3 Key Lessons on How We Became Profitable in Just 3 Years

Sep 10, 2014
3 Key Lessons on How We Became Profitable in Just 3 Years

Three exhilarating years — that’s how long it’s been since we first made our mark in the world of voice and SMS APIs. We’ve come a long way since our inception, confidently striding in the right direction, scaling up our team from four to 30 members, and growing our customer base at an unbelievable rate (by 400% in 2013 alone). What a fantastic journey it’s been!

Thinking back to when Mike and I co-founded the business, I remember all the ups and downs we’ve been through and the important lessons we’ve learned along the way. Here are three that I believe had the greatest impact on our growth and development as a company.

Lesson 1: How we persevered as Y Combinator rejects

Here’s a question: How would you feel after working 36 hours non-stop? Energized? Or cranky? If you still feel alert, eager, and want to keep going, you’re probably pretty darn passionate about what you’re doing and also having a lot of fun doing it. Over the last three years, we’ve lost plenty of sleep, but what we gained in return was invaluable — high-quality products that work smoothly and efficiently, a bunch of loyal customers, and an enviable team of talented people who truly believe in Plivo. We’ve also learned that perseverance pays off.

I remember the unfaltering enthusiasm that drove us when Mike and I first connected on GitHub, and created the Plivo open source framework. At the time we called it Telephonie, using the French spelling, since Mike is originally from France. We wanted a more robust solution to incorporate voice and SMS capabilities into web applications than we could find elsewhere and decided to build it ourselves. The result was technically superior to what existed at that point. The Plivo framework became popular, and people wanted to pay us to develop applications for them. That kickstarted the idea to take Plivo to the next level.

So what does working with passion mean? It means that if you’re fervent about what you do, then challenges along the way will fire you up rather than dampen your spirit. Mike and I learned that very early on. In September 2011, after meeting just once, we started our company, moving from being developers of the Plivo framework to providing voice and SMS APIs for easy integration into applications. At the end of September, in a rush of enthusiasm, we applied for Y Combinator — and we were rejected. Even worse, we took stock and realized that we had no money, no real product, and no customers. That still didn’t deter us. We wouldn’t give up, and that stubborn belief in ourselves worked. By the first week of October, we had our first paying customer. By the end of November, we managed to raise $250,000 in funds. In January of 2012 we hired our first two team members. We were running on adrenalin, and watching Plivo come to life was a rush like no other.

After we gained traction and more paying customers, we knew we were onto something. So, in 2012, after a second pitch, we were selected for Y Combinator’s summer 2012 batch. Four of us worked 22-hour days out of two tiny apartments across two continents. I wouldn’t advocate that every startup work this way. It’s a surefire way to burn out quickly. I’m simply stating that in order to succeed, you must put in the hours, do the legwork, stay focused, and believe in what you’re doing. That’s how we were able to launch the cloud-hosted version of Plivo in July 2012, and were subsequently able to launch in 50 countries just one month later. In December that year, we also raised $1.75M from some of the best VCs in the world.

Today, we’re set to take the market by storm. This never-give-up, go-getter attitude is something we take pride in. It’s why customers trust us and have built their businesses on us. Our confidence and attitude is pretty much what defines us at Plivo.

Lesson 2: How playing in a punk rock band can make you a better founder

At 22, my friend and co-founder, Mike, played in a punk rock band. No really, that’s what he did for five years before becoming a systems engineer. From his music-making days, Mike learned that good performance is all about how well the band members jam together. That energy is reflected in their output.

In our early days, ensuring good performance was a key goal. Every team member focused on making the API the best it could be — great quality, smooth, easy-to-use, convenient, and feature-rich. As we grew, we made a few mistakes; made some wrong hires and a few incorrect assumptions. Our biggest mistake was trying to fit the Plivo culture to the team we were building, rather than the other way around. When the light bulb went off in our heads, we realized we needed team members who understood where we were coming from and where we wanted to go. We wanted people who would work hard to keep our flag flying high. Today, the Plivo team reminds me of a band of musicians who connect, coordinate, and jam together effortlessly. We perform well because we’re in synergy, always backing one another.

People sometimes ask me, their voices laden with skepticism, if having our core teams located remotely is actually effective. I always answer with a resounding “Yes!” It’s a model that we consciously decided to follow for Plivo. While we were incorporated in San Francisco, our remote teams operate effectively, coordinating smoothly with their counterparts in the US. This has really benefitted us. We’ve had a vast pool of extremely good talent to pick from, making it easy to hire a great team, and have also saved on costs. Most importantly, we were able to put into place a system that ensures 24/7 support and help for customers and prospects, no matter where in the world they’re located. We’re lean but tough, and we intend to grow strategically, scaling up as our clients’ businesses grow.

How can we prove that our remote team model really works? Well, consider these statistics and achievements. Last year alone, our customer base grew 400%, and the figure was even higher for registered users. In the last quarter (2014), thanks to outstanding teamwork, our SMS traffic grew 500% and voice traffic grew 150%. In 2013, our product team launched Plivo SDK, the voice transcription feature, and app demos within our Plivo dashboard. That to me is clear proof that this model works.

Lesson 3: How opening a restaurant helped me understand our customers today

Some years ago, fatigued by uninteresting roles in large companies, I started a tiny food outlet selling dumplings in Ahmedabad, India. From that short-lived stint, I learned that no matter what kind of business you’re in, customers have an appetite for great quality, and a product is sure to succeed if it meets a need. Thus the potato dumpling was born — a terrible insult to the tasty traditional dumpling, but something that my customers ate up … quite literally. In other words, if you’ve got the right offerings on the menu, people will demand it. What has this got to do with the lessons we’ve learned at Plivo? Everything!

When we first started, admittedly it was tempting to scale up quickly, to keep putting out new products, and have a large team, in order to stay in the limelight. Innovation and R&D were always in the cards, but what we soon realized was that the success of our customers’ business was closely linked with how well our products functioned. The bottom line was that our customers were building businesses on Plivo, which meant that quality, uptime, low latency, and high scalability mattered most. And since we were running an infrastructure business, the bigger our customers grew, the bigger we grew. It was a really simple equation. That taught us an invaluable lesson — if we helped customers succeed in business, we would succeed too.

Here’s some food for thought — are you serving your customers something that will benefit their businesses? We put the promise of high quality on the Plivo menu, and once customers had a taste of what we offered, the demand for our products grew tremendously. Plivo is all about solving customer pain points, and we deliver on our promise of a superior experience at an affordable price. This makes our customers confident that they would not lose business due to poor quality or lack of support. By continuing to improve our existing products, we also continue to offer our customers the opportunity to grow their businesses without fear, because they know that we can scale to match their growth.

Essentially, the effort we put into our products gives us a rapidly growing pool of loyal customers, who in turn help us boost our voice and SMS traffic. This enables us to negotiate for more Tier 1 routes and better pricing on their behalf. This means that we can pass on those savings to our customers — and the cycle continues.

So what about the future? What about the next three years? Will the three stepping-stones I described above lead us to a bigger and better place on the global map of startups? I certainly believe so! But as we enter our fourth year of operations, there are other things on my mind. Right now I’m thinking, with a great deal of excitement, about tough new challenges ahead and new lessons we’re going to learn. We’re entering a vibrant phase. Is it going to be hard? Yes! Are we going to love breaking past those barriers that come our way? Yes we are. And we’re going to have a lot of fun along the way too. Challenges you say? I say, bring them on. We’re ready and waiting to meet them head on.

Venky, Co-founder at Plivo Inc.

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