Sramana: Let’s drill down into how you built the company. What were the milestones in the early development of Kayako?
Varun Shoor: As the business started picking up, I started to recognize what was important to continued growth. The most important aspect was trust. In 2002, if someone emailed email@example.com and expressed interest in buying the product; I did not want them to know it was just me running the company. I created several different identities for myself. I would respond with a note that they had contacted the wrong department at Kayako and that I would forward their request on to the sales department. I would then respond from a different account identity so that I gave the impression of being a larger company. If they knew I was a 17 year old kid on the other side of the world, they never would have purchased the product.
I then started to focus on the people who were buying the product. I offered to give them free extensions on the product in exchange for customer testimonials. Some people obliged, so I was able to populate my website with customer testimonials. I also published materials on my website to demonstrate that Kayako was a thought leader in this space. That let people gain trust in our company and product.
In 2003, I noticed that live chat was becoming an option for customer support. I thought that adding the live track would be a nice addition to our product portfolio. So, I added that to our product portfolio in 2004. By 2005, the overall growth of the company had maintained a slow, steady pace. I hired a couple of friends I knew to run support.
Sramana: What was the revenue level in 2005?
Varun Shoor: I think we were on a revenue run rate of $1.5 million. I had three employees at that time.
Sramana: That is decent money for a solo entrepreneur.
Varun Shoor: It was decent money back then. It took me a while to consider this a mature business. We opened our first office in 2005.
Sramana: How did you manage pricing? Was it downloadable software offered at a fixed price?
Varun Shoor: At that time, we sold the product for $400 for a download. We also had a SaaS offering that was $20 a month for an unlimited number of accounts. I copied my pricing model from other popular online software products. Initially, we were the cheapest product in the market and people flocked to us.
Sramana: In 2005, you started to shift into a more serious mode and secured an office. What prompted that change?
Varun Shoor: Looking back, I realized I did not get very serious until 2008. We opened the office in 2005 but I had no people management skills and I had no conflict resolution skills. I had no idea how to train employees. I was immature. I am embarrassed at how I worked at that time. Employees left in droves. There was no accountability and it was a pure disaster. I learned from experience.
The real trigger in 2005 was the ramp in support tickets and financial reporting. It was no longer an operation that could be supported by two people out of their homes. The financial reporting and regulations were in a mess. It was taking me three days to reply to customer support emails. The business had scaled and that forced me to open an office and start hiring college graduates.