Building a 50-million ARR company in India-US with WestBridge Capital, Innovaccer and Phenom People

And today we're going to talk about a fascinating topic on how to build a $50 million ARR SaaS company out of India. Ideally, I'd have loved to do this in person with all of you, but unfortunately we are where we are with the pandemic. I hope everyone's doing safe and well and it's a pleasure to connect with all of you via Zoom. I'm honored today to have two fantastic executives who've actually built $50 million SaaS companies out of India. Abhinav Shashank, CEO and founder of Innovaca and Susan Slater, Head of Customer Success at Phenom People. And let me start with a little quick introduction on myself by way of background. I started Westbridge Capital about 20 years ago to help companies out of India build strong businesses in the US. I then founded and ran Sequoia India for five years and my partners and I then last 10 years I've been running this version of Westbridge. We manage over $3 billion of capital and we've invested in some wonderful companies in the US India corridor like Innovase and Phenom people and are looking to invest in a lot more. We are very bullish on the corridor. We think a lot of great companies are going to get built. And I'm really excited to have Abhinav and Susan here to talk more about that two executives we partnered closely with. So with that, Abhinav over to you please for your introduction.

Thanks Amir. Just as background, Abhinav co founder and CEO at innovaccer, we're building the leading digital health platform for helping care delivery organizations transform into a connected and personalized future. As we all kind of really know, probably more so in the pandemic that the entire landscape of how healthcare is delivered has been like a challenge. In general, it's basically non accessible and it's fairly siloed in nature. We're basically building a digital platform for helping healthcare organizations transform into making it more digital, virtual and connected through a data platform underlying underneath.

Thanks Abhinav and Susan, please, over to you please.

Great, thank you so much. So a little bit about my background. I've spent the last 20 plus years leading talent acquisition, talent management and HR teams and global Fortune 14 companies from healthcare to technology to Pharma and now back to technology at Phenom. And to provide a little bit about Phenom, we're a talent experience management platform where every experience in the talent lifecycle is unified in a single platform and we call that Phenom txm and this is where candidates will find the perfect fit faster. Recruiters are creating meaningful moments, employees are engaged and involving and managers have more actionable insights than ever before. And I have to say Samir, I'm just really happy to be here talking with you and sharing my insights. We at Phenom are glad Westbridge Capital participated in our last round of funding. It's a great start to a very long relationship.

Thank you Abhinav. Thank you Susan for that. Fantastic. So let's begin talking about why cross border SaaS is so exciting and what edges India gives you as a geography. As you can see on this slide, Indian SaaS is a really exciting story. It's growing at 30% a year much faster in the US and the global SaaS markets. And 75% of that is companies focused on global markets like your own, primarily the US market. Abhinav, one thing I'd be curious to get your perspectives on is you built one of the fastest growing SaaS companies out of India very successfully. You and your co founders and team would love to get your perspective on how you see Indian SaaS evolving over the next five years.

I think Sameer generally like India has always been a hub for engineering talent for quite a bit. I think the global perspectives that Indian outsourcing kind of really brought to the landscape in general has been incredible to basically build upon. And we've seen like multi billion dollar companies created in that corridor for a really long period of time. And I think at this point like India sort of like struggled with like for some time to have like the right product design and skills of that nature. But over the last few years as this consumer Internet boom kind of really happened and we saw like these multi billion dollar organizations being created, there was this huge upswing of people who knew how to kind of really build like world class products. And that was just like I think game changing for India for in so many different ways. Mostly the talent kind of really got into a space where you can build like category creating, category leading products out of India. And we now see a plethora of these talent pools available in India. And so as this transition from a consumer perspective started happening, people realized that and parallel I think software delivery kind of really became like more Internet driven rather than basically like on premise software driven. Both of these trends combined basically meant that you can sit in one corner of the world and really deliver software to the world. And that basically was this phenomenal change that happened sudden in the last four or five years. And I think that would give India such a large competitive advantage over a period of time. Like I think in one of these conversations that like I had like I just feel like the number of people that are going and pursuing like product ideas today for the global world is just incredible. And I truly feel that the way software is kind of really eating the world, I think India is probably going to eat software over the next few years.

Love that Abhinav. Thank you. That's a great perspective. Let me switch to the next slide and follow up Abhinav on some of the points you're talking about on this edge. One thing we've seen is in addition to kind of the SaaS model and cloud model helping give India a big advantage, the other thing we've seen is that you talked about Abhinav is a massive advantage in terms of number of engineering graduates and cost. India graduates about one and a half million engineering graduates about seven times more per year than the US and the salaries are on one seventh of the US salary. So that that magic provides a fantastic base to help companies such as Phenom people at Innovas to succeed. And Susan, I know you've seen this in your wonderful customer success efforts at Phenom People the advantage of India. I'd love for you to comment on that, how you've seen it actually help with customer success for US customers having really strong operations in India for phenom.

Absolutely. Let me first start by just acknowledging that India boosts a vast network of technical and management institutions that are of the highest international standards and that really enriches that available talent more than any other country. And India also has the ability to produce innovation and provide that top class customer service from a service perspective and a customer support and success. And to me from an operations advantage, we're getting quality, lower cost talent and as mentioned providing that continuity and coverage for our customers. Basically someone's always on, you know. In addition I found that diversity of thought that India brings strengthens our position in the marketplace. So just to recap, from my perspective it's that lower cost, full coverage, diversity, learning new and better ways of working.

Thank you Susan, that's really helpful. Onto the next slide here. One thing I'd be curious about Abhinav, touching a bit on what you spoke about the opportunity set growing in India and what Susan spoke about leveraging Indian talent. The two comments you both spoke about really lead to something we love as investors. Capital efficiency. Basically making each dollar go five times as far. And I'd be curious, Abhinav, to get your perspectives on how you've achieved that very successfully at innovation. So one of the things that's really impressive about your company is not only hit 50 million of ARR but you've done it with spending very little money by leveraging India very successfully. Can you talk to that a bit? What are some of the secrets that Innovase has done to achieve this, which many of our entrepreneurs here on the call would love to hear from your success?

Abhinav yeah, I think sumit like a few things, right like generally a journey of a startup is a series of experiments, right? Like you're basically like trying to run like a ton of experiments and like some of them eventually work out and you then scale them. Right. Like most things that we do as entrepreneurs I think end up failing. But you really need to figure out that one thing that's working out and then scale that to a really large scale. So I think what we've kind of really experienced over a period of time that when you get like these incredibly smart scrum teams and etc. On projects across the board, one it gives you like a fantastic R and D capability. You can always be ahead of competition in terms of delivery of new features and the number of things that you can kind of really do. Second, I think just it's like obviously cost is a factor to it, but it's just that if you run more experiments, your chances of success on a period of time basically increase quite a bit. So I think that's kind of really been like an incredible tool for us. We've tried to do like a few things. We pivoted a few times. It did not kind of really ended up landing in a place where all hell broke loose and we can still really go ahead and run the next experiment and be successful at that on a $15 million type base. We still think the number of experiments that we are running is far larger than what anyone else is really running. What that leads to subsequently is the fact that your customer satisfaction because of delivery of new technology increases quite dramatically. We've seen that in Gartner class all of these reports where the next competitor to us on just general customer success is like eight or nine points behind. And these are like multibillion dollar companies in some way or form or basically like young startups, you can create that continuous be on the continuous edge of delivering new innovation and basically supporting customers in a really strong way. And given how important customer success becomes in a SaaS environment, because that is how you kind of truly differentiate and keep retention high, that is just an incredibly powerful tool for anyone to kind of really have. And so I think just this, both the first and second point, whether that's kind of really having a lower capital expenditure on experiments that you run on R and D or basically getting faster to product market fit because you are able to run experiments parallelly, is both of them. I think it kind of really gives you, like, incredible advantage from that standpoint. And as you mentioned in the third point as well, like there is the number of leads and the number of conversations that we are able to kind of really generate because of having like an incredibly strong, like inside sales engine based out of India. I think 4 or 5x then like anyone else would be able to do with the same thing. And that then therefore leads into like, our cacs are much lower. LTV2 cacs are like incredibly, incredibly high. And all of those metrics kind of really fall into place. It would be very hard for us to imagine that if you did not kind of really operate that way, how would you kind of really get to like the 8, 10x LTV 2 cacs that we are kind of really getting to today. So I think a combination of all of these things, it just makes it such a uniquely strategic advantage to be playing in the corridor, whether it's a US company, whether it's an India company. Just playing in the corridor basically has these distinctive advantages that you can have specifically in SaaS, for sure.

Definitely. Abhinav. No, that's a very interesting point you make, particularly on. I love your notion of lower cost allowing you to run a lot more experiments. I think that's a very powerful notion. And also your point on using India to improve customer success. And to that point, I'm curious, Susan, Phenom, people's got best in class net retention rates, and that's due to high customer success. How have you guys leveraged India for customer success and how has it helped you achieve those nice metrics?

Absolutely. And we actually, we leverage our team in India every day and sometimes multiple times a day they'll say, oh, gosh, it's you again, Susan. Yes, it's me again. So they really provide our customer insights. So the data and analytics, they pull together the data for our quarterly and executive meetings. To me, they're the engine driving the machine. They help us show up as the expert in front of our customers. That gives the customer, when we're that expert, the confidence in phenom, which allows us to really expand in revenue and also to keep the churn down. Because if you they have confidence in customer success, if we're showing them the value, they're going to remain with us. And you know, with the team, we just gain a brain trust at a cost advantage that allows us to invest in other areas in the business.

That's really helpful, Susan. Thank you. And moving on to the next slide, which is a really good segue, Susan. And Abhinav, to the point you were making, which is, you know, cross border has a lot of advantages, clearly, as you guys spoke about in terms of experimentation, in terms of improving customer success, net retention rates and many other forms of advantage. It also has some challenges like everything else. And one thing I'd be curious to get your perspectives on urbanerv is how do you manage these cross border teams? You've got over 500 people in Noida, you've got over about 100 people in San Francisco. How do you manage some of the challenges of being in multi locations and being successful across some of these functions? What are some of the secrets of that? Abhinav, from your, from your wonderful experience.

At innovasive, I think firstly you have to treat it as a globally equal team. I think that people basically start thinking of India as a back office. If you basically are starting with that perspective, I think it's not really going to work out like it works out in outsourcing situations. It is not going to work out in an entrepreneurial context unless basically I think you put like all teams across the world in an equal footing and a global footing from that perspective. I think that firstly that is a mistake that a lot of people kind of really end up making. Now there are two sides of it, like one for an India company to kind of really come to us versus like a US company also kind of really trying to go ahead and like, like have operations in India. In both of these cases, I think there are cultural differences that you'll have to kind of really work through. And I think we had a fair share of battle scars on those fronts that how do you kind of really have things sort of like working on time and like how do you kind of really create that culture of cohesiveness? Scrum teams kind of really working between India and the US and things of that nature. So we did like a lot of these experiments. So we, we tried to like just from a product perspective, most of our product and engineering teams are based out of India today. So just from a product perspective we tried multiple iterations of this. We put a product manager firstly in the US and then put the engineering team in India. That was a disaster. And then we kind of really tried to, we indexed the other way and basically put all product managers with their Scrum teams and started to focus on. And then we lost market context where quickly. And so the sweet spot of this was therefore like putting like a group of product strategy people, like people who've come from the industry who have relevant background, who think about like what do we do in the long term, how is the markets kind of really changing? And then working with product teams which have like a designated product manager and a fully staffed Scrum team per se, that just increased our throughput of engineering like 150% from some perspective and customers started liking a lot of what we were delivering. It was all in sync. So just kind of really figuring out that what are like skill sets that you need across the board, that if your product, if the general principle in Agile is the fact that you don't really want to have your product manager apart from your like Scrum team, then don't break that principle. Just like I think augment it in such a way that you can give market context to them and you'll be surprised in like how quickly these people would kind of really go ahead same I think with the sales flywheel and customer success too.

Yeah, that, that makes tremendous sense. Abhinav and I know we're running up against in a minute or two, you have time. So Susan, real quick, just following up on Abhinav's point. What have been some of the challenges in delivering customer success out of India? What are some of the things that aren't so easy? You know?

You know, to me it's communication and just making sure that we understand what's communicated. So seeking that clarity. And I found it's good to recap the conversation just to ensure that clarity. And then it's also to stress the importance of when information is due to the customer and walk through the timeline. You know, this is important so you can meet and what we want to do is exceed customer expectations. Right. So I've also found that verbal communication along with the visual aspects of slides also helps to reduce the miscommunication. And then spend some time with your team, gain that trust and then be transparent with your customers. You know, as mentioned it's, I always explain our team in India, they are not a back office team, they are part of phenom. And I think that's really important to make sure your customers understand.

Thank you. Thank you, Susan. That's really helpful. Let me just take a moment here and just zoom out a bit and ask you guys Both to comment Abhinav and Susan on really if you are a young CEO today attending this group and you're looking for key insights on how to build a business and scale, what are some of the things that come to top of mind for you? What advice would you have for some of the younger entrepreneurs here that are listening to us today?

I think from my standpoint if you want to basically build out a global company, you will need to really have a global team in some way or form. I think today there are massive advantages of and I think Covid kind of really showed us that the world does not really fall apart if everything was remote. And so I think people are going to start realizing that quite a bit and therefore leveraging a global workforce model and figuring out how do you really have the right mix of market expertise in the markets that you're really operating in and then having the right kind of capital efficiency in your R and D efforts and product efforts, et cetera so that you can basically scale much faster and deliver like experiences to your customers that are far more ahead of everyone else. That is competition is going to be critical. And like as you've kind of really mentioned, if you're doing this you really need investors who can basically understand this phenomena. It's not an easy phenomena. It's not basically something that a lot of people understand how to do too well. And so having people on your side who really understand and back the thesis is like an incredibly important part of the entire story. As been lucky to kind of really have you support our entire initiatives and how we are kind of really thinking about the business but having the right set of people, whether that's with investors, advisors, board members around you who kind of really understand that why this is basically going to be the new software delivery mechanism and how to kind of really back this is like incredibly important and I'll let you know. And given Susan is probably the champion of customer success, I let her kind.

Of thank you Abhinav. Please.

Susan, thank you so much. And I'm going to give more of a people perspective just from how I grew up, if you will in my career. So growing at this magnitude is extremely fast paced and you have to learn quickly, be nimble, learn from your mistakes. It's okay if you fail, just get up and keep going. There's no situation where you are the smartest person in the room and that is ok. You have to be OK with that because you are learning at a pace that you never knew you could handle. To me it is exhilarating and so you have to have that in you to be able to do this. Be confident in yourself, believe in your teams and keep going. And to me it is again it's talent. It's to hire and onboard the right talent. If I think about this and if you do this right, they become the competitive advantage. And just again back to the communication. Making sure that your team sees and understands the North Star, that they have extreme agility, curiosity and they let things roll off their back. Just as important, hire and cultivate the right leaders and make sure that you invest in customer success implementation. This is key to driving revenue expansion. And then I think lastly and maybe very important is having the right investors. You know, Westbridge, if I think about it, they've not only brought us their cross border expertise but they also helped us unlock some big customers like Merck Pharmaceuticals and given their great Rolodex, they're super long term thinking. This has really helped us a lot.

Thank you. Thank you Abhinav and Susan for that. Let's at this point open it up for questions to the panel. I know we're bumping up towards the end here. This has been really insightful. I've actually learned a lot hearing you guys. Thank you. I'm just looking here, we got a lot of questions here from the audience. The first one up here is what do we look for in a young cross border startup to invest in them? So I will take that one. I think one of the things we look for is the first and most important thing we look for is a great product. So really a strong product market fit SaaS company that's looking to solve a real problem for real customer in a very special kind of way. And the second thing we look for is very passionate and driven founders that take a long term approach like we do to building businesses. And I would just echo some of the points that Abhinav and Susan made that we look for companies that surround themselves with the right kind of DNA in terms of advisors, board members, people that can help them. And as Susan was saying, being founders that are open to learn. Many of our founders are very young and unless they're open to learn they're not going to succeed and they will fail and they have to pick themselves up and keep going. So there's some things we look for. I have one more question here from the audience and let me give this to Abhinav. Abhinav, one of the questions that has come up is large tech companies are increasingly embracing remote workers and do you expect more competition to Keep some of your top engineers, you guys have hired some amazing people. How do you attract and retain the very best talent in India in a world that is getting more competitive because many people have figured out it's quite an attractive place to hire people.

I think it's almost always about culture. Like talent retention is almost always about culture. So I think if you basically like we're basically building like one of world's best products in our category, like we're not doing like anything that's basically second to like anyone in the world. So if you basically have that belief structure and if you have like teams that kind of really believe in that mission in general, then you kind of really have like higher talent retentions with especially your top people for sure. So I think like most of talent retention battle is just about like maintaining culture and if you have a great culture really matter and if you don't then it doesn't matter per se.

Well said. Last comment. Maybe I'll open this up to Susan. Last question then we wrap up here. Guys. We're all here to follow up. If you want to follow up with any of us, we're available. Sorry we can't take all your questions but the last question for Susan is how do you deal with keeping your staff excited and motivated in India and reducing churn, which many companies have faced? India high employee churn. Susan?

Yeah, it's making them feel that they're part of a broader team. It's having those connections and the meetings not just about work related but as I mentioned, understanding who they are, building that trust and sharing. We've had many team members from us travel over to India and I'll pick up the phone and call someone just for, you know, hey, let's chat, what's going on? And they've said that makes them feel like they're part of something bigger. I also think our purpose helps with the churn of helping a billion people find the right job. So we try and really attract individuals that align with that as well.

Susan thank you. Abhinav. Thank you. I want to thank you both for taking the time to appear on this panel today and it's been a fantastic discussion. I've learned a tremendous amount abhinav Susan so thank you for taking the time and also I want to thank all the participants. I'm sorry we didn't get to all the questions but please follow up with us. We appreciate your time and look forward to hearing from many of you. So thank you everyone.

Thank you.

Thanks everyone. All the best.