ENTREPRENEUR SPECIAL.... Beerud Sheth

ENTREPRENEUR  Beerud Sheth 

Chitter-Chatter is Back Big Time and How 

A realisation that mobile users in India used basic services helped GupShup shape its success 

    Close on the heels of the global launch of Twitter in July 2006, back home a group text-messaging service provider called GupShup was racking up 15 million users within just a year of inception. Just when GupShup was preparing to monetise the user base, the economic meltdown happened. “It was a pessimistic environment,” says Beerud Sheth, CEO of GupShup, who co-founded the firm in early 2007 along with Rakesh Mathur, Viswanath Ramachandran and Milind R Agarwal. The founding team raised $10 million from global angel investors to develop an offline web browser for laptops and mobile devices but it didn’t take off. Sheth and his team realised that most cell phone users in India used basic devices. So, they developed GupShup, a free, social, short messaging service that allowed users to communicate and connect with family, friends and followers using ordinary mobile handsets. The product, launched in April 2007, was an immediate hit. One week before Lehman Brothers filed for bankruptcy in September 2008, Helion Ventures and Charles River Ventures invested $11 million in the Mumbaibased firm. Another round of funding looked unlikely amidst the global uncertainty. “Investors said we don’t know when you will get the next round of funding. They told us to assume that the first round of funding was our last,” recalls Sheth. But the company had to pay operators for every message sent through their platform. It had to spend a substantial amount for sending 30-40 crore messages per month. Though GupShup had millions of users, it did not make revenues and needed to build an advertising base quickly. “It became emotional for us; a lot of money, time and energy was at stake,” says Sheth. There were also other challenges in areas such as human resources and pressure from investors to come up with revenues. “We did not sugar-coat things. We were transparent about the reality,” says Sheth. It wasn’t long before Sheth spotted an opportunity when advertisers began scouting around for media that guaranteed them not just branding but business, too. GupShup positioned its platform as a high ROI product, where companies could measure the impact created by the firm and pay for performance rather than just branding. GupShup still ran the campaigns of the customers that had pulled out of advertising contracts and gave them the option to pay later. The firm also kept in touch with employees who had been laid off. “Even when you are parting ways, be it with an employee or a customer, if you do it with respect, dignity and honesty, chances are that you will again do business together,” says Sheth. Advertising revenues began to trickle in. From 5 crore in 2009, they increased five-fold to 25 crore a year later. A new investor, Globespan Capital Partners, came on board and, along with existing investors Charles River Ventures and Helion Venture Partners, invested $12 million in 2010. Subsequently, Tenaya Capital invested $10 million along with existing investors a year later. Today, GupShup reaches nearly 60 million users in India and has served the marketing needs of over 500 large brands and 25,000 small businesses. The company is now innovating further by launching a cross-platform messenger app in January, with which Sheth is hoping to target smartphone users. The company has 200 employees and aims to continue growing a social community that works well for all kinds of mobile users and phones. GupShup aims to penetrate other emerging markets like Africa, Brazil, Indonesia and China.

Beerud Sheth Co-founder, GupShup
FOUNDED IN 2007
Tough Phase
2008-2009 during which revenues and funding dried up; sales contracts were scrapped and a value-added product had to be canned
Turnaround
Reposition GupShup as a high ROI product where companies pay for performance and not just for branding
Positives
Revenues, investors are back. It has become India's biggest messaging service

Peerzada Abrar & Radhika P Nair ET121227