Captain Cool, Walk the Talk, & Gupshup

Topped JEE? Medal winner from IIT? Went to MIT? Wow! So, you are going to make it big with your startup as well. Right? Wrong. Beerud Sheth will tell you why…

It’s pitch dark. You can’t see anything. There is nobody around. All you can hear is howling winds, and a deafening voice inside your head that feverishly nudges you to begin your trek. You start inching ahead, you are still groping in the dark, and your brain is trying to figure out if you are clambering in the right direction. “Entrepreneurship is a bit like trying to climb a mountain in the dark,” explains Beerud Sheth. Two and a half decades ago, the rookie mountaineer was about to embark on his maiden ascent. An alien terrain, though, was waiting to embrace him with a hostile reception.

It was 1998. So far, the grad from IIT Bombay had brilliantly scaled and conquered all academic peaks. Always a school topper, a first ranker in national talent search, among top three in national maths Olympiad, top ranker in IIT entrance, a silver medallist at IIT, and then making it to MIT…it was a fairytale ride for the young scholar who continued to dazzle during his professional stints at Citibank Securities and Merrill Lynch. The magic persisted when Beerud started his entrepreneurial innings by cofounding Elance with IIT Bombay classmates Srini Anumolu and Sanjay Noronha in 1998.

When you touch something and it turns into gold — and when it keeps on happening repeatedly and regularly — you tend to believe that either you are blessed with a special power or you have decoded how life works. “If you’re smart, and you work hard, then good things happen. Right? There’s a very clear input-output relationship,” says Beerud, who was lulled by life to believe that he was a magician.

Well, he was almost right. Or else how would you explain the magical way in which things started unfolding for the first-time founder? An online freelance marketplace, Elance was too ahead of its time. I mean, it was 1998 folks. Right? No smartphones, terrible internet connectivity, professional life of employees tagged in a 9 to 5 bucket, and yes, not to forget the outlandish concept of remote working and deep scepticism around it…who would have believed what the rookie was trying to do.

On the demand side, Beerud was confronted with a bag of searing questions: How can I trust somebody I haven’t met? What if they abscond with money? They work across the world. Right? So how will you track them? What if they can’t speak English? What if they turn out to be unprofessional? What if they don’t deliver? “When you are selling something new, it means automatically people would either not believe, or would be openly sceptical,” he says.

And yes, there was widespread scepticism. The questions were genuine, the apprehensions were real, and it looked like Elance would meander without making any realistic progress. But then look at what our ‘magician’ did. Beerud managed to get an incredible set of angels on board — Ram Shriram (one of the first investors in Google and Netscape), Sabeer Bhatia (founder of Hotmail), Rakesh Mathur and Venky Harinarayan (cofounders of Junglee) and Pawan Tewari (managing director of Goldman Sachs). Great input, Beerud was dead sure, would result in an awesome output.

Speed Thrills But Kills

Let’s fast forward to 2010. Beerud’s racing car was zooming at a mind-blowing speed. “Within three years, we managed to get 70 million users,” he says. Interestingly, the racing car was not Elance, which had a near-death experience in the dotcom crisis of 2001. The new car was SMS Gupshup, Beerud’s second venture.

Let’s pause here for a second, and try to understand how the transition happened from Elance to SMS Gupshup. In 2004, Beerud cofounded Webaroo — an offline search engine — along with Rakesh Mathur. Two years later, in 2006, Webaroo morphed — you can call it a pivot — into SMS Gupshup, which was an SMS-based mobile group messaging platform.

Now let’s go back to 2010. In four years, SMS Gupshup became the biggest social media network in India. In fact, it was much bigger than Twitter and Facebook. The way it worked was quite simple. A person would send a message, and then Gupshup would send the message to his/her followers, which may run into thousands. The idea was to build a huge community of users who were not paying a penny and using the service for free. (very much like how we use WhatsApp, Facebook and Twitter). But somebody was paying a price. It was Gupshup who would pay the operator for sending all those messages. “The thought process was that a big community could be monetised. But first, one needs to build a huge community,” explains Beerud, who also tells us about Plan A. “We thought that with a crazy growth in SMS volume, its cost would come down,” he says.

Unfortunately, it didn’t happen. In fact, the cost kept increasing, text messages continued to become expensive, and SMS Gupshup kept on paying for the heavy traffic. Sensing trouble because of heavy cash burn, Beerud thought of an innovative plan to monetise. “We decided to insert ad (advertisement) messages in the bottom of the SMSes. It was very much like what you call a footer ad on televisions,” he says. Sadly, the regulations didn’t allow for such provision. The serial founder was in a Catch-22 situation. “We could neither monetise nor continue to subsidise,” Beerud sums up his plight.

What, though, made the situation alarming was another grim reality. SMS Gupshup was about to run out of money and nobody was keen to pump in more dollars into a sinking venture. Imagine, the era — 2010 — was different. The VC ecosystem was not even a toddler, the risk capital was conspicuously missing, and the room to explore, and ‘figure out something’ was not there. The new-age founders — let’s say somebody starting in 2015 or the great funding peak of 2021 — would mostly find funders who would give them money to pivot, and would back them to the hilt. “It was 2010,” Beerud reminds us of the forgotten era. Though his backers were willing to give him a little more money, it would not have served the purpose. “We were sending billions of messages every month,” he says. Naturally, Gupshup needed a lot more money to devise a Plan B.

Dead End & An Imminent Crash

Meanwhile, back in 2011, the high-speed car was about to hit a dead end. Look at the irony. Beerud wished for speed to build a big community. God granted him speed, but the blessing was nothing but a kiss of death. “We knew we were going to die,” he says. “Oh my God, what do we do now,” the mountaineer wondered in exasperation. It was pitch dark. Beerud couldn’t see anything. There was nobody around. Howling winds didn’t mean much to the ear.

This time, it was the cacophony of blaring noises inside his head which was causing trouble. Seven years into his second venture, and thirteen years since he turned an entrepreneur, Beerud was grappling with yet another failure moment in his life. However, in the midst of a new low, something was not adding up. How could he fail? How could somebody with an amazing academic and professional track record — and Beerud did have one — just fail? Thousands of hours of hard work and smart work, countless days — if not months and quarters — of sleepless nights, untold mental agony of not giving up despite formidable odds…so what happened to the input-output relationship? What happened to the general theory perpetuated by the educational system that if one is smart and hardworking, then good things are bound to happen? Why suddenly everything was at stake for this guy who was always a topper?

Over a decade since the event, Beerud comes up with an answer. “The problem with education and all success that one sees is that it doesn’t prepare you for failure,” he confesses. In the startup world, he underlines, you could be very smart, very hardworking but bad things can still happen. “There’s no guarantee,” he says. “I was just terribly unprepared for failure,” he says.

Back in 2011, SMS Gupshup made a hard pivot. It dropped the prefix SMS, and turned into an enterprise messaging platform. From a B2C venture, Gupshup made a transition to a B2B company. Unfortunately, a change in name and nature of the venture didn’t bring about an instant turnaround in fortune. “Pivots are hard and painful,” says Beerud, who was battling his mental demons. “Will this work? What if things don’t change? My employees have done B2C all their life. How will they switch gears? A round of layoff is on the cards. How will I deliver the bad news?

Unfortunately, there was no let-up in bad news for Beerud. Two years later, in 2013, Gupshup was again staring at a crisis as it was about to run out of money. “We were just three weeks away from missing the payroll,” he says. The founder had to drastically cut expenses, senior people had to take a salary cut, and junior employees got no increments. Beerud was still struggling to come to terms with the cruel reality. “I was like…wait a minute, we have a great product, a great team and we’re doing a lot of hard work and building some amazing things. But why is it not working,” wondered the entrepreneur who was hit hard by a change in the regulatory landscape.

Cut to 2024. It’s been 11 years since the crisis of 2013. Times have changed, Gupshup has changed, and the fortunes have changed. Gupshup has entered the unicorn club, it powers over 10 billion messages every month, works with over 75,000 brands across 60 countries, and is world’s leading conversation cloud platform for commerce, marketing and support.

Meet The Zen Master

Beerud too has changed. “I sound a lot calmer today,” he smiles. Ask him how it feels to be somebody who thrives in crisis, and the gritty founder comes up with a quirky disclaimer. “Let me clarify. I am not a crisis magnet. I do not manufacture crises. I do not date them or attract them. But they happen,” he flashes a disarming smile and shares a bunch of priceless lessons from his entrepreneurial journey. “In every calculation — whether life or entrepreneurship — there are so many variables. And you just can’t control them,” he says. “Sometimes it’s better to be lucky than smart,” he says. What do you do when markets crash? What do you do when regulations change? What do you do if a change in strategy or pivot doesn’t work?

The answer lies in behaving like water. “You have to be like water flowing around rocks,” he says. “You can’t break your head against a rock. You just need to go around it,” he says, adding that there are times when you just have to go with the flow. “Do you know this Serenity Prayer,” he asks me, and goes on to explain. It’s a prayer to God asking for three things: the courage to change the things one can, the patience to accept things one can’t change, and the wisdom to know the difference between the two. “In a way, this has been the guiding light in my entrepreneurial journey,” he says.

There’s no point worrying. And one must have the courage to face the crisis and battle it. “You could probably just go back to Bhagavad Gita and learn the essence,” says Beerud. Either one can worry about all of the distractions, or can just stay in the moment, remain focused and hunt for solutions. “Startup life is a hot seat. One has to continuously deal with high-pressure situations, high stakes, lots of people and loads of emotions,” he says. So if given a chance again, would he still prefer this life or settle for a job? Beerud says the answer is a no-brainer. “There’s nothing more challenging, exciting, gratifying and noble than entrepreneurship,” he says. “I enjoy the activity, I enjoy the impact, and that’s what keeps me going through all the crazy and dark moments,” he says.

Well said, Captain Cool!