Netcore as an Enduring Great Company

Published January 4-8, 2022


Beyond Entrepreneurship

As Netcore prepares for an IPO in the next 12 months in its 25th year, I have started to think a lot more about the long future. What is the best path to creating a “built to last” company, an “enduring, great company”, an institution that outlasts the founder (in this case, me)? Over the past few months, I have had multiple conversations with bankers, PE firms, potential acquisition targets, and our internal teams. While the discussions continue, I thought it would be good to start sharing what I have learnt and my current thinking.

In January, I wrote:

Somewhere during the lockdown days of 2020, the idea of “building to last” started taking hold. For the first time in my life, I had started thinking of the long future. IndiaWorld had lasted five years before I decided to sell. Netcore’s first decade when I was involved was a period of low growth. In Netcore’s second decade when it grew, I was in a different world as a political and prosperity entrepreneur.

I was now thinking about what next for Netcore. We had done all the hard work in getting past the obstacles that young companies face to grow. Why give it up now? Why not continue building? As long as we could maintain a good growth rate, why not keep it going? If so, how could we do it? What did it take a company that could not just survive and thrive for a long time?

It was then that I had come across Jim Collins’ book, “Beyond Entrepreneurship 2.0.” I wrote: “As the world of Jim Collins’ writings enveloped me, I decided that I will do what it takes to make Netcore an enduring great company. In our third decade of existence, I would lay the foundation for the future – an ambition beyond wealth for myself; an institution with a purpose; a greatness with longevity. It would not be an easy journey, but one I was ready for. I had to also persuade our leadership team and everyone else that it would be a journey worth undertaking. Even as we focused on the weekly, monthly and quarterly, we would start laying the foundation for making Netcore an enduring great company.”

Over the next three months, the Netcore leadership team read and discussed the works of Jim Collins to understand better and develop a common vocabulary for building an enduring, great company. I ended the January series thus: “In the tech industry that Netcore operates in, it is not easy to survive and thrive against both global giants and nimble startups. My hope is that the very process of setting off on the path to greatness will make us a better people and a better company. And in our small way, it would be a nice homage to Jim Collins and Bill Lazier for their teachings if we can go beyond entrepreneurship to craft Netcore 2.0.”


Looking Ahead

In April this year, as I began this blog’s second year, I had written: “Going forward, I want to write more about the present and future – how to go beyond entrepreneurship and build an enduring, great company. It is what I am focused on at Netcore, and I want to share my thinking and learnings as we go along.”

It is a promise I have not kept. Most of my writings since then have been on marketing – the ideas of rethinking the brand-customer relationship via ems and microns, solving the attention recession problem via atomic rewards, and the coming martech era. (I also wrote a few more series on Nayi Disha, a new path for India.) But until now, there hasn’t been much I have written on the great company journey. It is time to rectify that.

I spoke to Business Standard a few months ago about the forward-looking IPO and growth plans: ““We want to become India’s first B2B SaaS (company) going for an IPO by 2022,” says Jain … “One of our goals is to double our annual recurring revenue (ARR) in the next two years to $150 million,” says Jain. “We’ve done very well in India, Southeast Asia, the Middle East and Africa. Now our plan is to grow very rapidly in the US and Europe. We are looking at both organic growth, and acquisitions.””

A subsequent interview with the Economic Times elaborated on some of my thinking:

Martech SaaS company, Netcore Cloud is looking to double its annual recurring revenue (ARR) to $150 million by 2024 and will look to expand in new geographies, said Rajesh Jain, founder and managing director of Netcore.

“We are at about $75 million at this point of time and we are profitable,” he said. “The growth will come from multiple dimensions. The first is international expansion. We have had great success in India, Southeast Asia and the Middle East and want to now replicate that success in the US and Europe.”

… He said that he expects about 30-40% of the company’s revenue will come from outside India in the next few years through a mix of both organic growth and acquisitions.

Through 2020 and the first half of 2021, I wrote extensively on learnings in my nearly three decades as an entrepreneur and building two proficorns, IndiaWorld and Netcore. Each of three decades as an entrepreneur has had one success: IndiaWorld, Niti Digital (in helping the BJP get a majority on its own in the 2014 Lok Sabha elections), and then Netcore. These thirty years have also been punctuated with many failures, and even in Netcore’s success, I have had to endure the aftermath of many wrong decisions. And yet, we have survived and thrived. Could Netcore have been bigger and better? Yes. But that’s water under the bridge. Business is an infinite game; one has to visit past decisions to take stock of errors in judgement, but for the most part, one has to look ahead to the future that is unfolding.


The Past

Netcore is an unusual survivor; most companies don’t get to be 24 years old and still go strong.

I started it in 1997-98. IndiaWorld was my primary focus at that time. But I had to separate the fledgling Linux mail servers business because it made for distracting conversations when I was trying to raise capital for IndiaWorld. For the first 10 years, Netcore stayed small. After I sold IndiaWorld in late 1999, I spent a couple years at Sify. When I came back to Netcore, I worked through many interesting ideas but none clicked. Netcore’s growth started in mid-2005 when I professionalised the management to get past my inability to convert products into revenue. Our growth was led first by SMS and then email – both sold to enterprises looking to communicate with their customers. They created the early profits for Netcore which were reinvested into growth. The management team laid the foundation for a successful B2B business. From 2009 onward for about 10 years, I was peripherally involved in Netcore, focusing instead on initiatives to transform India: Niti Digital, Free A Billion and Nayi Disha. I eventually ended these efforts because I realised that changing minds and channelling votes for freedom and prosperity was going to be much harder than I had imagined. Ideas that seemed obvious to me were alien to most others.

Until 2019, my approach to Netcore was that of a majority shareholder involved only in key strategic decisions. The thinking was tactical – what needs to be done in the near-term. I did not have an intuitive and deep understanding of the spaces we operated in, and hence I made many mistakes on our expansion decisions. The business was profitable and growing, and I was happy. But I did not fully grasp the emerging world of B2B SaaS, CPaaS and martech, and how big the global market was. For too long, I was happy addressing just the Indian company. We stayed small for far too long – and it was my narrow view of the world that limited our investments into new growth areas. I said no to most acquisitions and funding opportunities. I was too cautious and focused excessively on profits rather than growth. I did have the outside in view. Netcore was a side project to my (futile) efforts to make Indians free and rich.

It was only after I decided to shut Nayi Disha in early 2019 that I started focusing more on Netcore. It took me many months to understand the new world of tech and the changed landscape that we operated in. In 2019, I attended many conferences in the US, and got a better and deeper sense of how the B2C communications and marketing worlds were coming together. Even then, I wasn’t sure of how Netcore fit in. The ambitions were narrow and short-term. Only through repeated conversations with Kalpit, Netcore’s CEO, did I start grasping the opportunity that lay ahead.



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.