Spreading Out to scale

Spreading Out to scale

While its India market strategy moves into a phase of consolidation in the cloud telephony segment, Knowlarity Communications, wants to extend its focus to the South-East Asian markets. In five years, it aims to sign up 1,00,000 businesses and establish a global presence


If there was one word to describe Ambarish Gupta, co-founder of Knowlarity Communications, in his pre-entrepreneurship days, it would be globetrotter. After an undergraduate degree from IIT-Kanpur, Gupta, whose family runs a business, decided to travel and live across Europe, Australia and the U.S., before pursuing an MBA at the Carnegie Mellon University. He followed this with a brief stint as a strategy consultant at McKinsey & Co. and in 2009 he decided to plunge into entrepreneurship in India.

“There were two triggers to founding Knowlarity,” he says, “One, there was a visible shift in power from developed to emerging economies and two, between 2004 and 2010, smartphone penetration had increased multi-fold and accordingly consumer telephony was on the rise,” he says while adding, “The next step in this direction was to leverage on enterprise telephony and I wanted to be a first mover in this space,” he admits. While he initially co-founded Knowlarity with his IIT-Kanpur mate Pallav Pandey, in May 2013, Pandey stepped down from his position as the COO, to pursue other interests.

Today, Knowlarity provides voice application products to small and medium enterprises and, currently, it offers four products to its customers; SuperReceptionist, Smart IVR, SuperConferece and SuperFax. The first product offers a host of features such as automatic voice response, real-time analytics and voicemail services and is priced at Rs. 1,000 to Rs. 6,000 per month. Smart IVR focuses more on CRM integration for businesses, by offering features such as call recordings, call logs, API integration and call distribution. The company operates on two revenue models; one, an upfront capex investment and two; a pay-as-you-go subscription model. “The second revenue model is more effective for businesses with lean budgets,” adds Gupta.

Until now, Knowlarity has partnered with over 12,000 businesses in 65 countries and aspires to sign up over 1,00,000 businesses in the next five years.

Finding investor support

Since its founding in 2009, the company has raised a round of institutional funding and followed it up with a Series A and Series B round from notable investors. In 2011, it raised U.S. $ 1.5 million from Emergic Venture Capital and Progressivist Investment Capital. Then, in 2012, it raised Series A to the tune of U.S. $ 6.5 million from Sequoia Capital, and in July 2014, raised Series B to the tune of U.S. $16 million from Mayfield Fund and existing investor, Sequoia Capital. “These funds will primarily be channelised towards building technology and fuelling international operations,” says Gupta.

Its competitors in the cloud telephony space in India include companies such as Exotel (which is backed by Blume Ventures and Mumbai Angels), Ozonetel and One97 communications.

Consolidating its strength

Gupta believes that the cloud telephony market in India is moving towards a consolidation phase, where market players either merge with existing businesses or shut down operations. In June 2013, Knowlarity shifted its base from New Delhi to Singapore, to capitalise on the opportunity in the South-East Asian markets. And, in January 2014, the company acquired New Delhi-based cloud telephony services startup, Unicom, for an undisclosed amount. “As compared to other international markets, Indian SMEs operate on smaller budgets and there is a lack of awareness in this space about the opportunity in cloud telephony services. As a result, even investors are not too keen on funding businesses operating in this space,” he indicates. In the coming months, the company plans to pursue more such acquisitions.

A second challenge he sees in the Indian SME space is the lack of knowledge on the technology front. “These companies require a lot of handholding because they are more accustomed to maintaining manual ledgers. As a result, a lot of time goes into educating our clients about the automated services deployed by the company,” notes Gupta.

A third challenge, of course, is the lack of technical talent. One way in which Knowlarity is tackling this challenge is by hiring employees based on growth in previous roles and running suitable training programs to enable them to fit in.

Today, the company is witnessing a 300 per cent growth year-on-year and Gupta has set his sights high, for Knowlarity, in the coming years. “We want to sign up 1,00,000 businesses in five years and position ourselves as a global company in the cloud telephony space,” he says, on a concluding note.

How to raise money, even if you’re not an e-commerce startup!

1) Have a billion-dollar idea

Not a million-dollar, not even a 50 million dollar one. Look for large market-size opportunities. This is the easier part for an Indian startup because of the sheer size of the country. Any idea that directly targets consumers becomes a big market opportunity.

2) Show that you can scale

This may be a tough part, but it’s not impossible. For instance, a business idea in education would hold plenty of promise, but to scale up may be a challenge because of its brick-and-mortar way of delivery. You could have logistical constraints, you may not be able to access all markets, or offer your services at a price that works for your target consumers. However, if you want to raise money, you have to be able to prove to investors that you will be able to take your services to a large number of people in a short time, and that you’ll do this at a price that will be irresistible and still be profitable.

3) Build a world-class management team

Put together a great founding team whose skills and talents complement and complete each other. This would give your business idea the holistic attention it needs to sprout and thrive. It’s impossible to have one person who can be a visionary, a great communicator, a shrewd business person, a farsighted technologist and a subject matter expert. This is why you need an eclectic team.

As often as it is repeated, this is true. Venture capitalists prefer to back an A-class team with a B-class idea, rather than a B-class team with an A-class idea, for the simple reason that a good team will soon realise the folly in the B-class idea and make it A-class.

Twitter, whose first prototype was an SMS-based communication platform for status updates used by employees of podcasting company Odeo, today has 271 million monthly active users around the world. Clearly, B-class idea, A-class team.

4) Your product should solve a big problem

Once you’ve discovered a big problem that affects a lot of people, build a product that solves it. It’s the surest way of winning investors as well as customers. That’s just what RedBus did. Most entrepreneurs already know this cardinal rule of consumer-first when they head out with an idea, but then get carried a

way by their passion for the product and the company and lose sight of the consumer. Don’t let that happen. Your focus should not be the product itself, but what it can do to help your customers. Remember that and you’ll succeed.

Ambarish Gupta Cloud Telephony Knowlarity Communications Mayfield Fund Sequoia Capital

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