The Start-Up Strategist

Sharad Mathur in a conversation with Shripal Gandhi, Founder and CEO, Swipe Technologies

Web Cover_Shripal Gandhi

For six years after graduating from University of California, Riverside (UCR), Shripal worked as a nano-scientist and earned 11 patents, two of which were licensed to Apple and Samsung. He returned to India to found Swipe Telecom which in only the second year of its existence has clocked in Rs. 100 crore in revenue.

With a high mortality rate for start-ups in the early days, what was single most important thing that you did right?

We put together a very competent and driven team. In India we are very relationship oriented people and it is not uncommon to find the leadership teams of start-ups comprise of people related to the promoter. However, we decided we will not hire anybody because of their relationship with somebody. At Swipe, relationships did not add brownie points to someone’s candidature, competence did. That is how we built a rock-solid professional team.

In the Indian tablet PC market flooded, with ‘me too’ products, how did you decide where to start?

From the beginning, I was very clear that we would never make any ‘me too’ products. We decided that if we had to make something, it had to be a disruptive product. It had to be disruptive technology. Or it had to be disruptive pricing. We decided that we would not make anything that did not fall into one of these three buckets. Looking back in time, we did many firsts. We came out with India’s first children’s tablet. We came out with India’s first six inch calling tablet when there was none. We came out with a 3D tablet which was priced at just Rs. 4,999 when similar tablets in the market were priced around Rs. 15,000.

You have said that you were inspired by Akash tablet to start Swipe. What did you learn from its failure?

I was in the US when Akash tablet was launched and I was one of its very first users. The best part about that project, which inspired me, was the pristine thought that every student in India should have a tablet. There could have been multiple reasons for its failure, given the complex socio economic environment that exists in India. But one of them definitely was quality. The product used to heat up and the touch screen was not really easy to use.

Learning from it, we decided that while we will remain affordable in comparison to some leading global brands, we will never be in the category of really cheap products that are highly quality- compromised. We resolved that we would not compromise with the quality of the product, even if we had to let go of business because of it. We realised that it was better to create a quality product and explain why the customer should pay more for it than to apologise later for a sub-standard product.

You had a very small team to begin with.  How did you manage to take your products to the market?

In July 2012 when we started, our initial business model was to do only online business. It was the easiest, fastest, and leanest way to reach our customers. We sold our first 3 devices online – a very affordable yet seamless 3D device, a 2G calling tablet, and an aluminum cased 7 inch tablet which was the thinnest Wi-Fi tablet at the time. In the first eight days, only on Flipkart and e-Bay, we completed our sales target for the first quarter.

How did you create an offline distribution network?

Because of our online success, we started generating interest in the distributors across the country. But we wanted to choose the pedigree of our distributors well and tie up only with top notch distributors who were distributing international brands like Blackberry, Nokia, or Samsung. We humbly said no to the distributors of the Chinese products. It was very difficult as a start-up to say no to business when overheads were mounting, but we maintained the discipline of sticking to our strategy. This yielded us great advantage over other tablet manufacturers because the quality of our distribution network was much better than theirs.

Secondly, we focused on depth and not width while choosing our markets and distributors. We did not want to be one of the smaller players operating in many states. We chose to be the market leader, number one of two, in the markets we operated in. That is why when we talked to our distributors and retail partners in a particular geography, we would clearly state that our aim was to be market leaders within a quarter. And we went with only those who had a similar vision backed by their retail channel, financial muscle and reputation. Soon, we were market leaders in five to seven states at any point in time.

Why did you not diversify into other related products like the mobile phones?

When you grow fast, there are many opportunities to do many other things. But for the first two years, we literally lived the word ‘focus’. We focused only on the tablet market because we wanted to be the number one player in that space. Our focus helped us stay ahead of curve. For example, when Bureau of Indian Standards (BIS) compliance became mandatory and other players were thinking of how to address this situation, all our products were already BIS compliant.

After we started selling tablets, there were some 50 other players who entered the tablet PC market, including some of the biggest names in the mobile handset space. Today, in 2015, how many players sell 12,000-15,000 tablets? Hardly five, because almost 80% to 90% of them have ended up exiting the business.

Once you became market leader in five to seven states, what did you do to grow further?

To expand, our biggest challenge in the early days was raising the capital. But as we started to grow, investors started showing interest in us and that is when we received $5 million funding from Kalaari Capital, a Bangalore based venture capital fund that invests in early-stage, technology-oriented companies. It has been over a year now since the Kalaari engagement and we are looking not only at Indian markets, but are also getting into other APAC countries. In addition, we are about to start local manufacturing.

What was your growth strategy?

Focusing on what we did well helped us grow too. I knew that unless we have a serious differentiation, we cannot create value; we cannot have a long term play. I had also seen the Indian telecom market play. No real product differentiation was happening here. That is why we chose to focus primarily on product design and development, and in order to be able to do that, we partnered with a leading TATA enterprise. They took care of everything else for us and allowed us to focus solely on three things – product design and development, marketing and branding, post-sales and service. As a result, from conception to final delivery, we take only 40-45 days flat. That is how quickly we respond to emerging customer needs.

How did you drive entrepreneurship within your organisation?

I tried to promote profit-center culture within our team by creating different verticals. For example, we have a vertical for emerging business or a vertical for education sector. Complementing this with leadership development and mentoring has allowed many individuals who started with us at a very junior level to grow within the organisation and lead an individual vertical. In addition, we have some very senior people to join us, including the advisor to the Government of India for the Akash tablet project, and it has strengthened our research capabilities.

From being settled as a nano-scientist in the Silicon Valley, how did you take a leap of faith to become an entrepreneur?

I have always wanted to be an entrepreneur. After graduating from University of California, Riverside (UCR), I had offers from GE and Motorola but I joined a start up in the Silicon Valley as a nano-scientist. Soon after, I got a call from one of my professors, George Gruner, who had started a new start up and wanted me to join him. He told me that he had this idea where we would use the expertise we had gained in developing nanotechnology chips for medical diagnostics for application in consumer electronics. He did not have any funding yet and from the research grants, he offered me a salary that was 30% less than what I was already drawing. Since I was very excited about the idea, I took a pay-cut and joined him.

This was a turning point in my life. At the age of 25, I was meeting VCs and working to set up an exciting start-up. It was a great learning curve for me and I learnt about the importance of relationships, camaraderie, and leadership. Soon, we raised $7 million in the Series A round of funding and that was just the beginning. We raised another $40 million dollars, acquired two companies, and the organisation that was started with just two people was now 400 people strong.

So, how did you move back to India?

The decision to come back to India was made long before I even left India. I was an outstanding student at the University Department of Chemical Technology (UDCT), Mumbai and secured admission in the universities of Michigan and California with the fellowship. That meant all my expenses including my travel and accommodation was to be paid for, and in addition, I was to get a handsome stipend. I was very happy and so were my parents back in Icharkaranji, a small town near Kolhapur. Only thing to be done now was to get the visa stamp on my passport. Most of my friends had already got it done.  However, my visa application got rejected three times. I was totally dejected, had already started preparing for Common Admission Test (CAT) and communicated to the concerned authority at the UCR that I was unable to attend their program. After some days, to my surprise, I got a telegram asking me to go back to the American embassy. I reluctantly went to American Embassy for the fourth time, after my father spent hours to convince me, and I was eventually handed my visa. It apparently happened as a result of direct intervention from Dr. Robert Haddon, a very senior scientist in the field of nanotechnology, whose research group I had to join at the UCR.

I would have probably not come back if my visa would not have got rejected thrice. But it did and I had made up my mind that I would learn in the United States and come back to India to implement my learning.


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