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Busi n e ss i n di a u the m aga zi n e of the cor por ate wor ldTechnology

capillary technologies is an indian start-up that provides easy-to-use, cloud-based soft-

ware products. its solutions empower retail businesses to engage more intel-ligently 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 relation-ship 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 company’s co-founder and cto. together, they have boundless faith in the transformative power of crm and how it could help emerging-econ-omy retailers provide a more person-alised 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 appli-cations. it’s this kind of pervasiveness that inspired reddy to pick two areas – mobile and retail – which were both the ‘next-big-things’ five years back. “we started on this journey with a consumer-focused product search and coupon idea and wanted to do some-thing that combined mobile with retail,” he states.

the Bangalore-headquartered firm started with a seed loan of `15 lakh from the founders’ alma mater, iit Kharagpur. in 2009, the year it launched its first product, it received a funding of $100,000 from Qual-comm 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

offices 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 antic-ipate its market valuation to touch $100 million by 2015.

Every customer countsin the retail business, the greater economic benefit of return and repeat purchasers is astonishing, especially for the traditional brick and mortar retailers. reddy’s strat-egy for india was to bring focus and energy to help consumer-facing busi-nesses consistently increase same store sales, enhance brand loyalty and provide personalised in-store experiences to consumers. using their solution capabilities to anal-yse purchase patterns, multi-chan-nel behavior outlines, feedback and customer experiences, the company is able to understand customer pref-erences and raise their engagement level. “this turned out to be a game changer for our early-stage custom-ers, and was a key growth driver for capillary,” he admits.

capillary’s 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 first few international clients on references from existing clients in india. those early experiences gave us the confi-dence to quickly scale our offshore operations,” reddy agrees.

capillary now has major clients that include big names such as ray-mond, 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 it’s 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 momen-tum as domestic clientele referred

them to their overseas affiliates. for instance, pizza hut india led them to pizza hut accounts in thailand and the middle east; puma india con-nected capillary to puma businesses in singapore and malaysia; robin-sons singapore got them into their malaysia business; and alok indus-tries in india helped them with their uK office and recommended them to achieve store twenty one, which was their first international account.

“crm has long been used by mar-keters 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-to-the-minute intelligence directly into the hands of sales associates, forward-thinking retailers can now dramati-cally enhance shopping experiences on the showroom floor, driving cus-tomer engagement through person-alised 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 custom-ers across the globe, who collectively engage 75 million shoppers with their solution. clients have attrib-uted up to 10 per cent growth in same-store sales.

Creating a new dreamcoming from a family of doctors, reddy’s parents were aghast when he

here to stayCapillary strives to dominate the SaaS solutions market

Reddy: selling to the world

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Ja n uary 6 -19, 2014

Busi n e ss i n di a u the m aga zi n e of the cor por ate wor ld Technology

joined iit for engineering and did not want to pursue medical studies like all his folks. they desired he too have ‘dr’ as a prefix to his name. “fortu-nately, at iit Kharagpur, where i got a bachelor’s degree in manufactur-ing engineering, it was the opportu-nity to work on interesting projects that made a real difference,” recalls reddy. his work featured two interna-tional journal papers, getting a patent and finally getting selected for an ms at massachusetts institute of technol-ogy (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 first assign-ment was to work with itc limited, where his role involved facility man-agement and setting up a new green-field factory for their fmcg division. the experience provided him a great opportunity to learn people man-agement and finally 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 jour-ney and not just focus on the end destination,” he remarks.

capillary technologies quickly established its credibility with ven-ture capitalists, who have contin-ually pumped significant amounts for its innovative product and sales strategy. “capillary has demon-strated that it can scale up success-fully and profitably by focusing on a segment that has been underserved by more expensive and complex solutions. we are happy to part-ner with the company in this next crucial phase of growth,” said shailesh lakhani, managing partner, sequoia capital.

But rome wasn’t built in a day, and neither was the emergence of capil-lary as a serious contender in the crm marketplace. apart from taking on big players like sap, oracle and salesforce, capillary also faces threat from cam-paign management platforms, loyalty and marketing agencies besides other analytics service providers.

avinash raghava, fellow, ispirt foundation, a think-tank for india’s software products industry, is upbeat about capillary’s success. “they are addressing a big market with an innovative crm product and have an efficient sales model that lets them grow quickly. they are a strong man-agement team that is constantly learning from their experiences and through the experiences of other entrepreneurs,” he explains.

Technology for businessesthe company’s first strategy towards relevance was to launch an sms and location-based discount search busi-ness. through this, capillary learnt that while discounts are fine 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 consum-ers to building technology for busi-nesses that would help them extract more value from consumers using a cloud-based computing model.”

facing challenges is part of any start-up’s growth strategy. “the key to success is getting it right the first time,” observes reddy. “among others, it is equally critical to pay attention to the product’s front-end development process, and lis-ten to the voice of the customer.” over time, capillary has continually

improved its strategy and made sev-eral changes to its technology, besides adding major product streams, including social, big data and instant engagement.

while most ceos seek the lime-light, reddy has been low-profile but driven. until he started capillary, reddy was intensely shy, sensitive and stage-fearing, who kept to him-self. he would even find it difficult to strike up a conversation with strang-ers. But he soon started transforming when he had to face sustained rejec-tion in sales, which is typical of any start-up’s growth phase.

today, life for reddy has become more complicated and demanding. he travels across countries, ensur-ing his customers are happy, as he works to get his new company rock-ing. gone is the shy and reticent guy. it’s been replaced by this persuasive, determined and ambitious person.

capillary technologies has received numerous accolades, includ-ing the gartner 2013 cool Ven-dor award and Marketing Magazine’s crm & loyalty silver agency of the year award 2013. the company was also named one of Forbes’ 12 hid-den gems. capillary’s increasing dominance is now less about what it sells than how it sells. and that reflects a new wave of change that is likely to transform retail again. the road ahead for capillary will be adding many enterprise grade fea-tures to its existing crm line of busi-ness products and deliver advanced technological support to mid-seg-ment retailers at affordable costs. its ambitious plans include integrat-ing its suite of interactive customer engagement and intelligent retailing solutions to provide a personalised and unique experience to delight its customer’s 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 first few large multi-national soft-ware product companies out of india, and help create a better product ecosystem in india,” he states.

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