Salonie: Hi and welcome to Matrix Moments, this is Salonie and in today’s episode we aim to uncover the learnings from serial entrepreneur, Bhavin Turakhia. Bhavin is currently founder & CEO at Flock, co-founder & CEO at Zeta and Founder of Radix Registry. He started out at the age of 17 when he co-founded his first tech venture Directi with his brother Divyank Turakhia. Directi owned brands like BigRock, LogicBoxes, ResellerClub, and Webhosting.info.
In 2014, he exited and sold all 4 companies to Endurance group, a NASDAQ listed web hosting firm for $160 million. His neo-banking venture Zeta recently raised its first round of investment and was valued at $300 million Over the last 21 years he has built 5 successful business, all driven by his passion for problem solving and maximizing efficiency through tech driven innovations. This episode is part 1 of 2 part episode and will be moderated by Tarun Davda, MD at Matrix India, who incidentally also happened to work with Bhavin as GM and Business Head at BigRock, close to a decade ago.
Tarun: Hi, everyone, and welcome to Matrix Moments. We have a very special guest with us today. This is someone I am personally very fond of and I have worked with. Have had the opportunity to work with in my past, Bhavin Turakhia who was the founder and CEO of Directi and is now founder and CEO of Flock and Zeta. Bhavin, welcome to the show.
Bhavin: Thanks, Tarun. Yes, awesome to be on it.
Tarun: So, Bhavin, you had actually a very very unique journey as far as entrepreneurs in India are concerned. And I am really excited to have you on this show because a lot of the things that I have seen you personally and observed you have been fairly unique. And your thought process, how you built your companies has been very different from what we see a lot of VC funded entrepreneurs building. So I thought this would be a great experience for founders listening in to see how a bootstrap entrepreneur has been able to scale the company to very large sort of levels.
So maybe first question, just overall I think walk us through a little bit of highlight of your journey from co-founding Directi in 1998 with Divyank, all the way to your most recent ventures which is Flock and Zeta. So you can talk about just about how did the idea of Directi come about. Was it an accident? Was it deliberate? Did you pick web hosting and domain registration as a space to just more as, hey, I see this is where sort of the internet is going? Or, was it more an accident, number one. And number two, talk a little bit about I guess your early childhood days and what are the key experiences that shaped you.
Bhavin: Awesome. Thanks Tarun, yes. And to start with as you said, I have had the opportunity and the luxury to take slightly different path in comparison to conventional entrepreneurship. In terms of at least the first company that I co-founded I didn’t actually raise any funds. And in fact with Flock and Zeta and with Radix, I have funded the initial stages myself. We recently raised a Series C for Zeta but this is kind of my first ever fund raise.
And I think in many ways it only goes to establish - I don’t think there’s one secret formula for success or one definitive path. It only goes to sort of prove or evidence that there are actually no constrains. Sometimes people will think of funding as a constrain. Sometimes people will think of idea as a constraint.
And I think and believe - I have always believed that you can achieve anything you set your mind though. And that’s kind of a good Segway into part B of your question which is talking about my early childhood days and some key experiences that shaped me I think in many ways. For both myself and Div, we are very grateful for the kind of childhood that we have had. We are very privileged to have to the parents that we have had and the upbringing that we had. Lot of the credit for where I am today my principles, values, and the person that I am goes to my parents, goes to my father who has spent a lot of his time and invested really behind our education.
So he used to always keep repeating to both us constantly this sort of mantra that I spoke about you can achieve anything you set your mind to. And sometimes something so fundamentally simple becomes so powerful. I have had the opportunity to start companies in four - five different industries and spaces. Each of which I knew nothing about before I started out. I had no formal education whether it’s in payments or enterprise communication or web hosting or whatever it is. And each time I or I along with my co-founders, we picked up that particular space, approached it from first principles, learnt everything that we could or needed to about that space. And then we built an amazing business around them. And just the courage and the mental resilience and the attitude of being able to do so is sort of derived from that single powerful statement that I always believed that I can achieve anything I set my mind to.
We came from humble beginnings. Dad moved to Mumbai before I was born and setup his chartered accountancy practice. We were living in one small single room with his elder brother. And then moved to his own he purchased and went through schooling et cetera in Mumbai. And throughout my childhood, I remember he would compromise on several luxuries for himself, but he spent such a lot of money on buying books for us. We had tons and tons of books about pretty much every subject.
And throughout my schooling I remember we used to have a standard curriculum where we would have various subjects Maths, Science, Physics, and things like that. We had a standard curriculum prescribed by the school. But then over and above that, my dad would go out and buy like five other books by different authors on each of these subjects. And I would go on and devour all of them to get a much more holistic overview. So, right in the beginning from an early childhood, he instilled this habit of reading a lot which I carry even until today. I read about two to three books every month, and that’s being extremely useful throughout the journey.
I found my passion early on. So I was in this school called Arya Vidya Mandir in Bandra, both me and my brother. Yes, they installed their very first computer room in 1989 when I was 10 years old. And I was just hooked. Dad bought me sort of 35 - 40 different books on programming. And I would spend all my time - short breaks, lunch breaks. The computer teacher would leave the keys to the computer room with me every day after school. We couldn’t afford a computer back at home. And so she would leave the keys to the computer room. And I would spend two to three hours every day after school practicing different sort of - writing different software programs.
One of the things we had to do I remember was in school we had to build out these computer projects twice year. It was part of the ICSE curriculum. And most people would spend a couple of days building up some tiny applications. I spent six months on my project building this really comprehensive game concerning sort of business and the stock markets. And it had like background music and graphics and lot of interesting stages. I really spent all my time on this computer science in many ways. It also helped that it was a boys only school. No other distraction.
Tarun: No other distractions.
Bhavin: And so, yes, I was fortunate to find my passion earlier on. Right then I knew that whatever I did in my life had to around computer science in some form. This was the days when computers were like I was doing programming in Basic, C, C++, GW-BASIC et cetera. Computers were like these MS-DOS green monochrome terminals. There was no Windows. There was on internet. There were no hard disk. We had this 5 1/4 inch and 3 1/2 inch floppy drives. So, very different days from today.
And then during the same time also - and I think part of this is also because my reading. I also spent a lot of time reading biographies. I remember reading - my favorite biographies then were about my Microsoft. I read about eight of them. Some of the best ones was about Microsoft. I read a bunch about on Apple, IBM, Xerox. Then even kind of non-tech companies like Chrysler, Crop, McDonalds. And so during that phase, I devoured probably 30 to 40 different biographies. And in many ways…
Tarun: Sorry to interrupt. One question I had as a parent about what you are saying is really intriguing, right? So, one is you telling your dad buying books for you. Your dad telling you that - inspiring you by saying that you can do pretty much anything that you set your mind on. As a parent, I have done that. But, either my son will roll his eyes when I say these things or when I give these books eventually - and I mean I don’t know if it’s just today, but it’s just hard to get kids to sit down and read something. There are so many distractions with gadgets and devices and mobile phones. So a lot of it - was it just innate curiosity that you just enjoyed reading books?
Bhavin: So firstly, I can tell you, I rolled my eyes enough number of times on my dad. And I am not even…
Tarun: Okay, now you sound more normal.
Bhavin: Sometimes I would be like dad, we know like you keep telling us this. But the thing is I read this interesting quote, repetition doesn’t spoil the player. And, that’s really I think what applies out here. I mean in hindsight when I think about it that constant repetition even if you roll your eyes, it sinks in. It sinks, becomes your default truth.
Tarun: Yes, I guess at some point you understand the meaning behind those statements.
Bhavin: Yes, you might just carry it as a notional statement that’s being repeated. But after some time you really truly realize the power of statement. And I think about books I must say I am not a parent. And, I have no experience in raising kids in this day and age, but as you said all these gadgets et cetera, but I do think one thing is that kids as human beings are innately curious. I don’t think it takes a lot to fire up that curiosity. You have to channel it in the right direction. As I said, I can’t claim to be an expert in parenting, but I don’t think dad had to force us in any form because I was innately curious.
And when I talk about reading biographies, I mean they are like fun inspiring stories. They actually end up releasing all the right hormones for anybody who reads them. So, it’s not like I didn’t read my fair share of fiction. I pretty much completed - as a kid the entire Enid Blyton and the sort of Hardy Boys and Three Investigators and all the kind of fiction stuff also. But apparently I loved reading some of the stuff. And I always had an innate passion for Maths and Physics. And so computer science kind of naturally rolls off of that. When you write a program when you see it work, I think all of this biological. You start out with a goal. You punch set of instructions. You see something work. It’s going to release all sorts of positive hormones like dopamine et cetera.
And so, I don’t think you need to - it’s almost like, yes, you can lead a horse to the water, you can’t make him drink it. But then the rest of it - many of us are innately curious. And these days I would even go so far as to say that there are so many online resources. I mean take coding for instance, I learnt it through books and my dad bought tons of books. And I would literally go page by page by page just trying everything out every day after school. But these days you have all these online apps and website actually gamify learning and make it so much more - I mean they use behavioral psychology to actually get people addicted to coding and programming. So, I think these days the variety of tools I think as a parent you just have the…
Tarun: It’s even more
Bhavin: but I think there is tons of material available.
Tarun: For all the distractions that are there, there is also ways to get you more addicted to these things.
Bhavin: Exactly, absolutely.
Tarun: Coming to the second part, Directi. You have told me a little bit about story of your early days and how you used to go holding servers around Bombay. But walk us through a little bit about that experience. When did you decide eventually that you are doing to startup? Or, how did you decide that hosting and domains is the space you are going to pick?
Bhavin: Yes, absolutely. So the internet came into the country around ‘94 with VSNL as the sole ISP if you remember for many many years.
Bhavin: And they had these TCP/IP and Shell internet accounts. And I got on the internet and I was really again fascinated by the concept of being able to transmit data across the world at pretty much zero cost. And so I realized - I mean I always wanted to do in computer science. I knew I wanted to be an entrepreneur. Funnily enough there is never a scenario of me wanting to take a job. It’s never been even an option or a possibility I had. And so when the internet came in, I realized well, this is it. Not only do I want to do something in tech. It has to leverage the internet because it’s going to change the world like I could start thinking about possibilities of this intermediation and how this is going to dramatically change the landscape.
I started writing code and building software and doing some consulting for people building basic websites and things like that. And then I started out by building what was disaster in terms of success. I built this entire equivalent of a job site in early ‘96. I basically had this logic of creating this algorithm that would match vacancies with candidates and essentially automate the entire job hunting process kind of like what LinkedIn or Naukri…
Tarun: This was in 1996?
Bhavin: And many of these guys have obviously sort of being very successful at it. I spent a lot of time building the product and going out there in the market trying to sell it for almost year and half. Whilst I didn’t make much in terms of sales, the product was way ahead of its time. I actually over built and over engineered a product which really wouldn’t function very well until the internet penetration in the country was substantially higher than what it was.
I presumed that this product that in fact in my head I was so convinced that this is going to change the entire world. But practically it would have never been feasible just because of the fact that there were less than 50,000 - 100,000 regular users of the internet in the place. And whilst - I was like 16 - 17 back then and whilst I went I spoke to HR heads of many big, big companies. I spoke to placement agencies and consultants and did tons of like marketing and sales all on my own. And whilst I didn’t make much in terms of sales, what ended happening was a lot of these people were welcoming and would spend like an hour - hour and a half with me and answer all my questions and open up their internal processes and systems to me. And so it was an interesting learning experience.
But eventually at some point when I really sat down to think about the practicality, I realized this product is not going to really work. And that’s…
Tarun: Build it and they will come, doesn’t work?
Bhavin: No. And that’s been one of my fundamental mistakes multiple times over in life by the way. And I have learnt a lot from realizing that go to market is as or more important in many cases, and sort of whole notion of building an MBP and lessons around that. But, Div and I then started with what we thought - I started off this notion of the most fundamental product that anybody would need on the internet is if they want to setup web presence, they will need hosting space. They are going to need domain name. They are going to need email. There were a couple of my friends who were running hosting companies small ones in India. And so I basically bought my first server - our dad lent us Rs. 25,000 approximately to pay for the first quarter for the server in a company called Alabanza which had a control panel that allowed me to break up that serve into kind of smaller hosting packages and sell them to various companies. This time around I flipped it around. So I remember in fact just three months after starting it, there was this huge conference NASSCOM used to hold this if you remember again back in the day. This big internet tech conference in Delhi.
Bhavin: And I didn’t have the money to participate and setup a booth there. But I instead went and took a train journey, went to Delhi. And I spent those three days going from booth to booth and instead of kind of listening to their pitch, I actually sold them hosting packages in domain names, set up a website or become a re-seller. And that one conference was represented more sales in those three days than the three months before like it turned us into a mildly profitable company. I remember I think we made Rs. 5 lakhs in profit or something like that in the first year by that March end.
And then since then we kept accelerating it and growing it.
Tarun: I loved the idea of going to a conference and actually selling to the booths that are trying to sell over there.
Bhavin: Yes, it was quite hilarious, but very successful. I spent zero money in terms of exhibiting but ended up walking out with clients worth lakhs of rupees. So, yes, quite interesting as a process and journey. And then we got to continue to grow the business. Became the first dedicated domain registrar in India. Started selling domain names through re-sellers and setup re-seller network around the world about 50,000 plus re-sellers the time we exited the business.
And yes, so continue to grow that until about 2005 - 2006. I think Div kind of then started working on Skenzo which was sort of the domain advertising piece of the business which we eventually morphed into Media.net. Somewhere in the middle you joined in actually and started working with us on BigRock. And by then we had kind of defined business BigRock later on LogicBoxes. And then I was reasonably hands-off actually by the time 2010 - 2011, I was spending part of my time on hosting business and Directi. And then I started working on Radix which was my next company in 2012. I started Radix with a small team and we bought a bunch of top level extensions. We currently operate .online, .store, .tech, .website, .space and many others.
And in 2014, I started Flock which kind of morphed or pivoted from a sort of messenger business that I was playing around with. And in 2015, I co-founded Zeta with Ramki. Ramki was working with us for a while before as my CTO in one of company - he was tech lead in one of my companies and then two of us started Zeta in 2015 because we were both passionate about payment space.
Tarun: So what I find really interesting about this, Bhavin, is you started with - and this is something I think which is interesting for a lot of people is it started with a very simple idea which is let me take x amount of hosting space, break it up into small pieces. And I am going to try and sell it to people for a profit. And then you over the next five to ten years what you did is basically just expanded your scope to everything from new gTLDs to re-sellers to direct to customer, to accreditation to just a bunch of different things, which honestly I think is something that today everyone starts with this very really large vision, right? And then they find very quickly that - actually realizing that vision is massively difficult.
What I find interesting about what you have done is you picked a small niche, tried to sort of focus on that and build a profitable company in that domain. And then over time actually expanded your vision to including areas which are adjacencies in the domain that you chose to operate in?
Bhavin: No, absolutely. I think one of the biggest concerns that most early startups face is lack of focus. If you diversify too early or in a start out - okay, that doesn’t mean you shouldn’t have big ambitions. When we started our hosting company, funnily enough we would always be like, oh, yeah, we are going to get millions of customers. And we are going to have thousands of employees, and we are going to have a global presence. And so lot of our thinking in terms of how we shaped our culture or how we shaped our automation tools and processes or the things that we built were built with that global ambition in mind. So there is nothing wrong.
And in fact if anything, I think it’s important for entrepreneurs to have a healthy dose of delusion and high sort of ambition, but focus is really, really important.
Tarun: No, I agree. It’s like the saying goes, more startups die out of indigestion than starvation. Great. So that actually takes me to my second question which in some ways is related to what we just spoke about. So one thing I found really fascinating about areas that you go in whether it’s Zeta, whether it’s Directi, whether it’s some of the other things that you built. You have managed to select businesses that don’t generally attract a lot of irrational competition. These are sort of areas that one can build profitable companies of scale that don’t require truck loads of capital. How much of this intentional, how of this is just your own liking towards these kind of businesses? Is there a science to how you pick opportunities?
Bhavin: Sure. I mean I think there is a couple of different avenues through which some of the businesses have come about. And I spoke about Directi. I can talk about Radix, Flock, and Zeta. And in many ways they kind of encompass or cover both the science and the art of how I went about picking some of these opportunities. I think it’s a combination of things. Firstly, I think sometimes frustration is the genesis of entrepreneurship. So you see something in the industry and space and you are like, hey, why is nobody fixing this problem. And then you are like, well, I am passionate about this and I am going to pick up this problem. So this whole notion of being passionate about this space is critically important I think as an entrepreneur.
The second aspect and even more now as I scale my newer companies is a sort of much more deeper and scientific analysis on the size and scale of the space. And sometimes you chance upon it. Sometimes it opportunistic. And sometimes you really spend a lot of time digging deep and figuring out whether this makes sense or not. And I can talk about each of three businesses and I highlight specific aspects about them that cover these principles. So with Radix, it was very opportunistic. Div and me had been in the sort of whole domain names and hosting space for many many years. By around 2009 - 2010, Div was already full time running Media.net. I had senior management that was running much of the Directi’s hosting and domains business.
And I always believed this notion of like why is it that the entire world only has these few top-level domains like why is it there is only .com, .org. Imagine a world where everybody had only three options of last names? If you think about naming the internet corporations assigned names and number, so I can. Had already started thinking of a process of how to expand that. And I really saw that as a huge opportunity and spent a significant of time between 2010 - 2012 like almost 20 - 25% of time working with small team of people in company really researching everything about this. So there was this opportunity that I knew was impending. I spent a lot of time doing research. And I think that’s what resulted in the success. I want to point piece out like Radix today one out of every three or four new gTLD domains that are registered is a Radix is TLD. So even though we have only nine top level extension versus there have been a 1000+ out there, our nine command about 25 to 33% of the market share. And the reason for that was the two years’ of prep work that went behind choosing every extension that we pursued and pricing those extensions in terms of how much I should be willing to pay for them in the auction. So that’s where the research part and preparation part came in after identifying the opportunity. And Radix is now a profitable healthy business. Sandeep Ramchandani who is the CEO now since the last few years, is running the show and is doing an amazing job growing it.
With Flock, it was kind of a pivot. I was interested in messaging in general. I started off with a few people from my teach team et cetera building out a personal messaging product. And then eventually, I spotted the opportunity subsequently. it didn’t start out with the opportunity. I have personal penchant for productivity. I am a huge, huge stickler for it trying to get every single minute to be as efficient as possible. And over time whilst the personal messaging space I realized wasn’t something that I would be able to sort of create a niche. At least it didn’t work out.
I realized that what we have built and one of the areas that I am passionate about is the highest wastage I think that occurs in any organization is about communication and collaboration. And I felt like I should focus on building something that was substantially improve efficiency in organizations through much better collaboration. So, that’s how Flock was born through a pivot.
And we now have messaging, video calling, email, contacts, calendar in a collaboration suite that substantially improves internal communication as well as external communication for organizations.
And with Zeta, it was kind of again a slight different situation which is it started from the size and let’s say some sense of frustration. Ramki and I started talking for almost a year before we founded Zeta. We were both passionate about payments. We both felt like I mean why does cash still exists. The fact that it exists is an anomaly. Why is it that there is - digital transactions are not as great as offline cash based transactions and have been able to substitute them. Why is it that payments are such a frustration. If you look at enterprise sector especially look at the end user sector, any organization in the world whether you look at B2E which is business to employee payment such as salary disbursement, reimbursements, or allowances or benefits or expense management or B2B payments, company to company, GST, every single accounts person - finance person, HR person, employee is frustrated with payment processes. They hate them.
And so we are like why is that in this digital day and age is there so much frustration and so much paperwork and delays and cost surrounding payments. And we spent a year - so we said that something here clearly it’s big. So that’s now the kind of science and art behind supporting an opportunity both with Flock and Zeta. The productivity space is huge. And payment space is huge. And so where it’s like a big space, we spent a year researching pretty much everything about the space. We read up regulations in different places. We looked at exploring starting up our own bank. Looked at exploring different B2C and B2B models et cetera. And at the end, we looked at technology stats that existed. All the legacy products that existed in system et cetera.
And then eventually over the course of a year from being really ambitious by the way by far one of my most ambitious plans today jointly figured out what’s the kind of platform we want to build. And our goal and objective, our vision with Zeta is to sort of accelerate world to invisible payments where we feel payment should be completely invisible. And it’s really the value that we can add on top of payments in various processes that we want to meaningfully exploit.
And so we then decided specifically what product and service we want to start with. But also over the sort of course of the last four - five years of evolved the vision in terms of how do we encompass this entire space that we anticipate will be 20 - 30 times bigger than anything I have created so far. So it’s kind of combination of opportunity, personal passion which existed in both productivity and payments, and a significant amount of research and deep dive in both Radix and Zeta case actually almost a year - year and half of research before I even started. And Flock, a pivot that happened because of some research afterwards.
Tarun: Just one sort of followup question on that. Do you consciously stay away from like businesses that require very heavy capital burn?
Bhavin: So that’s a good question. And, I have thought about this myself whether some of my choices have been conscious choices or it turns out that way. And I would say I think it’s a combination of both. I strongly believe that in almost any business but this doesn’t apply to all businesses especially because way the market operate today. But in most businesses, if you have limited cash you can still figure out way to acquire significant market share, but you have to think very very creatively.
I think I have spent a lot of time doing that. I mean look at Directi when we started hosting and domain names business, we eventually became the only company from India that hadn’t deployed a significant amount of capital that was based in Asia that became fourth largest in the world competing with some of the global giants with much higher capital than us. And how did we manage to do that? Well, we decided early on that because our core competence is Stack, we don’t know much about these markets, we are going to establish and create the world’s best re-seller platform that enables us to leverage thousands of companies around the world who will actually then pool in their capital and their wherewithal to sell our product. That’s the creative approach that we took to get to that stage, right?
Similarly if I look at let’s say with Flock and Zeta, with Zeta we now 2 million people who use our employee benefits product and wallet. We have achieved that through partnerships. In fact, it’s a revenue stream without any kind of cash backs or cash burn while the same kind of quality of users I mean these are all salary, taxpaying employees, extremely high purchasing power in companies Accenture, Amazon, IBM, Wipro. Many large B2C companies would probably hundreds of millions of dollars to acquire that kind of sales. And we have actually made it a revenue opportunity for us.
So I have always believed there creative ways to get through. In fact I talk about this that sometimes overfunding can actually result in substituting creativity with cash. If you actually have limited capital, you are forced to think creatively. So I think it’s a bit of that. I must admit that on the other side, there are B2C businesses who by the very nature of what they are trying to do in a country or by virtue of competition because there is so munch funding in the market, has no choice but to burn capital to acquire customers.
And I probably have consciously stayed away from some of those kinds of businesses where unfortunately the status quo is that there is a lot of capital burn taking place. And so might be able to apply creativity, but you won’t be able to make a significant dent.