By improving its technology and mobile platform, the online local services company Sulekha.com aims to touch a U.S. $100 million run rate by 2017 and help about half a million businesses capture customers at a click
For Satya Prabhakar, entrepreneurship is like sailing on high seas, where one navigates his way through unchartered territories and goes through unpredictable situations. The way he built his organisation to what it is today is by learning lessons on increasing productivity and time management, and managing people and customers.
While Sulekha.com (Sulekha) was incorporated in the U.S. in 2002, Prabhakar started the India operations in 2007. The company was initially conceived as the digital platform for Indians to interact (through content sharing) and transact (classified and local services) with each other. Prabhakar and his team decided that a brand cannot stand for so many things and hence, decided to remove things not critical to its future and sharpen its focus on local business services alone.
Since then, the company has seen good growth. “Currently, we get a need requirement every 1.7 seconds,” states a beaming Prabhakar. Broadly, it has eight different categories of services with 800 leaf note categories, which include home and office services, healthcare, lifestyle, coaching and education. In each of these categories, the company gets over 20 million visits per month. It currently has 75,000 SME customers, four million business listings, more than 1,500 advertising brand customer base, 15 offices in India and U.S., over 1,300 employees and four global investors; GIC (Singapore), Norwest Venture Partners, Mitsui (Tokyo) and IMG (New York).
Understanding the fragments
The local services business is a U.S. $200 billion dollar opportunity and the action is shifting quickly from offline to online. “However, this market is less than three per cent currently,” states Prabhakar. These days, local services companies put together spend about U.S. $2 billion to US $3 billion to promote their services, which is expected to increase further.
Sulekha’s brand building strategy is largely through the online medium. However, going forward it is also going to develop an offline strategy so that it is able to reach out to those who are not necessarily online all the time. Clearly, the company operates in a fragmented sector. And bringing clarity in its process happens with extraordinary difficulty, as per Prabhakar’s own admission. He explains this with an example. “This morning Amazon had a front page advertisement for a Micromax 40 inch television. This product is sourced from one vendor. The same advertisement ran in Mumbai, Chennai and Kolkata. That Micromax TV can be purchased by anyone across the county and there is value for that. But, if you are looking for a yoga instructor in Anna Nagar, the fact that we have a yoga instructor in Adyar is of no value to the user. If you are looking for a physiotherapist for an aging uncle, a physiotherapist specialising in children in that locality is of no use. There lies the difficulty of this business. Every cell is a market place by itself. We don’t have a Micromax TV that appeals to the entire city and that’s the problem,” explains Prabhakar. This apart, it has to work constantly on balancing the load of business opportunities with the users. “While it is complex and difficult, conquering the complexity also helps us erect an entry barrier,” admits he. Its strong algorithm and backend process has helped it operate with confidence in this highly fragmented market place.
As a result, the company has grown by about 70 per cent on a yearly basis as far as the need capture is concerned (needs from the users captured) and has witnessed an annual revenue growth of around 25 per cent. The main growth drivers for its business are macroeconomic: growth in the population of those connected, mobile penetration and the comfort that people have in transacting online. It derives its revenue from campaign placements by small business services, for which it typically charges Rs.10,000 to Rs.12,000 per campaign.
The business side of it
It has a customer base of over 75,000 SMBs and this segment is the lifeline of the organisation. “Mobile phone is their friend. Most of the leads are sent to them on their mobile phone despite them having an online account, because they are more comfortable with this medium,” states Prabhakar. For a segment which does not have a brand or a retail presence, Sulekha identifies a local user, especially those who have an immediate need for these businesses. Over the next few years, the company aims to fine tune its algorithm further so that it will result in better quantity, quality and quickness with which it secures leads. ”We also help them promote their business by getting reviews and providing insights on a quarterly basis about what is happening in their particular segment,” says Prabhakar. He adds, “No doubt this is an unglamourous business, but the opportunity is huge, as we are taking about eight million micro-businesses.”
Its users’ age profile is between 25 years to 40 years and is equally split between men and women. “We don’t appeal to those who are under 20 years as these are things that a household owner needs,” clarifies Prabhakar.
As far as competition goes, anytime someone wants to search for anything local the source of that information is its competition. “However, our USP is that we get exactly what you need. If you tell me, I am looking for an Indigo car at 4 PM in the evening, Sulekha gets it for you. There is a big difference between searching, getting it and telling what you need, and someone getting it for you,” opines he.
People, the asset
“Creating an environment where people are energised is very important to our organisation,” says Prabhakar. There is a concept called discretionary effort where an employee has some amount of extra time to spare, apart from the time he has to spend in doing justice to his job. “The ability to unlock the mystery of how to tap that discretionary effort where the person wants to give it back to the organisation is a challenge,” adds the founder.
Once this is done, how does the organisation apply this human capital? “That is where the senior management comes to play. They have to channelise this energy so that people are motivated to identify opportunities,” says Prabhakar. He believes that the knowledge workers are motivated by different set of things. One, they have to believe that what they are doing is truly important to the company. Second, they must believe that they are capable of conquering the challenge that is posed to them. It is within their realm of possibility. Third, they have the autonomy to execute and make decisions. “It is not just the senior management’s role, but the team has to give back their ideas to keep the organisation growing, especially in a business like ours” opines he.
This apart, motivating its people to learn is another big challenge the company faces. According to the founder, in this industry, you become obsolete every two to three years. So you always have to be learning.
The path ahead
The company recently raised Rs 175 crore from GIC, the sovereign wealth fund of Singapore, and existing investor Norwest Venture Partners, which it aims to use to expand its platform, invest in technology and branding. One of the major technological shifts that is happening is the focus on mobile application building, which calls for different skill sets. “We need to provide an app for the users, for business and for our own sales people. The entire app development process is one expense. We are also seeing a shift from the hosted platform to cloud,” states Prabhakar.
It plans to expand its sales and execute its mobile strategy bang on. “In 2017, we want three out of four transactions to happen only through the app,” states he. Currently, 45 per cent of its transactions take place through this platform. By stepping up its technology and mobile application platform, the company is aiming to touch a U.S. $100 million run rate by 2017 and serve about half a million businesses.
FIVE CRITICAL SUCCESS FACTORS FOR AN ONLINE VENTURE
A healthy mix of fear and fearlessness
Ability to tap into the discretionary effort of employees
People or leaders throw long shadows. You influence people a lot and the best way to influence people is through example.
An industry such as ours goes through inflection points. Ability to catch those inflection points and continuously reengineering ourselves is quite important.
The ability to raise and spend capital well.