Netcore as an Enduring Great Company (Part 5)


Even as I was learning and thinking, competition was racing ahead – raising private and public capital, expanding aggressively, building new product features. Business is, after all, war by another name. We tried to raise private equity (PE) in late 2018, but did not get the valuation we wanted. So, we were still on our own. Luckily, our profits from email and SMS helped us make the investments to expand into martech and other emerging markets.

We had missed a few turns in the industry – we should have woken up to the opportunity of B2B SaaS earlier and reinvented our sales and marketing, we should have focused more on new age app-first companies, we should have focused on consolidation (larger acquisitions) more aggressively, we should have opened our US and Europe offices much earlier than we eventually did. We had fallen behind, lost time and momentum, but luckily had not died. And in business as in life, renewal is possible.

None of the mistakes was fatal. We (led by Kalpit as CEO) took corrective actions – refocused Netcore as a SaaS company, invested in building a full engagement and experience stack rather than being only limited to communications, opened local offices in US and Europe even as we targeted customers in those geographies from India. Two targeted acquisitions brought in new features that B2C companies wanted.

The arrival of the pandemic in 2020 was a shock as we saw business drop sharply in the initial months. The future appeared uncertain. I took the Stoic view that there are some things that we cannot control – what we can manage is how we react to them. It was in those months that I started falling in love with Netcore. I know it may sound strange – but till then it was almost like I was bringing up Netcore to one day sell, and then move on to other things. The time at home in 2020 which gave me lot of time to read and think, the conversations with CMOs for the Velvet Rope Marketing ideas, and the starting of the blog which helped me look back at my past life as an entrepreneur – all played a part in helping me decide on Netcore’s future.

Was I building to sell or building to last? That decision became clear to me as I started reading Jim Collins’ books. I was an entrepreneur at heart, a business holder. In Netcore, we had done all the hard work in laying the foundation – a wonderful and resilient team and an amazing roster of happy customers. We had survived through many mistakes. Now was not the time to give up and exit. It was time to think big and long, but without giving up on the profitable core that had ensured we did not die through the past couple decades. It was time to take the advice that I was giving marketers and apply it to Netcore: build a business with exponential forever profitable growth.


An Institution

When a friend recommended I read “The Outsiders”, I understood the importance of “per share growth” as the best metric to evaluate performance. So, I decided to see how we had done at Netcore. I calculated our share price ten years apart. I had accepted an offer in late 2011 to sell our business, but the buyer backed out at the last minute. I then estimated our current share price. The per share CAGR over the past 10 years was 25%. I compared with some other public companies in India and the global tech space, and realised we had not done too badly. A number in the 30s would have been nice, but it was not a poor performance in a decade where I was less involved and as a result made a few flawed business calls.

Per share price growth is the right metric to track because it factors in changes in share capital, and not just overall valuation. 25% consistent compounding over a decade results in 10 times growth. 30% gets that number to 14 times. I set myself the goal of ensuring that Netcore should compound per share price at 30% in the next 10 years. We will need to think along multiple operating horizons to make this happen. We will need to become consolidators with smart acquisitions. We will need to tap the public markets so we incentivise employees (25% of Netcore is owned by its past and present staff) and also create a currency for acquisitions. More importantly, we will need to anticipate the tech turns and stay ahead of them. We will need to strengthen our moats and create a sustainable competitive advantage. And who better to learn from than Jim Collins? The 20 Mile March needs Level 5 Leadership, the genius of the AND, a growth flywheel, a culture that encourages the firing of bullets before cannonballs, and of course, a return on luck.

At a current revenue run-rate of $85 million annualised revenue with healthy profits, we have a unique opportunity to shape the future. To deliver outsized returns, to be an “outsider” in the words of William Thorndike, to be a “diamond in the dust” (as the title of a book by Saurabh Mukherjea) puts it, we will need to create new business practices. What got us here will not get us to the future. We will need to transform ourselves. I will need to unlearn and relearn. Most importantly, I will have to ensure that we build a team and culture capable of continuous renewal. The problem we are solving – helping businesses engage better with their customers to ensure retention and growth – will never go away. The methods will change because technology drives new habits in customers, forcing businesses to adapt. Some very exciting new ideas lie ahead as the Martech era dawns. Velvet Rope Marketing. Email2. Atomic Rewards. Progency. These are just the start. Netcore has a unique opportunity to build a “profipoly” – not just for ourselves but also for our customers. As an entrepreneur, nothing can be more exciting – lead the creation of a new world with the power of our ideas and products. If we execute well, Netcore can truly become a global company, with all the right adjectives – growing, profitable, enduring, great, forever. The leaders will change, but Netcore as an institution should thrive. That is the best legacy of an entrepreneur.

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.