Nix, Fix & Whatfix

In 2013, after three years of gruelling entrepreneurial journey, Khadim Batti and Vara Kumar found themselves in a big fix. The easy solution was a quick fix. The duo, though, took the road less taken and scripted a gritty tale over the next decade

June 2013

It was a Catch-22 situation for Khadim Batti and Vara Kumar. Nah, in fact, the friends were in a cruel fix. “We debated for almost four days,” recalls Batti, who started SearchEnabler with his buddy in 2010. For close to 100 hours, both didn’t work. All they did was to intensely ponder and weigh one single option, which had a devastating flipside. “Is it time to dump it? Shall we continue with it? What if the new thing doesn’t work…” the cofounders were grappling with all kinds of uncomfortable but realistic questions.

The entrepreneurs were in turmoil. “It was not an easy thing to do,” recounts Batti, who bumped into Kumar at Huawei Technologies in 2001, worked together for close to eight years and in June 2010, the engineers dreamt big and decided to cement their camaraderie by rolling an on-demand search engine optimisation platform. “Let’s give it one more shot,” argued Batti in 2013. Three years of gruelling journey with SearchEnabler, and product-market fit still eluded the rookie founders!

Back in 2010, the compelling idea behind turning founders was simple. There was a pressing problem, and the young founders dared to fix it. Small businesses of all kinds, explains Batti, wanted to go online to push their sales and make their brand more visible. “We thought let’s build a tool or a software to help them,” says Bhatti who was into his second stint with Huawei in 2010. Kumar, meanwhile, had an uninterrupted innings since 2001, and in 2010 the friends started their maiden venture. SearchEnabler used to crawl the web, collect all kinds of signals and give a bunch of recommendations to SMBs to improve their social media and search visibility.

Well, the hypothesis of the first-time founders seemed to be flawless. It was presumed that small businesses could shell out a small amount — $20-$30, so there was a need to give them a solution, which was more self-serve. The initial uptick was encouraging. Small businesses started subscribing in large numbers.

There was a small problem, though. The churn — the ones leaving the platform — was as high as the new addition. Batti explains what went wrong. The guys who benefited most from SearchEnabler were not small business owners but SEO professionals! “The business owners actually needed a lot more hand holding,” he says, adding that the cofounders now decided to tweak the offering and add new features to make it more DIY (do it yourself). “We created a button called ‘fix it,’” says Batti.

The Magical Button, & The Magic!

The gambit worked. The ease of using the ‘fix it’ feature did the magic. Sample this. When a small business owner clicked the button, it showed the parameters they needed to fix in their websites or their social media handles and so on. The impact was massive. The support and training needs of the small businesses came down, and the product engagement went up.

Well, the button turned out to be an instant hit, but it created an unintended problem. The business owners wanted to use ‘fix it’ for their end users who too needed a lot of support. What this meant was just one thing. ‘Fix it’ was one of the features of SearchEnabler but quickly turned out to be the only reason for stickiness and wide use. Imagine the predicament of the cofounders. “After three years, we realized that we can’t do too many things. This meant that we needed to only focus on fix it,” says Batti, who already had a steady stream of businesses who were paying around $40-$50 every month for SearchEnabler. Putting a full stop to all the features and taking a bet on just ‘fix it’ meant losing paid users!

There was too much risk in putting all eggs in the ‘fix it’ basket. The apprehensions were real. What if the love for the new feature faded quickly? What if ‘fix it’ failed to have enough pull to make users pay? Three years of hard bootstrapped journey, and all that the cofounders had to bet on the future was ‘what if.’ Though the friends were uncertain about the outcome if they at all pivoted, one thing was certain: an impending financial trouble.

When Batti and Kumar quit their jobs in 2010, they had dipped into their savings. By 2013, it depleted alarmingly. Bringing about a change in the lifestyle — the bootstrapped founders cut down on expenses, shifted to a smaller house, worked with a lean team, shunned auto and hopped on to city buses in Bengaluru, and dined out just once in a quarter — did little to stabilise finances. Though the friends decided to nix ‘SearchEnabler’ and start ‘Whatfix’ towards the end of the third year, the timing turned out to be a real bummer. “When we pivoted, I ran out of money,” says Batti.

Almost three years of SearchEnabler, almost negligible fuel to continue, and almost exhausted! But Batti and Kumar wanted to bet everything on Whatfix. It was as if they knew their gambit could fix their floundering entrepreneurial journey. “I withdrew my provident fund (PF),” says Batti. His partner in crime — Kumar — had around 15 lakh in the bank. The friends decided to put all the chips on the table but were smart enough to give themselves some room if the gambit didn’t work. “If this doesn’t work by December,” Kumar told his partner, “then let’s shut it down.”

As luck would have it, Whatfix got a term sheet from Helion in November, a month before the deadline set by the friends.

Serving Small, Thinking BIG!

Now, if you thought that Batti and Kumar fixed all their blues after getting the institutional round of funding, then you got it wrong. There were still innumerable and unknown variables lurking in the dark.

The first one popped out after a year.

Whatfix was at around $130,000-$150,000 ARR. The numbers were more than decent and it would have made any founder believe that much-wanted product-market fit has been fixed. Batti and Kumar too believed that the numbers told a perfect story. Sadly, they didn’t. In spite of growth, Whatfix was clocking a churn of around 15–20%, a number which didn’t portend well for the business. Though small businesses benefited a lot from the solution — on-boarding, support, training — Whatfix was not equipped to solve their biggest pain point. “Their number one problem was growth. The sales were becoming harder and stickiness was becoming a problem,” says Batti.

There was only one way out. Whatfix had to graduate from SMB to the enterprise segment. But it was easier said than done.

There were two reasons behind it. First, plunging into the enterprise market meant setting up operations in the US. And with just a little under $1 million in the bank, going abroad was not the easiest of the choices. Secondly, Whatfix was still a 7–8 people team. Making a dent meant expanding the team, which was constricted by scanty resources. “I spoke to a lot of people, and everybody said that enterprise won’t get fixed by working out of India,” says Batti, who was left with just two options. First was to continue with SMB, figuring out a solution, which might even lead to a pivot. The last, and the obvious one, was going to the US. “There was no choice. Us was the way out,” he says.

Next, the enterprising duo landed in the US to take a stab at the enterprise market.

$30,000, $8000 and $96,000!

And what was at stake $30,000! Yes, this was the amount that the duo had to shell out to attend Dreamforce, one of the largest software conferences in the world organised by Salesforce in the US. “I didn’t know if it was worth it,” says Batti. Spending $30,000, and still not clear about the outcome, the cofounders debated a lot. “I went in half-hearted,” he says.

Batti, though, soon got an opportunity to follow his heart to the hilt. “Okay, this will cost you $8,000,” he boldly quoted a much higher price of his software to one of the representatives of a big enterprise company who was keen to buy a solution from Whatfix. As far as the proposed price tag was concerned, Batti thought he had all rights to pat himself on his back. And rightly so. In close to four years of its existence, $,2000 was the maximum amount that Whatfix had billed to a single customer in a year. At Dreamforce, Batti was also trying to explore a sweet price point for his new enterprise customers.

When contrasted with $2,000, $8,000 definitely looked bold and much exaggerated. Right? Wrong. The potential buyer was about to teach Batti a new lesson in maths, and pricing. “Okay, $96,000 looks fine,” he said with a broad grin on his face. Batti panicked. He thought there was some communication error. “I clarified and stressed that it’s $8,000 for a year,” he said. The reply stunned Batti. “Man, that’s cheap. It’s damn cheap,” exulted the executive who was used to spending $5–6 million on a CRM, and thought the price quoted by Batti was for a month!

For Batti, there was a big learning. “We got to know how to price and position our products,” he says. Three days of Dreamforce, around 350–400 business leads which could easily be converted, and the cofounders were on cloud nine. “We came out so bullish. We felt like tomorrow it’s going to be a $1-billion company… everybody wants this,” says Batti. A sudden rush of adrenaline was indeed heady. Though no new business was added over the next three months, the deal pipeline started swelling after that. Things looked fine.

And if Batti thought that he had learnt the art of pricing, then there was a humbling lesson in store. Whatfix was now at a stage where it had a maximum billing of $20,000 a year. Now a massive opportunity knocked in terms of one of the largest banks in the US which was already spending around $20–30 million annually. “We didn’t want to lose this deal,” says Batti, underlining that for him it was not so much about winning the deal. “It was about not losing the deal,” he says.

The US giant liked the product, demo and asked for a price quotation. “Our head was not going beyond $40,000, $50,000, $60,000,” says Batti, who sent a sealed envelope with a quote of $75,000. The deal, though, didn’t get sealed. Whatfix lost it. In fact, the American firm didn’t even respond. Months passed by, and one fine day, Batti’s head of sales in the US — an angel investor in Whatfix who was doubling up as the face of the company in the US finally joined Whatfix — knew one of the senior officials of the American bank which didn’t reward the contract to Batti.

A week later, came the breaking, and shocking, news. The rival who won the deal had quoted $300,000! The pony amount quoted by Batti made the bankers feel that the company doesn’t have sizable scale and support for such a large contract. “We don’t want to work with a partner who might go bankrupt in 6 to 12 months,” was the reason cited not to reward the contract to Whatfix. There was a quick learning, and this time complete learning. “It must be more value-based pricing rather than being fixated with the price to be quoted,” says Batti, adding that six months later, Whatfix got back the same contract. “They were not happy with our rival and we got the contract at a much better price,” he smiles.

Keep Fixing & Luck Too Will Get Fixed!

Zoom ahead to 2023. Whatfix gets 73% of its business from the US; around 20% comes from UK, Germany and France; 5% from Australia; and 2% from India. Interestingly, over 90% of heavy lifting happens out of India! But what matters most is the fact that Batti and Kumar didn’t follow the beaten path. They built a successful enterprise sales business model out of India, and it was not easy. Back in 2014–15, the cofounders had to fix the egg-chicken problem. The hard question asked was: Nayi category hai (it’s a new category), who is going to pay? And if the duo had a convincing answer, then the follow-up query almost stumped them. “If the category is established, then how are you going to defeat the leader,” was the question.

Over the next few years, Batti and Kumar diligently kept fixing all the problems, questions, apprehensions and mental demons to scale Whatfix globally. The company, which now has six offices across the US, India, UK, Germany, and Australia, has emerged as the global digital adoption platform (DAP) market leader.

Batti shares what worked for the company, and some golden nuggets for budding founders. First, having a terrific cofounder and an equally good set of people around was a boon. “When you have people who believe you can pull it off no matter what the odds are, then it works,” he says. Second, all founders must think from a first principle perspective. “What works for others might not work for you,” he says. Third, one must give equal importance to go-to-market and product-market fit.

The fourth lesson is that one must be very stingy on designation. Remember, says Batti, the company soon outgrows everybody. “Founders have a macro view but that’s not the case with every,” he says. Now if one has been generous in doling out the tag of VP marketing or director marketing, and in a year the company overgrows, then how would one find the replacement. “Many people think, let me give the designation now and I will figure it out later,” he says, alluding to low-hanging fruit plucked by most of the founders. “You can’t fix it after the damage has been done,” he says, sharing one more piece of advice. “Don’t try the same thing again and again and again. It’s not going to change the outcome,” he says. “Keep trying but not the same thing.”

This was the last question that I needed to ask Batti. Helion funding happened just on time otherwise the company would have closed. Dreamforce happened just on time when Whatfix was making the transition from SMB to enterprise. “What’s your take on luck versus hustle,” I asked. A quick reply fixed all my doubts. “Luck will not work unless you give luck a chance,” smiles a plucky Batti.