Assess your customers pain points to make a product for the global audience.
Karthik Karunakaran (KK) became a first-generation entrepreneur in 1996. KK started with a college friend as a franchisee for a computer education for kids which was a new concept to the country at that time. He was the first franchisee for the brand and was very successful in spite of the concept being new and was premium priced. The franchisor was interested in spreading it in Chennai and was looking out how he can scale. At that point, in Chennai, there were only two franchisees but the franchisor was looking to capitalize on KK’s success and offering competing franchise licenses close to his territory, potentially cannibalizing his business. KK realized being a franchisee puts limitations on growth. He expanded his scope to find other global brands in the same segment, seized an opportunity, and became a country master franchisor for a different brand. He set up more than 100 franchises for the new brand and finally had an exit.
Now he begins talking about how he began his current venture – Mobius Services
Genesis of Mobius
KK recalls that the time coincided with the dotcom bust. He and a couple of friends started a dotcom company – an e-commerce concept that was very early for the market at that time. They had to shut down eventually. They were thinking of how to leverage the team they had built. That was the time when a US start-up doing a comparison shopping engine gave them a project. The scope was to collect data from the internet. Within a short time, KK and the team found that data was a common problem for many companies and pivoted the e-commerce venture into a data collection company.
In addition to fulfilling the contract for a specific scope of work, Mobius’ team also began collecting specific data for other industries ahead of time. The team began reaching out to prospective customers asking if they wanted the data and outlined the value proposition of ready-made data. There was another customer that was servicing America Online (AOL) which was building a directory website for US Government departments information right from Federal Government level up to city or village level data to help the citizens. Since this was not readily available, AOL decided to leverage the internet to collect information. It was a large team for the young company with a team of 20 people manually doing web research. KK found that the time taken by each team member and the output for the same research query was different. KK felt that there was a bigger need to standardize web research and provide consistent output. The team then began thinking about automating web research.
The management team reached out to a lot of people but not much of traction. This is because the concept was new and the prospects were not able to articulate what their pain points were. They said that it was difficult to outsource their search needs because they only know what to search and they can’t give input to an offshore company to make this work.
KK continued to explore use cases for a few industries. One of them was a daily news digest for PR and ad agencies. They began collecting news articles, manually curating it, and began reaching out to ad agencies for a daily scoop. The ad agencies were willing to pay only little but the CAC for the agency acquisition was very high. So, KK accelerated the thought to automate and began creating Bots that scraped the website and extracted the information to curate. The concept of building various scrape bots and what to change became a useful technology in their hands for the future. With different automation techniques, they found new sets of customers and use cases.
Another early use case was for the publishing industry. Finding opportunities in the data space was a struggle but KK got lots of opportunities in typesetting, XML conversion, and pre-press related work since Chennai was the outsourcing capital in this. They tied up with multiple vendors since they did not have the capacity and got these projects done. KK recalls that these were the allied projects that kept them alive and they also built some capacities in this space. Later an off-shoot of this capability in the mortgage processing space was spun off into a different company with one of the three founding partners taking over it.
Growth in the early days
The data business had a slow customer acquisition rate and the initial customers were small businesses in either e-commerce space or small directory publishers.
First large customer acquisition
To grow bigger, he needed bigger customers but they had no sales presence outside India. However, they began reaching out to larger companies through email. KK chose some industries that he believed would be utilizing lots of data. The list targeted global Information & Media conglomerates and information publishers. To differentiate with a prospective customer, they innovated on their initial outreach. They would do upfront research before even sending a cold email. They would outline the situation of the prospect, do custom research and would give them suggestions on how they can do better with more data. This technique got them a couple of big breakthroughs.
One of the top 10 publishers (McGraw Hill) was headquartered in New York, USA. The CEO of one of their divisions got intrigued by the research report but still wanted to do some due diligence by meeting them. The CEO visited Chennai to meet another vendor for due diligence and he decided to meet Mobius also because this was also in Chennai. The meeting happened and the deal got closed.
Another large company in the Real Estate Information space was working with a large IT company in Chennai. They also met when they visited Chennai. They approved Mobius but wanted them to be a sub-vendor to the large IT company. KK recollected that he rejected the offer but asked the client to meet them. When the meeting happened, the prospect was so amazed at the data solutions they had designed tailored to their specific needs without even a meeting. These two initial break-throughs helped create a momentum that led to the future growth of the company
KK attributes the two large closures at the beginning stage to two decisions they took. 1) Prospective clients that had some affiliation to Chennai because deals happened only with a visit. 2) Incisive research is done on a prospective client even before the cold email. KK says that their sales team does the research even today.
Things he could have done better
KK recollects and says that they could have done better if they had an onsite sales presence in the US market. He hesitated to invest in a sales team because he was boot-strapped and had to cut corners. Thinking back, he said that he could have been much bigger if he had made the investment in sales in the US. The mistake was, he knew that there was a market, he confirmed that his service has been validated by a few clients. His market and the service were niches, competitors were almost non-existent but still, he waited for the right volume of sales to come. He says that they did not have a local understanding of the US market.
Sales Advice to Entrepreneurs
KK says that an entrepreneur should do a lot of experimentation before jumping big into the market. Don’t try to have a product ready before you go to the market. You can go with just an MVP built just on a PowerPoint. He made the mistake of building the full-fledged products and realizing that they wasted a lot of time and money.
KK also says that an entrepreneur should leverage the power of inbound marketing. He began using that at a later stage. With so much digital available today, the chance that people are looking out and you don’t know where they are looking out.
Mobius had built some portals in some niche areas and are now getting inbound leads from all geographies and even some F500 leads have come up. This, KK says, has saved a few years for them.
Mobius is still bootstrapped and is a 1000 member company. They have about 20 F 500 companies out of the 250 + customers. They have a global presence now with subsidiaries in the US and the UK. The company today processes data from 100 million websites every month, 100s of thousands of unstructured content from PDFs, web pages, and other content types, manages a few thousand cloud IPs for their processing infrastructure, and has built its own proprietary technologies and platforms for managing these seamlessly. It’s growth plans are to double in size over the next 3 years.