How Sulekha Reached 40,000 Paying Service Providers and $40M Raised Scaling India's Expert Services Marketplace (Interview with CEO Satya Prabhakar)

Introduction and Business Model Overview

Nathan Latka

00:00Hello, everyone. My guest today is Satya Prabhakar. He's an Indian American entrepreneur, engineer, writer, and the founder of Sulekha, India's leading tech AI platform for expert services, offering SME service providers the best mobile SaaS medium to grow their business through matched process prospects and market intelligence. Satya, you ready to take us to the top?

Satya Prabhakar

00:22>> Yes.

00:23>> I am. Thank you for your time and for your interest.

Marketplace vs SaaS Model

Nathan Latka

00:25You bet. So just to be clear from a business model perspective, is this a marketplace business model or is there a SaaS component as well?

Satya Prabhakar

00:35>> Well, at this point till now, it is a marketplace business model where experts when we say expert services, these are services, service providers who offer high value services, there's a lot of user engagement in terms of which service provider that they choose for providing the service. So for these things at this point, Sulekha is a

01:00>> marketplace model. What

01:07>> we have is that we have for these SMEs so that they can get the right kind of consumers, not just from the Sulekha platform, but also from outside of Sulekha platform from various search engines and other local services marketplaces.

Company Origins and Launch in 2007

Nathan Latka

01:23And you list all kinds of things on your website, from finding ways to score IT, to finding jobs, to finding rentals, all kinds of stuff. Take us back to when you launched the business. What was the first sector you targeted?

Satya Prabhakar

01:41>> Initially when we launched the business in 2007, and primarily in India, and we strong have presence among Indians living outside of India also, which are the non resident Indians. So initially when we started the service, it was primarily a classifieds kind of a service. So which people were primarily so as we evolved over the last about ten years from the time, what we have done is we are focused on services as the main stay of the

02:20>> platform, where consumers are looking for service providers and service providers are looking for motivated buyers, which are consumers on the side. And there's a lot friction between trying to match these two things because the service providers don't have the credibility of the brand like big brands, and they need an independent platform where it tests for their credibility and their reputation.

02:47>> Take me back Welcome to service.

Nathan Latka

02:49Give me the timeline here. What year did you launch the company in?

Satya Prabhakar

02:54>> We launched the company in 2007 in India.

Monthly Active Users and Consumer Matches

Nathan Latka

02:562007, okay. And then if we fast forward to today, over the past thirty days, how many people successfully found a service provider through your platform?

Satya Prabhakar

03:07>> Right, so we have close to about seven to 8,000,000 people who use the service every month. Seven to 8,000,000 people who use the service every month were registered users.

Nathan Latka

03:22And what does that mean A registered

03:27user is less interesting than someone who actually got matched successfully with a service provider. How many people actually got matched?

Satya Prabhakar

03:33>> The ones who are matched successfully to service providers per month would be around

03:41>> about 600,000 to about 800,000.

How Sulekha Makes Money from Service Providers

Nathan Latka

03:43Okay. And when you facilitate a match between someone looking for a service provider and a service provider, how does Sulekha make money?

Satya Prabhakar

03:53>> So what we offer to service providers, our revenue comes from the service providers, for the consumers it is free to use. So when the service providers subscribe to the Sulekha services, based upon the city and category in which the service providers are, we estimate what is the number of service matched and verified service requests that they get. And there is a cost that the AI algorithm of the platform estimates for that city category based upon the

04:26>> value of the service, based upon supply demand, And then says that in this period of time, we'll

04:35>> be able to serve you so many matched service requests and these matched service requests are valued for service requests so much. And the system automatically comes up and say this is what you need to pay for a three month period or a six month period. So there is accountability on part of the Sulekha to the service providers in terms of what is the match to value that they would get from the platform.

Service Provider Pricing

Nathan Latka

05:01And so on average, was a service provider paying you per month if you're actively bringing the matches?

Satya Prabhakar

05:09>> Yeah. Correct. And that one, actually, Nathan, varies from anywhere between $100 to about $2,500 a month.

Nathan Latka

05:19And it just depends on the number of matches.

Satya Prabhakar

05:24>> On the number of matches and also on the value on the service. For example, let me give you a small example. If looking at a painting contractor, the value of match service request can be $2 to $3 But if you're looking at a large event organizer, the value of that thing can be anywhere between $15 to $20 So it varies based upon the value of the service.

Total Funding Raised

Nathan Latka

05:48And and have you raised capital to grow the business or you bootstrapped?

Satya Prabhakar

05:52>> We have raised we have we raised capital to to grow the business. Yes. We have.

Nathan Latka

05:58How much have you raised to date?

Satya Prabhakar

06:01>> Till date, have raised about $40,000,000.

06:04>> $40,000,000?

SaaS Expansion and Remote Services

Nathan Latka

06:05Yeah. That's that's great. And and so when you go out and have conversations with the the markets, right, the VC markets, the equity markets about valuation of the company, Are you able to tell a story to get a SaaS multiple, which are usually higher than a traditional marketplace multiple?

Satya Prabhakar

06:25>> See, the thing is, as we are moving forward, there are two ways in which the core match making platform is expanding. One is in the SaaS marketing model,

06:38>> service SMEs come to us and say that per month I'll pay you so much and further we are providing marketing services for them to reach out to consumers across other platforms. So that is not based upon the core marketplace model that we have. The second one actually Nathan that we're doing is, there are certain services and this is the exciting part of the business is that there are certain services where the consumer and the service provider

07:06>> need not be located in the same city or the same locality of the city. For example, if you are a business consultant for opening actually restaurants, and you can be located in the North Of India and I can be located in the South Of India and yet you can provide me the service. So what COVID has done is it made it possible and it made it feasible for people to know that they can get services done

07:33>> from instructors, from consultants, from lawyers, advocates, from anywhere across the country.

Nathan Latka

07:41I understand.

Satya Prabhakar

07:41>> So that's

07:42>> that's the second,

07:44>> yeah, in which we are we are expanding.

First-Year Revenue and Early Days in India

Nathan Latka

07:47And if you if you take me back to your first year in business in 2007, do you remember how much revenue you did that first year?

Satya Prabhakar

07:55>> Oh, in the first year, we would have done about $100,000, $200,000, $300,000.

Nathan Latka

08:01How did that feel? That must have felt great back then.

Satya Prabhakar

08:04>> Yes, it is. It is. You know, because see the thing, Nathan, while India is an exciting country, it is the last large internet market that is available in the world. So everybody is coming to India, everybody is investing in India. But when you go back to 2007,

08:23>> people the access to internet was very expensive and very low in the sense you were very fortunate if we had five twelve kbps access. It's not the 30 mbps access we have right now. And people used to pay to their nose for that. So from that onwards being here, it's very difficult to gain acceptance for the business model. It's very difficult and expensive to get consumers. So it was a very hard slot in the at least

08:58>> in the initial period in India. Only now, Nathan, in the

09:08>> last from 2000 several handsets that the whole market has exploded in India. And that is since when everything has become more exciting.

Passing $1 Million in Revenue

Nathan Latka

09:20Do you remember which year you passed a million dollars in revenue?

Satya Prabhakar

09:25>> We passed a million dollars in revenue in maybe in twenty two thousand and ten maybe around that time.

Nathan Latka

09:38Yeah.

Satya Prabhakar

09:38>> Twenty twenty ten.

09:39>> 2010, 2011. So

Nathan Latka

09:41then take us forward to to last year Yeah.

Satya Prabhakar

09:46>> Because, Nathan, we are still a private company and we are not disclosing revenue yet for this one, you have to excuse me on that regard.

Nathan Latka

09:56That's fine. So you break a million dollars in revenue though in 2010, right? Some of the challenges with scaling a model like this is making sure that both sides of the marketplace stay actively engaged. So can you spend some time talking about each side? How how many individual consumers are putting a request to the platform each month, And how many service providers are waiting for like a request to hit them every month?

Satya Prabhakar

10:19>> That's right. So we have in this quarter, we would have the number of live service providers who have paid us money and so would be in between 40,000 to 50,000 across India. And the number of consumers who are coming to get them. Pre COVID it was about one point one to one point three million per month. Because of COVID people are not going out doing stuff, it has come down to about six hundred to eight hundred

10:56>> thousand. But we are expecting in the next three months for it to go back up to about one point five million per month again.

COVID Impact on the Business

Nathan Latka

11:03How did you handle COVID in terms of your cash position? Were you trying to raise capital and did COVID hurt your valuation at all or no?

Satya Prabhakar

11:13>> Well, we don't know if it has hurt your valuation. I am sure it has because see the thing Nathan that happened is that in the month of March 2020, just

11:30>> in a matter of one month,

11:33>> actual sales have dropped 80%, eight-zero. Because the service sector SME was the worst affected sector in the whole space. Because of the lockdown, they just can't go and do any work. They can't earn a living, they can't make a living. And they were like that for three, four months. There were no events, there were no education, there was no home improvement, nothing. Everything froze for a matter of three-four months. And if they can't make, they can't

12:04>> spend money. Right? And they are also saying, I

12:10>> can't move out of my house, nobody wants me in their house. So I can't do that. So for a period of about three-four months it was absolutely the worst period in the history of this company.

12:24>> And it has affected us very badly, but then since then as the economy improved, as the lockdowns lifted, as the vaccines got improved, our growth also has

12:37>> swiftly come back from there.

2015 Revenue Projection Discussion

Nathan Latka

12:39Satya, you've talked about revenue. I'm trying to figure out why you didn't tell me, but you chose to tell Livemint back in 2015. You gave an interview that said your revenue was right around $30,000,000 at that point. You were one the only profitable internet companies in India with Info Edge and Justdial being the other two. Was revenue 30,000,000 in 2015?

Satya Prabhakar

12:59>> Our revenue including The US, we have a US business at that time. So at that time, it was better exchange rate at that time. We were projecting that revenue at that time. Yeah.

Nathan Latka

13:17Okay. Got it. So this quote that you gave the outlet Livemint was a projected revenue for twenty fifteen of thirty million dollars

Satya Prabhakar

13:23>> Projected revenue.

Nathan Latka

13:25Got it.

Satya Prabhakar

13:26>> Did you miss or hit?

Nathan Latka

13:28Yes.

Satya Prabhakar

13:29>> We were we were we were off by by 25%.

Nathan Latka

13:35That's that's pretty good that's still pretty good projection. Alright. Very good, Satya. This is great.

Satya Prabhakar

13:41>> Now you obviously trying to we we are now trying to get back to that. Yep. Please go ahead.

Path to $40M to $50M Revenue

Nathan Latka

13:47So, obviously, obviously, you're trying to drive additional growth in the business. You've raised $40,000,000 of venture capital, which means you have to keep telling a very compelling growth story. When do you think you can pass 40 or $50,000,000 of revenue? Can you do that this year or next year, do you think?

Satya Prabhakar

14:05>> Are projecting that happened, Nathan is that in The US, we had a very thriving events market where all we were the largest and the most dominant player where people came and looking for events and looking for subscription to events and event tickets and all these things. So that market has come to a complete freeze. So we are expecting that in the year 2023 was when we'll be to get that market back. And once we get that

14:41>> market back, we'll be able to hit the numbers that you're talking about.

Famous Five: Books, CEOs, Tools, and Life

Nathan Latka

14:46Got it, that makes sense. Let's wrap up here, Satya, with the famous five. Number one, what's your favorite business book?

Satya Prabhakar

14:53>> My favorite business book is The Effective Executive by Peter Drucker.

Nathan Latka

14:58Number two, is there a CEO you're following or studying?

Satya Prabhakar

15:00>> The CEO I follow is

15:08>> there is an Indian conglomerate called Tata Sons. And the person who runs Tata Sons is from the same college as I am. So I tend to follow him in terms of how they're executing and all these things. It's a $100,000,000,000 conglomerate in India that sells variety of services.

Nathan Latka

15:28I'm very bullish on India. We had Girishan with FreshBooks. We had Sarvana with OncoBuy and Document360. There's a lot of $50,000,000, $60,000,000, $100,000,000 revenue SaaS companies coming out of India.

Satya Prabhakar

15:41>> Something special Number is

Nathan Latka

15:43three, what's your favorite online tool for building the business?

Satya Prabhakar

15:46>> My favorite online tool for building a business?

Nathan Latka

15:50For building your business.

Satya Prabhakar

15:51>> At this point, it is Microsoft Teams.

15:57>> Microsoft Teams.

Nathan Latka

15:58Number three, how many hours of sleep do get every night?

Satya Prabhakar

16:01>> I'm sorry, couldn't hear that properly.

Nathan Latka

16:04How many hours of sleep do you get each night?

Satya Prabhakar

16:05>> Oh, get about between five to six hours.

Nathan Latka

16:09Okay, and what's your situation? Married, single, kids?

Satya Prabhakar

16:11>> I am happily married with two kids.

Nathan Latka

16:16Two kiddos, and how old are you?

Satya Prabhakar

16:17>> I am 56.

Nathan Latka

16:2056. Satya, last question here. What's something you wish you knew when you were 20?

Satya Prabhakar

16:25>> I wish I understood the power of compounded

16:32>> interest.

Nathan Latka

16:33Guys, compound interest is powerful. We just talked to Sulekha. Again, launched in 2007, did $300,000 in revenue, broke a million in 2010, now scaling up, trying to get back to $30,000,000, $40,000,000, $50,000,000 in revenue post COVID. In the past thirty days or past quarter, 50,000 service providers have paid Sulekha something in response to over 800,000 consumers asking for services through the Sulekha platform. They are a marketplace model. Satya, we're rooting for you. Thanks for taking us to

16:59the top.

Satya Prabhakar

17:00>> Thank you so much for your time.

Nathan Latka

17:02One more thing before you go. We have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU, CAC, LTV, you name it, they share it. And the buyers try and make a deal live. It is fun to watch every Thursday, 1PM

17:27central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2PM central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button, and then click the little bell notification to make sure you get notifications when we do go live. I wouldn't want you to miss breaking news in the SaaS world, whether it's an acquisition, a big

17:48fundraise, a big sale, a big profitability statement, or something else. I don't want you to miss it. Additionally, if you wanna take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You wanna get in there. We've probably talked about your tool if you're running a company or your firm if you're investing. You can go in there and quickly search and see what people are saying. Sign up for

18:09that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode. And if you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to counter those people. We gotta

18:28push them away. Click the thumbs up below to counter them and know that I appreciate your guys' support. Alright. I'll be in the comments. See you.