Would you bet on this startup ? - unsexy market - long sales cycle - dominant global giants - 100s of competing startups - 1st time founders Most wouldn’t but DarwinBox found a way. They challenged the existing Indian SAAS playbook & built a new one.
To make it actionable, I’ve organised their story around 3 lessons: (1) How to get contrarian insights (2) How to establish credibility in early days (3) How to improve product & pick markets for expansion Let’s dig in..
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1️⃣ FOR CONTRARIAN INSIGHTS, BUILD DOMAIN EXPERTISE
Paul Graham calls Domain Expertise one of 3 key traits of great founders. The founders of Darwinbox (@chennamaneni, @jayantp, @chaitanyapeddi) certainly had that. In their work with large enterprises they saw a common gap.
Every company has 3 systems of record: (a) Finance (accounting software) (b) Customers (CRM) (c) People (HRM) For most companies 1st 2 were in decent shape but the 3rd was a mess. To understand more, they dug into the HR software market in India.
In 2015 the accepted wisdom for HR enterprise software was: - Don’t go after big enterprises as they have long sales cycle, prefer established vendors (SAP-Oracle) to startups, want comprehensive offerings - Go after SMEs as they are untapped & you can sell them point solutions
But there were issues: - 100s of startups targeting these SMEs - the SMEs needed lots of education - Small ticket sizes On the other hand, when the DB founders spoke with big enterprises a different issue emerged: These firms were paying a lot for their HRM but were very unhappy
The big Indian enterprises wanted local customisations but the big giants refused. Many reasons: - Arrogance: “our way is global best practice. Adopt it” - Product architecture - Bureaucracy So Darwinbox had their first contrarian insight: the big global players were vulnerable
Also, going after big enterprises had other advantages over SMEs: - They didn’t need education - They were OK with high ticket sizes - They wanted to jump on the upcoming cloud wave - the market was bigger than realised (12K firms with >500 employees & 80% not on cloud)
So in 2015 Darwinbox decided to go with their domain expertise + market hunch + research & go against conventional wisdom. They decided to take on the global giants & aim for medium & big enterprises as clients. But they had a problem which leads us the 2nd point.
2️⃣ TO GET WHO YOU WANT, START WITH WHO WANTS YOU
Darwinbox’s big problem: their lack of credibility. So getting big enterprises or raising money would be hard. They made 2 uncommon choices: - Decided to bootstrap for Year 1 - Decided to start with a different market segment
Now who would be willing to bet on: a young startup which had good insights hungry team great product vision but still in early days Other startups. They were in a similar position & were willing to bet on Darwinbox. So that’s the segment DB 1st went after.
Their 1st big win was Delhivery & they soon got most of the unicorns. Their UVP: (A) Use 1 app (instead of 3-5) for the full employee life-cycle (B) Mobile 1st, great UX-UI, built for low storage & bandwidth (C) Very customisable: all features built like configurable lego blocks
These wins got them the 2 key things you need in Enterprise sales: Case studies & Referrals They then added 1 more arrow to their UVP quiver: Faster implementation. Oracle-SAP would take 12-18 months for implementation. DB shocked the market by doing it in 3-6 months.
In a chat with Suresh Sambandam, 1 of the founders shared the playbook. For Pharma: - 1st went to smaller companies - Delivered huge value & learnt industry lingo & needs - Only then went to the bigger ones Result: Now 7/10 biggest Pharma companies are clients.
In 2015: Darwinbox focussed on startups as they had no credibility with big enterprises. By 2021: They had as clients The biggest Startups: Swiggy, Paytm, Big-basket, Inmobi, Delhivery AND The biggest enterprises: Tata, Mahindra, Kotak, TVS, SBI, Adani, JSW, NSE, Dr Reddy’s
Then in 2021 their ‘Ladder up’ strategy got the ultimate validation: Salesforce Venture invested in them (SV’s 1st in India & 2nd in Asia) Why ? Most of Salesforce’s clients in the region were switching to DB and loving it. How is that for credibility! Now for the final lesson…
3️⃣ IN PRODUCT: GO DEEP & IN MARKETS: GO SIDEWAYS
DB has kept innovating: - Chatbots & voice commands - Employee social network - AI insights Result: DB is the youngest & only Asian-origin firm on Gartner’s magic quadrant (HCM) & highest rated on their customer review platform.
When the time came to expand beyond India they again took a contrarian path. Instead of going up (US) they went side-ways (South East Asia). Reasons: - Very similar problems - Similar market structure - Higher ticket sizes The founder shared a funny story to illustrate this…
Darwinbox was pitching to a big SEA insurance firm & its CEO wanted something for their unusual problems. Example: absconding employees. Global players had never dealt with this problem. DB, given their India origin, already had a solution. DB closed the client shortly.
This is what @dkhare calls an ‘Asia First’ GTM strategy. This is how Indian companies can win over powerful western vendors.
In just 2 years Darwinbox has become one of the biggest HRM vendors in South East Asia. Their secret: 4 years of perfecting the India playbook.
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That’s the Darwinbox story. They became a unicorn in 2022 & have big future plans: - $100M revenue by 2025 → IPO - Win India, SEA, Middle East - Expand to US Overall, 1 thing stands out to me: At every cross-road, they took the path less followed. That has made the difference.
Darwinbox shows a great playbook for Indian SAAS companies: 1️⃣ For contrarian insights build domain expertise 2️⃣ To get clients you want, start with clients who want you 3️⃣ In Products: go deep & In Markets: Go sideways
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A closing story: Years ago SBI hired TCS to upgrade software. It involved things like taking servers on boats to remote branches. Within a year, 25 global banks contacted TCS: “If you can do it for SBI in India, you can do it for us” Build for India. The world will come.