Netcore Cloud founder Rajesh Jain met up with the GetLatka team to discuss the state of the iconic Indian marketing technology company. Jain chatted about the 25-year history of Netcore Cloud, revealed his future IPO plans, and introduced and defined for Latka his own founder term: proficorn.
- $95mm ARR
- Team of 750 at Netcore with 175 engineers
- Team of 150 at Unbxd with 60 engineers
Nathan Latka (00:00):
Hey, folks. My guest today is Rajesh Jain. He’s the founder of Netcore Cloud, a global marketing technology company that offers AI-powered marketing automations and analytics solutions. Rajesh, are you ready to take us to the top?
CEO Netcore Cloud Rajesh Jain (00:12):
Nathan Latka (00:13):
All right. This is an interesting platform. We could say you’re maybe one of the OGs in the marketing automation space. That means original gangster. Tell us what you’re building. What are customers paying you for?
CEO Netcore Cloud Rajesh Jain (00:25):
We got a full stack MarTech platform. I’ll put it in comparison to what US companies do, so it’ll be easier for people to understand, because we do a lot of things. We come from India. Emerging markets have been our playground so far, and we are now working to expand in the US and Europe.
CEO Netcore Cloud Rajesh Jain (00:45):
At the lowest end, we have a communications layer, which is like Twilio, SendGrid, API plus campaign management. Then we have engagement, customer engagement for B2C companies, like what Braze offers. Then there is the experience layer, product experience, so nudges and A/B testing inside there, like Pendo, which does this for B2B companies. We do this for B2C companies.
Nathan Latka (01:12):
Yep. It’s like Braze, plus Twilio, plus Pendo.
CEO Netcore Cloud Rajesh Jain (01:19):
Pendo for B2C. Then there is also search, search personalization recommendations, a bit like Dynamic Yield and Nosto. We recently acquired a company for $100 million, basically invested, one of the largest deals out of India in the SaaS space. It’s a company which primarily operates in the US, a company called Unbxd. They essentially do search recommendations, onsite search, exactly what Amazon does on its site, when you do the search for other sites. B2C companies, C2C companies, retailers, they do recommendations and they do PIM, product information management. It’s a full stack.
Nathan Latka (01:59):
You’re mainly selling to e-commerce brands?
CEO Netcore Cloud Rajesh Jain (02:02):
Yes. All our customers are basically B2C companies globally, very big in emerging markets, so India, Southeast Asia, Middle East, and Africa. We’ve got now about 40 customers that Netcore has directly in the US and about 100-odd customers that Unbxd has in the US, so a pretty significant presence now in the US also.
Nathan Latka (02:25):
How many total customers is Netcore working with, including Unbxd customers?
CEO Netcore Cloud Rajesh Jain (02:29):
Netcore totally has about 5,000 customers, but we have a few other products which basically add up to this. In the communications and MarTech space we would have about 1000+ customers.
Nathan Latka (02:43):
I see. Very cool. Now, talk to me about the Unbxd deal here for a second. They had raised $14.5 million from some B2Cs as well. When you guys put in $100 million, were you buying 100% equity or just a majority, 60%?
CEO Netcore Cloud Rajesh Jain (02:55):
We’ve bought 90% in the company. Founders own 10%, the remaining 10%. They continue to run the company, Pavan and Prashant, great team there. Investors are out. We are in and we’ll work together. There’s a great cross-sell opportunity actually with Unbxd because Unbxd customers can now get the rest of our stack, so email engagement, et cetera. We can take Unbxd to our customers across India and emerging markets.
Nathan Latka (05:45):
Now, just to, Rajesh, paint a picture here. This is a great setup, obviously for those two founders because now they’re building with you and maybe they obviously have some equity in the combined company, but they had raised $14.5 million total. Their last run was a series C in 2017 for $12.5 million. Now, if they were raising $12.5 million, that was probably at a valuation at around $100 million. Now three, four years later, they’re effectively selling for $100 million. This was not a big win for the VCs that had money on, right?
CEO Netcore Cloud Rajesh Jain (06:12):
I think VCs got a reasonable return on their investment. Actually, the way we got to look at it is that there are multiple rounds of VCs. The early VCs of course got a bigger multiple. I think for Unbxd, basically, the advantage that Netcore really brings in is that we bring in additional capital. We bring in our capabilities, our customers across the region.
CEO NetCore Cloud Rajesh Jain (06:38):
And for their customers, I think the ability to actually have a fuller solution with what Netcore also does, email engagement. I think what we are seeing this happen in the SaaS space is that marketers basically over time will want to work with fewer vendors. There’s a consolidation which is happening. I think the other big thesis that we’ve been working on is really the big shift which will happen from AdTech to MarTech. I can explain that.
Nathan Latka (07:08):
I would love to. I don’t want people to get lost here though on the headline, which is, you guys have some significant scale. You reported to the Economic Times, I believe last year, that you broke a $75 million run rate. Is that accurate?
CEO Netcore Cloud Rajesh Jain (07:19):
Yes. We are ourselves at about $85 million now, and we add Unbxd $10 million. We are very close to $100 million ARR now and completely bootstrapped.
Nathan Latka (07:31):
That’s my favorite part of this whole story, completely. You should be on the cover of every magazine on every billboard. People should be celebrating. When did you found the company? What year?
CEO Netcore Cloud Rajesh Jain (07:41):
I founded it 25 years ago…
Nathan Latka (07:43):
CEO Netcore Cloud Rajesh Jain (07:44):
… after I sold my first company for $100 million.
Nathan Latka (07:47):
CEO Netcore Cloud Rajesh Jain (07:49):
It was India’s first internet portals, basically targeted at Indians and Indians globally, especially in the US.
Nathan Latka (07:55):
What was that first company?
CEO Netcore Cloud Rajesh Jain (07:56):
Nathan Latka (08:00):
IndiaWorld. Was it a media business?
CEO Netcore Cloud Rajesh Jain (08:02):
We had a family of internet portals. I set up India’s first internet portals in March, 1995. I started just around the time Yahoo and eBay did. I was very early. I did it pretty much all from India. We got a very good exit when Satyam Infoway, which was listed on NASDAQ, Sify, bought my company for $115 million, pretty much all cash in November 1999. We sold I think at the right time, just before the NASDAQ crush.
Nathan Latka (08:33):
That’s amazing. Were you the sole founder there?
CEO Netcore Cloud Rajesh Jain (08:36):
Yes, we were. IndiaWorld and NetCore have one thing in common, and you’ll love this one. We are both what I call proficorns. Profitable, private, promoter bootstrapped, and highly valuable, highly valuable in excess of $100 million.
Nathan Latka (08:49):
What was the word you just?
CEO Netcore Cloud Rajesh Jain (08:52):
Profi-corn, like unicorn, proficorn, P-R-O-F-I-C-O-R-N.
Nathan Latka (08:58):
I love that. I’m stealing that, proficorn. I love that.
CEO Netcore Cloud Rajesh Jain (09:02):
Yes, proficorn, absolutely, Nathan.
Nathan Latka (09:05):
Give us more history here. $95 million run rate today, $75 million in 2021. What year did you break a million in revenue? You launched in 1998.
CEO Netcore Cloud Rajesh Jain (09:14):
We’ve had a few pivots along the way. The first 10 years Netcore did not grow much. We hit about a million dollars, I would say, in 2007 or eight, thereabouts. We’ve basically got two streams. We have what we call the high margin business, the platform business. That’s email, MarTech, and all the other things that I spoke about. That we sell globally.
CEO Netcore Cloud Rajesh Jain (09:40):
We also have an SMS business, which we only do in India. SMS of course is a little lower margin. The revenues are split between these two businesses for Netcore. SMS also is doing very well. Basically, we combine CPAs and MarTech together. We don’t do much of voice, but other than that, all of the full stack basically. The way I think of it is that the trend is really towards digital experience platforms really, other than the content part, big in emerging markets, and now looking to grow of course more aggressively in US and Europe.
Nathan Latka (10:19):
Fill out the revenue story though for me. A million in 2018. What’d you have in 2015 revenue wise? Do you remember?
CEO Netcore Cloud Rajesh Jain (10:27):
2015, I don’t remember.
Nathan Latka (10:30):
When did you break $10 million?
CEO Netcore Cloud Rajesh Jain (10:32):
I think we would’ve been over $10 million.
Nathan Latka (10:35):
What about 2018?
CEO Netcore Cloud Rajesh Jain (10:38):
2018 would’ve been, I’d say, about $50-odd million.
Nathan Latka (10:45):
You had a lot of growth from 2015 to 2018. In three years, you grew from $10 million to $50 million. What drove most of that growth?
CEO Netcore Cloud Rajesh Jain (10:54):
Two things, basically the big drivers have been that SMS grew in India, and we also expanded the platform business outside of India. The challenge for us is that the Indian market is actually quite small. Even though the customer base is very large, companies don’t pay a lot of money yet. The email market plus the MarTech business put together would probably be just about $150-odd million dollars, maybe $200 million across India and Southeast Asia.
CEO Netcore Cloud Rajesh Jain (11:23):
If you have to grow, we’ve got to expand outside. Over the last three years, the real growth has come from our platform business. We haven’t focused as much on the SMS business because SMS is low margin, a lot of operator involvement. We only do that in India, but it’s a healthy profit margin business. Where we see the future growth coming really is, and of course the valuation of the business, comes from the MarTech side of the business, email and the MarTech side.
Nathan Latka (11:50):
Now, you said that you’re eyeing $150 million ARR by 2024. I think you’re going to beat that.
CEO Netcore Cloud Rajesh Jain (11:57):
Yes. Now with NetCore plus Unbxd together, I think we should be doing much more than that. We’re also planning to do an IPO in India in about 12 months time. We are 25% owned by employees, so I’ve got to make sure they also get some wealth creation.
Nathan Latka (12:13):
I love that. The equity today, you own 75%, employees own 25.
CEO Netcore Cloud Rajesh Jain (12:20):
Nathan Latka (12:20):
I love this. 75 is Rajesh. Great. Then, take me back. Profits are a beautiful thing. I rarely get to talk about them on the show though because so few people have them. We should talk about them. When you did $75 million last year, how much profit?
CEO Netcore Cloud Rajesh Jain (12:36):
Our profit margins have basically been about 17 to 18%.
Nathan Latka (12:42):
You said 17%?
CEO Netcore Cloud Rajesh Jain (12:43):
Yeah, 17 to 18%.
Nathan Latka (12:44):
You profited about $12, $13 million last year, something like that.
CEO Netcore Cloud Rajesh Jain (12:48):
Nathan Latka (12:50):
A million a month.
CEO Netcore Cloud Rajesh Jain (12:51):
Yeah, a million a month is what we’ve been doing. That’s how the internal accruals have been.
Nathan Latka (12:57):
CEO Netcore Cloud Rajesh Jain (13:00):
The internal accruals to help us do the acquisition, the profits basically we’ve used to invest into Unbxd.
Nathan Latka (13:06):
Yep. Now, did you go raise debt to do that Unbxd deal or was it $100 million of your own money?
CEO Netcore Cloud Rajesh Jain (13:12):
We are debt free, zero debt.
Nathan Latka (13:14):
Where’d you get $100 million, if you’re only profiting $10 million a year? Your bank had $100 million in it and you used it on Unbxd?
CEO Netcore Cloud Rajesh Jain (13:20):
We’ve been profitable for 15 years.
Nathan Latka (13:24):
Wow. Wow. Before Unbxd, how much cash did you have in the bank? $120, $130 million?
CEO Netcore Cloud Rajesh Jain (13:29):
Just over $100, so plenty.
Nathan Latka (13:34):
That must be a little nerve wracking. You’re spending almost all of your cash balance on one deal.
CEO Netcore Cloud Rajesh Jain (13:40):
Basically what we look at it is Unbxd is a great asset. I think now that we’ve got the critical scale, it also allows us to tap the public markets. We could have gone public in India probably even a year earlier, but what I wanted was a story which is a global company, not just India and emerging markets, but also with a significant presence in the US.
CEO Netcore Cloud Rajesh Jain (14:04):
That’s what Unbxd gives us. It gives a fuller stack also. I think in the future, there’s going to be more consolidation. We want to look at funds raised from the IPO. We get a currency, plus we get cash both, for further consolidation as we go forward.
Nathan Latka (14:26):
Rajesh, I imagine a lot of people have tried to buy you. Don’t tell me who, but what’s the size, the dollar amount of the most recent acquisition offer you turned down?
CEO Netcore Cloud Rajesh Jain (14:38):
We haven’t got too many acquisition offers, Nathan.
Nathan Latka (14:41):
CEO Netcore Cloud Rajesh Jain (14:43):
See, I mean companies like us should basically, I’d say profitable companies, not too many in this space. Emerging markets are going to grow very well going forward. We’ve got some great innovations coming up, email 2.0, what we call the MarTech 2.0 stack also, which basically brings in a lot of AI for predictive segmentation, et cetera.
CEO Netcore Cloud Rajesh Jain (15:07):
Email 2.0 brings in some very interesting ideas to transform email, which has been around for a long time. I’d say that companies like ours, basically, we got a mix of CPAs and the high and the platform business. I’d say we’d probably be valued anywhere between 6 and 10 times revenues, and maybe with some bonus for being profitable.
Nathan Latka (15:29):
I know, you deserve a bonus. Maybe 800, 900 million valuations. With your IPO in 12 months, you could be IPO at 1.5, 2 billion valuation, something like that.
CEO Netcore Cloud Rajesh Jain (15:37):
Hopefully. I don’t want to preempt the markets. You know how they’ve been. I think for us, the intermediate valuations are not that critical because I really want to build it, as Jim Collins puts it, you’re in great company. We’ve been around for 25 years and we want to be around for another 100 years.
Nathan Latka (15:57):
I love that. Talk to me a little bit about churn. What’s your net dollar retention today?
CEO Netcore Cloud Rajesh Jain (16:02):
About 123% in net.
Nathan Latka (16:05):
How much of that is coming from expansion?
CEO Netcore Cloud Rajesh Jain (16:11):
I’d say about 13 to 15% in expansion.
Nathan Latka (16:16):
Sorry, to get net dollar attention, you subtract your churn, you add back your expansion. Shouldn’t your expansion be more than 23%?
CEO Netcore Cloud Rajesh Jain (16:25):
Let me correct that. I thought what you meant was the growth from existing accounts. You’re talking NRR, not the GRR number.
Nathan Latka (16:38):
CEO Netcore Cloud Rajesh Jain (16:40):
NRR would be roughly about 30%. We have churn off roughly about five percent, so five to seven percent.
Nathan Latka (16:45):
CEO Netcore Cloud Rajesh Jain (16:47):
No, annually. This is annually.
Nathan Latka (16:49):
Got it. You’re churning five and you’re expanding 30%, so net retention is 125, something like that.
CEO Netcore Cloud Rajesh Jain (16:55):
Our platform business is growing totally about 45%, so you add another 25% and 20+ percent in new customers.
Nathan Latka (17:03):
I see. Rajesh, how many folks are full time on the team today?
CEO Netcore Cloud Rajesh Jain (17:06):
We are 750 people in NetCore, another 150 people in Unbxd.
Nathan Latka (17:12):
How many engineers total?
CEO Netcore Cloud Rajesh Jain (17:14):
Engineers is about 175.
Nathan Latka (17:17):
Wow. How many sales reps that carry a quota?
CEO Netcore Cloud Rajesh Jain (17:20):
That’s 175 in NetCore, and add maybe another 60 in Unbxd. I’ve got to add now both the companies. We still run them independently.
Nathan Latka (17:27):
Okay. How many sales reps for quota?
CEO Netcore Cloud Rajesh Jain (17:30):
Sales reps would be about 100+.
Nathan Latka (17:33):
Do they all have a quota?
CEO Netcore Cloud Rajesh Jain (17:36):
I would say 65 to 70 would be a quota. What you’ve also going to remember in Netcore is we’ve got two smaller businesses also, which have been our legacy businesses. They also have about 100+ 125 people working on those. We have essentially Linux based, [inaudible 00:17:57] office and Google Gmail in India. That’s been a legacy business. We have also our own Linux based server. We also do some amount of acquisition, a tech type business. It helps us get into companies. The mail server business has been around for a long time. We basically sell resale security and [inaudible 00:18:17] solutions for companies, in India largely.
Nathan Latka (18:20):
You have huge penetration in India. I think you said 75% of India’s email traffic and 50% of Asia’s email traffic goes through NetCore Cloud. Right?
CEO Netcore Cloud Rajesh Jain (18:29):
Absolutely. We do 18 billion emails a month, which would be among one of the largest ones. We are probably one of the few independent email companies left in the world, given that most of the other companies have been acquired.
Nathan Latka (18:43):
Emails per month you said, right?
CEO Netcore Cloud Rajesh Jain (18:46):
Emails per month, 18 billion.
Nathan Latka (18:46):
Yeah, it’s incredible. All right, Rajesh. Heck of a story here. Let’s wrap up with the famous five. Number one, what’s your favorite book?
CEO Netcore Cloud Rajesh Jain (18:54):
Favorite book is Jim Collins, the book which came out about a year and a half ago, Beyond Entrepreneurship 2.0.
Nathan Latka (19:01):
Number two, is there a CEO you’re following or studying?
CEO Netcore Cloud Rajesh Jain (19:07):
Essentially I think a couple of our competitors, basically. I think Twilio has done a fantastic job. There’s a lot to learn from Twilio, and of course Salesforce. Both the CEOs I think have a lot to teach us on how to build very big SaaS companies.
Nathan Latka (19:25):
Rajesh, number three, besides your own, what’s your favorite online tool for building Netcore?
CEO Netcore Cloud Rajesh Jain (19:31):
Online tool for?
Nathan Latka (19:32):
Online tool that you used to build the company.
CEO Netcore Cloud Rajesh Jain (19:37):
We used Salesforce a lot internally, and Freshworks.
Nathan Latka (19:45):
Yep, it’s a nice comp for you in the public market. Number four, how many hours of sleep do you get every night?
CEO Netcore Cloud Rajesh Jain (19:51):
I get about six and a half to seven hours of sleep every night.
Nathan Latka (19:55):
What’s your situation?
CEO Netcore Cloud Rajesh Jain (19:55):
I wake up at 4:00 a.m., so I sleep early. This is late for me by my standards.
Nathan Latka (19:59):
Amazing. What’s your situation, married, single, kids?
CEO Netcore Cloud Rajesh Jain (20:03):
Married for 29 years.
Nathan Latka (20:05):
CEO Netcore Cloud Rajesh Jain (20:05):
I have a kid who’s 17 years.
Nathan Latka (20:08):
CEO Netcore Cloud Rajesh Jain (20:09):
Nathan Latka (20:10):
Yes. How old are you, Rajesh?
CEO Netcore Cloud Rajesh Jain (20:13):
I’m 54. I’ll be 55 in August.
Nathan Latka (20:16):
54 years young. Last question, something you wish you knew when you were 20.
CEO Netcore Cloud Rajesh Jain (20:23):
I wish someone had told me how important things other than engineering would’ve been, especially economics, psychology, all these disciplines. I think I realized the value of liberal arts pretty late in life. I wish I had known that when I was 20.
Nathan Latka (20:41):
Guys, we found a gem today. It’s so rare, a profitable company doing almost $100 million in revenue, launched in 1998, they broke a million revenue in 2008, 50 million in 2018, $75 million last year. They did their first acquisition, paid over $100 million bucks of cash, which was about 90% of their total cash in the bank at the point, so a big bet, added on 10 million bucks of revenue, but it helps Rajesh build out a full stack and move into the US market with an acquisition company called Unbxd. They’re looking at an IPO in the next 12 to 24 months. We will see what happens. Rajesh, thanks for taking us to the top.
CEO Netcore Cloud Rajesh Jain (21:11):
Thank you very much, Nathan. Great conversation.