Gupshup nearly died. Became $1.4 billion text company

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Joining me is someone whose business failed so many times that most people would started over with something new.

He didn’t. And today the business is worth $1.4 billion.

Beerud Sheth is the founder of Gupshup, a smart messaging platform that enables developers to build messaging services and bots that work across all channels.

 

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Beerud Sheth

Beerud Sheth

Gushup

Beerud Sheth is the founder of Gupshup, a smart messaging platform that enables developers to build messaging services and bots that work across all channels.

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Full Interview Transcript

Andrew: Hey, they’re freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy where I interview entrepreneurs about how they built their businesses. And joining me is someone who  I, this business basically failed so many times and most people would have said, okay, I’m going to start over with something new.

And today’s founder. Didn’t. He went from having a business that was bigger than Facebook in India to then having one that was completely unsustainable and basically had to be scrapped to now today, dude, all I see about you in the press is that you raised a hundred million dollars from tiger. The business is worth $1.4 billion and you figured out messaging for businesses.

And you’re to me, baroud chef feels like one of the few people who has, um, I invited him here to find out how Gupshup did it. And, um, we could do it. Thanks to one phenomenal sponsor it’s HostGator, but I’ll tell you later why you should go to HostGator too. host your websites. I’m kind of stalling here because brood you, so you and I met, it occurred to me just minutes before we started this interview, because you used to do these events here in San Francisco.

You invited me to speak, I was all hot on chat. Why were you doing those events?

Beerud: Oh, uh, I mean, you know, we want it to you’re right. Those are the early days of the sort of bot ecosystem, Facebook messenger and slack had just launched a bot API APIs. Right. And this, it was the early days of the conversational trend, uh, that I think is still going to be here. Uh, but, but the hype cycle at that time was huge.

And, you know, and there were the ups and the downs and so on, but in the early days, you know, we really wanted to just tell us to meet up, to get the community together, uh, to figure out what people were thinking to share ideas, exchange and stuff. It was a very small inactive community. And there’s really exciting at that time.

Right. I remember you coming and speaking and many others, so it was just good to build up the community of practitioners.

Andrew: I didn’t realize when we met that you were also one of the founders of E-Lance, which is now Upwork. I had no idea that you’d end up becoming the founder of this, um, this unicorn startup what was the name? It started out as Weber Ru what was Weber Ru.

Beerud: Oh, that was a, that was in the early days we had some, uh, crazy idea of the offline web, right. The web to go as we called it then, which is, you know, those are the early days of the mobiles. On ecosystem, mobile networks are not as good. And if you could take your iPod with you with all your music in your pocket, could you do the same with the web as well?

Anyway, it was, uh, you know, mobile networks got good. And while we developed some cool technology, it didn’t as a business, it sort of didn’t work much. Right. So we sort of pivoted away from that

Andrew: what year was this?

Beerud: I think 2007, maybe 2008.

Andrew: Okay. Just around the time that the iPhone came out. And today, can you give me an example of how Gupshup is being used by businesses?

Beerud: Sure. So, you know, we are a messaging, a conversational messaging platform, right? What that means is you have banks and e-commerce and airline and travel companies, and so on. They need to communicate with their customers in real time. Right. So your bank tells you, okay, you spend, you know, $10 at the cafe.

Your e-commerce company says your order is confirmed your packages. You know, your flight is booked, your hotel is confirmed and so on. So all of these notifications, uh, there’s uh, billions of messages that go out from businesses to consumers. And there’s a lot of complexity in the middle. So we have that platform in the middle that sits between these enterprises that want to send messages and the consumers that want to receive them.

Right. So it’s sort of the it’s, it’s, what’s called customer engagement, uh, businesses trying to, you know, communicate and update their customers in real time.

Andrew: So my bank might tell me via what via WhatsApp that I don’t have enough money in my bank account.

Beerud: So a great question, right? Traditionally it used to be text messaging and SMS, right? You would receive a, just a basic SMS, but these days that are more messaging channels. Yeah. You mentioned WhatsApp. That’s clearly one of the newest and biggest messaging channels. And then there’s telegram, Skype, quite a few others.

And then Gupshup itself has launched something we call GIP, which is short for Gupshup IP messaging channel. But the point is, you know, it could be any one of these channels, uh, that could enable the delivery of that message, you know, depends on the user preference. It depends on the enterprise product.

Andrew: Okay. And what you do is you allow them to do it all safely and to not have to figure out all the different APIs and the different rules and the different formats of information, buttons, carousels, et cetera, on these platforms, they just log into or connect to Gupshup and you handle all that for them.

Beerud: That’s that’s exactly right. Right. In fact, uh, there are different message formats, like you said, there’s also sort of one way notifications and two way conversations. Right? When you, for example, when the user applies saying, I want to reschedule my package delivery, or I want to upgrade my flight. Well, then the business has to handle those user queries coming in and they could be in the millions.

Right. And then do they send it to a human agent? Do they, or do they automate it? Right. All of those options. I mean, it gets fairly advanced, fairly complex. And then if you want to automate the queries, then you need AI and other tools as well. But this whole idea of businesses chatting with consumers right, is a very powerful idea, right?

For a consumer chatting with the business should be as easy as chatting with a friend, um, to do, you know, get support, to buy things, to find deals and offers, whatever it is they want to do with any brand or business they should be able to do just as easily as chatting with them. Yeah.

Andrew: I can’t wait for that world. I feel like I always think that it’s there. We’re almost there almost there it’s coming and then it doesn’t, but I I’d love to be able to just text my bank and say, how much do I have in the account right now? And then get a response that’s meaningful. I, I, frankly, I can’t even get them on the phone and I don’t want to, I’d rather do this.

All right. But that’s the world that you’re in. You’re actually doing this. What’s the revenue today.

Beerud: Oh, we, um, you know, we ended last year at $150 million revenue run rate. Right. So the business has grown substantially. Yeah. And, uh, you know, it’s a combination of both sort of, uh, like I said, one way messaging, which is very high volume and then two way conversational stuff, which is newer, but also growing fast.

Um, so our, you know, the bulk of our business is actually in Asia, in India in particular, but we are expanding globally because you know, these newer messaging channels work equally well all over unlike text messaging, which is different in different countries,

Andrew: All right. So let’s see how you got from there to here from Weber OU, which didn’t work to this, which is, which is killing it. And then also I’d like to hear what your, what you think the future of this place of this space is. Um, how long did it take you to realize that Weber was not going to work?

They’re condensing the internet and putting it on people’s phones. Wasn’t going to be the.

Beerud: Um, I think it was about two, two and a half years maybe.

Andrew: Okay of just going in and what made you finally say this? Is it? Cause I think you raised $10 million under that.

Beerud: Yeah. Yeah, we did. And you know, so we, um, we developed the tech, um, which was, I mean, it’s a, it’s a very interesting engineering and sort of, uh, computer science problem. Of how do you create a representative cross section of the web and keep it within, let’s say 50 gigabytes or something, something that fits on a little device or a USB drive.

And that time they were actually smaller drives and so on. Right. So we developed the tech and then took it out there. Right? We’d put it up. Pen drives or on a laptop desk or on a CD drive and things like that. And had some partners, you know, take a look at it, try actually distributed salad and so on. And I think, uh, the, the, you know, I guess it just didn’t take off, right?

I mean, I think so the, the, the, the traction wasn’t there, um, of course people would try it for novelty value. There was a lot of buzz and interest in the idea, but, you know, PR does not a business. Right. So, uh, we just sort of, at some point you just have to say, wait a minute, this is not gonna, um,

Andrew: sales, not enough for usage, right.

Beerud: exactly.

Andrew: Easy to dismiss it and say how naive we were back then when we thought we could condense the most important parts of the internet onto something that’s like a USB drive, but let’s look at what made sense about it. And when you look back, what was it? That was logical that, that you’re proud of.

Beerud: Oh, well, I mean, you know, the, the, the logic behind it was really, um, you know, that’s how we use, uh, music, you know, devices, iPod had just come out. Right. And if you remember the early versions of the iPod had no connectivity, I mean, it’s really, you just connected to your laptop, download songs onto it, and that’s it.

You carry it around and, you know, you don’t, uh, So, so it was just, it just go with you in your pocket and you’ll have access all over, even on a flight where there’s no connectivity or if the mobile networks were not good. And in the early days, you know, the networks were very, very slow. So, so I think it sort of made sense.

It just damned anticipate how fast, um, these technology shifts happened, paradigm, you know, how

Andrew: Were there some aspects of the internet that did make sense? Obviously, I think maybe I shouldn’t say obviously, but Wikipedia made sense. It wasn’t a lot of data and people could search and get real meaning. Were there other elements of the internet that made sense to offload.

Beerud: Yeah. I mean, I think, uh, you know, there’s a lot of like say, you know, travel information tourist. And for me, I mean, there’s, there’s a lot of redundancy and duplicate, uh, you know, duplicate information on the web. Right. So if you really just say, okay, How much content is really unique, unique, and meaningful, and yet covers all of that.

Right. I think it’s an interesting sort of, uh, a computer science problem, like I said, but I think from a business standpoint, it was just, uh, it didn’t make sense, partly because you know, technology got good and consumers don’t behave that way. Right. They don’t spend the, they don’t like to download. Right.

Even with apps. For example, if you think about it, there are millions of apps. Of as any more than a few dozen apps on our devices. Right. So let alone trying to set up, you know, like 50, 25, 50 gigs of data. Um, it just would not make sense, right.

Andrew: Okay. So then the next evolution, according to an article I read in Forbes, India was. That you, you said, I think what we could do is let people communicate via SMS. How did you find that out?

Beerud: So I think, you know, th the, the key was look, these were early days of, uh, of mobile, right. And really, um, you know, some of this was okay. If mobile networks are not good, what could we do? But as they were improving, Um, we said, okay, how do we build services that reach billions of users. Right. The amazing thing about mobile.

Again, we take it for granted, but the, the sort of desktop web, if I can call it that right at that time was maybe a billion users, but the mobile, uh, give or take, right. But the moment you took it to mobile, suddenly the web became accessible to billions of users, almost four or 5 billion. And today it’s a lot bigger, right?

So. When you look at that trend, you’re just seeing this, you know, a whole bunch of new people multiples of the existing web population, then, uh, getting online. And, you know, it’s an opportunity for them to form habits, to create things and so on. So if you want to build any service that reaches every one of these users, sort of the lowest common denominator on mobile phones was text messaging, right?

SMS. Uh, that’s the only thing that works. So that was sort of the key insight to say, okay, you know, if that’s the trend. Protocol the equivalent of, uh, you know, IP messaging on the internet, right. Uh, then TCP IP on the internet. What can you, what can you do? And that’s where we got started now. So he came up with this, uh, you know, so a lot of it was just brainstorming, looking at our own usage, kicking around ideas and so on.

And we sort of came up with the idea that. Exactly like Twitter at the same time that Twitter came about. Right. If you think about it, it was also inspired by, by SMS. And hence you have this cataract board character limit in, in Twitter now is it was the same thing, you know, publish, subscribe, you know, your followers while somebody could post a message and it would reach the followers.

And so on. Now Twitter sort of, because it was in the U S essentially became a web product inspired by SMS while you know, what we ended up launching was initially in India and it stayed as an SMS product. Right? So it, it, it grew very widely kind of like Twitter, same way grew to like 60, 70 million users, very, very rapidly.

Uh, but also dramatically increased the SMS traffic, which got very expensive.

Andrew: This was after Twitter. Were you inspired by Twitter and how they used to send essentially all tweets by text message. And you could also tweet via text message. Was that where it came from?

Beerud: No, because, like I said, it’s sort of about the same time, right? So we

Andrew: Just the same understanding of the world.

Beerud: Yeah. We launched our service in about 2007, which if I remember roughly, I mean, so we heard about Twitter much later. Um, right. So, so no, it was sort of different. Yeah.

Andrew: Why India? Why not? In the U S.

Beerud: I think that’s a great question. I think we, uh, you know, you’re right. I was in the bay area, but our, the bulk of our team, uh, the engineering team was, uh, was in India. And we were looking at, um, I think they just went with sort of parts that they were comfortable with and that worked in there in that context.

And so, you know, just one of those sort of, uh, accidents of history really.

Andrew: And the way it would work is if I wanted all of my family to get my messages, they could subscribe to me. And when I sent out a message, it would go to all of their phones as text messages. And then if I wanted another group of people, of all the people who I work with to get messages from me, they would subscribe to a different set of messages.

And when I texted out, it would go to all of them.

Beerud: Well, it’s sort of it’s, it’s not like you could do multiple because on one phone, you know, you’re just posting a message and so on. So it was really just a, I mean, you were the group, uh, you know, it’s sort of like your Twitter handle and when you posted all your followers, Uh, so the same idea. Right? So, so, but, but the cool thing was you send one SMS and then we would send out 10,000 to 10,000 followers, for example.

Right. So, and by the way, when they replied, we would also send the reply back to you so that you could reply one-on-one right. Which is kind of like DMS, we call it right now. So sort of the similar idea.

Andrew: And the way that you wanted to monetize it was through advertising. And then from what I understand, a couple of things happen first. It could became too expensive to send out thousands of messages. Every time someone decided to, to message out. And second advertising was heavily regulated in India. Am I right?

Beerud: That’s exactly right. Right. So I think both, it got too expensive to subsidize and it was still difficult to monetize. So, you know, that game, another pivot point.

Andrew: big did you get when you realize that? How many, how many

Beerud: Oh, we were, uh, you know, it was like 70, 75 million users at peak. We were sending out like 4 billion messages a month or something. I mean, we single-handedly created this mobile messaging industry in India because we were about 80 or 90% of the. Enterprise messaging while Liam just ourselves, because people loved it.

I mean, this is really, you know, super engaging. And that was the only way to communicate in large communities with mobile phones. Right.

Andrew: The people also have to pay for each text message. Did they have to pay their phone company in addition to the fee that you paid the phone company,

Beerud: Well, so I mean, a person is sending one message, right? Which doesn’t cost a lot. I mean, so of course they would pay for that, but we would pay for 10,000 messages.

Andrew: but then do those 10. Oh. So each of those 10,000 people is just paying for, but they are paying for that one message that they’re getting.

Beerud: No. So the way it works in most countries outside the U S is incoming is free. So to receive messages, cost no money, um, it costs only to send so, so the group owner, right, the publisher would pay for one message  would pay for 10,000 messages and the recipients would pay for.

Andrew: All right. So this is 2011. You realize this thing is not working. You need to pivot. Do you ever think I’m done? Let’s start with a new idea.

Beerud: maybe I should. I don’t know. Uh, no, I think, you know, for me it just, uh, there’s a few things, right. I think, uh, when you take. Funding from investors. I mean, you have a sense of model obligation, you know, at some level that you want to do your best and, you know, provide a good return to anybody that, that backs me.

Right. I mean, that’s one part of it. So I don’t like to, uh, quit or, you know, at least let’s, let’s give it one more shot if you will. Right. So that’s sort of at a, at a personal level. And then at a, at a business level, I mean, you’re. You know, you’re in it. You’re thinking about it so long as you’re learning and observing, right?

It’s not like it, it dramatically ends one fire. I mean, one fine day, right? Your realizations are growing. And as you realize, this is not working, you’re also thinking about, okay, what’s not working. Why is it not working? What can I fix it? How can I flip it around? Like, how can I change it? You know? And, and, and by the way, at the same time, what is working and how do I retain that and how do I grow it and scale it and so on.

Right. So I think, yeah, for me, just giving you. Wasn’t an option. It wasn’t an attractive option. I don’t like to do that. And in general, I’ve just believed that, you know, I think there’s rarely a situation that you can innovate your way out of right now. The only thing sometimes is if you don’t have a runway and so on, that can be a challenge.

Uh, we did have a little bit of capital enough to be able to navigate these things.

Andrew: So what was working and then how did you use that to become a B2B company?

Beerud: I mean, what was clearly obvious is just sort of mass engagement of users, right? Which at least sort of in the Indian market, we create a single handedly created ourselves when I was working in scaling. Well, because people loved receiving messages. People loved sending messages. I mean, it was clear from both anecdotal and, you know, quantitative, both qualitative and quantitative feedback was very, very positive.

Clearly, uh, you know, this messaging platform as a way to engage consumers was very powerful. What was not working was sort of the business model, right. Because consumers, I mean, they love the engagement, but they can’t pay for it. Uh, so we said, let’s find, you know, let’s keep the platform, but find somebody who, who can pay for it.

And clearly, you know, clearly just by shifting it to enterprises saying, okay, bank or an e-commerce company or an airline and so on, they have the same. Yeah. They need to, you know, or consumer goods companies and so on, they are eager. They’re hungry to engage their customers. Right. And they have the ability to pay for it.

So, so that was the change where we sort of scaled backs and you know, all these publishers that were just loving, you know, they’d share, I don’t know, jokes and inspirational messages and so on. I mean, there was nice, but it was expensive for us to subsidize. We sort of had to scale that back and then allow businesses and brands to send out their updates,

Andrew: Was it kind of like MailChimp for text messages for SMS.

Beerud: Um, sort of right. Uh, you, you, you do have a list of customers and you’re sending out notifications to them. Right. But, uh, but they may, it’s the list could happen in, in many different ways, right. When somebody opens a bank account, I mean, typically your phone number is your ID or your identity. Right. So that, uh, And by the way, over time, even regulators required businesses to send these notifications.

Right? So these were just sort of customer lists and they would have any events, you know, several events would trigger these notifications.

Andrew: what type of events.

Beerud: Uh, like I said, right, every time you charge a credit card, for example, you know, uh, you get notified. Now, the interesting thing is even the banking regulators realize that this is a great feature because it reduces fraud, right?

Because if you have identity theft and somebody else is trying to charge your card, but you notify the owner. And, and so on. Right. So I think it ended up becoming a security benefit and, uh, and just use it. Right. So, and so that customers would expect that text message to come. And if it doesn’t, they think the transaction didn’t go through.

Right. So, so suddenly a lot of these things, also two factor authentication, you know, as a one-time password. For logging into banking systems. It became a useful tool, um, with the rise of e-commerce, you know, basically every transaction, uh, right. Leads to notifications. And it’s a little hard to appreciate this again, in the U S because in the U S a lot of this happens over here.

Or maybe over a voice call, right? Because you have a lot of call centers, you have, uh, you know, email carries a lot of this, but in places like, uh, you know, but the India and other places are mobile first ecosystems, right. That’s how customers came onto the internet, just purely through their mobile device.

So the email habit is not strong. The voice habit was not there. Uh, call centers, you know, you don’t have nearly as many. Uh, but messaging, it’s all about messaging, right? That’s sort of the most, the heaviest usage, uh, of the, of the, uh, of the mobile device. So really just about anything you do in your life, right?

Your bill payment reminders, your, you know, transaction notifications and any alerts and your loyalty points. I mean, just you name it. Just, everything is notified through, through text message.

Andrew: And this was before Gupshup started turning into a B2B company

Beerud: Uh, no, I think it was around the same time. Right. Because like I said, at that time we had the biggest sort of messaging platform. I think, uh, some businesses were doing a little bit of this, um, but not enough. Right. And it sort of in. We both enabled it, accelerated it. We showcased our experience with these large communities and customer engagement, which also provided a lot of proof points and data points for them.

Right. So we both created it and enabled it and got businesses to do it even more. Right. So over time they they’d start with one use case, but then they added many, many more use cases and so on. So the volumes grow and you know, and that’s really how our business grows.

Andrew: And then another issue. But before I get into the other issue, I should say, this interview is sponsored by HostGator. If you need a website, you should know. I host on HostGator. You should host on HostGator. It’s an expensive, it just fricking works. That should be their motto, just fricking works, go to hostgator.com/mixergy to get their absolute lowest price.

They’ll give you a big discount. That’s not even a big discount because it’s already inexpensive. They’ll give you a discount on an already an expensive product, which will make it even less expensive. And just as incredibly reliable, I love HostGator. Go sign up at hostgator.com/mixergy. So my producer put this a note in front of me about how 2013, despite having made this change to, um, To business to business, you were running out of money again, and it had something to do with how your expenses couldn’t keep up with your revenue.

I’m sorry. Your expenses were outpacing revenue and you couldn’t cut back on your expenses without hurting revenue. What was going on?

Beerud: Well, and so, you know, like we discussed a little bit, right. Um, businesses were new to using messaging mobile messaging as a way to engage customers and. Obviously, um, our revenues were tied to their volumes and if their volumes are slow to grow than our revenues would grow slowly. And, um, of course, you know, we’d, we’d be eager to push it along faster.

We had developed a lot of technology, a lot of use cases, a lot of marketing material, education, evangelism, all that good stuff. Uh, but you know, um, some of these enterprises, they have their own. Timelines. They operate at a different pace. They have, you know, integration takes time and so on. So while, yeah, while we did have revenues, but you know, it did take a certain amount of a certain size of team to sort of keep the lights on, right.

To keep the platform running, uh, to, to have it scale. To make sure that it’s reliable and works well and continue to invest, you know, add new features and capabilities and so on. So I think it’s just a, one of those things where I think our last funding round was in, I mean, until the recent one was in 2011 and, but a couple of years later, right.

We kind of came, I think within a couple of months of, you know, sort of running out of runway,

Andrew: Oh, wow.

Beerud: So, yeah, I mean, I think it’s really, those are hard choices, right? Because if you sort of cut costs that can also impact revenue, which is, which becomes a bit of a vicious cycle,

Andrew: Oh, so it wasn’t that you had to keep advertising in order to beef up your revenue. It was that the infrastructure costs to maintain this, to hire developers. That’s where the cost was.

Beerud: That’s exactly right.

Andrew: Um, how what’s your experience setting up sales teams? It doesn’t seem like that’s in your background. How do you get an enterprise sales team put together fast enough?

Beerud: Yeah, I think, look in general, you know, no entrepreneur can do everything. So the important thing is to surround yourselves. With good people. Right? So I think people who can compliment your skills, you can build it. So obviously, you know, I mean, look this whole story. I mean, you’re talking to me alone, but it wasn’t me alone running the, running the business.

Right. I mean, there were clearly, we had a management team, we had a whole bunch of people I think are a hundred, 150 people and so on. Right. So I think, but, but as the, as the leader, um, The hard thing is, you know, especially in these sort of trying and difficult times, right? On the one hand you want to be open and sharing about, uh, business metrics so that everybody knows how we are tracking on a day-to-day basis.

On the other hand, when the metrics are tracking are lagging, right? Uh, the expectations, uh, it can be a challenge to keep the team together. Uh, do beer out to, to sort of, uh, keep a straight face to make sure that let’s, let’s stay focused on the execution, let’s do this. Or, or for example, it’s even harder things, right?

Like maybe we can’t do the same kind of bonuses and, you know, salary increments that we had previously discussed or we’ll have to skip this year and we’ll make it up hopefully next year and things like that. Right. So they, I mean, those are sort of the hard conversations, but that’s really, um, you know, A leader has to do in the sort of trying circumstances.

So we had good people, we had loyal people, but okay. I found that in these situations, right. If you’re just authentic, if you’re just honest, you’re just sort of very clear saying, look here, here’s the difficult thing, but, but here’s why I’m still optimistic. Here’s why I think, you know, there’s an opportunity here and here’s why I’m still here myself.

Right? So, uh, I think. And that puts things in perspective and say, look, you know, we, you have, it’s a rollercoaster ride. It can be, there’ll be ups and downs, but I’m sure we’ll get through this. And once we get, once we get past this, you know, obviously the, the, the numbers add up and it looks nicely, the unit economics were good, but just the aggregate, you know, um, element was sort of PNL was not as good.

And then we had to sort of ride that out and, you know, navigate those tricky moments.

Andrew: So text messaging is what we’ve been talking about, SMS up until now. What I know you for is messaging on WhatsApp messaging, using chat bots, et cetera. What’s the first step outside of SMS that you took. What other what’s the first platform.

Beerud: Um, you know, a great question. In fact, uh, we’ve always been eager to push beyond the limitations of SMS, right? Because I mean, SMS is great. It’s truly ubiquitous works on every device. Um, You’re restrict the user experience is restricted to 160 characters of plain text. And, you know, we’ve always felt that you could do so much more by making messaging richer and more interactive.

And so on the first step we actually took, you know, to your question, uh, was we, we, uh, in fact, pioneered a, a messaging app, uh, called a team chat, which was, you know, probably one of the first examples of a similar. Yeah, a messaging app, if you will, where each message could have, you know, um, sort of logic inside, right.

It could, where you can have images and buttons and not just carousels, but you could also aggregate sales figures or have a poll or a survey right. Within the message itself

Andrew: a chat app. It’s on its own. I’m looking it up and I haven’t seen anything yet.

Beerud: Yes. Yes. It was a standalone chat out. Now this dates back to 2014 or so even before I think slack and Facebook messenger introduced.

Andrew: was this meant for teams to communicate within, within their organization.

Beerud: Yes. That’s

Andrew: Uh, okay. So you said we should do more than more with tech. Why teams? Why go into a slack like product?

Beerud: Well, I mean, because on the consumer side you getting consumer downloads is prohibitively expensive, right? I mean, I think if we had a consumer like product, it would be even harder. Right? So at least with teams, you can go into an organization and if they like it, if the manager likes it, they can, you know, Get the org to adopt it and so on.

Right. So, so that was the initial focus. But look, those are, those were early days where all messaging, including slack. And so it was all very basic messaging. Right. But in our case, uh, what we had said was each message could be. An object unto itself. Right? Imagine like a pole that you, for example, you see on Twitter now, and it could be a survey or could be carousel and interactive elements, right.

Within the message. In fact, I remember we called it, you know, chocolates. Uh, these were like a little, you know, servlets or coding modules embedded inside a chat message. Uh, it was interesting, but anyway, the point is, you know, it, while the product didn’t scale, we just, we were the earliest to experiment with some of these interactive messages elements.

And since, since then, I think we’ve been pushing the limits of what’s possible. Right. So, so we said, look, instead of creating our own app, meanwhile, you know, Facebook messenger opened up APIs in 2016. So that slack, I think that was around the time when we met first, we were doing these meetups. There was a lot of buzz and hype around, you know, conversational experiences, chatbots and so on.

Um, and I think got it. It did scale a little bit, but not far enough because I think, uh, not enough consumers. Um, we’re using, I think Facebook messenger is a very different kind of it’s friends and family kind of chat experience. Right. It’s not sort of, uh, because, uh, at least in the U S it’s, uh, people use it in a very specific way.

Andrew: Was Facebook, the first platform that you went on

Beerud: Yeah.

Andrew: It was

Beerud: Everything. It was about the same time. I think.

Andrew: And Facebook was really eager for people to build on their platform. They wanted to replace email and one way that they were going to do it was by allowing companies to reach, to reach their, their users on Facebook messenger.

And I’m guessing their idea was eventually then they charge per message for businesses to reach their users. Right.

Beerud: To this day they haven’t charged. So there was no specific business

Andrew: Because they haven’t made it work for businesses. That’s why. Right.

Beerud: Right, exactly. Because I think, uh, you know, it never took off in scale.

Andrew: Okay. And, and part of what you bring up makes a lot of sense. If I’m looking for messages from my friends, I don’t want businesses flooding my inbox for us. I’m not going to see the messages from my friends and I could do it with email because there’s nothing time sensitive. We’re not much with chat.

Everything is time sensitive. And if I don’t look at chat because I’m afraid of all the spam in it, even for an hour, it takes away the utility.

Beerud: Yeah, perhaps. Right. So, I mean, I think, I think that’s probably the primary reason, but whatever it was, I think, you know, bots built on Facebook messenger have I think to this day sort of limited scale and reach, right. We’re seeing, uh, but fortunately right after. WhatsApp opened up business, API APIs as well, and, and so on.

So I think we’ve seen far greater attraction with WhatsApp now, even they have the same problem where of course you’re with friends and family chat right there, all your personal conversations are in there. And then when you add business conversations in the same screen. So, so of course. Careful and rightfully so, you know, uh, WhatsApp has a lot of limitations.

They approve each account. They approve templates. Your users have to Optane users can also opt out and block and so on. Right? So there’s, there’s a lot of algorithmic controls to manage spam and such, uh, Yeah, but we’ve seen a lot of interest in businesses, you know, especially in countries where WhatsApp is dominant.

Right? So certainly, uh, India, Europe, uh, Africa, Latin, uh, you know, seeing a lot of heavy WhatsApp usage. And when businesses start using WhatsApp to communicate with consumers, then you know, they on the bank end, they need to link it either to a customer. Dual or, or to an automated chat bot. Right. So we have seen a resurgence in, in sort of adoption of bots and conversational experiences.

And I think the, the hype cycle from 2016, right. Like five years later now is sort of, I think, uh, achieving its potential and reality. Right. And sort of that ties to the entrepreneurial journey where it’s not. Things are taking long and you’re struggling. And you say, give up because you always believe in this vision, but you say, look, the ecosystem’s not ready.

Right. And when it’s not ready, then you can’t rush it. It’s a bit like surfing. Right. You could be the best surfer in the world, but you don’t have the right wave. You have no choice except to wait for it. Right. Uh, but, but you have faith or you have belief that it will come and it will happen. And sometimes you just got to stick it out, you know?

Andrew: And did you, you had businesses who were signing up to do these Facebook experiences, right?

Beerud: Yes.

Andrew: Okay. You know what? I actually invested in a couple of companies that did this because I got hot, hot, hot on the, on the possibility one of them was selling to larger enterprise. And what he told me was they were willing to spend money, not for results, but to learn so that they wouldn’t be late to this.

And the money that they were spending is not that much, a hundred, $250,000 deal for a startup here in San Francisco. That’s just proving out an idea. It’s a lot for them. It’s it’s a nice small inventor. To learn. And if they’re hot on a new thing. Great. If not, they’ve learned something that they’ll use later on that’s it seems like where you were, maybe when you and I met in 20 16, 20 17.

Beerud: That’s exactly right. Right. So we had a lot of customers too, and it just ended up being that they were, I mean, they were early adopters, but ended up being an experiment because, you know, The user traction and the ROI doesn’t bear out. Then after some time they just sort of move on to other projects,

Andrew: Okay. And then the one platform that you just brought up is the one that I’ve seen. You talked about a lot, the WhatsApp business integration, what’s different with WhatsApp beyond the fact that it’s more, it’s used more widely in other countries and use more widely, maybe even India.

Beerud: I think, uh, uh, C compared to, let’s say a Facebook messenger in the U S right. I mean, in the U S people use text messaging already quite actively. Right. And then Facebook messenger is yet another messaging app. And. While, while when you look at WhatsApp in the emerging markets, it actually completely crushed SMS, right?

The P2P messaging conversations are just completely, almost entirely migrated onto WhatsApp. Right? So it, it really is the only messaging platform there is virtually no, uh, PDB SMS happening on the traditional SMS platforms. Right. So, so it’s an app that has a very high. Uh, intensity and frequency of usage.

Like people use it 50, maybe a hundred times a day. You’re always messaging and all your communications are in there. Right? So it’s a sort of a far more intense and intimate experience, um, of WhatsApp in, in India and Africa versus let’s say Facebook messenger in the U S so, so you’re starting from sort of a very heavily used tool.

And then when you allow businesses to engage. And so long as it doesn’t overwhelm the personal conversations, then those messages get read and people interact with it and engage with it and have these messages are good then sort of it builds on itself.

Andrew: And so I’m on, I’m on Gupshup now gupshup.io. I can see that there’s marketing marketing is one of the first use cases that people were excited about for Facebook messenger, the ability to send out messages and have people say, I want 20% discount and even buy within chat. Commerce is where peop where the users.

I’m looking to buy from a store, they load up the page, they load up the chat experience and then they could see pictures and buttons that allow them to buy what’s in the pictures. Right. And then support, which of these is the one that’s most popular right now?

Beerud: Oh, um, I think certainly commerce, right? That’s where the money is and that’s where, um, you know, always,

Andrew: actual sales are happening in WhatsApp.

Beerud: so, so, uh, I think some of it, yes. Uh, subject to payments being integrated. But short of that, right now, when you look at a transaction, there are many elements of it. So certainly, you know, uh, browsing products and order taking is, is one part of it.

But then order confirmation and then. Package tracking, delivery, logistics, right. Things like that, um, are, um, you know, there’s, there’s many different elements to it. So people have started when, when businesses start with any new medium they’ll, they’ll start with specific and small use cases and then say, oh, this is working fine.

Now let’s do another and let’s do another. Right. So it hasn’t fully gotten to. Order taking and payment yet though. I think WhatsApp is releasing some new features as we speak that will enable it and make it easier. Right. So, so, but, but bits and pieces of the commerce part is getting, getting adopted. Um, and then the other, uh, next in importance might be support, right?

Customer support. I mean, businesses provide. Um, WhatsApp based, uh, customer support to their consumers. And that, that again is a very effective, popular, uh, thing to do by, by businesses.

Andrew: Yeah, that makes sense. Right? You just send a message to a company that you’ve just bought from. You have a question they can support you via chat and unlike something like, uh, uh, Intercom, for example, which happens on the website, you can just shut your browser, come back later and know that there’s, that the response will be there.

But which of these is the biggest, uh, is the biggest use case? Where, where do you see the most activity? Right.

Beerud: Yeah, I think commerce, I mean, everything transactions and commerce. Um, you know, and when I say commerce, I mean a little more broadly, meaning like say, you know, banking transactions, lending updates, bill payments, collections. You know, um, um, ordering or the confirmation logistics notifications, right.

Everything around, uh, transactions is, is sort of the bulk of the use cases.

Andrew: Okay. Do you see more, um, to get more of your business now from. It’s like WhatsApp and Instagram chat than you do from SMS.

Beerud: Not yet, but it’s growing rapidly and I can easily see in a, in a year or two, you know, we’ll be.

Andrew: Wow. All right. So let’s talk about the future then. What do you see here? What’s going to happen in chat.

Beerud: Oh, I think, uh, you know, uh, at the risk of, um, I certainly, this is more real than, than it was in, in 2016, but, but I have a lot more data points to sort of believe that that is indeed the case. Right. But, um, but it’s, it’s a conversational future where, uh, you know, the way consumers and businesses talk to each other will be entirely through the sort of.

Interactions and it may be text. It could also be voice. Okay. Um, I think if I take a broad sweep of, uh, technology history, right? The way humans interact with computers, uh, sort of it changes every decade or so. Right in the, in the mid eighties, when the PCs came about, it was sort of the devil. Way, right.

You had a banking app and a gaming desktop app that you downloaded and used it in the mid nineties. It became web right businesses at websites that you use a browser to go visit there. And then in the mid two thousands, you had mobile apps, right? You had a banking app and a gaming app, and you download it onto your mobile device and use it.

And I think now the interface is going to switch to a, a conversational experience where businesses and brands would have. And these chatbots, if you will, and consumers would use their messaging app to go interact with these, these different chatbots. And it’s going to be as broad and as widespread as the web era was right.

You have what, billions of websites and so on. I think every business, every brand has to have it because that’s the digital storefront. That’s where consumers are walking in from. Now I think it’s going to be, you know, through, um, through conversational experiences and, and all of this, if it sounds really aggressive and audacious, I mean, we, look, we need to look no further than China where we chat.

Right. Which is the messaging super app. It really is a tool to interact with every business, you know, and all times. And I think it’s a very sort of powerful example of what’s possible when messaging and conversation experiences become very much.

Andrew: Do you think that we’ll end up with chat where we text message or like write messages or is it going to be more and more buttons being added into a chat?

Beerud: Um, I think it really depends on context. There are times where, as a convenience to the user, you know, if you have four options and then just present the options and let them select one, right. Which is easier than typing. Uh, but there are times where, you know, there may be a thousand options, right. Or it could be one of many things a user could do in which case they use, it would just type it in saying, Hey, you know, can I, can I upgrade my account?

Because they could have said a hundred things and that’s what they said. Right. So, so now if it’s structured interactions, they are easier to build. If it’s unstructured conversation, then of course you need AI. It. To figure out, you know, to decipher, uh, the user message, uh, to figure out what the intent is and so on.

So, yeah, but I think both, I think it’ll all happen and even voice right. Will come in. A lot of it is just a matter of context, like what is being discussed? What, uh, are you in a private room or in a public setting, right. If I own the car or in your kitchen, you know, voices. Okay. But if you’re in a meeting or in a public place, um, in not work and so on.

So I think, eh, That’s sort of somewhat secondary as to what sort of conversational mechanism is used, but the fact that this is how we all interact with businesses is inevitable.

Andrew: Oh, yeah. You know what? I use Siri all the time, but you’re right. They’re places where it doesn’t make sense and I have to hold back on it. Do you think eventually the Gupshup will work with Siri

Beerud: Oh, yeah, absolutely. I mean, I think, look we, yeah, we have, we have integrations with Alexa and Google assistant. Um, I think, I don’t know if CD has APIs or not, but certainly, you know, I mean, for us, each of these is a separate channel, right. Which is if a business builds a bot, it should work on WhatsApp or telegram or, you know, Alexa and Google assistant doesn’t matter.

Andrew: Why’d you raise so much money from tiger. Global management, a hundred million dollars valuing you at 1.4 billion. I’ve seen this so many times. What was the, what are you looking to do next? Where’s the money gone?

Beerud: Well, um, so a couple of things, right? Firstly, we see this massive opportunity ahead of us, right? The, the, the rise of IP messaging channels, right? Like WhatsApp and others, uh, is hugely disruptive. Um, and then, you know, um, going from one way messaging to two way messaging is even more so transformational, right?

So the, the, the scope of the industry has just expanded dramatically. It’s a much bigger market. Um, it feels like a, like a land grab really, right. There’s so much, so much to build so much to invent so much to do. Um, virtually every business is going to going to need it. It feels like the early days of the, of the internet.

So to be able to execute against that opportunity. To be able to, you know, quickly, you know, so we are adding a lot of, uh, you know, we are expanding our team dramatically where, whether it’s an R and D right. A lot of engineers or, uh, also on the sales and marketing side, you know, taking it out to customers and so on.

Um, we are looking at potential M and a situations as well, right. Companies that can augment our product offerings and such. So all of that is, I mean, needs capital. And then on the other hand, there is a lot of interest from investors in multiple things. Right? One of course, India is. Potentially one of the fastest growing markets over the next decade or two.

Right. Very sustained, very long growth rates. Um, second go away, right. Has accelerated a lot of digital transformation for businesses. Um, and then sort of messaging the industry that we are in is actually sort of the foundational. Bland fights and enablement platform for, for e-commerce, for banking, for all kinds of services.

So really because of those three things, I think there’s a lot of investor interest and yes, we announced the a hundred million dollar round, but we have some more announcements coming up as well, uh, with

Andrew: funding announcements.

Beerud: uh, yes, with even even more and even bigger, uh, sort of set of, uh, funds.

Andrew: Okay.

Beerud: Yeah. So I think there’s a, you know, I think we, the important thing for us is can we use the capital in the right way for the right things and really scale up and scale up the business.

So that’s what we focused on.

Andrew: All right. I don’t want to end this interview without asking you about E-Lance you founded Elan’s back in, what was it? 98. Am I right

Beerud: Yes, that’s correct.

Andrew: today? The idea of going online and finding a stranger, who’s going to code up anything for you. It’s natural. It’s not crazy. In 98. What was it like to get customers to sign up?

Beerud: Yeah. You know, it was, it was really hard. I mean, things that we take for granted now, I was just joking with my co-founders and early employees. Right. Which is, it was really hard. And it took, you know, two decades in a pandemic for remote work to become conventional wisdom. But back then people would say things like, you know, what, if you know, how can I, I can’t work with someone that I can’t see face to face.

What if they run away with my money? What if they, you

Andrew: What if they don’t do the work the way that you want it to wasn’t oDesk also, I think it was oDesk that would let you see screenshots of what your people were doing when you hire these freelancers.

Beerud: Right, right. But ODS came much later. They were founded in 2004 or five. Right? So back in 98, when we were literally the only ones in the pioneers, I mean, there were a few other companies, none of which are around at the moment. But these are the kinds of objections would hear. Right? What if they don’t speak my language, they’re in a different time zone?

How can they, do they even know how to code in other parts of the world? You know, things like that. And, uh, it was, yeah, just a very, you know, the, the internet really opened everyone’s minds, right. Not just connected our computers. So I think, I think, uh, it was difficult, but we found, you know, you made headway and sort of smaller segments or new software and technical and website development were the early categories.

Writing and translation and transcription and so on. Right. And, and mind you in 98, you can track location, but let’s say when smartphones came about and you could do location that also gave rise to Uber and Lyft and door dash and things, because now you can find a service provider, right. A block away from you as opposed to the world away from you.

Right. So, so we had to focus on remote service location, independent. Services and also virtual services because the physical stuff won’t work as well on the web. So yeah, it was a, it was, those were the days. Yeah.

Andrew: So, how did you get customers? I understand that what you did to get the freelancers were you went to ITT, IIT, Bombay, and no. Did you did, and then you started looking for people who could do this on the side, and they said, sure, it’s great money. I could work on the side, made a lot of sense for them, right.

Students.

Beerud: Yeah, but with businesses, it was, it was tricky. Right? Uh, all, all these objections and so on. So I think the only thing in the beginning that, uh, we would. Encourages look you’ve, you know, so you find these sectors where businesses are struggling to find talent, right? If you, now, if you remember, these were the go-go days of the early days of the internet, uh, right.

It was hard to find engineering, talent, software developers, website, developers, and so on. So it’s a look you’re, you’re having a hard time anyway. And the ones you find are either not good or super expensive. Why don’t you give it a shot? You know, it’s it’s and you don’t have to pay if it doesn’t work, but if it works, you might be surprised it’ll be a lot cheaper.

It will be better and so on. So people would just out of, in the beginning, just out of desperation, right. They will try it, a lack of alternatives. And then they say, wait a minute, you know, these it’s actually in many ways, just as good or better. And it’s a lot more cost-effective and, you know, and then sort of word of mouth and then we’d highlight showcases, but them on the website, but it was a lot of hard, you know, hard work in terms of evangelizing educating, explaining, and we had to build a lot of product.

To address some of these risk factors, which are justified, right. We had to set up escrow and dispute resolution and arbitration and, and also tools for businesses to specify. You have to document everything right. When you work remotely versus when you work verbally face-to-face so, um, I think all of those, so the product had to improve the marketing, the education evangelism took a while.

Right.

Andrew: The marketing was partially showing off the wins. I remember Kevin Rose.

Beerud: Yes.

Andrew: on your side talking about how he used Elan’s and the fact that he would use anything meant others were following along. So you guys were great with content marketing. Great. With influencer marketing. What, where was the heart of your customers?

Where were they coming from? Was it online ads? Was it salespeople? Something else?

Beerud: Yeah. Uh, no, it was mostly, you know, we were targeting the sort of the SME market. Right? So search ads. I mean, again, you know, we were among the earliest advertisers at Google and what we found was Silicon valley itself. Right. So emerging startup. Right, who are always short on cash. They want to do more with less.

They want to move quickly. And so on. I mean, they, they ended up being the early adopters in many ways. So I remember in fact, even Tim Ferris was a big fan of Ellanse, uh, in the early days and so on. Right. So basically the, the, the startup ecosystem really resonated well with the value proposition that Elan’s offered.

Andrew: All right. And you stayed on until the merger that created, um, Upwork.

Beerud: Well, so I was at Highlands for about eight or nine years in an operating role. I stayed on the board for another five or six years until the merger happened. Uh,

Andrew: Nice, impressive as hell,

Beerud: and, and I’m still a major shareholder, so I’m happy with it. Yeah.

Andrew: I bet. all right. The site is gum. shop.io and gum shop means conversation. Am I right?

Beerud: Chit chat. Yes.

Andrew: chit chat in what lane?

Beerud: Oh, Hindi Sanskrit, many, many Indian languages. You know, I joke with people, they should remember this as the next famous word from the language that gave them yoga and Nirvana. And Kamasutra.

Andrew: Gotcha. All right. Thank you so much for doing this. And, uh, I hope we’ll get to see each other in person again. And I had no idea that that you’ve done so much. I had no idea the business was so good. You were just way like modest and calm. I think you’ve made enough that you can be an a-hole you call it.

Beerud: Uh, I don’t think so, but. So, I mean, you know, it just, I’m just doing my stuff. I think, I mean, I enjoy this, I do it because I like it. Right. It’s not a, it’s not an ego trip. It’s not an exercise in vanity. It’s really, I genuinely enjoy the process of creating, innovating, inventing new ideas, uh, and making a dent on the universe as they say.

Right. But the rest of it, the trappings of it are not interesting at all.

Andrew: All right. Well, congratulations. Thanks so much for being on here and it’s gupshup.io for everyone.

Beerud: Andrew. Thanks so much for having me.

Andrew: Thanks.

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