The Scholars' Avenue

A Bangalore based start up, Capillary provides mobile based customer management solutions, meaning it helps businesses understand the needs of and effectively communicate with their customers through mobile services. One of the co-founders of Capillary, Krishna Mehra (06, RK, CS) shares his experience with us.
TSA: Firstly, a hearty congratulations on winning the Qualcomm Business Plan Competition. We, at The Scholars’ Avenue are indeed very proud of your achievements and would like to narrate your success story to our readers.

Krishna Mehra: Thanks for the chance to interact with people through The Scholars’ Avenue. It really feels privileged, especially since The Scholars’ Avenue was actually started right in front of our eyes, and it’s great to see it moulding public opinion in the institute.

To give some info about our company, Capillary focuses on leveraging this dizzying growth to enable retail and consumer-focused businesses to identify, understand, attract, and interact with customers with a next generation CRM tool that is more functional, cost-effective, with higher resolution in consumer targeting, enables instant-gratification and micro-level alliances to drive revenue and profit growth. We are 3 promotors – Aneesh Reddy (ME 2006), Ajay Modani (IEM 2007) and Krishna Mehra (CSE 2006).

TSA:  When did you start your company? Was it immediately after college or after some job experience? Would you advise your juniors to start-up immediately after college or after ample job-experience?

KM: Going back a few years, Aneesh and I were wingies in RKCTM, and Ajay was a year junior (from RK as well). We had always been interested in entrepreneurship and had in fact started the Entrepreneurship Cell under the guidance of SRIC/TIETS in our final year. I had also worked in a startup (Minekey Inc.) in my final year which went on to raise $3m from NEA. However, both of us went into a job – I joined Microsoft Research but the itch to start up was there, esp. due to the wonderful experience I had in my final year. At the same time, Aneesh worked in ITC Ltd. We started after about 2 years of job experience each, and Ajay joined us from Danieli soon after, racked our brains around, did a fair bit of mindless running around in front of clients before we got out first break.

I would strongly suggest some work experience, since it really prepares you for a different kind of life, and makes you take life and work much more seriously. In Kharagpur, it’s all “peace” as we all like to say, but once you step out, you suddenly need to do a lot of learning, and a couple of years of job experience is an important stepping stone in this regard. It also depends on the kind of company you wish to create. In our company, we need to do a lot of institutional sales, and work experience helps understand the organizational structures, vicariously understanding client requirements better, and gives a better network to start off with. At the same time, Microsoft, Google, Yahoo, and Facebook were all created without any work experience!
TSA: How did you develop the technology that you are currently employing in your venture? How much of it was during your Kharagpur days? How effective is the form of marketing that you are doing? How much of a customer base does it have in India?

KM: We did it after we’d left our jobs with Microsoft Research and ITC. Initial development was all done ourselves, along with some very talented students from Kharagpur itself, who were kind enough to help and intern with us. Now, we have a small technology development team that’s taking care of product development.

We are into institutional sales – this requires a fair bit of business development. It’s not the traditional consumer-facing business, but rather B2B sales, for which a different sales strategy is required.

We are currently working with about 300 stores in more than 75 cities in India.

TSA: How much of a competition do you have in India? Can you narrate a bit more on your experiences in dealing with competition when you first jumped into this field?

KM: Our competitors include marketing services companies like SurfGoal, Wunderman, Accentive and IT vendors like Shawman and Pine Labs.

When we started we realized that many of the assumptions with which this industry worked had changed dramatically with the emergence of the ubiquitous mobile phone, and we decided to re-think the solution to be more effective and topical from ground up. We focussed on bigger bang for the buck for the retailers and giving them more RoI through simple and effective tools.

In the beginning, we couldn’t integrate with any software because IT vendors would not be willing to work with us. We had to take the battle into their territory by automatically integrating without their help using innovative means. The fact that we didn’t carry any baggage in terms of previous industry knowledge helped us think from first principles and come up with better answers to some of the problems and build a competitive advantage.
TSA: Is the Qualcomm B-Plan competition your first shot at VC money? When, according to you is the appropriate time for a young entrepreneur to think about VC funding in the course of his venture? Should it be just at the start when his idea is susceptible or after sometime when he has a decent foothold?

KM: Our first financing was from IIT Kharagpur, through TIETS, for which we will be forever grateful. It helped us start out and take small risks without which we wouldn’t have moved an inch. Qualcomm is the first private fund we are working with.

I personally believe, the right time is when you have a clear idea for a product and have validation through interested/paying customers. Everybody wants to see market traction before giving out money, and it’s important to be able to clearly demonstrate the traction and value proposition for your customer before you look at institutional capital. I would personally be against trying to raise money before you have a clear product with some traction, because a lot of time would be spent in chasing VCs/Angels which is better spent in trying to build the initial product.

Of course, there are always different ways to look at this – if you are trying to build a capital intensive business, you can’t do initial experiments on your own. It’s easier in technology businesses since if the founding team can build the technology themselves, there is very little cost of product development. It’s more difficult if your product requires manufacturing or a lot of sales expenditure for instance. Like many others, there’s no clear answer to this question – it highly depends on a case-to-case basis.

TSA: Each entrepreneur that I have come across has had his own story to tell, about the struggles that he faced on his way up? Do you have such a story?

KM: We had our share of despair when we were trying to figure out what the value proposition for our clients was. We were turned down by many parties because our value prop was too dilute, or because the problems we were trying to solve didn’t exist when we did a reconnaissance in the actual marketplace. Even after that, the period while the product was being developed, we had little to show for all the work we were doing, until the deployments started happening and we got real action.

I believe in the end, its 99% perspiration, 1% inspiration and some good luck that carries the day.

TSA: Where do you see your company in the next 5 years? Are you planning on branching out to anything new?

KM: We want to be the preferred customer engagement program in India – with a presence in tens of thousands of retail outlets. We want to make our product more sophisticated and effective. At the same time, we have some other ideas we would like to try in terms of product extensions.

TSA: Last, but not the least, what was your CG?

KM: 9.76 (!)

The Scholars’ Avenue wishes Capillary tons of success for the coming years.