So who is the quintessential Indian entrepreneur? This is the question we keep asking while analysing success and failure of Indian startups. On one hand, large scale platforms such as Flipkart and Ola have high profile founders at the helm, always grabbing the headlines. On the other hand, a bunch of low key, reticent and enterprise focused startups such as Mettl continue to create impact in the niches they serve.
When Mercer acquired Mettl few weeks ago for $40 million, it didn’t make splashy headlines. And while you would have read the stories by YourStory and The Ken, there’s always more to learn about these entrepreneurial journeys. And with Outliers, we bring you the stories told as it is from the horse mouth.
So here’s the podcast, our 76th, with Ketan Kapoor, Mettl’s co-founder and CEO. Transcript credit, as always, to Kanika Berry.
Pankaj: So, welcome to Outliers. This is a podcast with Outliers. And like I keep saying, you know, it’s quite a journey discovering newer Outliers every week. We are back in Delhi. I am sitting down with Ketan Kapoor, who is co-founder and CEO of Mettl. Welcome to the podcast, Ketan.
Ketan: Thank you Pankaj. Pleasure is mine.
Pankaj: Ok. We were just exchanging our lineage. Allahabad, Lucknow…
Ketan: UP, hardcore UP ke hain hum.
Pankaj: So why do I think you are an Outlier? Of course, we will discover more in the conversation but more importantly, in this whole ‘startup going mainstream’ movement in India, if you are anyone who did not do an e-commerce venture and I really mean it, over 10 years ago or when things were looking up, I think it takes a lot of courage to be that. And it has been my personal interest to discover entrepreneurs who build software products that helps all business problems and from what I understand… Ketan was telling me, Mettl helps people discover their capabilities across different professions but before we get into that, Ketan, let us start from the start, shuruwat se shuru karte hain.
Who are you? Where do you come from? And how did this happen?
Ketan: So Pankaj, like I said, born in Allahabad, grew up in Lucknow, spent a couple of years in Kanpur and belong to a middle class background. My father retired from a bank, State Bank of India, so it was kind of a cherished professions back in the 60s and 70s and 80s to a certain extent as well. And my mom has been a homemaker ever since. So I think, ek cheez jo thi ki (one thing was there), we were in a comfortable position as far as monetary because banks pay decently, I mean not great not bad but it was never ki, bahut zada paisa hain (it was never that there was a lot of money). I still remember that parents had incentivised their kids ki agar aap first aa jaoge toh aapko yeh milega (that if you come first in your class, we will buy you this as a gift), and we had to wait for five months, six months even to get a small gift based on your performance. But I think ek cheez consistent thi ki (one thing was consistent that), the parents had a very strong focus on education because I think that in their minds and you belong to an education background, that is one way where you can get the maximum RoI in terms of effort, in terms of investment. I think there is no other way up also, India of the 80s and the 90s was like that, ki aapke paas opportunities kam hain (you had fewer opportunities) and that is why the ‘angry young man’ image of Amitabh Bachchan and government jobs were most lucrative. I still remember when I got through Roorkee and I was getting civil engineering and the first thing my father said was, ‘tum junior engineer toh ban jaoge’ (you will at least become a junior engineer) and I said, ‘junior engineer!’ Probably, I could not understand that term very well but again very middle class background, focus on education and because of that got through IIT Roorkee. In Kanpur, got through a good school where I met Tonmoy (Shingal), my current co-founder and we have stayed in touch ever since. He went to a different IIT, IIM, I went to a different IIT, IIM and kahi na kahi beech mein (somewhere in the middle), because of our set of experiences, because of the people that we knew, because of a shared common pool of awareness, we felt that we had to do something and that is why this idea of Mettl germinated in 2009-10.
Pankaj: How was it building Mettl? Take us through the journey. Were there moments when you said, ‘Ok, let’s do something else’. Take us through the highs and lows.
Ketan: So I actually left my job, a stable kind of job in 2006 and joined a garage startup in 2006. And it was a decision which nobody approved of. Obviously, 2006 mein (in 2006) startups were not sexy. I mean, it was just a rash decision, I would say looking in hindsight, ki aap kuch kar rahe ho, acha career hai aapke saamne (you are doing something and there is a good career in front of you) and then you suddenly leave your job and join a company which doesn’t have any brand, wants to do something and again I was lucky because that decision in retrospect was very rash. It could have bombed very, very easily. It did bomb eventually but how it helped me was, our CTO is somebody I met in that company. Our first investor cheque came from a reference of a guy I met in in that company. There are many strong small and large big learnings around sales, around B2B ecosystems that I attribute to learning in that company and the CEO of that company was one of the best sales guys that I have met in my life.
Ketan: So, obviously, kuch bhi aap karte ho, kuch toh takeaway hota hee hai (there is always a takeaway in anything that you do). Again, we raised 14 million dollars back then. In that small company, we wanted to do mobile payments in 2006 which was just very, very ambitious before its time, which probably Paytm is doing today. So from that standpoint, I think that experience, then I met a couple of VCs, they recommended that, ‘join a startup again’, again I tried to something at that point in time, it didn’t work out, joined another startup called Isango! Again new set of learnings, how to do B2C marketing, how to kind of scale up global businesses, so yeh background tha (this was the background).
Mettl came about because of the hunger to do something, to do something of our own. We were not very, very fixated on ki hum X nahi kaam karenge, ki Y nahi kaam karenge (we will not do X work or Y work). We had gone through a competitive exam system which almost all the people in UP and Kanpur and Allahabad and Lucknow go through. We had worked in a few start ups, the common problems we had seen there. This is pre MOOCs. MOOCs like Coursera, Udacity, were not there at that point in time.
We had some idea that maybe this can morph into a MOOC system and we started with training and assessments and very soon figured out that assessments ek aisa area hai jahan pe innovation matlab ki cheekh raha hai hone ke liye (assessments is one such area where it is craving to have some innovation), it’s craving ki yaar kuch multiple choice questions ko kuch improve kar diya jaaye ya essay type questions ko kisi format mein change kar diya jaaye (it’s craving that some multiple choice questions should be improved or the format of some essay type questions is changed), because now you are doing it on a computer and you can do a lot many things which can be done through the right mix of research, right mix of validity and reliability… also plus we were really naive as well. And aapne jaise kaha, ‘ki aap ecommerce mein nahi gaye’ (and like you said, that you did not enter the ecommerce space), probably hume pata nahi tha ki ecommerce hai waha pe nahi toh hum chale jaate (probably we did not know that there exists an opportunity of ecommerce else we would have gone). We were just internally focused which I think in retrospect is a good thing. If you are hungry, if you feel ki, andar se aa raha hai, bottoms-up aa raha hai, ki yaar aapko kuch karna hai… (if you feel that it’s coming from within and it’s a bottoms-up feeling, that you must do something…). In fact after we decided, we did a competitive scan, we figured out there are few companies in this area. We actually did not care about the market size, we did not care about the competitive scenario, we did not care about globally kya chal raha hai (we did not care about what’s happening globally), actually itna pata nahi tha (actually, we did not know much).
Pankaj: You are making a very important point here, Ketan, because a lot of obsession is around product market fit and what you mentioned about ‘kuch karna hai’ (that, we have to do something). What is that ‘kuch’ (something)? How do you get to that something…
Ketan: Apna dhandha karna hai (we had to do our own business) – as simple as that. Yeh fitoor tha (this was an obsession). And that dhandha (business), I remember talking to my friends in 2007-08 time frame, ki kuch bhi ho sakta hai (that anything can happen). In fact, we tried an ecommerce small venture in 2007 with the current CTO, company called ‘Smart Sauda’ and that was home delivery of what BigBasket is trying to do today, home delivery of daily need goods that you need. Again, we had a burning desire to do something of our own, we had some idea ki kin cheezon mein hum ache hain (in what all things we are good), we had some advantage over others but it was not coming from a very strong analysis that this is what we should do. Top down ki yaar yahan per market gap hai (top down that there exists a market gap here), iss market gap ko fill karte hai (let’s fill this market gap), we didn’t come top down at all, it was more bottoms-up and once we figured out, we were comfortable that this… assessments is one area and we just went all out into it. And I remember telling my wife that now that we have closed the two most important problems or challenges which is kya karna hai aur kiske saath karna hai (what to do and with whom it is to be done), with me and Tonmoy were at least there. At least, there was confidence ki at least kuch toh kar lenge (at least we will do something).
Pankaj: Take me through some of the milestones that shook Mettl journey – good, bad and ugly.
Ketan: This company was registered in 2009, we started working in assessments in around April-May, 2010. So that was one milestone, that at least clarity aa gayi ki karna kya hai (at last we had the clarity of what to do). We spent the next 4-5 months looking for our technology co-founder. We had one guy who almost came, said yes, said no on the second last day, two days before joining. We had one guy who said yes for four months and even started working on with us but again said no at the last minute. At some stage we decided that we can’t just spend time like this, so we had to start recruiting people, we did not have money and we had a small pool of capital, so we just said, ‘to get to a state wherein we have a remote chance to even ask for money, we at least need to have some basic product’.
So we started recruiting people, we got a couple of, I would say again equally naïve people to join us, leaving their settled jobs in July-August time frame. We were lucky to have some mentors with us, so Naveen Tewari from InMobi has been a constant mentor and in the year 2010, he was in a way beginning to scale his own venture after a struggle of 3-4 years post a year. I think his startup was called Khoj Guru, I am Khoj. So I think first set of employees, then we did a quick friends and family round between 30 individuals, six of them said, ‘yes I will give you money’, raised 40 lakh by October 2010. Again, somehow luckily, Blume was getting set up in October-November 2010 time frame. I remember speaking to Sanjay (Nath) and Karthik (Reddy) in November of 2010. It was the second cheque of Blume that closed in March-April 2011 and by that time we had around 15 people around. We had few handful of customers who were beginning to use the product and over the course of next year, we got Ericsson, we got in Mahindra Comviva, Wipro to pilot. I think Cognizant also started using us and because of that enough momentum was created that Kalaari (Capital) became interested. So I think once we had Series A and just before Blume came in, we had CTO Guneet said, yes, that he was also of that mindset, he wants to do something of his own. I think he used to say, ‘yaar, mujhe life mein CV nahi banana hai, ek kaam karna hai ki jaise meine Mettl banayi hai ya mein ‘X’ banaya hai’ (I don’t want to make a CV in my life, I got to be able to say that I made Mettle or I made ‘X’). And I think, today he is at that stage where he doesn’t need to create a CV anymore. So that basic group of people was formed. I think just before Series A again, we had signed the term sheet and two of our most critical tech guys had resigned on one day and they said, we want to do something of our own.
So, I mean, those are some of the setbacks you get that you still don’t have any money and you feel that because of two wickets falling down, you can just lose the match. You have to balance some of those situations which may be stressful for a short period of time and then you come out of it. So, I think from a milestone perspective, we have had that journey. From a business standpoint, I don’t think there have been days that we said, ‘ki hume yeh nahi karna chaheeye (that we should not do this)’, there have been days that we have discussed that this is extremely difficult to do, ‘I don’t know how will we scale up! I don’t know, if we can get one client in three months, how will we get 1,000 clients? How will we solve that problem?’ And it’s just a very, very difficult problem on the face of it. So, I had not done sales, Tonmoy had not been in products and that is why it was a lot of learning for us in terms of how do you build a structured sales organisation, how do you build a structured product technology process? Business point of view it was smooth till about one year from Series A wherein we started getting some inbounds from the US and uss time hume laga (that time we felt), we got a half a million dollar customer, first customer outside India without any significant effort, so we felt that we should explore the US and uss time wave bhi thi (that time there was a wave as well) that in 2012-13-14, ki US jaayeh, waha ke clients, waha ki market badi hai (that go to the US, there clients, there market was bigger) and I think one mistake that we did was to go there before the product market fit because we were just exploring that, chiseling the product market fit in India but we did not discover it for the US.
Second was that we did not have too much money, we had raised four million, it was ok but it was not a whole lot that we could experiment endlessly. So I think there we lost a year or a year and a half, going to US before the product market fit, before understanding that what does it take to build a full-fledged business out there. At some stage, 2014-15 we decided that let us just win the India market first, US can wait, other countries can wait but at least let’s just win that and I think from thereon, it has been a very, very solid, consistent growth journey, we became profitable, we did not raise any more money post Series A, any significant amount of money. I mean, there was a small round for investors that we did.
So I think, if you look at the pattern, it is… I think more solid periods of growth come once you have decided what to do, once you are very, very clear ki yaar yahi karna hai, yahi karenge, isse zada nahi karenge per isko bahut ache se karenge (that we have to do this only, not more than this but to do the best we can).
Pankaj: Yes, I think some key lessons there, especially on the product market fit. So as a person who is an entrepreneur and you have had few shots, what does this journey mean to you and may be what does ‘exit’ mean to you, as people call exit, in your case now, of course, it is one. How did you get here and what are the key lessons on this front?
Ketan: I think more than the exit, the way we think about this is how can Mettl become the largest player in its area of play in the world? We now are number 1 in India in corporate assessments, we have a great growing business in India, we have amazing international opportunities that business has grown from near zero to about 2.5-3 million dollars without any sales force on the ground, it is just catering to in-bound requests.
Now I think, to solve that problem of how do you become the biggest, you can probably spend 3, 4, 5, 8 years in a new geography, build it the way you have built it in India and it will be done. It will be just replicating of what you have just done through the experiences in India, probably product is already there so that’ll be faster. But to do that in parallel, you needed some external support. External support could have been in the form of, let’s say, somebody who has solved this exact same challenge every year, may be some private equity player or some strategic player who would have their interest aligned to Mettl’s growth because somehow if he can convert this into a win-win which has happened with Mercer.
Then we feel that they have deep expertise in working with large HR teams globally, in more than 100 countries. We have deep expertise in one area which they don’t have but they can easily plug into their offerings. So it was more to do with that and less to do with anything else that I can make a quick exit and we can get some money. Yes, money is important but given that we have waited for eight years, we could have waited for 3-4 years more also, I mean that was not the prime force. From an investor standpoint as well, they were happy if there was an exit option on the table but if there had not been an exit option or set of options, they would have supported us for the next 3-4 years as well. That is my view. So I would say, that personal gratification is secondary, it is more because we are getting a good synergistic force to back us up, the goal of becoming bigger and doing that faster can probably materialise quickly.
Pankaj: You also keep becoming an entrepreneur like you kept becoming an entrepreneur, right! How do look at entrepreneurship? What does it really mean to you and why do you keep doing it? Is it because you are still seeking an ideal, I don’t know what is it in your mind? Because if you look at the entrepreneurs we have had, some of them when they build a company, it doesn’t work, some of them would go back and work in a job or if it works well, they get an exit, take a break. I am trying to understand, what is going through your mind and especially since you have had quite a few shots at entrepreneurship, so why do you keep becoming an entrepreneur?
Ketan: I think you have only one life and while everybody has their different appetite for risks, if you can take a risk and again you can do that only at two or three junctures in your life. You can’t keep doing it again and again. To have a best shot of success, you have to time it right as well but if you can take that risk and if you are well prepared to go through that journey, the journey itself is amazing, you get to learn a lot. The impact that you can create, the employment that you can provide, is something which is of great pride, at least to us and anybody as I speak to on the entrepreneur’s side. And thirdly, if there is success, there is a lot of money at the end of the tunnel, not just for you but also for people who back you up, for the employees who go with you along that journey as well. So why won’t you do it?
If you flip the question, why should I not do something and if I look at my IIM exam, Kolkata batch, there would be, I would say, 10-15 people who are entrepreneurs right now out of a batch of 280 people. Everybody had the potential or may be 90% or 80% of the batch had the potential to do. It’s just that they may be, became comfortable too soon. They got into a McKinsey or they got into a banking job or they were just very comfortable with the money coming in or they took a house very quickly, so real estate sector is probably one of the biggest inhibit to startups because people just get into the loan cycle where they can’t just get out of it. So, I think in our case, we were lucky that the timing was right in retrospect. But if somebody starting out today, they need to time it right which means that they need to have a runway of three years, at least three years to survive without any expectation of income. They may be need to be well prepared to do that journey. Maybe you don’t know a lot about the specific domain but the first principle thinking should be there at least, basic common sense, first principles thinking should be there. You need to have a feel for business, you need to have that gut feeling, ‘ki yaar yeh karne se sahi hoga’ (if I do this, it will be fruitful for the business). And you know whether you have it or not, certain things you know, wo business sense hai ki nahi (do we have the business sense or not). And if you have that business sense, if you have that runway, if you are mentally prepared to go down that journey for 2-3 years, you must do it, even if there are no monetary returns, the returns in terms of learning, returns in terms of exposure to situations, exposure to may be senior management or processes is just amazing.
Pankaj: Does it help to have seen failures closely? I mean, I am also trying to understand, there is this thing about startups few years ago, I don’t know if you remember it where people said, ‘the classic image of a startup founder was this young, brash, first time…’ you know and all those stories came from Silicon Valley and so on, right. Do you think failing helps? You don’t plan for failures…
Ketan: Given a choice whether you want to fail or you will want to succeed, you will succeed. If you can’t succeed, the best takeaway is that you take the most out of failure, in terms of learnings, what went wrong and probably not do it again, not try to fail again, not fail at least in the same situation again. I think it is inevitable to be an entrepreneur and not fail. It is not possible. You will have to fail and again failure would mean different things. You can fail at a new experiment, you can fail at a new skill but you will stumble, you will fail, you will try to get up every day of that journey. I think one big challenge as you scale up is the different skill sets that you need for various stages of a startup. You may fail to kind of morph or adopt.
So one is a large, big banner failure where the company shuts down and maybe you have to get to a state to avoid that under all circumstances but you will fail on a daily basis, you will learn on a daily basis and yes, it teaches you a lot. It kind of helps to have a critical co-founder as well who is not diplomatic, who is on the face, who calls a spade a spade in a way so that you know that next time I won’t do this. How do you internalise the failure, how do you internalise that situation where you see, ‘Ok, this situation I failed last time, at least, now, this time, let me not do the same error’.
And at hiring, you will fail a lot for example. Hiring the wrong set of people, I think every startup would do this but how do you come out of that journey, how do you start raising the bar in terms of quality of people that you hire? At least in Mettl, that has been the single biggest change agent for success which is we got the right set of people at the right time. At some stage, we raised the bar. We said, ‘no more compromise, we will make sure that we get what we want, we will understand what is needed to be successful, we will measure those competencies properly and we will minimize that failure chance’. And actually that has happened, we have seen that happen at Mettl.
Pankaj: Great insights, Ketan, from your journey. And I hope people listening in, that they apply on their journeys. Thank you so much for your time, Ketan, and God Speed! Thank you.
Ketan: Thank you, Pankaj.
(Kanika Berry has a Masters in Business Administration and has been a communications specialist for over eight years.)
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