Sramana: What was the premise of the company you founded in Chicago?
Bhanu Chopra: It was essentially the same thing I was doing before. We were working with some very large firms in the Chicago area. We had four Fortune 500 clients and we helped them implement large CRM systems. We built a very good yet small team of consultants. At our peak, we had a dozen people. There was a lot of home grown competition from Indian firms at that time-frame in 2002.
Indian firms were gaining a lot of traction via outsourcing because of the labor arbitrage. We realized very quickly that because our business model was based on billable hours that our company would likely not be sustainable. I had been in the US for about a decade by that point and I wanted to move back to India. I noticed that a lot of my friends were starting to move back to India. It made a lot of sense to me as well. I could see the potential in India.
I knew that I wanted to build a software product and I felt that I could leverage the talent that was returning to India to help me build that product company. I felt that I could build a product in India more cost efficiently. I also had personal reasons to return to India. I felt that I could take the risk of returning to India, and that gave birth to Rategain.
Sramana: What was the initial concept behind Rategain?
Bhanu Chopra: The initial concept was to build a meta search travel site like Kayak and Trivago. Kayak was formed around the same time as Rategain. I saw that there were other companies starting in this area, which meant a few things for me. First, I saw it as validation for my concept. However, on the flip side I knew that it would be difficult for me to compete with a company like Kayak since I was building a product from India without investment capital.
I bootstrapped the company. I started it in 2004 and at that time, the VC ecosystem in India was just developing. Access to capital was very difficult. I come from an entrepreneurial background and I have seen businesses run and built on traditional values. You have to build a business model that can quickly turn into a profitable company. I knew that since I was bootstrapping this company, a B2C business model would likely be a cash drain that I could not afford. It would take several years before I could turn a profit.
I flipped the model to be a B2B company where I could license our technology to other travel players so they could gain an understanding of what the competitive landscape is like. Expedia did not know what Travelocity or Orbitz were doing in terms of pricing the same product. That is how Rategain started.