Sramana Mitra: Let’s talk a little bit about some of the nitty-gritty processes. What year did you start Inspyrus?
Nilay Banker: I started Inspyrus in 2008.
Sramana Mitra: You said you started by consulting. How long did you operate this company in a consulting services mode that got you the opportunity to understand the problem at a deep level?
Nilay Banker: We did consulting services for about two and a half years.
Sramana Mitra: How many customers did that expose you to?
Nilay Banker: We got exposed to between 7 and 10 customers.
Sramana Mitra: These are large enterprise customers?
Nilay Banker: Very large. I would say Fortune 50 customers.
Sramana Mitra: Terrific. By the way, just to give you a little context into why I’m probing here. We have a whole methodology that we teach in the program that is called Bootstrapping Using Services. There is a book on it. There is a whole module around it. This is something that we have seen, entrepreneur after entrepreneur and case study after case study, successfully used to bootstrapped a product company using consulting services.
All the things that you’re describing of being exposed to really good customers at a very deep level through those services relationships are great mechanics of scoping out a compelling product. It sounds like your case is a textbook case study of that.
Nilay Banker: Yes, there is nothing better than real-life experience of seeing the pain and feeling the pain and then coming up with ideas to address that. You’re absolutely right. We spent two and a half years with some very large customers. They were extremely helpful customers who worked with us. That experience eventually helped us, not only come up with the right ideas, but that services nature and the revenue of our services helped fund the development of our software product.
Sramana Mitra: That’s the other advantage of having cash available. How much did you do in revenue in the time that you were in consulting? What kind of revenue numbers did you get to?
Nilay Banker: We barely did a million dollars.
Sramana Mitra: How many of you were involved in the company at that time?
Nilay Banker: Just three of us. It was myself in the very beginning. I got a couple of people who I had worked with in the past and who I saw eye to eye with.
Sramana Mitra: Then what was the insight? Based on these customers and the intensive consulting that you did with them, what was the insight? What was the opportunity that you identified for building a product?
Nilay Banker: The really interesting thing is that the same problem exists everywhere irrespective of the type of the company whether it’s manufacturing, software company, or a payment solutions company. Those were the verticals that we were dealign with at that time. The problem in the finance department with how they process their invoices and how they interact with their suppliers remained exactly the same. You might think that’s a very simple business operation but there’s too much waste in these terrible processes. There’s this commonality across the board.
Sramana Mitra: What did you build?
Nilay Banker: Obviously, we built software. More importantly, we built software using a very different approach to solving the problem for automating invoice processing. We call it invoice automation. That is actually the name of our product. The idea is to bring innovation to the fin tech space and bringing 21st century user experience to a line of business that has been largely ignored. Again, the line of business is finance and accounts payable.
If you know about traditional ERP systems like Oracle and SAP, they have been around for years. There’s no innovation there. Those companies do revisions of their products once in maybe three years. Those products have been left to the 20th century and are being provided to the new generation.
That finance operation was always perceived as a cost center. People thought of them as just a waste. Our approach was to try and invigorate that particular line of business and to help turn that from a cost center to a profit center. That goal involved reducing waste, providing process efficiency, and eventually getting them to a point where they’re no longer a cost center.