How a drastic pivot saved one of India’s newest unicorns

“We were near zero cash. And if we had not turned profitable immediately, we would have died,” recalls Beerud Sheth, co-founder and CEO of messaging platform Gupshup, one of India’s newest tech unicorns.

Most of the six Indian startups that achieved unicorn status within four days in early April, began their journeys no more than five years ago. But Gupshup was the exception, as it started out around 16 years ago.

Beerud Sheth, co-founder and CEO of Gupshup / Photo credit: Gupshup

The company raised US$100 million in its latest round led by Tiger Global, a good 10 years after its last fundraise.

An expensive pivot

Gupshup helps businesses and developers build messaging platforms for their apps. The tech firm, which also provides chatbot services, competes with Twilio, Sinch, and other similar businesses in the enterprise messaging space.

Gupshup has built messaging and chatbot features for top clients including Bharatiya Janata Party, the ruling political party in India, as well as ride-hailer Ola, banking and finance giant Kotak, ecommerce player Flipkart, and education tech firm Byju’s, among others. People can use Gupshup’s chatbots to make a payment, book a flight, buy a meal, or modify a delivery without any human intervention.

But when Gupshup was established in 2004, it was a consumer-centric platform that allowed users to send text or SMS messages in bulk. By 2011, however, it had to pivot as it was running out of money.

The cash crunch stemmed from inefficiencies in Gupshup’s previous business model. It offered steep discounts to users for sending bulk texts, which amounted to over 4 billion messages a month. Unable to recover the money through advertising revenues, the company decided to pursue an enterprise communication solution model instead.

Gupshup also had to change its tack because India’s regulatory authorities imposed several restrictions on bulk SMS services.

Case in point: In 2011, the Telecom Regulatory Authority of India (TRAI) put a cap on the texts that users can send to 100 messages per day – a move that limited the services offered by bulk messaging providers.

TRAI also prohibited the sending of promotional messages between 9 a.m. and 9 p.m. At that time, only banks, insurance companies, and telecommunication firms could send transactional messages that gave information related to their customer accounts. Messages from airlines and railways regarding schedules as well as from educational institutions to their students’ parents were also allowed. However, the messages were restricted to relevant information and couldn’t include commercial content.

Road to recovery