Talking Heads with Satya Prabhakar

Durgesh Gupta - Televisionpoint.com | Mumbai
Satya Prabhakar is the founder and CEO of Sulekha.com, an website running entirely on user generated content. Before starting Sulekha, Prabhakar was working with global telecom giant AT&T.

From a dotcom start-up, the firm now has seven offices across India. It provides customer responses to city centric small and medium business enterprises, for whom advertising in the mainstream media would be a costly and a wasteful affair. The company has seen two rounds of venture funding, Prabhakar talks about his experiences as an entrepreneur and running a start-up.

How did sulekha.com come about? Did you envision it as a business while starting out?
I was working in the United States at that time, and I saw a lot of good writing from many people, a sort of a blog. So I thought of putting this up online. Later on, the thought occurred to me that if this forum can be used by people to exchange opinions, why couldn't it be used for business too. By 2001, I thought the opportunity was big enough to take the plunge.

When and how did you decide to quit your job and go on your own? How difficult was it to take the plunge?
I was working at AT&T when I started the website. To leave a well paying job is not so easy. This was especially tough given my family background, which didn't consider being in business a very respectable calling.

Around that time, I picked up this book Alchemist which I read during a flight. The book was about going for what you desire. By the end of the flight, my mind was made up and I decided to quit my job. On the practical side, I figured that if things didn't work out within an year, I could easily find another job.

You have raised two rounds of venture funding. As a start-up, how tough is it to secure funding for your venture?
The first round was extremely tough. It took over two years and 50 funds before we could zero in on an investor. The first problem was that we didn't have a track record. Secondly, most of the deals in that period for ventures were in the $5-10 million range.

We were not in a position to absorb that kind of money. However, for a typical fund, it doesn't make sense to look at a small transaction because it takes the same effort as a large deal and the returns are too small for them. In contrast, the second round of funding, when Norwest came in, took just two months. We raised about Rs 50 crore from Norwest in 2006.

What are your future plans for your company?
We expect to clock an 80 per cent increase in turnover this year and a similar growth rate for the next 3 to 4 years. As a portal, we provide information on eight Indian cities. We are planning to bring 40 more cities under coverage. In Andhra Pradesh, this would include Visakhapatnam and Vijayawada.

Online businesses face the challenge of converting eyeballs to cash flows. What is your revenue model?
Any major city we operate in, there are 2 lakh to 3 lakh small businesses. At the same time, we have people visiting our site looking for information on education, travel, hotels and entertainment. For a fee, we offer to connect the customers looking for the services with the service providers. While we seek to list all the service providers in our directories, we offer preferential treatment to our advertisers.

Currently, we have about two per cent of the players in the markets. We operate in advertising with us. Our biggest clients are small businesses for whom it is wasteful to advertise on mainstream media as the target audience is only a small fraction of the total reach. We guarantee them a certain volume of user responses. We also provide a platform for small value transactions for which advertising in mainline media will be a prohibitive cost.