Andrew: Hey there, freedom fighters. My name is Andrew Warner. I am the founder of Mixergy where I interview entrepreneurs about how they built their businesses for an audience of real entrepreneurs who are looking for insights and excitement from the stories of people who built phenomenal companies, not just average, not just okay companies, but phenomenal companies.
Joining me today is an entrepreneur who saw mobile happening back when most people just didn’t fully get how far advanced it was going to be, and he’s nodding in agreement, nodding in satisfaction. Am I right?
Arish: That’s correct.
Andrew: Yeah, but it still was super painful to be that prescient, to see into the future. His name is Arish Ali. He is the founder of Skava. They make versatile e-commerce platforms for retailers. They’re being used by companies like Kohls, by companies like Barnes & Noble, to sell online. He launched it. Suffered through it. He built it. He succeeded. He sold it, and then, well, we’re going to find out how that happened. Boy, it was a big sale too.
This interview is sponsored by two phenomenal companies. The first will host your website right. I’m going to tell you this painful story that happened just today, and we’ll explain to you why you need to work with HostGator for hosting.
And the second is a company that will help you find your next phenomenal developer. I have a feeling that Arish is going to end up being one of their customers by the time this interview is over, but I’ll tell everyone, including you, Arish, about them later.
First, Arish, good to have you here.
Arish: You’re welcome. Thank you for having me here.
Andrew: Do you remember the . . . well, how much did you sell to Infosys for? How much money?
Arish: $120 million.
Andrew: $120 million. And how much funding did you take to get to that point?
Andrew: Zero dollars. Wow, and the company was founded when?
Andrew: So, really, you were ahead of the curve on mobile way, way, way before the rest of us had mobile devices and were doing any kind of shopping on the phone.
Arish: That’s correct. I call it the stone age of mobile. So we were building mobile apps and mobile platforms in 2002 all the way to kind of before there were iPhone and Android operating systems, which is a very . . .
Andrew: And the iPhone was launched when? 2007? 2008? I think it was the App Store . . .
Arish: Yeah, exactly right. So 2007, 2008 is kind of when we started taking off. So we were kind of building apps for multiple devices, very fragmentary ecosystems. There wasn’t a real kind of big enough market for mobile at that point. I only remember one [inaudible 00:02:35], a company called JAMDAT data. IPOd. Got acquired by EA and became EA Mobile. It was the one real kind of mobile player that made it big. Most of the companies in that space kind of died away or kind of just went away or became, like, a smaller shop somewhere else.
We kind of survived through that rough era [inaudible 00:02:55]. Unfortunately, that’s what we had to live through. Very hard to make money in the space. So we managed to kind of get bootstrapped, get some kind of money coming in through building games and apps and putting them on any app store we could.
Andrew: I found a Dummy thing that you built. We’re going to talk about that in a moment, but why don’t we start with the exciting period. Do you remember the day that the sale was announced?
Arish: Oh, absolutely. So the [inaudible 00:03:17] . . .
Andrew: What happened that day? How did you find it? Bring me to that excitement, and then we’ll see how you got there.
Arish: Obviously, there’s a whole process that goes into selling a company, and that happened through many kind of years and the months before that and hectic kind of . . . closing the deal takes a lot of time. I flew to Bangalore. I was there for one very frenetic week where I hardly sat for a whole weekend stretch kind of ironing all of the details and then finally when kind of our [inaudible 00:03:43]. Infosys had a board meeting kind of and approved it, so it was official.
I was exactly at that time going to take a flight to meet my team in [inaudible 00:03:51] where they’re located, and that’s when I found out that this was official. It’s public. It’s all done. So it was an amazing kind of feeling for me. I flew down to [inaudible 00:04:00] and met my team, kind of announced to them as well that as of today they were all part of a much bigger kind of thing. We had reached kind of a next stage of our evolution as company. Then I went back . . .
Andrew: You know what? I hear a lot of entrepreneurs. They, like I know myself, go to sleep at night worrying, “What’s going to happen tomorrow?” The whole world could change, it feels like, or some competitor could come and knock you out. I wonder if at that point when you finally had that sale, were you able to just breathe out and go, “Okay, things are going to be fine now?” Did you feel that?
Arish: Yeah. Absolutely, absolutely. It’s a big kind of weight off your head, if you will, because we had built a successful company, and we were kind of an oddity in Silicon Valley, I would say. We had actually built a profitable company, and we had bootstrapped it, and we had been staying very focused on [inaudible 00:04:51] we might grow a bit slower than many other [inaudible 00:04:53] companies do because they’re quick. They take a lot of funding and try to grow very fast. Our [inaudible 00:04:59] wanted to make it to be . . . it had to be a real business, and the reason is . . .
Andrew: So part of the reason is, as I understand it, you worked for a company in the dotcom bubble when the bubble burst, right?
Arish: [inaudible 00:05:11].
Andrew: Which company did you work for there?
Arish: A company called Brience. It was a very heavily-funded kind of . . . in the wireless, middleware space. It was a startup, and they had some of the coolest kind of people out there, very smart sort of mobile people, and many of them have gone on to start their own kind of fantastic companies afterwards. It was a big learning experience for me, but this was right around the time of the dotcom crash, so [inaudible 00:05:31] . . .
Andrew: So how did you feel? How did you experience the dotcom crash? This is like all these companies started to get funding and go public. This is on the heels of Netscape. People were becoming millionaires overnight, getting tons of funding, and then all at once, within a year, it seemed to have all gone away. Talk to me about how you experienced it. Do you remember one day when you thought, “Oh, my goodness, what did I get myself into?”
Arish: Yeah, so it’s interesting. My cofounder and I flew down from Seattle. We were working at Microsoft. We left a very cushy job in a big company that was doing very well to join a risky startup, to take our chances. Came here. Very exciting for the first few months or a year, I would say, and then it all kind of just fell apart, right? San Francisco was a ghost town at that time. You could walk around the city, and all these kind of [inaudible 00:06:17] companies are just no longer there anymore.
So it was a very kind of educational experience, and our own started kind of slowly. People started getting laid off, and there started to be smaller and smaller groups of people, and at some time you realize, “It’s time to move on. This is not going to happen anymore, right?” So it was very personal experience. Again, we lived through it, and that I think really helped us. It formed our point of view that we have to build a business more than just something that’s going to be a fad.
Andrew: That had to be profitable and had to be . . .
Andrew: . . . something that was sustaining. We’re now recording this at the tail end of 2018. There are people who have gone 10 years without seeing one of these downturns in the economy, who don’t know what it’s like, who haven’t prepared themselves emotionally, haven’t prepared themselves financially for this, who are going to be in for a world of pain. You had your foundation in that. I wonder why. Why when you saw this was possible did you go and start a company? Why didn’t you say, “Hey, you know what? My partner and I met when we were working at Microsoft in Seattle. Let’s go back to Microsoft and beg for a job instead of starting another startup.”
Arish: That’s exactly [inaudible 00:07:21]. That’s was a decision point for us. We thought, “Hey, we are not going to go back to Microsoft but join Google,” which was the next sort of Microsoft of that era. I figured we were joining that as a big company that was growing fast, but recently we had been through it. We had been through Microsoft. We learned a lot at Microsoft. It was a fantastic kind of educational experience for us, but we didn’t want to kind of just go back and do that again. We had the freedom to go and start something on our own, and we really believed in mobile. More than anything else, kind of we really felt this was the next big thing and if we got in [inaudible 00:07:52], we could do something big there. It just took way longer than we thought [inaudible 00:07:57].
Andrew: When you say you believed in mobile, for the most part, the mobile phone that was hot back then was a flip phone, right? You flip it open. You’ve got the nine buttons plus the pound and the star. You talked about JAMDAT. They created games that would work on these little phones with no color. Let’s not color the past. When you were looking at it back then, what did you see that made you say, “This is my opportunity?” You saw people do what? What did you imagine was going to happen in the next year or two and took longer?
Arish: Yeah, so what we felt was just from those times that devices like the Nokia [inaudible 00:08:31] came out, which was the first device which actually allowed you to write in Java, J2ME, [inaudible 00:08:36] and of a programming profile built in an app that ran on a phone, and that’s what excited us. Now you can build an app which [inaudible 00:08:45] on a PC. You could carry them on your phone, and the whole spectrum of what you could do . . . so when we started out, we wanted to build a platform that would enable mobile-to-mobile communication [inaudible 00:08:56], not phone calls, but you could actually have apps communicating from one device to another device. That was our big idea [inaudible 00:09:03].
Andrew: Like what? Give me a use case of what you thought you were going to . . . you didn’t have one?
Arish: Like multiplayer games. Like if you want to play chess with somebody else, you would need some server software running in the cloud somewhere, and back then the cloud was not really [inaudible 00:09:16] out there. You needed to have a server running [inaudible 00:09:17] which would allow you to communicate and do that, and you [inaudible 00:09:21] problem like the way mobile connections keep on dropping off. So there’s a lot of work you have to do at the server level to enable kind of great kind of communication between apps.
Andrew: And you said, “We’re going to be the back end. We’re going to empower that. If Andrew has an idea for a chess game that people can compete head-to-head on, good on him. We’ll power that. If someone else has an idea for a shoot-em-up game, good on them. We’re going to power that. This is the future. Mobile to mobile.” You launch your company in 2002, as I said. What is the first version that you came out with?
Arish: So we found out very soon that it’s very hard to sell a platform. We tried. We went to gaming conferences, GDC, and other events and tried to have people buy into it. First, there was no kind of need for a multiplayer game because people were still thinking about single-player games at that time. Even they were a novelty at that point.
So we actually started building kind of our own sample games, some multiplayer games, and we built some. There’s a game called Spades, which is a card game that we built out, just a single-player one, and that became very popular. It was a top-selling game on, like, Sprint and a couple of other kind of operators, and that allowed us to see the first dollar coming in into our company, and that was very exciting for us.
So then we said, “Okay. There’s something here. There’s some way to kind of make a business out here. How do we improve that?” So the multiplayer portion took a bit of a back seat for us, and we started building more and more kind of these apps and games and [inaudible 00:10:43] from there. We needed to kind of bootstrap the company.
And then kind of it grew slowly from there, and at some point – I think when iPhone and kind of Android and these started coming out – at that time we stepped back, and we realized that the mobile gaming and app business was a Hollywood business model. If you got that one hit, you had it made. Great. Lots of money coming in for a certain amount of time. And we had some hits as well. Like, you mentioned the Dummies app and some of those other apps we did. One of those was actually a top-selling app on the App Store in 2008 [inaudible 00:11:10].
Andrew: What was the top-selling app?
Arish: Spanish for Dummies. It was [inaudible 00:11:14].
Andrew: But that happened later on. Let me stick with the beginning. In the beginning, to get on a phone, you had to go and make a deal with Motorola and get them to say yes to being on the phone. And so before you had any games, were you able to get partnerships with these handset makers?
Arish: Yes. Not just handset makers. You had to split carriers and handset makers. So you had to go and find [inaudible 00:11:35] AT&T and Sprint and [inaudible 00:11:37].
Andrew: And you did both of that. Do you remember when you got your first carrier and handset deal?
Arish: Yep. It was Nextel, and we got, I think, one or two apps. There was a cricket game, funnily enough, that we put out there, and then there was this space game that we put out there through an aggregator. There was a company that we met at one of the tradeshows who was aggregating content for the operators to where [inaudible 00:11:59]. So we worked with them, and they published our first title on Nextel.
Andrew: Oh, okay, and the advantage for Nextel was Nextel was a carrier like AT&T. They were charging monthly for these games, and then the extra cost was getting hidden in the phone bill. So your phone bill would go from $100 to $102 a month or whatever, and you’d have this extra game, and they’d have the extra revenue.
Arish: It was a one-time revenue for most of them, not monthly. Some were monthly later on It’s just like you download an app for $2, and it’s on your phone, and you can play it as long as you want.
Andrew: Okay. So you were starting to make had way. At that point were you able to make enough money to support yourselves?
Arish: Yeah. So we started kind of making some money through some of these apps and games that we were building out, and then it started coming in. You had to kind of really go up and get in front of the carrier and show why your games are unique, because they would feature you. If you got featured, you got lots of downloads. So we started getting some money out of that. It was still a very, very kind of small amount of revenue, so we went through a [inaudible 00:13:01].
Andrew: Give me an example. What was so rough about it? I don’t want to brush over it and make it feel like you just instantly landed where you are.
Arish: So I just [inaudible 00:13:09]. I actually have a . . . so you know the Social Security statement you get at the end of every year which tells you how much Social Security income you have. I had been getting a $100,000-plus salary for the last few months before I left the company. When we started this company, I actually had a year where I had zero income in that one whole year. [inaudible 00:13:27]. We went from [inaudible 00:13:29] . . .
Andrew: So you went from over $100,000 to $0. How did you feed yourself?
Arish: I had saved. I had saved up some money. I had kind of [inaudible 00:13:36]. Then we had moved from a larger apartment to a studio apartment. So there were a lot of things we did personally to kind of cut our costs and [inaudible 00:13:45].
Andrew: When you say we, were you married? Did you have a family?
Arish: So my wife and I, we were both cofounders of the company, so we both were in this together.
Andrew: And you both said, “Hey, you know what? We’re going to go into a small . . .” now, when you go to a smaller apartment, do you feel a little bit different about yourself, and then do you feel a little more embarrassed about having people coming over to see this new version of you?
Arish: I don’t think we really cared about that [inaudible 00:14:08].
Andrew: You didn’t care at all.
Arish: We didn’t care about that at all. Absolutely. We had friends at both our old apartment and our new apartment, and they all knew what we were trying to do, and they were very kind of helpful and supportive. In fact, many of my friends [inaudible 00:14:19]. We never felt any of that.
Andrew: Okay. All right. So you’re building these games. I interrupted you as you were starting to say, “It’s a hit-based business, and we knew that we couldn’t be in that.” Let me take a moment to talk about my first sponsor and come back and ask you what you did once you realized this is a hit-based business.
Okay. Here’s a thing that just happened recently. Tumblr said they are not going to have porn on their platform. It’s a thing that I brought up in past interviews. Tumblr had kind of built itself up with a porn background. Most people don’t see it.
Here’s the part that affects our audience. They’re not in the porn business, but I saw this artist who said, “I went to see which of my content was taken down or flagged by Tumblr,” and one guy showed a picture of a cat that had, like, runner’s legs, and because the runner’s legs had a little bit of hair on them, somehow that triggered Tumblr’s software, and Tumblr flagged it, and I’m sure that, for many people, their sites are going to be impacted, either completely put down or aspects of it will get taken down because Tumblr is going to decide it’s not a good fit.
So what does this have to do with my first sponsor, a company called HostGator? There are now a lot of companies that are in the builder space. They will make it super easy for anyone to build a website. You pay them monthly. You get your website. It super easy to build. It’s fantastic.
Here’s the problem. You and your business are now at the whim of them. If they decide that they want to be aggressive about a certain type of content, you can get taken down, and it’s not like you can take your whole site and move it to a different hosting provider because if you build on one of those builders, you’re locked into their software. That’s why I like building my websites on WordPress. If I don’t like the hosting company, I take my WordPress website and I move it to another company. I don’t like them, I move it again and move it again and move it again. There’s nobody who can stop me.
Same thing for you. If you’re building a business on someone else’s platform, you’re really hurting yourself. Build on a platform that you can take with you, and HostGator will work with WordPress and Magento and all these open-source platforms. If you want to do a shopping site, they even have WooCommerce. Of course, of course they do. And frankly, their site has been around forever and doesn’t charge a lot of money, so you know you can count on them to continue, and you know that you’re not going to have to pay a bunch of money to run your website.
Do what I did when I started a new business. I went to HostGator. In fact, I went to hostgator.com/mixergy because they gave me the lowest possible price. If you go to hostgator.com/mixergy right now, you’ll get a super low price. It’ll be easy for you to get started. Build up as many websites as you want for one reasonable price. Reasonable is not right. It’s actually unreasonably low, and if you’re ever unhappy, you can move it.
hostgator.com/mixergy. I’m so sorry to the people who are on Tumblr who are needlessly getting flagged. That’s another problem. Tumblr stopped evolving a long time ago. You build on someone else’s platform, they stop evolving, your whole site stops growing.
Okay. So coming back to the story away from the ad, you realized that these game businesses were hit-or-miss. What did you do next?
Arish: Well, next, right around that time kind of mobile started taking off. That’s when the iPhone and Android had come out and people were starting to really use the devices. We really felt that shopping on mobile was going to be a big thing. I remember kind of going and creating a demo, going to a large retailer and showing them a demo for shopping [inaudible 00:17:30] site. I still remember the president of the company saying, “Shopping on this thing, I don’t think that’s going to be a thing,” but he was nice enough to introduce me to some of his technology folks as well, and we kind of started working with them. It was a good partnership.
But that was the really early days for us, and we realized our startup simply did not want to be in kind of the hit business and kind of the game business. We wanted to really do enterprise sales. We wanted to go and get a few customers, and our focus was, “Let’s go find some good customers, large customers who have kind of weird problems when it comes to mobile and mobile commerce and see how we can help them because we have the right expertise. We’ve been in the mobile space for many years now. We understand the challenges that they are [inaudible 00:18:09] experience in mobile devices, and we have built a platform.”
Andrew: Why . . . I’m sorry. I interrupted you because I’m excited about this. This is the pivotal decision. I’m wondering why commerce. It wasn’t obvious back then that commerce was going to be a thing. It’s a pain for people to type in their credit card information using their thumbs, and that’s the way we had to do it back then. Screens are too small to really evaluate. It feels like more of a move, move, move experience as opposed to spend time, focus on it. There was content. You could’ve created a content publishing platform. Why didn’t you go for content? Why didn’t you go for your own e-commerce site? Why’d you want to do this?
Arish: Yeah. So there are two reasons for that. One is if you’re building your own kind of content mix, publishing content on mobile is really an easier problem. Enabling commerce and transactions is a hard problem, and we wanted to make sure we were solving a hard problem because that gives us some [inaudible 00:19:00]. It allowed us to kind of leverage our expertise in kind of [inaudible 00:19:04] mobile and platforms and scalable kind of [inaudible 00:19:07] platforms for these [inaudible 00:19:08].
So it was a harder problem to solve, and that’s why kind of we jumped onto it. We wanted to have a problem that had a large customer base so large kinds of companies were interested in it. So we realized that if we tried to go down and tried to target, like, small mom-and-pop shops and tried to build something that [inaudible 00:19:25], we would not [inaudible 00:19:27] that’s needed to kind of get scale there.
But if you can get a few large customers, they have the funds and the budget and the data to fund your development and grow the company. But that strategy [inaudible 00:19:39]. The first few kind of customers we had were all large kind of top-500 kind of retailers, and we only needed to get, like, a few large customers at a time every year. It’s not like we were adding hundreds of customers every year, but they were all very big.
So what happened was they helped us focus our platform evolution as well because now we were working on real problems that they were facing that we had to address in our platform, which [inaudible 00:20:04] problems for the top 10, top 20 retailers. That same problem is going to be faced by every other retailer down the line. It’s just that the bigger guys [inaudible 00:20:14].
Andrew: So you were saying, “Look. It’s a tough problem. Other people aren’t going to get in on it, and if we can find a big client, they’ll pay us essentially a consulting fee to create something almost custom for them, but whatever we create for them, because it’s not exactly a consulting experience, we get to take and build into our platform that we bring to other customers.” That was the thinking. How did you get the first client to convince you? I know you talked to our producer, Brian Benson, about it. I’d love for you to talk about how you convinced them to work with someone new.
Arish: Yeah. So we had one large retailer. Again, I don’t want to go into names now, but it’s a very, very well-known retailer. We had to show it to them. The goal there is they understand the problem as well. When we went for the first kind of meeting we kind of had, they said, “Okay. We heard you talk at a tradeshow. We’re interested in mobile commerce. Come and tell us what you have,” and we understood their problems.
We went [inaudible 00:21:04], we meaning the team that we had. We actually created a whole fully-functional mobile version of their site, and we showed it to them. It’s obviously a gamble. They might have just said, “Oh, great. Thank you, but no thanks.” But when they saw what we had brought to them, then they started asking questions. We had their head of technology, the head of IT, all those kinds of key people sitting there. They started asking questions. “How did you do this? How did you do that? How do you solve this problem? How do you [inaudible 00:21:29] security?”
We had the right answers, and we had taken the right course. This exercise of kind of going over both in that meeting kind of impressed them, and to show them that we know our stuff is what allowed them to kind of give us a chance and try us out because, mostly, when it comes to these kinds of initial pitch meetings when you’re trying to convince somebody, either the guy on the other side will go for a trusted and well-known company. “I know what they’ve done so I can trust them with my business. Because I’m a billion-dollar business, I can’t just give it to anybody else.”
But when it’s a new problem which bigger guys are not attacking right now, then it’s only your credibility that will kind of [inaudible 00:22:06]. It’s nothing else that’s going to make the sale because you have to show them that you know their problems and you can have a solution for them and you can deliver.
Andrew: So you built it for them. You told our producer. Here’s a quote I highlighted for myself in my notes. “You always have to do more than you think you should.” They expect just a quick page. You basically created the site. Was it fully working?
Arish: Most of it. We could actually show them browsing on the site and show them how you deliver a transaction on the site, and they were impressed because we did not ask them for anything. We just did it from the outside, and that’s kind of a key part of the solution because they did not want to go and do a major IT project internally to kind of create a mobile experience. So when they saw that we could do this all from outside by kind of grabbing the data from their site and kind of rendering in the right kind of mobile optimized format for different devices and we knew how to again handle kind of [inaudible 00:22:54] security and transaction process, that’s what helped us kind of [inaudible 00:22:59].
Andrew: How did you know all those issues? You weren’t in the e-commerce space. Did you do any research that allowed you to know what problems they were going to consider?
Arish: So we had been in mobile for a very long time. So we know the problems that are especially on the mobile side of things, right? How do [inaudible 00:23:13]? And we also knew what we were trying to shop on mobile and what kind of challenges. We had already built shopping-related demos before that as well, and so we understood kind of shopping cart problems and, you know, vending problems, these kinds of things that you have in a mobile commerce thing. So we had a very good idea of the [inaudible 00:23:27].
Andrew: Okay, and then they started asking you questions. Anything that helped shape the product based on what they said?
Arish: Absolutely. I think what we kind of understood from them was their unique requirements as well. Like, they were a multi-brand site. They had multiple kind of other kinds of requirements that [inaudible 00:23:45] that we had not initially though through, but we could give them convincing answers on the fly, and I think that was key as well. I think as an entrepreneur, I see a lot of companies out there which [inaudible 00:23:57] and then they try to kind of find somebody to buy it.
We had built a framework and built a platform. What we were able to convince them was that this is something that can meet their needs, but wherever there are gaps, we always had credible answers to what they kind of felt how will get them to what they exactly wanted. We may not have everything right up front, right, and that trust building is . . . the sales process is basically a trust-building exercise. If you can establish and earn their trust like, “These guys know what they’re doing and they can solve the problem,” then they move to the next stage. That’s how we were able to do that. I think that, to me, is key.
Andrew: How did you even get into the office with them?
Arish: Basically, I was at a tradeshow. I was speaking on a panel, and somebody from the company was there. He reached out to me afterwards, and he said, “You seemed to be the only person on the panel who knew what he was talking about.” [inaudible 00:24:46] talks. I don’t know what I said in that panel, but whatever it was kind of had an effect, so that got us the invite.
Andrew: You know, one of the things I like to do is go to the Internet Archive and see what the website of my guest looks like. I went to Skava. skava.com didn’t really starts as skava.com as we know now for a while.
Arish: It started . . . yes.
Andrew: What was the website?
Arish: It was skava.net.
Andrew: Oh, skava.net. What does Skava mean?
Arish: So Skava is S-K-A-V-A. So my name is Arish Ali. That’s AA. My wife, who’s cofounder, was Sudha K. Varadarajan. So we took our initials. We wanted something short, and we just kind of bunched it together and came up with something that was easy to kind of remember.
Andrew: You know, I put your name into . . . another tool that I like to use is Crunchbase, and Crunchbase listed all these Dummies books. At what point did you create the Dummies books, the apps for the Dummies books?
Arish: Yeah. So those are kind of earlier on. I think it was sometime in 2007, 2008 kind of when we were still in the mobile games and apps business. That’s when we got a bunch of licenses as well from companies part of Wiley publishing, which has the Dummies brand name, and we published. We actually published [inaudible 00:26:01] USA Today and some other companies as well, and we helped them kind of with mobile apps and games that they were . . .basically, they wanted to take their kind of licensed content and IP and they wanted to build a mobile experience around that. So this was, again, what I call the Skava 1.0 business model where we were building apps and games for licensed kinds of content.
Andrew: So this was actually what I was mentioning earlier. You did have a publishing platform. You did have publishing clients. It’s just that that business wasn’t as big.
Arish: It wasn’t really a publishing platform [inaudible 00:26:37]. Basically, you know, we were using our mobile apps technology that we had built to build mobile applications. We were using it to create kind of interactive experiences and games and puzzles on top of that technology, but [inaudible 00:26:47] . . .
Andrew: Oh, okay.
Arish: . . . [inaudible 00:26:46].
Andrew: So it was more than this. It just happens to be that Basic French for Dummies is in iTunes, Basic Italian, Basic German, Basic Japanese, etc. That just happens to be what Crunchbase has, but you’re saying it was way more than that.
Arish: Yeah. Exactly. The technology was kind of broader than that. We had built a platform that could allow you to build apps that would run on kind of the iOS as well as Android and some other platforms as well. So we did a lot of general-purpose mobile stuff that we pretty much kind of gave up on once we started working with large retailers when we found a much better kind of business model, and that was kind of something more tangible for us to focus on.
Andrew: Oh, look at this. I do see it now. There is . . . you know what? It’s hard for me to tell which is you and which are company names that sound like you, but it was a bunch of different apps that you guys were doing. Got it.
Arish: That’s true [inaudible 00:27:40]. We had done a lot of crazy stuff at that time.
Andrew: Okay. So you were experimenting, experimenting. Was e-commerce just one of these experiments? You saying, “You know what? The other things seemed right. They didn’t work out. We’re going to keep trying until we find the thing that works.”
Arish: Definitely. I think that mobile apps and games was a good business model but not our cup of tea. That was not something we wanted to kind of focus on. There had been a lot of other successful kind of mobile publishers and game publishers and app builders that also do a phenomenal job of that.
We wanted to really kind of go back to our root of building great platforms and also building great kind of communication gap solutions, right? So that is where we kind of focused on the enterprise mobile commerce capability, and once we got the first few customers and kind of helped them launch their kind of mobile sites in public, that was phenomenal. Kind of once we [inaudible 00:28:30], that allowed us to focus more, and it kind of snowballed from there.
I think it was the strategy of going out to really big names. Big customers worked out because once you’ve got the first couple of them, it becomes very easy to go to other retailers and say, “You know what? These guys are using us. You also have this pain point. We can help you get there.” That kind of became our sales strategy. We would go to every tradeshow, [inaudible 00:28:53] or other kinds of web or internet kinds of e-commerce tradeshows. I still remember [inaudible 00:28:57]. The very first time I went to [inaudible 00:29:00]. We [inaudible 00:29:03] there we’re going to meet prospective customers.
We’ve come a long way now. We have a massive group now, a whole team that goes out to attend these shows. But I still remember the early days where it was a one-man show sitting in the tradeshow and kind of hoping to meet some large retailers and convincing them to use our technology.
Andrew: Did you actually get a customer that way? Did a customer come to you because you . . .
Arish: We did.
Andrew: . . . were sitting at . . . you did?
Arish: We did. We did. So basically, if you are at the right show, [inaudible 00:29:30] are usually the best show for internet and e-commerce, and every retailer in the country would come there to scout for new technologies and new [inaudible 00:29:40]. So you have every kind of possible [inaudible 00:29:42] out there. We tried to set up meetings in advance before the show so we would already have a bunch of meetings lined up, but they would be completely [inaudible 00:29:49] meetings as well. People we would run into [inaudible 00:29:52] later on.
Andrew: Who were the big players at the time? Was Magento around at the time? Was osCommerce around at the time and they just weren’t very mobile friendly?
Arish: That’s absolutely right. So the big e-commerce [inaudible 00:30:06] at that time was Oracle ATG, SAP Hybris, Demandware, which is now Salesforce Commerce, Magento, so a lot of the well-established e-commerce players in the market. And everybody we talked to, every customer that we got was using one of these platforms.
And the reason kind of they wanted to still work with us was they realized that because of the technology limitations, most of these platforms tended to be kind of monolithic systems. They had armies of developers kind of maintaining them, and these are platforms which were built . . . their biggest technology challenge used to be [inaudible 00:30:41] and upgrade for more than [inaudible 00:30:43] and we had to worry about that. [inaudible 00:30:46] from a platform that is built for that kind a form factor and device, and now you have thousands of devices with different form factors, screen sizes. Having to render on those kinds of platforms was not something those platforms were built for.
Most of these platforms eventually kind of caught up and started providing all these capabilities, but we had to [inaudible 00:31:07]. Usually, you wait for many years to kind of really start doing it on your main platform. In that time, if a shopper comes to your site, has a bad experience, and goes off to Amazon, they’re not coming back to your site on their mobile device. They may still be loyal shoppers to you in physical retail or desktop, but mentally, they’ll also see if there’s a mobile phone app to go from there on, and you don’t want to lose that shopper. That was a big kind of driver for many of these retailers to jump on and to not wait for their existing platform to build mobile capabilities, because they did not want to lose those customers.
This too was very important because adoption of mobile was much faster than anybody kind of predicted. I think within the first few years [inaudible 00:31:46] almost 50% of the traffic used to be coming from our mobile-powered site was from their existing desktop site. That was a huge kind of a milestone for us and kind of a big rationale for why retailers needed to adopt mobile very quickly.
Andrew: All right. I’ll talk about my second sponsor and then get back into what you did to keep getting customers and then what advice do you have for anyone who’s selling to bigger businesses.
My second sponsor is Toptal. There’s a guest that I had on Mixergy to teach a master class, the founder of Totango. This dude used to listen to my interviews. Derek did. He’s now growing so much I’m now listening to his ads on other podcasts. Basically, what Totango does, it’s kind of a funny name, but they do text message marketing software, the kind of stuff most people do via email, but it’s done via text messages and keeps you compliant. Tons of customers now. Doing really well.
The thing that stood out for me as I was listening to an ad about his company on someone else’s podcast was, “Why isn’t he advertising with us?” number one and, number two, about how when he was smaller he had a CTO who needed to hire developers, and they needed to grow because they wanted to really get big. So he was saying, “Well, how do we hire developers?”
He did the usual thing. He put ads up on the internet. He would do 20 to 30 interviews. He’d wait for the CTO’s time to get on calls with people, and it was just a waste, and it didn’t work, and it wasn’t productive. But that’s what most people do, and some people get much more efficient than Totango did.
But Derek said, “You know what? I know Andrew. I’m listening to his episodes a lot. I’m a fan of his stuff. Just give this Toptal thing that he keeps advertising a shot.” So he got to Toptal. He talked to them, and, immediately, Toptal set not him but his CTO up with two people to interview. The CTO thought they could’ve hired either one, but they picked one of them that they felt best about. I actually see how much they paid. It’s not outrageous, but I probably should keep it private.
And within a short period of time Derek’s CTO said, “You know what? This guy is so good, he could be our CTO. He could be our CTO,” and they continue to work. No more working to try to find new developers. Instead, they got to work on their software and finding new customers. They ended up hiring more people from Toptal.
If you’re out there listening to me, do what Derek Johnson and so many other people who have heard my voice did. Go to toptal.com/mixergy. They’re going to give you a big, big, big offer, which is 80 hours of Toptal developer credit when you pay for your first 80 hours in addition to a no-risk trial period. They’ll have details. Actually, it’s pretty short. Go to toptal.com/mixergy. You’ll see. Nothing hidden there. Super easy to work with them. T-O-P-T-A-L, TOP as in top of your head, TAL as in talent, toptal.com/mixergy.
All right. You told Brian – and I kind of highlighted this with skepticism – you told him retail is a close-knit community. If you get a good client and you do well for them, they’re going to start to talk about them. Is this really a space where people are recommending Skava and talking about it?
Arish: Oh, absolutely. So I think retail in particular [inaudible 00:34:55], but all of our growth has been organic in the sense that we got it from purely customers. We did some really good jobs for them. They [inaudible 00:35:06] references for a few other customers down the line and [inaudible 00:35:09] . . .
Andrew: Did you ask them to be a reference or do they just . . . they don’t naturally call up their friend and say, “Hey, guess what we’re using. It’s a great piece of software.” What do they do? How does this work?
Arish: That also happens. I mean, what happened is, as I said, it’s a very kind of close-knit community. The people leave their jobs and go to another retailer, and that happens all the time, and what will happen is when they go to a new job, sometimes they’ll call back their previous job and say, “Hey, we’re looking for a solution for mobile. What are you guys using because we are going to be a bigger company [inaudible 00:35:36].”
So that definitely happens. We’ve gotten inbounds from people who have left and might have taken the message of Skava kind of to their new company. We have had people who have hired us at multiple companies. They were our clients at one company, and then somebody went to a different company, and they give us a call. “Hey, they have the same problem. Can you come and help us as well?”
So this has worked very well for us, and this is something I would say has become a [inaudible 00:35:59] strategy for us. It’s very important that, obviously, you do a great job for your customers so they’re happy with what you’ve done. It’s very important that you build relationships from a sales perspective and not just with the key decision-makers. What I learned was you always want to have a great relationship with the number two and number three people at each company as well because, at some point down the line [inaudible 00:36:22] will move on somewhere else, and the number two person becomes the head up there. So building those relationships really helped us to kind of grow organically [inaudible 00:36:29].
Andrew: How? What’s your process for building the relationships? Like, you and I are going to talk. We have a great conversation now. The conversation will end in a few minutes, and then we may never talk to each other again. As much as I like you, as much as I like so many of my guests, I feel like there’s no easy way to continue a conversation and then build up that relationship. What did you do?
Arish: So a client kind of relationship is very different because you have to build that . . .
Andrew: What if they’re not clients?
Arish: If they’re not clients, what we used to do was hold the Skava Summit. We did it every year where you call both clients and potential clients and kind of have them all in the Bay Area. We went to Napa once. We had [inaudible 00:37:05] to just kind of let them know what we are doing and what our future roadmap looks like [inaudible 00:37:11] as well.
So there were these kinds of events and these kinds of parties and kind of, you know, social events as well, but I would say that the biggest [inaudible 00:37:18] that would help us build relationships was over the course of one year kind of engagement with them, going to meetings, meeting them regularly, doing a great job.
Things would oftentimes not go well, right? I mean, things would not work out. Some things might not be delivered on time. You would escalate. Being able to kind of reassure them and fix and make corrections is what they appreciated. So it’s not about things always going on as planned, but when things do go south, can you and your team – it’s not just about you, it has to be the whole team communicating with the client – can they step up? Can they get things done and delivered as well for them?
And when that happens, you find out that you have relationships at multiple levels. It’s not just me talking to the VP of e-commerce, somebody that’s senior out there. It’s also my delivery manager or my program manager working with their director of IT, their program manager, and those relationships also help down the line. So I think it’s relationships at all levels that have to be kind of maintained and nurtured, and they all [inaudible 00:38:16] more effectively than any kind of marketing campaign you can do.
Andrew: I mentioned that Barnes & Noble was a client of yours largely because they’ve been on the site for a long time. Doesn’t Barnes & Noble, though, want to build their own software? I mean, this is a key part of their business today. The stores are closing down. The software is the thing. If they’re not good at building their own software, what are they then? Good at picking books?
Arish: Good point. So I think this is not just with Barnes & Noble, so I’ll talk more broadly. So many of our customers are in the same boat where it’s not about even building software. It is like, “I have to give a great experience to my customers so they can come and shop on whatever I’m selling,” right?
When it comes to doing that, they only have two options. One, they use software that’s available or they build their own, and this is where the tradeoff tends to be. I mean, companies who were kind of born and kind of brought up online like Amazon.com, they’ve all been built on top of software. That’s kind of their deal, and that’s what they have done very well.
Companies which are not kind of born and bred online, they have to figure out a way. How do they get that talent? How do they get that kind of asset? If you’re really big like Walmart, they have been sort of acquiring large kind of e-commerce companies and going that way, but not everybody is a Walmart.
Once you move down kind of the top few kind of retailers, it’s very hard for them to be able to build at scale [inaudible 00:39:36]. That’s when these partnerships come into play. What they try to do is work with Silicon Valley companies where they can get that talent that [inaudible 00:39:44]. They understand that there’s a cost to kind of buying companies and to kind of just to acquire the talent or the technology and own it versus kind of renting it from those companies and kind of having the right partners.
That’s where the relationships are key. It’s a business objective that has to be met. Technology is purely incidental. They have businesses . . . sorry. Go ahead.
Andrew: No. The thing that’s standing out for me is, as you’re saying that, I’m looking at the reviews on the iTunes App Store. It’s 1.8 out of 5, and so if they’re hiring someone to build their app, isn’t that what you guys built?
Arish: So, again, what we enable them to do is kind of create the shopping experiences on those devices. There’s a lot of things that go into when you create a sort of project like that, right? So there’s an app [inaudible 00:40:32] different types of solutions that we are doing for them.
So when we are powering an experience for them, right, there’s a mobile experience, there’s a mobile web experience. There’s a lot of transactions that actually take place where the reviews themselves, the design of that itself, you work closely with the client to kind of make sure it meets what their needs are.
There are always tradeoffs. You will see some of the properties, some of the apps may not do as well as something else, and a lot of the reasons for those kinds of reviews could be certain products are not available, [inaudible 00:41:05], or transactions are not working. So there are sometimes bona fide reasons why those things may not be working out as well as they’re expected to.
The really the really interesting part is, for example, we just went through black Friday. We had multiple clients on Black Friday. We had 100% kind of uptime, no outages at that time, which is absolutely [inaudible 00:41:24].
Andrew: Because you’re hosting the content.
Arish: Right, and then all the sites are running on us. So from a business perspective, what is key to all our retailers is how much revenue they’re generating on the platform where [inaudible 00:41:36] work with them very closely. Are we helping make sure that your transactional site is not going down where people are able to buy in a quick [inaudible 00:41:45] when they need to, especially [inaudible 00:41:47] like black Friday? That’s where you get kind of our customers [inaudible 00:41:50]. We look at our customers as giving us our priority for making sure that we have the right capabilities in our platform to do that.
Now, with a particular app or a particular solution, the customers make the feedback. They may not like the site. They may not like the app. We have our customers. We have had the top-rated kind of site and app as well as other reviews as well. So we have had both kind of wins and things that may not have gone very well, but our metric, our criteria, is not what the [inaudible 00:42:19] is telling us. It’s what our customers are telling us, and we want to make sure we are delivering what they’re looking for. I think from that metric we have given an outstanding Black Friday this year and over the past few years as well. The holiday season has been flawless. That’s how our customers [inaudible 00:42:32].
Andrew: I don’t know. When I look at the reviews, it does seem like, “It won’t let me sign in. Everything takes forever to load.” It’s stuff like that that comes up. I don’t see a lot of people saying, “The book that I want is not available.” Timeout, 404, crash, that type of thing is what I’m seeing on iOS. On Android it’s a different story. People are excited about it, and the ratings are high, but it feels like there are some issues with the software, and that’s surprising.
Arish: No. I mean, that happens. I mean, we have had apps, and there’s a reason why those particular apps may not be that highly rated, but again, to me, the issue is, “Are we meeting our customers’ needs?” If the customer wants us to kind of prioritize or focus on that, we’ll be doing that. If the customer wants to focus on the commerce side where they’re getting most of their transactions, it’s very important to be doing that as well. We work with our customers to understand what their priorities are and make sure that that’s [inaudible 00:43:25]. As I said, our customers are our clients, and we are trying to make sure that they are happy with what they need. If they want us to [inaudible 00:43:31] and build a different app, we will happily do that for them.
Andrew: One of the things that I noticed was that you went for about five, six years of pain from 2002 to 2008, roughly, when the iPhone App Store came out and soon after Android. Now it’s called Play, but it was called, what, the App Store there too. Why did you continue with the business considering all the pain, considering the frustrations?
Arish: There were a lot of points where we thought, “Do we need to continue this?” right? And one of the things that I think lots of entrepreneurs get into is, again, I have learned over time that being an entrepreneur is roughly a 10-year journey if you’re trying to build anything of real value, right? You have to struggle your way through. You have to kind of stay persistent if you fundamentally believe that [inaudible 00:44:27] is real, the opportunity is real. The timing of it may be off, but if you know that this is [inaudible 00:44:32], then you have to stick with it. I think that’s what kept us going. We could see that. I mean, it was obvious to us that this is going to be big [inaudible 00:44:42] . . .
Andrew: That mobile was going to be big.
Arish: Mobile was . . .
Andrew: You weren’t sure exactly what. Was it going to be mobile games? Was it going to be mobile books? Was it going to be something? You weren’t sure. You just said, “Mobile’s going to be big. It’s got to be.”
Arish: Exactly, and it’s going to be [inaudible 00:44:52] . . .
Andrew: Because what? Were you a mobile person? Were you someone who had, like, a phone that you were doing more on than most people? Did you have a PalmPilot that gave you an insight? What was it that you did that said to you, “This has got to be the future of everyone?”
Arish: We did have it. I was using [inaudible 00:45:06] Blackberry stuff came out for [inaudible 00:45:08], for example. We were working with a lot of mobile devices at that time. Even early on in the previous company we were doing some mobile stuff as well. The transformative power of it is how it can affect you. You can be anywhere and you can be transacting. You can be interacting. That was a no-brainer. So that is what we kind of said we were excited about, and we said, “This has to kind of take off in a big way at some point of time.” It just took longer than we thought.
I mean, every tradeshow we went to, people used to say, “Next year is going to be the year of the mobile,” and I remember the [inaudible 00:45:38]. That was a big show in the mobile industry. Every year people would talk about, “Next year is the year of the mobile,” and it just turned out to be a few more years down the line than everybody thought.
Andrew: I feel like finally now this year became a big thing. I forget the Adobe analytics data on mobile, but it’s a huge amount of money now being spent on mobile. I wish . . .
Arish: [inaudible 00:46:00] . . .
Andrew: . . . I had the data at my fingertips right now. Mm-hmm?
Arish: Yeah, but it’s been increasing every year. I think it’s just been going up every year since kind of the iPhone/Android thing kind of came there. It’s just been growing by leaps and bounds. Everybody is now heavily invested in kind of mobile [inaudible 00:46:16] and that’s the business model [inaudible 00:46:19].
Andrew: Yeah, and I think that some of the problems that we used to have have been overcome. We’re getting more used to doing things on the phone, but also, phones are getting smarter at helping us. Like, I don’t have to type in my credit card information anymore. I just double-tap the side of my screen, and now I can pay. I’m on Overcast. If you guys listen on Overcast, you should subscribe to Mixergy on there. And they’re so good at selling ads to me. All I have to do is hit the phone and then, boom, I’ve bought it.
It’s actually so much easier to buy using Apple Pay on my phone when I go to buy an ad from Overcast. We’re talking about $1,000, $1,500 for an ad. They say, “Do you want to use Apple Pay?” I hit Apple Pay Yes. It says, “Okay. Double-click the side of your phone.” So I’m on my computer. I just go to my phone, which is smart enough to make the interaction. I double-tap the side. Boom. I’ve paid. It’s that much easier on mobile now than desktop that desktop has to rely on mobile. You really were prescient. I think back on, like, when you were a kid programming your . . . can you tell people about that first game that you programmed to see how far you’ve come?
Arish: Oh, absolutely. So the very first game I learned [inaudible 00:47:21] reading a magazine which had an article on programming, and when we first got a PC in our school in the middle of eighth grade, I was just kind of dying to kind of try it out. So the first game I wrote was I rendered, like, a little rocket kind of shape on the screen that would just move off the screen, and there were two lines. You had to tap on the space bar as soon as the rocket reached in between those two lines. [inaudible 00:47:43] and that would be it.
Andrew: And that was the beginning of you getting started with mobile games or, excuse me, with computer games.
Arish: [inaudible 00:47:50], yeah. That was the very first program I wrote of a game, basically.
Andrew: Wow. You’re still at Skava?
Andrew: Why did you sell? If you’re still at the company, why did you decide to sell?
Arish: A couple of reasons. I think we had realized that mobile commerce had reached kind of a logical kind of . . . we were the number one kind of [inaudible 00:48:09] leader in mobile commerce at that point of time, and we also realized that eventually the e-commerce world would catch up. They would start putting their big players and big market share.
So we knew that to compete at the next level, the kind of market would just again go down and kind of once the market is kind of gone [inaudible 00:48:27]. We kind of had a good product to market fit for that window of time when mobile commerce was big and on its own [inaudible 00:48:34] there was a place for a company to focus on that, but we knew that this would [inaudible 00:48:38] kind of go beyond that.
So we needed to grow much bigger. That meant either kind of taking a large amount of funding and [inaudible 00:48:46] kind of happen organically as well. We kind of had a couple of companies who were interested in it at that time. I just thought it made a lot of sense because it gave us not just [inaudible 00:48:59]. Entrepreneurs, you know, kind of have [inaudible 00:49:03] a bit more easily and say, “This is kind of done. We can move on.”
More importantly, from a product and strategy perspective, being part of a much bigger kind of organization allowed us to kind of now set our sights higher, and that’s what allowed us to [inaudible 00:49:18]. Now we can go compete on a global scale. Prior to acquisition, we were kind of [inaudible 00:49:22]-focused, kind of retail-focused [inaudible 00:49:24].
Post-acquisition, we have kind of really taken on the big guys. We are now competing against all the big e-commerce vendors. We have pivoted from [inaudible 00:49:34] commerce to full e-commerce platform, and just this year both Gartner [inaudible 00:49:39] as one of the kind of players in the space, and IGC called us a major player.
So that’s a big milestone for us that now we are actually competing against Salesforce, IBM, SAP, Oracle, all the big guys. We believe we have the best kind of technology, the most modern kind of technology for e-commerce to compete against them, but there’s no way we could have done that just having a small startup. You need scale in many different levels to kind of take on those fights.
Andrew: Yeah. I see you in Gartner. As you’re talking, I’m searching to see, like, what can I find about Gartner. Gartner 2018 says you guys are more visionary than Shopify, than Sitecore, than BigCommerce, and then they put you . . . I see their analysis of you. Even Gartner’s peer review has very positive reviews of you, and I heard recently Infosys wants to sell the business. New leadership there, right?
Arish: Yeah. That’s true. So we are [inaudible 00:50:39] . . .
Andrew: How does that feel that they’re publicly saying, “The last guy made a mistake buying this company and this other one and we’ve got to get rid of it by March or something?” I forget what they said.
Arish: Yeah. So I think, again, I can’t comment because it’s a public company and [inaudible 00:50:51] public statements, but it is just that we’re exploring the best possible kind of [inaudible 00:50:56] option for the company. We have to focus on our goal, which is to have the best possible [inaudible 00:51:00] commerce platform out there and picking up new customers if possible.
Andrew: All right. For anyone who wants to check it out, it’s at skava.com, and don’t you also personally blog? I did a bunch of research on you. I found a bunch of articles. Do you blog at all, or is this from other people?
Arish: Yeah. So basically, I work with the marketing team to publish occasional posts out there. I use Twitter and LinkedIn and kind of our own blog to kind of move from a professional point of view [inaudible 00:51:28].
Andrew: All right. So it’s Skava. It’s not .net anymore. It’s now skava.com. Go check them out there.
I want to thank my two sponsors who made this interview happen. The first will host your website right. It’s called hostgator.com/mixergy. The second will help you find your next phenomenal developer. Just like so many other people who have listened, you should go check them out at toptal.com/mixergy.
Finally, if you have a smart speaker somewhere, yell at it. Say, “Hey,” whatever it is that you’ve got. Google. I won’t say the other name so it won’t start calling them up. Say, “Hey, play Mixergy,” and let me know if it’s working for you or not. If it’s not, maybe we need to start, like, doing domaining or buy a bunch of variations of the name on these devices. I want to make sure that everyone can listen to Mixergy and the entrepreneurs that are on here. I’m so proud to have you on here. Thanks so much for doing this interview with me.
Arish: Thank you for the time. Thank you.
Andrew: Okay. Bye. Bye, everyone.