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B U S I N E S S I N D I A u T H E M AG A Z I N E O F T H E C O R P O R AT E WO R L D

Here to stay
Capillary strives to dominate the SaaS solutions market
apillary Technologies is an Indian start-up that provides easy-to-use, cloud-based software products. Its solutions empower retail businesses to engage more intelligently with their customers in real time through mobile, social, online and in-store channels. But will Capillary be able to thrive and take on the customer relationship management (CRM) solutions market that is dominated by the likes of SAP, Oracle and Salesforce.com? Yes, Capillary, in all probabilities, is here to stay. Aneesh Reddy, 29, co-founded Capillary Technologies in 2008 with his IIT colleague, Krishna Mehra, who is the companys co-founder and CTO. Together, they have boundless faith in the transformative power of CRM and how it could help emerging-economy retailers provide a more personalised experience to their customers and improve their own business. The reason is as simple as this: the world has gone mobile. PCs are old hat now. And the popularity of smartphones and tablets has spawned whole new industries of mobile applications. Its this kind of pervasiveness that inspired Reddy to pick two areas mobile and retail which were both the next-big-things ve years back. We started on this journey with a consumer-focused product search and coupon idea and wanted to do something that combined mobile with retail, he states. The Bangalore-headquartered rm started with a seed loan of `15 lakh from the founders alma mater, IIT Kharagpur. In 2009, the year it launched its rst product, it received a funding of $100,000 from Qualcomm Ventures. It also raised funds from well known angel investors like Rajan Anandan, head of Google India; Venkat Tadanki, CEO, Secova; and Harminder Sahni, founder of Wazir Advisors. Today, Capillary has over 350 people on its rolls and

ofces in India, the US, Middle East, UK, South East Asia and Australia. As a policy, the company is tight-lipped about its earnings, but analysts anticipate its market valuation to touch $100 million by 2015. Every customer counts In the retail business, the greater economic benet of return and repeat purchasers is astonishing, especially for the traditional brick and mortar retailers. Reddys strategy for India was to bring focus and energy to help consumer-facing businesses consistently increase same store sales, enhance brand loyalty and provide personalised in-store experiences to consumers. Using their solution capabilities to analyse purchase patterns, multi-channel behavior outlines, feedback and customer experiences, the company is able to understand customer preferences and raise their engagement level. This turned out to be a game changer for our early-stage customers, and was a key growth driver for Capillary, he admits. Capillarys winning strategy has been to focus on building a base of loyal customers to earn repeat orders and references. Our support and understanding of our customers problems led to gaining our rst few international clients on references from existing clients in India. Those early experiences gave us the condence to quickly scale our offshore operations, Reddy agrees. Capillary now has major clients that include big names such as Raymond, Madura Garments, Jack Wills, Marks & Spencer, Benetton, Nike and Nokia in India. It is important to think global right from the start, he explains, as its a big advantage to build a software product out of India and sell it to the world today. On the international front the company has gathered great momentum as domestic clientele referred
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Reddy: selling to the world

them to their overseas afliates. For instance, Pizza Hut India led them to Pizza Hut accounts in Thailand and the Middle East; Puma India connected Capillary to Puma businesses in Singapore and Malaysia; Robinsons Singapore got them into their Malaysia business; and Alok Industries in India helped them with their UK ofce and recommended them to achieve Store Twenty One, which was their rst international account. CRM has long been used by marketers as a back-end process to mine data and create sales campaigns, but ideal customer relationships are built face-to-face by store associates, says Mehra. By putting valuable up-tothe-minute intelligence directly into the hands of sales associates, forwardthinking retailers can now dramatically enhance shopping experiences on the showroom oor, driving customer engagement through personalised recommendations and instant offers, with an immediate impact to the bottom line. With a rapidly growing customer base, Capillary powers more than 10,000 stores for over 150 customers across the globe, who collectively engage 75 million shoppers with their solution. Clients have attributed up to 10 per cent growth in same-store sales. Creating a new dream Coming from a family of doctors, Reddys parents were aghast when he

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B U S I N E S S I N D I A u T H E M AG A Z I N E O F T H E C O R P O R AT E WO R L D

Technology
improved its strategy and made several changes to its technology, besides adding major product streams, including social, big data and instant engagement. While most CEOs seek the limelight, Reddy has been low-prole but driven. Until he started Capillary, Reddy was intensely shy, sensitive and stage-fearing, who kept to himself. He would even nd it difcult to strike up a conversation with strangers. But he soon started transforming when he had to face sustained rejection in sales, which is typical of any start-ups growth phase. Today, life for Reddy has become more complicated and demanding. He travels across countries, ensuring his customers are happy, as he works to get his new company rocking. Gone is the shy and reticent guy. Its been replaced by this persuasive, determined and ambitious person. Capillary Technologies has received numerous accolades, including the Gartner 2013 Cool Vendor award and Marketing Magazine s CRM & Loyalty Silver Agency of the Year Award 2013. The company was also named one of Forbes 12 Hidden Gems. Capillarys increasing dominance is now less about what it sells than how it sells. And that reects a new wave of change that is likely to transform retail again. The road ahead for Capillary will be adding many enterprise grade features to its existing CRM line of business products and deliver advanced technological support to mid-segment retailers at affordable costs. Its ambitious plans include integrating its suite of interactive customer engagement and intelligent retailing solutions to provide a personalised and unique experience to delight its customers consumers. Considering the amazing growth of Capillary, and the seemingly smart strategies it has adopted, Reddy may have proved himself the best CEO at taking the long view. We strongly believe that we will be among the rst few large multi-national software product companies out of India, and help create a better product ecosystem in India, he states.
u SHASHI B HAGNARI

joined IIT for engineering and did not want to pursue medical studies like all his folks. They desired he too have Dr as a prex to his name. Fortunately, at IIT Kharagpur, where I got a bachelors degree in manufacturing engineering, it was the opportunity to work on interesting projects that made a real difference, recalls Reddy. His work featured two international journal papers, getting a patent and nally getting selected for an MS at Massachusetts Institute of Technology (MIT). All said, he decided against joining MIT after learning dynamic new concepts that included research, entrepreneurship and management, which he found simply awesome. Looking back with satisfaction, Reddy believes it was a smart decision to stay back in India. His rst assignment was to work with ITC Limited, where his role involved facility management and setting up a new Greeneld factory for their FMCG division. The experience provided him a great opportunity to learn people management and nally begin his own start-up. I strongly believe that you need to be happy about what you are doing, even if it means taking more risk, as everyday is a new journey. It is important that you enjoy the journey and not just focus on the end destination, he remarks. Capillary Technologies quickly established its credibility with venture capitalists, who have continually pumped signicant amounts for its innovative product and sales strategy. Capillary has demonstrated that it can scale up successfully and protably by focusing on a segment that has been underserved by more expensive and complex solutions. We are happy to partner with the company in this next crucial phase of growth, said Shailesh Lakhani, managing partner, Sequoia Capital. But Rome wasnt built in a day, and neither was the emergence of Capillary as a serious contender in the CRM marketplace. Apart from taking on big players like SAP, Oracle and Salesforce, Capillary also faces threat from campaign management platforms, loyalty and marketing agencies besides other analytics service providers.

Raghava: learning through experience

Avinash Raghava, fellow, iSPIRT Foundation, a think-tank for Indias software products industry, is upbeat about Capillarys success. They are addressing a big market with an innovative CRM product and have an efcient sales model that lets them grow quickly. They are a strong management team that is constantly learning from their experiences and through the experiences of other entrepreneurs, he explains. Technology for businesses The companys rst strategy towards relevance was to launch an SMS and location-based discount search business. Through this, Capillary learnt that while discounts are ne to attract consumers, retailers wanted more capabilities to understand, retain, nurture and engage personally with their customers by learning their preferences and buying patterns. So, we shifted our focus radically, from building technology for consumers to building technology for businesses that would help them extract more value from consumers using a cloud-based computing model. Facing challenges is part of any start-ups growth strategy. The key to success is getting it right the rst time, observes Reddy. Among others, it is equally critical to pay attention to the products frontend development process, and listen to the voice of the customer. Over time, Capillary has continually
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