How Profitbooks CEO Harshal Katre grew Profitbooks to $2.9M revenue and 9K customers in 2024.

hello everyone my guest is harshal khatre he is building a company called profitbooks.net he worked with mncs like hsbc big bank obviously and barclays for over nine years and helped them implement banking solutions before starting this company he started profit books in 2012 and since then acquired 75 000 users on the platform it's india's most popular accounting software today all right harshaw you ready to take us to the top yes okay well so what would girish say at the at the freshworks crew would they say yeah profit books is taking our lunch they're the most account they're the most popular accounting tool in india actually pressures they don't i mean at least until this point they don't have an accounting software so we are kind of safe but yes i mean we have a lot of competition from various players like zoho which is also homegrown and obviously intuitive also there in india so we have a quite a bit of competition here in india why has i feel like i feel like freshworks should buy you guys if they don't have an accounting software already why haven't why haven't you they acquired you i don't know i think they started with a customer communication product suite first and maybe they are you know um adding more products to that uh that uh that bouquet so maybe accounting software is not on the cards for them yet okay well tell me more about this so you launched in 2017 uh what are customers paying for today what's the product yeah we launched in 2012 actually yeah great and so tell me about the product what are they how they're using it today so the product product is essentially about accounting software so idea was to create a product which is uh using which business owners can organize their finances without any accounting knowledge earlier when back in year 2012 uh in india products are mostly built for chartered accountants right so they are very complex in nature so we wanted to build something which is very very easy to use anybody can you know who has a basic knowledge of english who can write and read and write english can operate this kind of software so that was the original philosophy behind that and who are you selling to jay are just like small business restaurant owners or online software companies or who uh this is small business owners so basically uh if you categorize the entire small business uh honor group there are three primary categories the one is service providers like web designers or software development companies and things like that then there are traders uh basically who have uh either retail shops or they sell on amazon or flipkart's uh or any e-commerce portal so they are basically traders wholesalers and the third one is the manufacturers so we basically uh focus more on service based businesses and the traders businesses so we have two uh editions of the software one is focused on people who are more uh who want to just focus on creating invoices and the second lot uh who uh that deals with inventory the physical inventory so they want you know inventory management and stock coming in stock going out and all those reports and and what do these customers pay you per month on average so in indian rupees it's around six thousand to eight thousand rupees so around uh that is hundred dollar per year actually it's very dirty sorry how much in indian rupees indian rupees is six thousand to eight thousand rupees per year so that's roughly 100 per year so like on average maybe eight nine ten dollars per month is what they're paying yes yeah interesting and when did you so 2012 you launched tell me how you got your first hundred customers so we launched late in 2020 uh 2012 okay it was i think around september or october when we launched it okay and we got our first customer uh almost in november and december of 2012 and then um we participated in a lot of business expos okay and can you name one uh there was an expo called martech maharashtra is a state where i uh where our company is based out of so it's called mahatik so it's an industrial expo where all the industrialist people who are manufacturing trading they kind of you know participate in this expo so it's a five days five days expo and we got a very good traction from there for the first time and we acquired our first i would say 50 to 70 customers from that expo itself and then we got covered by a lot of publications like yourstory.com and a lot of other publications they started covering us so through that we got our first bunch of 100 customers okay and how many customers today right now we have just crossed 75 000 customers oh these are you said users in the bio those are all they're all actually paying customers these are uh these are companies you the actual account of user is much uh larger these are actually the company seventy thousand thousand seventy five thousand companies that are using the application right now it's a mix of both free and paid uh we also have a free addition right now well how many how many are actual customers paying customers actually we don't disclose the uh the actual data of paid customers okay usually in your funnel like when someone comes in and tries a thing for free like in a given month about what percent will you convert to paid typically uh it's around um i have seen the um it's around five five to seven percent okay so i mean can i take 75 000 like total accounts and just multiply by five to seven percent you have like three thousand four thousand paying customers all right but this free plan we didn't have this free plan earlier so i think uh in january we launched this free plan and then since then we started you know seeing a spike of uh new registrations and um so it's a mix of uh and also you know i will tell you that our actual user base 85 of them are from india and remaining 50 of them are come from you know different parts of the world so the pricing for them is different so uh for them we sell you know 25 a month to almost 50 dollars a month okay if you look but so before january this year 2020 when you launched your free option was everyone who used the platform prior to that oh they're all paid no so we had a trial account so they had to go through the trial and then after that we used to convert them to the paid okay so what so i'm a little confused why did you move from a trial to a free plan in january 2020 yeah there was a philosophy behind that so we noticed that um we we had to you know spend a lot of time because see the unit the actual ticket size of our software is very low right so at this price point we have to invest a lot in you know um uh hand holding those customers from trial to becoming a paid customer so we had to you know call them up manually explain them all the features and they were you know a lot of to and fro calls because in india uh the touchless uh buying doesn't happen okay so we have to you know um interact with the customer directly okay so we had to spend a lot of time uh and energy uh supporting those customers right so then we what we did was we so launched this uh free edition and then we created a very good knowledge base and you know bunch of videos and people started to you know figure out on their own and they got a sense of what the software is all about okay and when they are ready uh they started moving on to the uh paid tier plan uh in free plan we don't offer support so the support is reserved for the uh paid users i see okay so um tell me a little bit about other parts of the business so have you bootstrapped or have you raised capital yeah totally bootstrap i love that okay bootstrapped in how many people are on the team so currently we are 18 18 uh people there on the team apart from the three founders okay and how many folks are engineers okay so 21 total 18 employees three founders and seven engineers okay and do you have people today again this is a low price point so having sales people would be tough but do you have any sales people with a quota well we have two sales people they have quota uh they they have are they on a quota do they have a sales target they have to hit uh you see so now there is one more vertical that we also focus on okay so uh this is a software which is a sas based model like profit books which which we sell directly to the end customers but there is one more vertical uh that addition that we say to chartered accountants the accounting firms okay where they can onboard their own customers and have their own branding okay so we use our sales people to talk only to those guys we don't use our sales people to talk to people who are using our free edition or you know wanting to move to the paid version do your sales people have a quota do they have to hit a sales target no no they don't have quota they're more like heads of bd they work with these accountants that white label your software and sell it through to their end customers right i see you're looking at me like i'm confused or there's something on my forehead what are you thinking ah no actually you just blurt for a minute so that's why i was looking got it got it okay so boots dropped the company 21 people on the team uh no real quota carrying sort of sales reps uh so you full no touch model um how are you getting customers today what's the distribution channel 100 inbound so we write a lot of articles we generate a lot of content we have a very good traffic on our website so it's hundred percent right now we don't say we don't spend anything on paid ads according to ahrefs your big search terms that bring you the most organic clicks per month are invoice terms and conditions which you rank number one for uh and uh depreciation and what is depreciation uh was that intentional yes so uh invoicing is uh obvious okay because people who want to create an invoice and you know uh want to uh get more into that so invoicing is pretty much obvious so depreciation is more uh towards the accounting part of it so the people who are specifically business owners they get confused about these terms like what is depreciation you know uh what is you know actual versus cash and all those stuffs right how do i record my own contribution in the business and things like that so they search for these kind of terms so that is where we rank the most how have you grown you have over 9 000 backlinks how have you grown your backlinks uh to be very honest we have not uh put in a lot of efforts or in you know reaching out individually to people and you know getting these backlinks uh like i said we write a lot of in-depth articles and uh there is a tax in india it's called gst so we we wrote a lot of content around gst and during that time we gathered all these backlinks so a lot of institutions supporters academic institutions they started you know backlinking our website for specifically uh those tax related topics tax related articles yeah you rank number one for input tax credit and the term itc in gst that drives you thousands of clicks per month that's what you mean right yes yes that's true you're smiling yes because you know more than i revealed we do we do good research we do good research okay so you're investing a lot in content now a lot of people listening right now have sas companies and content creation is really tough you have to write it yourself which takes time or you have to hire writers which can be expensive how are you creating so much content see um rather than quantity quality is very important so we make sure that whatever we write on any topic that we write on it is an in-depth topic and we you know try to cover the uh the various topics in a holistic manner and our aim is to you know um make that topic best piece available on the internet okay on that particular so for example if you are writing on itc so you will find that that is the most in-depth article on internet right now okay again i mean we recently wrote something on the uh remote working tools or something like that so it was very comprehensive article so whatever we write on we make sure that it's very very comprehensive okay and it ranks uh at least on the first page of the google if not the first result itself so we uh we rank almost for you know 50 to 60 keywords uh for number one on google on first page so you've chosen to go the targeted route you find very important keywords and then write a very like i'm scrolling down this input tax credit under gst there's charts there's tables there's faq there's 10 important points regarding itc there's listicles built in i mean it's a very long article so you're going deep not wide right interesting okay before we wrap up tell me a bit about uh what a month looks like today so in a given month how many new trials will you sign up to the platform uh in any given month it varies actually because uh i mean uh last three months have been very tough for us okay we i mean we saw a huge drop in the sign up but then again i think uh uh after may 15 things started to look up well um in a month typically um we get around 3000 to 3500 new signups 3000 sort of trials yeah it includes both files and the uh uh the free edition users okay and then you said about five percent of those will convert to paid typically yes stupid so that's about 150 new customers per month something like that uh yeah you can say that but like i said we have another vertical as well so we get paid customers from those vertical cells well again i just let's talk about the whole company so the whole company you're getting 3 000 new trials and 5 convert to paid if you include all your channels what are those numbers so paid uh i would say around um it closes around 250 to 300. okay got it so when you add in your relationships directly with accountants who are selling your product to their end users you're getting more like 250 to 300 new customers per month right i see and at ten dollars a pop that means you're adding between two and three thousand dollars a new mrr each month uh it like i told you it's not that straight forward for people who are coming outside of india the price is much much higher and we have a different pricing for accountants so they pay us themselves are they for payers more for per account as compared to what we get here in india so are you adding more or less than 3 000 a month in revenue more more than that god more than double yeah actually a lot more than that because see in white level what happens is that whenever you onboard a customer there are multiple costs involved so there is a monthly fee going on for them so typically uh we charge around two thousand two thousand five hundred uh dollars for one accountancy form okay that's just the main temperature right so um it's not only based on users okay um so this product is like uh they can use our administration panel admin panel and they can onboard their own customers and have their own branding so the whole uh the whole power power yeah white light so how many how many accounting firms use you so right now we have um i think uh 15 to 17 accounting firms that are using it right now got it so that seems to me like that's probably your business is growing faster with your two sales people selling white labels to accountants who manage their firms is that true is that the fastest growing part of your business yeah in terms of revenue in terms of users or primary website it is the uh main crowdfunder yeah i mean 17 accountants paying 2500 a month i mean what is that 40 50 000 a month in revenue right there right yeah when do you guys pass a million dollar run rate when did you pass the million dollars yeah it's a big moment right yeah it's a big moment um actually we passed it uh last year itself okay and do you think you can double this year even with covet or is it going gonna be tough to get two million i don't know because the three months were very very bad for us uh literally i mean a lot of um we saw huge like i told you we saw huge drop in traffic use drop in uh customer signups so we don't know but let's say i mean even if you know hit the same target of 1 million dollars we'll be happy to be very honest yeah okay fair enough now are you profitable today are you burning cash no no we are totally profitable that's a good place to be any plans to raise capital or you're going to stay bootstrapped uh i would say i will i will we'll stay bootstrap because we are being low this way all right let's wrap up let's wrap up with the famous five number one favorite business book um i enjoyed reading james clear's atomic habits i don't know if you can call it as a business book but i really enjoyed reading that number two is there is there a ceo you're following or studying um ceo um i really admire the work done by anil uh mukesh ambani which is the ceo for reliance okay he's doing a very good job here in india for which company can you spell it freelance reliance so you must have heard about the jio the facebook has invested in jio and google as a switch yeah can you can you spell the company uh reliance r e r r e l i a n c c really minus okay number three what's your favorite online tool for building profit books uh favorite online tool i really like intercom okay we use intercom almost for uh five years i guess yeah yeah okay so and number four how many hours of sleep are you getting every night um i think i'm getting pretty uh i mean seven to eight hours and what's your situation harshaw married single kids i'm married i have a 80 year old son oh very good so one kid and how old are you i'm 38 38 last question what do you wish your 20 year old self knew okay i would say to invest more in personal growth guys there you have it profit books helping accountants manage their customers via a white label model also sell direct they broke a million dollars in run rate last year hoping to grow this year but we'll be happy if they stay flat considering covet they've done this all bootstrapped he's profitable which we love harshal thanks for taking us to the top thank you so much for having me