Sulekha is one of the largest innovators in connecting professionals with customers that want those services. The marketplace goes beyond the similar Facebook marketplace and Kijiji model and pairs subject matter experts with potential clients.
Nathan Latka sat down with Satya Prabhakar to get the inside scoop inside this growing SaaS platform company. Key metrics include:
- 50,000 service providers
- 800,000 customers
- 50 Million run rate post-covid
Nathan Latka (00:00):
Hello everyone, my guest today is Satya Prabhakar. He’s an Indian American entrepreneur, engineer, writer, and the founder of Sulekha, India’s leading tech AI platform for expert services offering SME service providers the best mobile SaaS medium to grow their business through matched prospects and market intelligence. Satya, you’re ready to take us to the top?
Sulekha CEO Satya Prabhakar (00:22):
Yes, I am. Thank you for your time and for your interest.
Nathan Latka (00:25):
You bet. So, just to be clear, from a business model perspective, is this a marketplace business model or is there a SaaS component as well?
Sulekha CEO Satya Prabhakar (00:35):
Well, at this point until now, it is a marketplace business model where experts, and when we say expert services, is our services service providers who offer high-value service as there’s a lot of user engagement in terms of which service provider they choose for providing the service. So, for these things at this point, Sulekha is a marketplace model. What we have done is that we are for the SMEs, so that they can get the right kind of consumers, not just from the Sulekha platform, but also from outside of Sulekha platform, from the search engines and other local services market places.
Nathan Latka (01:23):
And you list all kinds of things on your website; finding ways to discover IT, finding jobs, finding rentals, all kinds of stuff. Take us back to when you launched the business. What was the first sector you targeted?
Sulekha CEO Satya Prabhakar (01:41):
See initially when we launched the business in 2007, and primarily in India, and we have a lot strong presence among Indians living outside of India also, which are the non-resident Indians. So initially when we started the service, it was primarily a classified scan of a service, which people were primarily… So as we evolved over the last about 10 years from the time, what we have done is we are focused on services as the mainstay of the platform, where consumers are looking for service providers, and service providers are looking for motivated buyers, which are consumers on this side. And there’s a lot of friction between the trying to match these two things, because the service providers don’t have the credibility of the brand, like big banks and they need an independent platform to test to their credibility and their reputation –
Nathan Latka (02:47):
And take me back-
Sulekha CEO Satya Prabhakar (02:48):
For the service-
Nathan Latka (02:49):
Give me the timeline here. What year did you launch the company in?
Sulekha CEO Satya Prabhakar (02:54):
We launched the company in 2007 in India.
Nathan Latka (02:57):
2007, okay. And then if we fast forward to today, over the past 30 days, how many people successfully found a service provider through your platform?
Sulekha CEO Satya Prabhakar (03:08):
So we have close to about seven to 8 million people who use the service every month. Seven to 8 million people who use a service every month, with our registered users.
Nathan Latka (03:22):
And what does that mean now? A registered users is less interesting than someone who actually got matched successfully with a service provider. So how many people actually got matched?
Sulekha CEO Satya Prabhakar (03:34):
The ones who are matched successfully to service providers per month would be around about 600,000 to about 800,000.
Nathan Latka (03:43):
Okay. And when you facilitate a match between someone looking for a service provider and a service provider, how does Sulekha make money?
Sulekha CEO Satya Prabhakar (03:53):
So what we offer to service providers, our revenue comes from the service providers, but the consumers it is free to use. So when the service providers subscribe to the Sulekha services based upon the city and the category in which the service providers are, we estimate what is the number of service matched and verified service requests that they get, and there is a cost that the AI algorithm of the platform estimates for that city category based upon the value of the service, based upon supply demand. And then says that in this period of time, we’ll be able to serve you so many match service requests and these match service requests are valued per service so much, and the system automatically comes up and say this is what you need to pay for a three month period or a six month period. So there is accountability on part of the Sulekha to the service providers in terms of what is the match to value that they would get from the platform.
Nathan Latka (05:01):
And so on average what’s a service provider paying you per month if you’re actively bringing the matches?
Sulekha CEO Satya Prabhakar (05:09):
Yeah, correct. And that one actually, Nathan varies from anywhere between $100 to about $2,500 a month.
Nathan Latka (05:19):
And it just depends on the number of matches?
Sulekha CEO Satya Prabhakar (05:24):
On the number of matches and also on the value on the service. For example, let me give a small example. If you’re looking at a painting contractor, the value of match service request can be $2 to $3. But if you’re looking at a large event organizer, the value of that thing can be anywhere between $15 to $20. So it varies based upon the business service, yeah.
Nathan Latka (05:49):
And have you raised capital to grow the business or are you bootstrapped?
Sulekha CEO Satya Prabhakar (05:54):
We have raised capital to grow the business. Yes, we have.
Nathan Latka (05:58):
How much have you raised to date?
Sulekha CEO Satya Prabhakar (06:01):
Until date we have raised about $40 million.
Nathan Latka (06:04):
Sulekha CEO Satya Prabhakar (06:06):
Nathan Latka (06:07):
That’s great. And so when you go out and have conversations with the markets, the VC markets, the equity markets about valuation of the company, are you able to tell a story to get a SaaS multiple which are usually higher than a traditional marketplace multiple?
Sulekha CEO Satya Prabhakar (06:25):
See, the thing is, as we are moving forward, there are two ways in which the core matchmaking platform is expanding. One is in the SaaS marketing model whereby service SMEs come to us and say that per month, I’ll pay you so much, and for that, we are providing marketing services for them to reach out to consumers across other platforms. So that is not based upon the core market based model that we have.
Sulekha CEO Satya Prabhakar (06:54):
The second one, actually, Nathan, that we are doing is there are certain services, and this is the exciting part of the business, is that there are certain services where the consumer and the service provider need not be located in the same city or the same locality of the city. For example, if you are a business consultant for opening actually restaurants and you can be located in the north of India and I can be located in the south of India and yet you can provide me the service. So what COVID has done, is it made it possible and it made it feasible for people to know that they can get services done from instructors, from consultants, from lawyers, advocates from anywhere across the country.
Nathan Latka (07:41):
Sulekha CEO Satya Prabhakar (07:42):
So that is the second income in which we are expanding.
Nathan Latka (07:47):
And if you take me back to your first year in business in 2007, do you remember how much revenue you did that first year?
Sulekha CEO Satya Prabhakar (07:55):
Oh, in the first year we would’ve done about $100,000, $200,000, $300,000.
Nathan Latka (08:01):
How did that feel? That must have felt great back then.
Sulekha CEO Satya Prabhakar (08:04):
Yes, it is, because see the thing I while mention is while India is an exciting country, it’s the last large internet market that is available in the world. So everybody is coming to India, everybody’s investing in India. But when you go back to 2007 the access to internet was very expensive, and very low in the sense, you were very fortunate if we had 512 KBPS access, right? It’s not the 30 MBPS access we right now. And people used to pay to their nose for that.
So from that onwards being here, it’s very difficult to gain acceptance for the business model. It’s very difficult and expensive to get consumers. So it was a very hard slot, at least in the initial period in India. Only now Nathan, in the last – from 2007 handsets that the whole market has exploded in India. And that is since when everything has become more exciting.
Nathan Latka (09:20):
Do you remember which year you had $1 million in revenue?
Sulekha CEO Satya Prabhakar (09:23):
We passed $1 million in revenue maybe in 2010, maybe around that time, yeah.
Nathan Latka (09:38):
Sulekha CEO Satya Prabhakar (09:38):
Nathan Latka (09:41):
And then take us forward to last year.
Sulekha CEO Satya Prabhakar (09:45):
Yeah, because Nathan, we are still a private company and we are not disclosing revenue yet for this one. So you’ll have to excuse beyond that regard.
Nathan Latka (09:57):
That’s fine. So you break $1 million in revenue though in 2010, right? Some of the challenges with scaling a model like this is making sure that both sides of the marketplace stay actively engaged. So can you spend some time talking-
Sulekha CEO Satya Prabhakar (10:09):
That is correct.
Nathan Latka (10:09):
… each side, how many individual consumers are putting a request to the platform each month and how many service providers are waiting for a request to hit them every month?
Sulekha CEO Satya Prabhakar (10:20):
So in this quarter we would have the number of live service providers who we have served, who have paid us money and served, would be in between 40,000 to 50,000 across India. And the number of consumers who are coming to get them, pre-COVID, it was about 1.1 to 1.3 million per month, because of COVID, people are not going out doing stuff, it has come down to about 600 to 800,000. But we are expecting in the next three months for it to go back up to about one and a half million per month again.
Nathan Latka (11:03):
How did you handle COVID in terms of your cash position? Were you trying to raise capital and did COVID hurt your valuation at all or no?
Sulekha CEO Satya Prabhakar (11:13):
Well, we don’t know if it has hurt our valuation, I am sure it has because see, the thing, Nathan that happened is that in the month of March of 2020, just in a matter of one month, our actually sales have dropped 80%, eight, zero, because the service sector SME was the worst affected sector in the whole space. Because of the lockdown they just can’t go and do any work, they can’t earn a living, they can’t make a living. And they were like that for three, four months. There were no events, there were no education, there was no home improvement, nothing. Everything froze for a matter of three to four months.
Sulekha CEO Satya Prabhakar (12:03):
And if they can’t make money, they can’t spend money, and they’re also saying, I can’t go to my house, nobody wants me in their house, so I can’t do that. So for a period of about three, four months, it was absolutely the worst period in the history of this company, and it has affected us very badly. But since then, as the economy improved, as the lockdowns lifted, as the vaccines got improved and our growth also has swiftly come back up there.
Nathan Latka (12:39):
Now, so you’ve talked about revenue. I’m trying to figure out why you didn’t tell me, but you chose to tell Live Mint back in 2015, you gave an interview that said your revenue was right around $30 million at that point, you were one of the only profitable internet companies in India with InfoEd and Just Style being the other two. Was revenue $30 million in 2015?
Sulekha CEO Satya Prabhakar (13:00):
Our revenue, including the US, we have a US business at the time. So at the time it was at that exchange rate at the time we were projecting that revenue at that time yeah.
Nathan Latka (13:17):
Okay, got it. So this quote that you gave the outlet Live Mint was a projected revenue for 2015 of $30 million?
Sulekha CEO Satya Prabhakar (13:24):
Nathan Latka (13:25):
Got it. Did you miss or hit?
Sulekha CEO Satya Prabhakar (13:26):
Yes. We were off by 20%, 25%.
Nathan Latka (13:36):
That’s pretty good, that’s still pretty good projection. All right, very good study. This is great. Now you are-
Sulekha CEO Satya Prabhakar (13:42):
We’re now trying get back to that. Yeah, just go ahead.
Nathan Latka (13:47):
So obviously you’re trying to drive additional growth in the business. You’ve raised $40 million of venture capital, which means you have to keep telling a very compelling growth story. When do you think you can pass $40 or $50 million of revenue? Can you do that this year or next year, do you think?
Sulekha CEO Satya Prabhakar (14:05):
We are projecting that happened is that in the US we had a very thriving events market where we were the largest and the most dominant player where people came and looking for events and looking for subscription to events and event tickets and all these things. So that market has come to a complete freeze. So we are expecting that in the year 2023 was when we’ll get that market back and once we get that market back, we’ll be able to hit the numbers that you’re talking about.
Nathan Latka (14:46):
Got it, that makes sense. Let’s wrap up here with the famous five. Number one, what’s your favorite business book?
Sulekha CEO Satya Prabhakar (14:54):
My favorite business book is The Effective Executive by Peter Drucker.
Nathan Latka (14:58):
Number two, is there a CEO you’re following or studying?
Sulekha CEO Satya Prabhakar (15:01):
The CEO I follow is, there is an India conglomerate called Data Sense, and the person who runs Data Sense is from the same college as I am, so I tend to follow him in terms of how they’re executing all these things. It’s $100 billion conglomerate in India that sells variety of services.
Nathan Latka (15:29):
I’m very bullish on India. We had Girish on with Freshbooks, we had Saravana with Kovai and Document360. There’s a lot of $50, $60,000 million revenue stats companies coming out of India, so something special is happening.
Nathan Latka (15:43):
Number three, what’s your favorite online tool for building the business?
Sulekha CEO Satya Prabhakar (15:46):
My favorite online tool for building a business?
Nathan Latka (15:51):
For building your business.
Sulekha CEO Satya Prabhakar (15:52):
At this point it is Microsoft Teams.
Nathan Latka (15:57):
Nathan Latka (15:58):
Number three, four. How many hours of sleep do you get every night?
Sulekha CEO Satya Prabhakar (16:01):
I’m sorry, I couldn’t get that properly.
Nathan Latka (16:04):
How many hours of sleep do you get each night?
Sulekha CEO Satya Prabhakar (16:05):
Oh, I get about between five to six hours.
Nathan Latka (16:09):
Okay, and what’s your situation? Married, single, kids?
Sulekha CEO Satya Prabhakar (16:11):
I am happily married with two kids.
Nathan Latka (16:16):
Two kiddos. And how old are you?
Sulekha CEO Satya Prabhakar (16:17):
I am 56.
Nathan Latka (16:20):
- So, your last question here. What’s something you wish you knew when you were 20?
Sulekha CEO Satya Prabhakar (16:25):
I wish I understood the power of compounded interest.
Nathan Latka (16:33):
Guys, compound interest is powerful. We just talked to Sulekha again, launched in 2007, did $300,000 in revenue, broke a million in 2010, now scaling up, trying to get back to $30, $40, $50 million in revenue post COVID. In the past 30 days or past quarter, 50,000 service providers have paid Sulekha something in response to over 800,000 consumers asking for services through the Sulekha platform, they are a marketplace model.
Nathan Latka (16:57):
Satya, we’re rooting for you. Thanks for taking us to the top.
Sulekha CEO Satya Prabhakar (17:00):
Thank you so much for your time.