM, you have a problem your TV is not working, your laptop is not working. You call the call centre at 9AM and say, “Hey I am facing this problem. This is what is happening.’ The guy says as a response, ‘Sir, we will do one thing. Our expert is away and we will call you back at 12.’ So you say, okay, and the support guy, of course calls after three hours; let’s imagine he is very efficient. And he calls you now at 12, because you are promised that in three hours somebody will call you. 12, he calls you, he takes your complaint, he tries to understand, and he creates a ticket because now he is in conversation with you so he wants to create a ticket to solve your issue with the product. And everything happens, let’s say then, in four hours the issue gets resolved. But in the KPI that his manager and the entire company sees the SLA was four hours because he created a ticket when he was available. But as the consumer your problem was from 9AM, not from 12PM but in the system he could only enter from 12PM. So he was very happy he solved the issue in four hours. But you reached your customer after 3 hours, so customer is in fact, having a problem since 7 hours. Who looks at that? That’s TPI for me. Seven hours is the customer SLA, but in your systems, you’re still very happy and saying, ‘Hey, we did a great job and we did it within SLA.’ No you didn’t. So that’s TPI for me.
Now, think of let’s say 10 customer issues, 10 customer problems of let’s say a laptop needed 12 parts, you ordered 12 parts on your supplier, the supplier supplied 10 parts. Now if you go by order fulfilment rate, which is one of the KPIs the company tracks, 12 orders, 10 supplied. So it is 10 by 12, you’re at 90% efficiency, or close to 90%. Now, imagine those two parts are actually open on two tickets. So two customer’s cases are pending. Then you are on an 80% SLA. So the logistics or the part supplier cannot be happy saying I have done 90% of job since even after doing this much only 80% customer problems get solved. So don’t be happy with KPI, look at the TPI, which is actually order fulfilled and in full, not just order fulfilled. So I think that’s my premise of TPI. So I think that’s what we are trying to do. Everything that we do we are saying can we give it a consumer angle, because ultimately everything you are doing for your customer. You can have a lot many KPIs, but if the consumer is not impacted positively, that’s all useless. You know in one of the investor meetings rather investor conferences, one of their portfolio companies, a very popular guy, obviously I will not name, said we track some 855 KPIs. So after his presentation I went and told him in my company I track 5 KPIs; do you have that much time to track 855 KPIs? And he said that for everything there is a tracking thread. I said I don’t even track in office who comes at what time, it is discipline obviously, but if my customer is giving me an NPS of 75, everything should be good. So that’s my customer KPI. Second I see whether my sales is happening on time or whether my target is getting fulfilled. I see 4, 5 KPIs why do you have to see 855? So for me again KPI maybe 1000 of yours but TPI can be one or two.
In my opinion, everything has to be linked to the consumer and that is the consumer happiness ecosystem because if you are not positively impacting customer experience, I think all other KPIs have no meaning. I mean, today the Amazons of the world and Apples of the world, why are they rated so high on the Consumer Happiness Index? It is because they keep the consumer at the centre in every planning, right. Every customer is the starting point. So I think, for us, consumer happiness is like our starting point. So that’s the why, again, to our business, like I said, consumers deserve better experience. So if you don’t have that, then all the other things are probably vanity for me. I mean, you can keep doing a lot of stuff, but that’s the consumer happiness ecosystem we are building.
Vinay Rao: Fantastic. I think it’s very important what you said about being obsessive about true performance versus key performance, right? And keeping the customer angle at the centre of everything that we do, both strategically and operationally. I was reading someplace, there was this fantastic article I will pull it up and share it with you about how Apple and their customer first approach plays out; and the minutiae of details they look into to be able to engineer that fantastic NPS that they have. So there’s no other way that you can do it. You have to obsess over the details. And you have to obsess over true performance over key performance. Fantastic. So Sree, I also wanted to ask you about the device lifecycle itself, and interestingly, it is also represented in your logo. And when I read this, I actually doubled down on your logo design to see how it manifests as a logo element. So after sales as an ecosystem is broken, even in 2021, right, we are at the latter part of 2021 and not much has changed. So why is this ecosystem broken? And what can be done to be able to better it? If you can just walk me through it in the context of the device lifecycle itself?
Sreevathsa Prabhakar: Sure. Like I said, so for like almost 30, 40 years, companies always looked at after sales as an obligation. So it’s a serious mind shift, right? I mean, you have to get people to believe that they also can give you money. There are a few companies where sales gives you some budget and from that you need to manage service. Now, if I go back to my sponsor who is the sales guy, because my budget comes from the sales team, as a percentage of sales, I get that money to service the customer because I have an obligation to service the customer. Previously, I never collected any money from the customer, or that was not sufficient enough to build any infrastructure. But with increasing installed base, everybody has two, three products, they use it for a longer time and there are events where customer pays for the services, which is where this whole opportunity is. The mind shift is it has to look like a business. I mean, if it is a $150 billion TAM, don’t you think you need a Harvard guy or a Stanford guy or an IIT, IIM guy also looking at this as an opportunity. But unfortunately, I will give you next two days, please find the Chief Service Officer of top five companies that I will name or you choose the name of your choice, I mean, any electronics company, you’ll not find a person, that person doesn’t exist.
Vinay Rao: That title does not exist.
Sreevathsa Prabhakar: No. Maximum, you’ll find a VP of Service who will report into an SVP of sales. That person he doesn’t have any business plan, he has cost budget. In many companies even today. So he’s given a budget to manage, therefore, to change that, you have to make after sales service, a profit centre. To do that, you have to bring efficiency and you have to deliver experience where the customers will pay you. So to do that, it takes a while. And Apple has been able to do because from day one, they said we will charge you money but we’ll give you that experience. So they are collecting money. So I think it’s just a matter of time. Obviously, you know, it will still take a lot of time because a lot of companies even today think more from a trading standpoint that we made product, we sell – that’s our business. Once it is sold two, three customers will come that we will manage. It is not like they are not one, or two. Apple, when they sell a product they know every customer. And then they want to influence the experience till that customer buys the next product. That’s what Apple ID is all about. So our business in some sense is also can we be that Apple ID, which actually enhances experience between the brand and the consumer, where everything else otherwise is owned by the third parties.
I mean, when you go to Amazon, you’re still buying an iPhone, right? You’re not buying an Amazon iPhone; or with a Samsung TV, you’re buying a Samsung TV, you are not buying a Croma Samsung TV, right? So why don’t brands own that experience of sales to service to extended warranty to exchange to upgrade to buy now pay later. Today none of them are really participating. So I think our belief is consumers deserve an experience that will only happen when OEMs put their skin in the game. And warranty is the starting point where we said to even do that, let’s bring that approach of profit centre mindset to do that this is a good opportunity, because if Apple could build a $11-billion-dollar warranty business, why not a Samsung, why not an LG, why not a Whirlpool, why not a Xiaomi. So I think it’s slow change obviously, till the moment this becomes a billion dollar business. So today at Apple, the person who leads the Apple Care business is as important as the guy who leads the iPhone business because it’s big enough. And I can tell you the Head of Service at Apple is a Harvard graduate and he was managing something else before. The lady who left Apple Care who was leading or is today CEO of Airbnb. So the head of care or service business was never looked like an obligation managing guy. That’s how many companies are still thinking and that’s why their experience still sucks. And I would say maybe in another few years but it will change because social media and customers demand and today it’s easy to get exposed if you’re not changed.
Vinay Rao: Correct absolutely. Very well put. I think it’s very easy for a brand to be taken apart, to be taken to the cleaners on social media if their customer experience is sub optimal. So brands have to factor this when it comes to customer service and after sales service right?
Sreevathsa Prabhakar: Yes.
Vinay Rao: Absolutely Sree. Fantastic. Sree so my next question is around narratives, right, specifically around the customer side narrative. So the manufacturer side narrative is very clear. Now I want to understand from a customer side outreach and narrative standpoint, how exactly does this B2B2C competence work in the context of Servify?
Sreevathsa Prabhakar: So for us, like I said customers need not know us, but first is making that awareness that this kind of service is now available , and brands are kind of owning or willing to own that experience for you – that is what B2B2C is all about. So we said we have to white label because consumers, like I said, you’re going to Amazon and buying an iPhone, not an Amazon iPhone. So obviously, when you want service also, you want service from an Apple and not from an Apples partner who says I am different. So we said, it’s time to bring that ownership. So I mean, why should the consumer think who’s this Servify now? But yes, there could be a seller on record, like Croma is selling so we will become a brand or we probably are in some sense today, a little small brand, but at the end of the day, it is still Apple, it is still Samsung, it’s still LG, right?
Vinay Rao: On the face of it, correct.
Sreevathsa Prabhakar: Correct. So for us, therefore, we are still a B2B2C company. And secondly, why we are still a B2B2C is because we don’t sell everything direct to consumer as Servify, number one. Number two, we don’t do anything that the OEMs don’t approve off. And that’s where, you know, our confidence and our partnership also grow stronger because brands know that these I mean, we are like Foxconn. We are like the Foxconn for Apple. So Apple decide that would be chipset, what would be camera and customer buy. My work is I will make the phone and give it to you, assure quality and I will make sure that there is no replacement to me, at least in scale, and the quality and the pricing and all of that. So I think that’s exactly how they have to kind of optimize the manufacturing, we want to optimize this whole services play by technology and be asset light. And that’s probably the difference – our assets are technology assets, therefore it is asset light from a physical asset standpoint. So services play for me is B2B2C is the way to go because you can scale. Also, our cost of acquisition is zero.
Today, Apple customer goes to Apple store for after sales service. I don’t have to sell or advertise, right. It means he knows Apple and brands are already spending money on customer acquisition. It’s a channel which needs to be taken care of. So there is a commission structure for the channel. So for us B2B2C allows us to scale significantly because the brand is now pushing across all their width of distribution. Brand is also taking ownership of the service experience. So obviously, there is a bigger, you know, skin in the game here. And that’s what helps us scale. So we said B2B2C is the way to go, number one, number two, not just from a scale perspective, from an efficiency because if Apple cannot supply parts at the best possible price, no third party can be, of course duplicate may come but not to don’t want to do duplicate. So obviously, therefore, you have to work with the principal again. So I think in our sense, it’s the inefficiency, which is what is being distributed as a profit or savings across everybody else, and the consumer gets benefit out of it. And since you’re using OEMs, you’re able to scale. So then, therefore, it’s a massive scale opportunity, but with a very good unit economics, which is a win win for everybody, because you’re making big money, even and, you know, people ask us, you are an asset light company, you’re not a SaaS platform, but you don’t own any assets, and you don’t really have any operations people, how do you really then make money on the back of the platform, then your gross margin should be 80%. 90%. And so we say no no, we are like Uber, we are like AWS. So we will own the experience, therefore we will control the whole experience. So we will coordinate with Samsung, Apple with their service centres with their call centres to ensure great customer experience, but we don’t run any of them. But because we are participating in a TAM of 150 million, even if we do $10 billion tomorrow on a 30% gross margin it’s good enough, rather than being only a SaaS provider and maximum have 100 million dollars’ TAM because nobody pays for software right globally unless it’s like a real need.
Vinay Rao: Unless it’s premium.
Sreevathsa Prabhakar: Yeah, correct. So we said what is the point in building a $100 million company with $80 million profit and 80% Gross Margin when you have an opportunity to build the $10 billion company with probably $5 billion profit or a $4 billion profit. So I think that’s where our B2B2C play really comes in. I mean, we had a choice to become only a SaaS provider, but we said no, we want to be a B2B2C Company.
Vinay Rao: Fantastic. Great. This is great context. Sree, my next question is around your fundraise journey itself. So your first round of funding was in April 2016. Blume be next Burka BMTM, and amongst others on the cap table, and sometime in 2020 is when you raised your Series C round. Now we are on the cusp of series D right? Would love to you know better understand this fundraise journey itself that you’ve been a part of at Servify.
Sreevathsa Prabhakar: Sure. So I think these are again, like I said, learnings every day, right? So one of the things that I learned is founders’ almost full time job is also fundraising. So I think as you scale that takes a lot of your time but I think that’s the process that you have to enjoy. And I think we first raised with Blume obviously I think Karthik was somebody who just kind of, of course, no questions asked is the wrong word, but in spirit, no questions asked investment he made. I think he really trusted our gut belief, our story and said I’m investing, I’m coming in. So that’s the trust that has continued. And like I’ve said many times Karthik is like my cofounder because I’m a single founder, and not for any reasons that I don’t believe in, but I become emotional when I talk about it because you know, running a company as a single founder is also not easy when you want to scale. And you have believers who get other believers in and I think Karthik is one such who got introduced me to Beenext. So again, a very strong supporter till date. Then came Anand again. Anand was introduced by Karthik during Blume Day and Anand came in we met at a restaurant outside after Blume Day, and Anand signed up. And Anand has been a massive, massive supporter ever since. But again, at the same time, we also had a lot of rejections. I mean, 90% of our conversations when I have with investors, they don’t get it. They are like I mean, with due respect, I think it’s not their fault. They don’t know how to categorize us, right? Are you a SaaS company, or are you a big commerce company? Are you a B2B2C company, I mean, where do we really bucket you, are you an inshore tech? Are you this, are you that; so I think many a times it’s confusing where to bucket us and therefore how do you see this company. Is the opportunity real? You’re talking about Samsung and Apple and HP, you are talking about so many big companies; is the market big enough, can you scale outside India; we want to see traction outside India. Currently 40% of our revenue is coming from international markets and next year it would be 80%, but people are interested to see traction. Yes, which is true, because a lot of companies I think don’t scale outside India.
Fourth, you’re saying all this which is fine, but there is a concentration risk. in your company; 80% of the revenue is coming from Apple and Samsung and future revenue of yours in next three years is from HP. Yes, they are the market leaders, obviously. 80% of the value of smartphones today go to Samsung and Apple, who else is there? We should not be talking in numbers, but in value. So if you have 80% of the markets, with them in terms of value, obviously your business will be in alignment to that. So concentration risk. I mean people ask questions and reject, but it’s okay. I think that’s a journey. And as they say, and I think this is true with most investors and it’s not their fault right. I mean obviously they have a responsibility to also give back to their believers and many of them came back in this round to again discuss with who passed. I mean I can tell you three years back when we said we will do 100 million dollars in two years as revenue. People said you are doing 6 million dollars and you’re telling in two years you will become 100 million dollars, it’s crazy. And today we are at $110 million ARR and this year we’ll do with close to $100 million revenue. So those who believe they’re coming back say because they say we want to see traction. Now see traction. Please don’t think that I’m saying this with arrogance. No, not at all. I’m saying this is also learnings for me where probably I need to sell better. I need to also show that confidence. When I explained that this is a business opportunity to go after, but at the same time, like today also, when we are talking about Series D, there are a lot of guys who do PE investments. Therefore they still see us from a PE lens. Your gross margin is only 30%. Yes sir, but see the TAM, there is $150 billion TAM. In the next three years I will be at a half a billion dollar company revenue. Today my order book is $1 billion plus based on the contracts I have signed. So I am no less than a SaaS company. At the end of the day see what is my operating margin. I am still getting 20% EBITDA, and it’s free cash flow because all the money that I collect from customer is upfront in advance, and I have an obligation to service them 12 months later. So it’s free cash flow.
So almost 98% of the money I collect is free cash flow, 2% of mine is spent on giving laptop to people. So how is it any different from a SaaS kind of play, you know, at least behaviorally. So I think the challenge is that but again, these are learnings. And there are a lot of people who have believed in this round also. So hopefully we should be able to conclude soon and officially announce it. But I think we’ve come a long way for sure. There are a lot of supporters. There are times where sometimes, we of course, you know, between us we speak and say that our investors don’t even ask us questions. I mean, of course we have a reporting requirement monthly, weekly etc., but it’s all happening on WhatsApp, right when Karthik says, how is this month looking like and that too randomly sometime at two in the night. And I respond to him and say well, great this that. But that’s the beauty of building together. And I think I am fortunate, I’m super, super fortunate to have my investors as if they are my cofounders, they’re part of my family. I think I can pick up the phone and explain any kind of news without hesitation to any of them. That’s the kind of relationship that I’ve been able to establish. And I think it’s just pure luck, not just them their entire team. I mean, Vinay, I can tell you today we are talking but maybe we have not spoken before; but I can tell you, I can pick up the phone and speak to Ashish anytime. Sanjay I can speak to him any time and there are many other people. Rohan is there, he is not even managing our account now. So I think that’s the kind of relationship we have built and I mean, this is just pure luck and coincidence that you have in your investors who are as good as your own family.
Vinay Rao: Fantastic. I’m sure it would. Beautifully put Sree. So Sree my next question is around so you’ve witnessed this massive growth over the last one and a half, two years. And with this kind of growth also comes expansion. And in your context, expansion is expanding into other key geographies, for instance, I was reading this live event article sometime back about how a key focus area for you is recruitment of your global team and making various key hires in all of these different defined geographies. So just wanted to gather your thoughts around how you’re looking at global growth and expansion?
Sreevathsa Prabhakar: I think to truly become a global company, you need to have business globally, you need to have the right people running it globally. I think these are two very fundamental elements one has to focus. So obviously, I think like all of the senior hires, I spend time personally, to ensure they’re the right fits in the company. Because culture is something that you can’t compromise. And especially when you’re scaling and you’re growing at the pace that we are growing, and which is like 3x 4x kind of growth year on year, you will make mistakes. And you know, we are all human beings, right? So even we’ve had bad hires, but that cost of bad hire can really pull you down, which is where I think, you know, I want to make sure that we hire the right people. But at the same time, you have a business plan. Now, let’s say Turkey is a market where we want to do business from next year, let’s say, if I don’t start looking at people for Turkey, now, I can’t do that once I get the company licence. I want to see now because I know that it will take six months and that person will also have three months’ notice. So I think, therefore, hiring is also an investment. In fact, if you see in our operating cost, which of course we’ll turn profitable in another few couple of months, or maybe yes, January, February, so if we had not hired some seniors, we would have been already profitable. But we said that’s an investment I mean, globally.
Our business will start maybe in the next six months, but we have hired people 5 months in advance because it’s an investment you need to make. Not only that, second is, you know, in our kind of business where compliance and everything is also key, like the insurance, intermediary licences, etc., because we run insurance enabled businesses. So you need to also apply for those licences, for which you need a person who has spent some time in the company. So you have to also hire people well before you apply for all of this. So I think that’s something that we don’t compromise. And I’m lucky that we’ve got some of the best people; like we recently hired our CFO which we haven’t announced publicly yet. He comes with 16 years of group CFO experience of public market companies, he was a group CFO at Jubilant Pharma. Before that, he was a group CFO at Yatra, who took Yatra public on NASDAQ. Before that, he was a group CFO with Hindware. Fantastic guy, seven years before that, with Deutsche Bank in the US, New York, managing mergers and acquisitions for them. So great experience, he’s got a single KPI objective – to take company public, which means he needs to do so much more before we are ready to go public, whether it is reporting compliance, whether it is that discipline, getting the right teams to ensure all those automation of finance processes, etc. So that’s investment. I mean, people could have said, why do you need a CFO when you already have somebody managing CFO finance function very well.
So we said no, no, no, we need a specialist and therefore he’s onboarded. So I think, for me, many companies fail to hire the right people at the right time, which is ultimately resulting in their, you know, kind of a lost opportunity of growth. So I think that’s something that we don’t want to do, number one. Number two, so that’s again linked to our global growth ambitions; like I said, so for us one is international growth, to become a truly global company. Second is also category expansion. So from smartphones, we’ve already moved to all the personal category products, which is laptops, tablets, phones, watches and everything. We have also started appliances and electronics; of course, in India, we are doing this only for a couple of brands, but in the US we are doing for multiple brands. We will grow by category also which is beyond smartphones, and we are also doing for fitness equipment and similar categories, which is important for consumers. Like health is an important priority for consumers right. So, obviously, therefore, fitness equipment becomes a big priority for us too. And maybe in the future, even electric vehicles, which are nothing but big iPhones with more sensors. So, obviously, therefore, growth when I say it has to come from category expansion, market expansion; and all of this can be achieved with the right people, and therefore, expansion of your leadership capability, which is in terms of people.
Vinay Rao: Fantastic. Also, because you spoke about growth plans you associate it with growing massively. So when an org reaches a certain scale, right, and when it reaches a certain degree of growth maturity, so how does an org cope with all of the trappings and travails that are associated with this. In the context of the founder, herself or himself what does that maturity curve look like? What is the founder to CEO journey like for instance, how do you mature?
Sreevathsa Prabhakar: Fantastic question, Vinay. In fact, this is something that I experienced every day. In fact, in the company, you can ask all our people, this I have told probably even in almost all the town halls, and including in board meetings, and you can also check with Karthik, the day I find a better CEO, I will step down and report to him. That’s the culture we want to set up. Because it’s a journey for me and I believe there are better CEOs than me, right? Obviously, you can have egos and say that you are the best, but no, you’re not the superstar, you will be good at something no doubt. But for me, the entire leadership team, in fact, even our WhatsApp group, and our email group, all of them are called as Chief Vision Officers. They all have functional responsibility, but they all have to be responsible for the overall vision of the company. So he is CEO but he’s the chief vision officer. So for me, it’s a great journey. I mean, I’m still not fully a CEO if you asked me, I’m still a founder, who is learning to be a CEO. That’s the reason even in my designations, my business cards, you’ll only see me as founder, not as founder and CEO, but I think that’s the journey.
So for me, that journey in fact, I have kind of codified that and this is something that I keep telling our people also. So when you start your career, you need to have a lot of IQ that brings success to you because you’re going to be an independent contributor who will one day become a small manager, and then from manager to a leader and all that journey, right? But IQ is good enough. But when you become a manager from an independent contributor, and you’re responsible for your team, function department, all of that you need EQ, which is emotional quotient, so you can have a lesser IQ, but have extremely high EQ. But for me, my codification of a founder to a CEO is applicable probably to all leaders who are responsible for beyond their functional responsibility. Which means, they are responsible for society, responsible for sustainability, government, multiple people. So for me, that means can I step down from my ego and have dinner with my security guard? If I don’t have that maturity, then I have not arrived. And I think that’s for me the day when we all have matured.
So I think, for me, therefore, it’s a journey. But imagine, can I handle failures? I think that’s also something as a founder, you can be emotional and say that, I can cry, you can write a story saying why I failed and all of that. But as a CEO, you can’t, so obviously, can you face the world again, as a failed founder? I mean, there is no harm in it, but I’m saying then you have not become a CEO, you’re still a founder. And it’s not bad too, I think it’s all perspectives. But for me to be a CEO, can you face the public market, even on a failed quarter? I don’t know today if I’m ready. I can probably talk to Karthik and I can tell him bad news also, but I don’t know if I’m able to go and tell the public market in front of analysts on a public platform. So I think it’s an important journey for every founder and that’s the reason I have so much respect for Deepinder or all those people, right, who have taken company public. And in fact, this is not a conversation I heard from Swiggy founder himself but one of the investment bankers, I think, who worked with them, and they made a decision that they will not go public soon. The reason is, and this is one of the learnings for probably many founders, you know, because everybody today talks about going public, right? That’s the new fashion, style everybody wants to go public. In fact, Swiggy said we don’t want to go because there is already overvaluation relative to Zomato. Obviously, not overvaluation but people are gung ho about it, but they have still not seen the real outcome. And he’s saying, if the market is getting split between two similar sized companies, where we still don’t know the benchmark valuation after probably six months, eight months, nine months. And secondly, Zomato now cannot do as many experiments now, whereas Swiggy can continue to experiment with investor money. They can do a lot of new things, and they can fail, but Zomato cannot, suddenly your hands are tied.
So whereas Swiggy probably has three years of some new innovative plans, so they said, as long as we’re able to raise enough capital from private market, we don’t need to go public. It’s not a fashion statement that I am public Now being real is public. And that’s where I feel he’s really become a CEO, though he’s not ready to probably face the public market yet from a sentiment standpoint, but he’s the right CEO from a founder standpoint. So I think, again, philosophical topics all.
Vinay Rao: No, no very well put, very interesting this dichotomy between founder and CEO and what makes a founder and what makes a CEO. I think you should definitely codify this and share it on the AKK group with all founders.
Sreevathsa Prabhakar: Will do.
Vinay Rao: Fantastic Sree. Sree my last two questions for the day you are a serial entrepreneur so I just wanted to gather your thoughts I would love to know so what have been your major learnings from your two stints as an entrepreneur? Like, if you had to offer this advice to somebody who’s just starting out in 2021 what would these learnings be from your two stints as an entrepreneur?
Sreevathsa Prabhakar: Okay, I think this is an easy one which is what I tell our people also many people who come to me, and be genuine if you really want to be a founder. It’s not for others that you’re doing right it’s not a fashion. It’s not a statement that founder title makes you popular. So I think one key foundational element is, look at the why, why are you doing it? It’s not the what and how that matters. So I think everything has to start with why. And there is a beautiful Ted Talk of Simon Sinek on the power of why and the Golden Triangle. So I think that’s a good, I would say, starting point, if one has to really understand what is the meaning of the why. So for me, unless you are really believing in what you’re doing, or what you’re going to do will solve a problem, or it’s something worth pursuing don’t do it, don’t do it for others, don’t do it halfhearted and when you’re there, just get into it. So that’s why number one, you know, kind of, I would say guidance.
Second is, don’t go after valuation. I think valuation is just an outcome, if you really build value valuation will follow. So if you’re going after valuation, and then trying to find what is the value I will deliver, I can tell you, I mean, there are companies who have gone that route and kind of shut down also. So I think if you’re really delivering value, valuation will be an outcome. And you will get if not, the day you want but definitely the day it really deserves to get. So I think, be real, go after the why and second, forget about the valuation, that’s a market validation, if you are confident and delivering value market will respect and respond. So I think therefore don’t build companies for valuation.
Vinay Rao: Correct. Build value and valuation will follow.
Sreevathsa Prabhakar: Absolutely. It has to.
Vinay Rao: Very well put. Sree my last question for the day, and it’s been a fantastic conversation through and through, what are your three, five and ten year goals for Servify?
Sreevathsa Prabhakar: Wow, that’s really long. Okay, three years, I can tell you five, and ten probably, I will retire. So three years that’s also the advantage of being an entrepreneur with some exit, right. So for me, my financial goals are not goals any longer. I mean, it’s more important that I live life in a nice manner. I mean, if I have to put a number, what is the money that will make you happy, your money will never make you happy. But as long as you are living a happy life, I have a nice car, nice dress I wear, nice office I have, nice home I have, what else do you need? You have good health, you need to focus probably on all these things, which matter. So I think, therefore, for me, there are no real big financial goals, to be honest. But from a three-year standpoint, I can answer – I really, really want to take this company public. I think the real validation is when public believes in your company. And I think it’s also a responsibility you have for your believers where, you know, they need to get an exit. So I think that’s my immediate priority. Maybe three years is long it will be earlier than that. But I think we are doing all the preparations and we will do it the right time. Again, not because we want to do it for others, I think no pressure there. So it’s not a validation we’re looking for from any private party, but I think for our own selves, we are doing that.
So that’s probably three years I mean, less than three years that’s a short term goal to say. Five years, if you ask me, frankly I mean, except for series D investor conversations, we’ve got a five-year plan but I think five years in current context where you don’t know what’s going to happen in the next three months, I think is too long. But still, I can tell you, we hopefully will be a decacon if not anything from a classification standpoint. Again, I’m not like I said, valuation conscious. But from our revenue, if you are doing about a billion plus five years, I think we should touch a billion dollars if we continue the growth and the scale and the contract and the promises that we have from the brands. In fact, I’m lucky also that we have one of the largest global OEMs coming on our cap table in this round. So which is kind of also giving us visibility to a much bigger pipe. So I think in the next five years, we can be a proud Indian global company where people also know us like ‘Intel Inside’; if people can say ‘Powered by Servify’; so I think that’s the goal. 10 years I want to still be happy and young and healthy. So, I think that’s the personal goal I have in 10 years.
Vinay Rao: In fact, my only recommendation as a marketer is you should start thinking about the sonic branding that will accompany the powered by Servify tagline. Like how Intel has its own Jingle. Fantastic Sree on that note thank you so much. This has been a fantastic conversation and I wish you and Servify all the very best for all of your 3, 5 and 10 year goals.
Sreevathsa Prabhakar: Thank you very much. Great talking to you Vinay. Thanks and we’ll stay in touch. Bye-bye. Thanks again.