Nathan Latka is everything SaaS! Here is my interview with him.
We are on the verge of a historic move – becoming a public company. When we accept money from others, our responsibilities will increase. We will have a great obligation to deliver value and returns for big and small investors.
We also want to ensure wealth creation for as many of you as possible.
We may not always match the salary offers that you get from other companies. But if you trust us, if you have stock (and everyone in Netcore can get ESOP), you will make more money over the next few years than what you will make with a salary hike.
Our expectation is you put work ahead of life; I know this is a big ask after the past 2 years of the pandemic. Remember that nothing in life comes easy.
At Netcore, you can live the life of an entrepreneur or CEO in whatever function you do. You get to see what it takes to run and build a business. You can be an entrepreneur within and lead. Working at Netcore is like doing the world’s best startup MBA program! Netcore prepares you for the future, gives you an education no money can buy.
If you want to quit Netcore, don’t quit for money; quit to become an entrepreneur. I will be the first to congratulate you. It is the hardest journey you will undertake in your life.
For 30 years, Bhavana and I have done just that. Life for us has been about our two companies: IndiaWorld first, and then Netcore. 24×7; even while on vacation; always looking one step ahead; a life built around our work; with passion.
We are now ready to climb the next mountains; together with Unbxd; and as a public company.
Netcore’s journey will go on; as an institution that outlasts every one of us. Built to last; an enduring, great company; one that delights customers, innovates, grows.
Many among you are our future leaders; you will be tomorrow’s faces of a public Netcore.
Thank you for being a part of the Netcore team and family.
I ended by asking everyone to join me in singing one of my favourite songs – Ruk jaana nahin tu kahin haar ke (from Imtihaan). I called it the song of an entrepreneur, the anthem of Netcore.
Profitable growth. Infinite mindset (long-term focus). Extreme employee centricity (with 25% stock options). These are core beliefs I have written about in the past. Besides these, a number of things make us stand apart.
We have taken the road not taken to becoming a proficorn.
We believe in the genius of the AND rather than the tyranny of the OR. Profits AND Growth. India AND the World. Emerging Markets AND Developed Markets. Family AND Professional. CPaaS AND Martech. Product AND Progency. Humans AND Machines. Netcore AND Unbxd.
We are beating competitors who have been in business for 10+ years and still cannot show profits.
We are not afraid to fail. We try out things, we experiment. Pepipost (an SMB email API service) and Scoop (a conversational analytics platform) have been two such efforts.
We don’t give up on things we believe in even if success takes time. For example, our international expansion and our CE (customer engagement) platform.
We are always open to learning. We learnt the SaaS way: ABM, SDR, inbound.
We are willing to walk alone on a different path. We bootstrapped our way through the years while others raised and burnt capital. When the pandemic began and the future was uncertain, many funded companies fired employees; Netcore did not fire and did not cut salaries.
We trust people irrespective of age or background.
We are willing to accept our mistakes and say sorry. Kalpit and I did just that when we called a leading brand’s CEO to apologise for an error from our side.
We never compromise on integrity. Once when a global tech company overpaid us by almost a million dollars (and they did not even realise it), we returned the amount in full.
We will go the extra mile for our customers and have maintained relationships through the years.
We are survivors. We are challengers. We are winners. We are Netcore.
Netcore celebrated its Annual Day on April 7, 2022, delayed because of Covid. It was a special occasion, in our 25th year. It was a memorable evening of awards and performances. We were meeting in person after a gap of two years. I gave a short speech. Here is a rough transcript.
Netcore began 25 years ago in a 300 square feet office in Fort in South Mumbai with a team of 5 people as a spin-off from IndiaWorld. It was a forced separation because I was having trouble explaining to IndiaWorld investors what a Linux-based mail server provisioning business had in common with a portals business. We moved to Peninsula Chambers in Lower Parel a few years later after IndiaWorld was acquired by Sify.
The early years saw very slow growth; we were stuck at Rs 1 crore revenue for many years. During the first decade of Netcore, I tried multiple ideas: BlogStreet (blog search engine), an RSS-IMAP Aggregator (for consuming feeds), Pragatee (an all-in-one server for small businesses), Emergic Freedom (thin client, thick server to make computing affordable), MyToday SMS (microcontent subscriptions), MyToday.mobi (mobile web portal). All failed and cost us money.
2007 saw an upward shift in our fortunes. The previous 15 years have taken Netcore’s revenues to Rs 660 crore ($88 million) in FY 22. What were the key decisions that made Netcore?
I replaced myself as CEO. Netcore has been led by three professional CEOs who have been the agents of transformation, starting with Abhijit in 2007-11, Girish in 2011-14 and Kalpit 2015 onwards.
Bhavana (my wife) gave me an ultimatum when she saw Netcore losing money in 2008: turn it around or shut down. We made the business profitable in a few months thereafter and have had 15 years of profitable growth since then.
We ended our B2C experiments in the quest for profitability, and focused only on enterprise solutions, starting with SMS and then email.
We added martech in 2015. We expanded to other emerging markets. The early years were difficult but we never gave up, and eventually succeeded.
We also expanded to the US in 2018 and Europe in 2021. We pivoted to becoming a SaaS company in 2019.
Our vision of a full-stack martech platform was enhanced with the acquisitions of Boxx and Hansel in 2019 and 2020, respectively.
In 2022, we made our biggest investment of $100 million in Unbxd, funded entirely after internal accruals.
Many of these were shots in the dark when taken, bullets that later became cannonballs. Taken together, these decisions have brought Netcore close to $100 million in ARR. I wrote about Netcore’s journey recently.
I launched IndiaWorld, India’s first Internet portal, in March 1995. This was even before Internet access was commercially available in India. In this with PC Quest to celebrate their 35 years, I recount the early years of the Internet in India, the dotcom revolution and the IndiaWorld story. IndiaWorld was acquired another early Internet pioneer in India, Satyam Infoway, for $115 million in November 1999.
My conversation with Prasad Shejale at “Digital Dialogue with Prasad.” I spoke about my journey as an entrepreneur in IndiaWorld and Netcore Cloud. We also discussed how the coming decade will see big spending shifts from adtech to martech. And we ended with a rapid fire round.
Economic Times had a story on Netcore’s forward looking plans around acquisitions and IPO:
Netcore Cloud will start the process of making filings for its Initial Public Offering (IPO) in two months, Rajesh Jain, the founder and group managing director of the bootstrapped Software as a Service company, told ET.
The firm is also looking to make several acquisitions, including one upwards of $100 million and multiple smaller ones, in its bid to widen its software offerings ahead of the IPO in the first quarter of the next calendar year.
Jain said the company was focusing on product analytics, customer data platforms, email intelligence and loyalty for the acquisitions. These segments have drawn large investments as digital businesses scout for software that can give insights into customer behaviour.
Tomorrow’s Netcore – 2
In the continuing learning journey, the next Netcore will need to focus on many new things going forward.
Coming Martech Era: I have written extensively in the past few months about the shift from Martech 1.0 to Martech 2.0. [See: The Coming Martech Era: Driving Exponential Forever Profitable Growth.] Adtech budgets will shift to Martech as brands seek a path to profitability; the 50% waste in adtech because of reacquisition and wrong acquisition is not sustainable. CAC (customer acquisition cost) is the new rent for digital brands eating into their profits. A business that cannot make profits is not a business at all; it is a “non-profit.” There are many exciting new ideas which will power this shift. Best-Rest-Test-Next customer segmentation framework based on CLV (customer lifetime value). Velvet Rope Marketing. Best Customer Genome. Email 2.0. Atomic Rewards. Web3 Tokens. Hooked Score. Microns. µniverse. Earned Growth Rate. Adtech-Martech Bridge. Progency. (These are themes I have covered in my previous writings.)
Talent: Even as companies battle for customers, there is another battle underway – for talent. Attracting and retaining employees has become equally important because it is people who will deliver the products, platforms and profits of tomorrow. Creating learning environments where employees can enrich their own skills and create better versions of themselves will be increasingly important. We have to do the same at Netcore. Our stock options program offers a wealth creation opportunity that no short-term salary hikes can match.
Life as a public company: Netcore will soon IPO and become a listed entity in India. The responsibilities as a public company grow to also include investors. Delivering good predictable profitable growth is what will be expected of us. The narrative is changing from the race to becoming a unicorn to race to profitability. While we will get a currency via our stock for driving consolidation, that will only happen if investors have the confidence that Netcore is building a dominant position in key product segments and geographies with a large TAM (total addressable market). They are investing in our future; and the day we list will be like another Day Zero for Netcore; the work begins afresh for the next 25 years.
M&A: We will need to learn from the likes of Danaher and Constellation Software on how to do acquisitions right. Most acquisitions fail, as history has shown us. And yet, the ones that work can have a transformative value and create great value for all stakeholders – customers, employees and investors. We have to create a playbook to ensure we can do this right and as a repeatable process. The goal is to adopt a three-pronged strategy of “build, buy and partner” to unlock value going forward.
Netcore Business System: Netcore will need to become better daily. We will have to ensure that we learn from practices like Kaizen to create an internal efficiency machine that is capable of doing “more with less.” It will be about automating internal business processes and information flows to create a real-time enterprise, which can also combine agility and innovation. With an employee strength that will soon cross 1000 and revenues which will touch $150 million (over Rs 1,000 crore), Netcore needs to reinvent its organisation architecture and retrain its leadership to become more process-driven and yet have decentralised decision-making to maintain the entrepreneurial spirit that has guided our past.
We have a great opportunity to show the power of “Made in India, for the World.” I always remember these words of William Burnham: “Make no little plans. They have no magic to stir men’s blood and probably themselves will not be realized. Make big plans; aim high in hope and work, remembering that a noble, logical diagram once recorded will never die, but long after we are gone will be a living thing, asserting itself with ever-growing insistency. Remember that our sons and grandsons are going to do things that would stagger us. Let your watchword be order and your beacon beauty. Think big.”
The company that began life in a 300 square foot office in South Mumbai a quarter century ago is now ready to think long, aim high and build big.
Tomorrow’s Netcore – 1
The past two years have been a period that few foresaw. We lived through a pandemic that will for many of us become a defining period in our lives. Digital grew rapidly, compressing many years of growth. Work from home/anywhere entered out culture. There has also been massive capital inflows into many businesses as cheap money from central banks flooded the world. India is at the cusp of an entrepreneurship era. Innovation is remaking many industries. But even as things change, there are some constants. Innovation and marketing will always be at the heart of every business. That is what we in Netcore need to remember.
Bootstrapping our way to $100 million in ARR has been no mean achievement. When I began Netcore, the goal was to get to 10 crore in revenue. (IndiaWorld was 3 crore when it was acquired.) The 10 become 100, and now it is 1000. We have perhaps taken much longer than we should have to get to this stage, but that is now in the past. We need to look ahead to a new future – keeping some of the things that have got us this far, unlearning a few that hold us back, and imbibing new ideas to build better. We need to chart a new path to drive exponential forever profitable growth of our own and create what is the ultimate moat – a “profipoly” (profits monopoly).
Netcore, together with Unbxd and future partners, has a great opportunity to create a global B2B SaaS company from India – focused not just on developed markets but also in emerging markets, and be among the one of the world’s leading Digital Experience Platforms (DXP). US-based enterprise customers today don’t shy away from buying good Indian products. Brands globally need to build better relationships with their customers; Netcore has many of the solutions that can help them do that. A greater focus on existing customers will also end the $200 billion of “adwaste” that is the single biggest pain point faced by business leaders. Businesses which can help brands create more stickiness, better engagement and greater loyalty will be the successes in tomorrow’s world – not just enriching the lives of their customers but also winning their hearts and money.
Tomorrow’s Netcore must empower modern marketers in global mid and large brands with full-stack AI-first martech platform, layered with innovations and complemented by KPI-focused customer success teams.
- Netcore’s solutions enable creation of data-driven long-term relationships,
- superior conversations, engagement and experiences
- delivering on the 4Rs (right person, right message, right channel, right time),
- which leads to better retention, reactivation and referrals,
- which in turn leads to reduction of wasteful adtech spending,
- thus maximising CLV, especially from Best Customers, and
- driving exponential forever profitable growth
Tomorrow’s Netcore must offer the Genius of AND which eliminates the Tyranny of OR for modern marketers
- Be the world’s first integrated progency (Product AND Agency)
- which offers platform AND owns KPIs
- is comprehensive AND cost-effective
- delivering point solutions AND full stack
- leveraging the power of machines AND humans
- powering profits AND growth
My hope is that this Netcore of the future can become an institution that outlasts me and even the current leadership team. Marketing as a function is never going away in brands, and hopefully, neither will Netcore.
Netcore has evolved through the years. Here is how we have transformed over the past few years:
- SMS and Email –> Full-stack cloud platform
- Enterprise customers –> Digital first brands
- India à Emerging markets –> Developed markets
- Organic growth –> Large acquisitions
- Everything in-house –> Building a constellation of companies (ecosystem)
- CPaaS company –> Leader in Digital Experience Platform (DXP)
We have done all this keeping in mind our promise to our customers to help them drive exponential, forever profitable growth.
Here is an overview of Netcore 2022:
- 750 Netcorians globally
- 5,000+ brands across all key global markets
- US$ ~100 million ARR
- Multi product SaaS across Communication, Engagement and Retention
- 75% email market share in India; and 50% in SE Asia
- Sending 18 billion emails and 3 billion SMS each month
- 100+ billion events and 15 billion notifications monthly
- Profitable for the past 15 years
- Zero external capital raised: and debt-free
- Great Place to Work: 4 years in a row
- Named Contender in Forrester Wave report of Email Marketing Service Providers, Q1 2022
- Received highest ratings in Gartner Peer Insights’ Voice of the Customer 2021 reports as a Customers’ Choice for Email Marketing and Multichannel Marketing Hubs
- Four acquisitions and control investments (Quinto, Boxx, Hansel and Unbxd)
- Four investments (ANS Commerce, EasyRewardz, ProfitWheel and Comsense)
Even as we build on our strengths in email, SMS and martech, there are many new ideas and innovations that we continue to work on. The one I am most excited about is Email 2.0 to make email cool again and make it a habit (delete to delight). If we succeed in transitioning brands from Email 1.0 to Email 2.0, we will be helping reduce “adwaste” – the $200 billion being uselessly spent by brands in reacquisition and wrong acquisition. Email 2.0 thus is at the heart of what I think of as “profit-centric marketing.” Email 2.0 is a key pillar of the coming martech era (Martech 2.0), which will prioritise retention, growth and cross-sell in existing customers rather than the acquisition-churn-reacquisition cycle.
Little did I imagine when I started Netcore in 1997 that we would survive and thrive. There have many near-death experiences, and we have emerged stronger from every such storm. The failure rate in startups is 99.99%. Netcore has beaten the odds, grown strongly, and is ready for an even more promising and profitable future.