BUSINESS SPECIAL.... POWER OF ONE

POWER OF ONE



As India marches towards building a product nation, a few companies have chosen to remain single-product entities. Though that might limit revenues, their founders believe superior customer experience is what matters

Vivek Ravisankar's start up had kicked off. A pivot that worked smoothly for Ravisankar and Hari Karunanidhi, the duo that started Interview Street to help engineers with mock tests before interviews, blossomed into a highly regarded community of developers better known as HackerRank. Ravisankar says their goal was to make technology hiring simpler. Their product that allowed companies to test a candidate's coding skills turned out to be quite a hit. Then the company set out to find a secondary market in schools and educational institutes only to realise it was deviating from its primary goal: assessing developer skills better than any other tool available.

Ravisankar learned a lesson: going multiproduct is not always ideal for an entrepreneur.

“It's a fallacy,“ he said. “We started going down the multiproduct route for a while and figured that it might not be the best idea.“

With the IT services hangover wearing off, a good number of product companies have emerged from India the past few years. Some including Zoho, Freshworks and Manthan have gained significant traction in global markets with multiple products. Another set of companies including HackerRank, Kayako and Postman has taken the alternative single-product route, finding abundant inspiration in global successes.

“Look at Slack,“ said Ravisankar.“When they started out as an enterprise communication tool, there were a bunch of other tools in the market that enterprises already used. But the user-experience Slack offered was far better and that explains its phenomenal growth.“

Slack is touted to be an overnight success. Launched in 2014, the messaging startup was valued at $3.8 billion last year. Its story is that of a great product that was a late entrant in an overcrowded market and yet able to outrace rivals with its superior user interface.Domestic single-product companies are treading a similar path.

HackerRank today is a platform for more than two million developers and counts Vmware, Cisco and Red Hat among clients. Others companies targeting exponential growth with a single product include Kayako, a customer relationship management tool; Nexus Venture-backed Postman, which provides an application programming interface (API) management tool; enterprise sales assistant Vymo; and enterprise team messenger Flock. (APIs are pieces of code that allow a software to talk to another software.) So why are these companies focusing on a single product when they could possibly achieve multifold growth with a suite of products?
Their argument is to do one thing and do it right--that being their path to profitability and growth.

“The more focused you are the higher the chance of you being able to get to profit-generation,“ said Bhavin Turakhia, founder of Flock.Turakhia, who started and sold bootstrapped businesses Media.net and Directi, believes single-product companies have a higher and faster chance of getting to profitability.“Diversification does not mean getting revenue and profit. It means increasing revenue and profit but at the cost of reducing focus,“ he said.

FOCUS ON USER-EXPERIENCE

While having a singular focus might be a strong point, these startups face a major hurdle in competing against counterparts that have a suite of products to offer to their clients. This is why differentiation through enhanced user-experience has to be the cornerstone of their business models.

The key is to keep it simple, said Abhinav Asthana, who started Postman as a piece of code available for free download on Stack Overflow, an online developer community. As the tool gained popularity in the developer community, Asthana and Ankit Sobti, who were with Yahoo at the time, turned their developer-based solution into a business idea. They built a fullfledged API management company that now boasts of a clientele of large enterprises including Netflix, Cisco, Microsoft, Sony and Paypal.

“The idea for building a good enterprise product is to match the user-experience of a consumerfocused product,“ said Asthana.

Helpdesk software provider Kayako operates in a highly fragmented market, competing against companies such as Zendesk and Freshworks (previously Freshdesk) that offer a suite of products. Sequoia Capital and Accel Partnersbacked Freshworks began with a single helpdesk product. The company rebranded recently after seeing significant traction from its other products that were launched in the last few years. Freshworks said the rebranding was to signify its multiproduct strategy as up to 30% of its revenue was now coming from these other products.

For Kayako, a company that operates in the same space and has been bootstrapped since its inception in 2001, it is more important to focus on enhanced customer experience with a simple offering. “We are selling in a small-and-mediumbusiness market. You don't want to induce choice paralysis in your customer's mind,“ said chief executive Varun Shoor. “It doesn't make sense for customers to buy separate products for self-service, live chat, Facebook chat and messaging. We offer a bundled solution and that works well for our customers.“

Kayako has 30,000 customers and offices in Singapore, Gurgaon and London.

KNOWING YOUR AUDIENCE

Several of these single-product companies were born out of a need that their founders faced at their previous organisations.

Yamini Bhat, who founded Vymo, was at McKinsey when she realised that an employee productivity tool needed to do more than tracking employee activity. Such a tool would actually need to help employees enhance productivity, she decided.

Vymo's sales-based assistance solution helps sales representatives manage their tasks better without adding to their workloads. Vymo, incorporated in 2013, now has more than 25 enterprise customers including financial institutions such as HDFC Bank, SBI Life and Axa.

Companies that take the bottom up approach with enterprise sales, such as Postman and HackerRank, believe that community-led products stand a higher chance at acing the market. For these companies, the end-users are developers who in turn influence business decisions.

“If there's a large community of developers in an organisation using your product, it is highly likely for the company to standardise your offering for the entire organisation,“ said Asthana. Of course, it takes an effort to get the product right and hit the spot to solve the exact problem statement, he said. But once you get that right it doesn't matter whether or not you have a suite of products to offer.

GROWTH HACKS

If getting the product design and user-experience right is most crucial for a sustainable single-product strategy, it is equally important for companies to stay relevant and keep adding use cases. There's only so much revenue you can gain from a select customer base.

Turakhia, who positions Flock as a communication and collaboration tool for employees, is convinced that once you have got a product right and gained a good number of customers, it is imperative to scale by introducing iterations of your product.

Flock has introduced new use cases for collaboration. For technology events, Flock is presented as a default communication tool that allows people at the event to collaborate. Then there are coding communities where groups of developers can come together to hold discussions, participate in coding contests, and engage in activities that foster community interaction.Since it is a platform that allows other applications to be built on top of it, Flock organises hackathons where it invites developers to build on top of its platform, thus increasing the usability of the platform.

“Currently, Flock allows integration with various tools, like GitHub, calendars, making it easier to collaborate workflow tasks from within the platform,“ said Turakhia.“Going forward, the goal is to weave the platform and the apps built on top of it into every possible workflow in an organisation, whether it is customer relationship management (CRM), sales, marketing, product management or software development.“

GOING MULTIPRODUCT

It is not hard-and-fast to remain a single-product company. There have been instances of large global companies that have cracked a single-product market and then focused on other markets. In such cases, companies chose to either build a product internally or acquire another company building a similar product.

Capillary Technologies provided software solutions to offline retailers but saw a huge change in its market with a growing need for multior omni-channel sales. The company, which initially offered a CRM tool for retailers, acquired MartJack in 2015 and started offering an omni-channel solution as its main offering. Last year, it launched multiple products to increase sales in offline stores. The company has since hired 200 new employees is targeting a run rate of $50 million revenues next fiscal Another case in point is FusionCharts, the data-visualisation company that started with a product for developers that allowed them to make sense of data. It later launched a plug-in product that allowed business users to integrate it with data and generate reports and graphs.

“It is not as much about the number of products you launch but the problem statement you want to solve. If you find a market area where you can solve a similar problem, doesn't mean you are losing focus on your original problem statement,“ said founder Pallav Nadhani.

INDUSTRY ACCEPTANCE

Tally Solutions, a provider of enterprise resource planning software, is considered a pioneer of product companies from India. The company has seen its share of troughs but the recent rollout of the Goods and Services Tax has given it new hope. Tally's focus on a single product without any fresh iterations has been cited often by industry experts as the reason for its slide. The view, however, is changing as the industry has seen successes like Slack and Dropbox that offer a superior product experience while constantly evolving their products.

“Investors are realising what companies like (enterprise software company) Atlassian and Slack have been able to achieve and we have seen that their fascination with large deals has come down,“ said Asthana of Postman. “If your prod uct is rightly positioned and widely accepted there are various ways to monetise it. You can even charge for an individual feature and still make a lot of money.“

Jishnu Bhattacharjee, partner at Nexus Venture that's an investor in Postman, agreed.

“I don't think the multiproduct approach to start with is a winning formula,“ said Bhattacharjee.Investors look for companies that are focussed and have clearly articulated value propositions for clearly identified target customers, he said. “Not only should (the company) be single-product, it should have preferably a single killer feature that makes it a must-have and drives adoption.“

When you are selling great products, you are really selling an experience, said Bhattacharjee, and unless customers can effortlessly experience product functionalities, those functionalities are meaningless.

Shadma Shaikh

ET21JUL17