Last fortnight, Clevertap raised $105M to reach a valuation of $800M, to expand globally in a time when the world was slowing down
Just Do It
No marketer wakes up and says, ‘I’m going to spam my users today. I’ll perhaps send them an irrelevant message at an appropriate time on a random device.’
The reason they can’t send timely, targeted messages to the right user base is that they find it hard to stitch together data from various sources and personalize messages for their users.
This learning was the inspiration for Anand Jain to start CleverTap. Like other “overnight successes”, this too was many years in the making.
Anand started his entrepreneurial journey during his teenage years when he assembled computers and wrote commercial software for lawyers.
While Anand was not interested in academics, he developed a curious mind and a penchant for taking apart and putting together home appliances. He even fixed broken TVs, VCRs and desktops.
At 16, this hobby led him to start Compoint Computers, a company that assembled and serviced computers for a nifty profit. Anand also ran side hustles, selling soap to make the extra buck.
By 1997, he moved to a corporate job, first as a sales executive selling Netscape browsers and later as a coder for Software Frontiers. Over the next few years, Anand worked on cutting-edge software innovation in the US at companies such as AT&T and Motorola.
He was deeply entrenched in the technology space while the world went through the dotcom bust
By 2005, the entrepreneurial spirits started to kick in, and Anand moved back to India to start Burrp – India’s first restaurant discovery and reviews platform. While these were the pre-Zomato days for food tech, the team ran the company for three years before selling to Network18.
While working as the CTO at Network18, Anand met his co-founders Sunil and Suresh. In 2013, the trio quit starting CleverTap.
Three hardcore engineers set out to solve complex marketing problems.
Anand realised that companies could not send personalised and targeted messages because all the granular user data was disaggregated and unactionable.
They spent the next 30 months building the data layer called Tessaract db that would eventually become the single source of truth for user actions. No TAM analysis or market research. Just solving the hard problems.
Sometime in October 2013, while the team was busy building the database and connecting it to dashboards, Anand received a call from his friend, who was also the co-founder of BookMyShow
Based on its movie-watching history, BMS relied on mass emails and was looking for a way to send targeted and meaningful emails to its users. Anand immediately hopped on an autorickshaw to the BMS office for a demo of the product they were building.
CleverTap had landed its first customer.
By 2014, Anand could also find investors who believed in the product and his ability to deliver on the technology. They raised a $1.6M seed round in 2014 without a paying customer or a product in production.
With a few phone calls to some of his former colleagues, Anand could now assemble a small team of engineers to fast-track the building process. Series A of $8 million followed in 2015.
CleverTap was set to make marketing less spammy and more contextual.
There are Some Things Cashbacks can’t Buy, for Everything Else, there is Clevertap
Anand and his co-founders had a philosophy that relied on relevant first party data that would help companies serve their customers well.
This helps to predict customer actions based on past behaviour.
Companies did not have to triangulate data from multiple sources such as bank balances, telecom records or complex geographic information to predict user behaviour.
For example, a customer has looked at a product a few times in the past but has not yet made a purchase. Marketing managers would want to immediately send her a notification creating urgency based on available stock or flexible return policy.
Moreover, they should also be able to predict, with reasonable accuracy, if the customer is likely to purchase.
The traditional approach would rely on weeks of pattern recognition and train a model to help make such predictions. But this would be too late, and the customer would’ve moved on to a different product, and the conditions would no longer be the same.
The core technology of CleverTap allows companies to build a model based on primary data, train it and execute it on the fly. It would take seconds to assign a probability of the customer making a purchase.
Research also showed that, on average, consumer-facing apps lost close to 90% of their daily active users during the first 90 days.
Anand found this to be staggering and unacceptable. He wanted his customers to change this too.
Anand and his team instead encouraged companies to view retention as a technology problem. Given the right tools and technology, they did not have to resort to quick rewards, cashbacks or ads to prevent users from churning out.
Users were not to be treated as rows on an excel file who could be bombarded with mass mailers or spam calls with a fraction of them continuing to engage or make a purchase.
Instead, CleverTap wanted marketers to understand users better through easily accessible and actionable data. Users are bound to stick around if they can speak meaningfully to users and give them what they came for.
Hence, by sending contextual and personalised messages at different points of the customer’s journey – from leads to long-term customers – CleverTap was making the marketing process more effective.
If customers stayed, CleverTap was here to stay with its clients too.
I am Loving the Retention
Post starting with BookMyShow, CleverTap took its services to many more industries.
These were witnesses to digital adoption such as ecommerce, fintech, foodtech and entertainment. While Anand had started building in India, he also decided to sell to India.
As many startups saw remarkable mobile growth, CleverTap built products to help them earn user loyalty. Post generating a lead via mobile, brands could engage with users and organise their journey through onboarding, purchase, payment and retention.
In a world of multiple competing products and noisy messaging, companies could stand out by segmenting their users. They would have rich profiles for anyone interacting with the app or website and optimising campaigns.
Whether users were browsing clothes, struggling to book a cab or leaving their food unordered, companies could automate an intervention and seamlessly send thoughtful notifications, SMSs or emails.
In 2014, Sunil moved to the US not to sell there but to ensure they learnt from a mature SaaS market. With the months of building behind it, CleverTap had all the frills of enterprise-grade software and was chasing a massive opportunity.
The company ran freemium plans that allowed brands to create up to 100 million events or user actions. This allowed the company to acquire a wide range of customers, with many startups wanting to try it out and eventually converting to paying customers.
CleverTap might have touched close to a billion users through its enterprise customers!
Since the early days, the team has been focused on building a product that could compete in markets globally. The philosophy was to enable adoption by creating something 10x better than what was available in the market.
While they did not see advantages with building in specific locations, superior features helped them scale quickly across global markets. This allowed them to cater to large telecom companies with hundreds of millions of subscribers.
Even within companies, CleverTap promised to bring Product and Marketing teams on the same platform by combining product analytics with user engagement and segmentation. This was a key win to garnering internal adoption and love for CleverTap.
CleverTap was not only onboarding new-to-digital brands but also winning accounts from the competition! It looked ready to fly.
It was cleverly looking at a market that was rapidly growing.
What an Idea, Sirjee!
CleverTap’s success depended on two essential factors of modern online businesses
Mobile-first platforms and customer experience. CleverTap was unlocking the market by unlocking new market opportunities for its customers.
India was estimated to have one billion smartphone users in a decade post-2016. Indian digital-first brands will encompass a massive $250 billion market opportunity. Around 46% of Indian CEOs considered engaging with millennials via digital channels challenging.
Real-time analytics was the main challenge for more than 40% of marketers.
The most important part, if a brand can increase customer retention rates by 5%, it can lead to a 25-95% increase in profits! That is the superpower which Clevertap wanted to build into its clients.
Making their topline bigger would help CleverTap increase its topline.
CleverTap disrupted engagement and customer relationship management by solving significant challenges for marketers using powerful graphic dashboards. They worked with some top-notch players across media & entertainment, and fintech.
Powering through CleverTap owned a market share of 0.03% of the mobile analytics industry by late 2018.
To gain even a minuscule percentage of market share in a booming industry with giants like HotJar, Adobe Analytics, and Yahoo! Analytics was challenging.
CleverTap adeptly chose the excellent traits of a market, geography, and use cases to exploit the opportunity.
The APAC market was predicted to have a CAGR of 24% from 2018.
CleverTap carefully built its market entry opportunities in the region, starting with India, one of the top countries in terms of the number of apps installed and used per month.
It soon began diversifying away from just India. The client base was now majorly from India, with other primary sources being the US and the UAE. The rest come from Indonesia, Singapore, the United Kingdom, and Malaysia.
The Clevertap rocketship started taking off, driven by a high-quality insight
Think Outside the Bun
Starting a SaaS company is simple, but maintaining and scaling the business is difficult.
The biggest issue in the SaaS industry was that the client’s stickiness is constantly called into question because switching from one service provider to another that solves a specific problem is extremely easy.
Clients will always look for a lower-cost option.
CleverTap recognised this early on and focused on providing a solution that addresses multiple client issues.
CleverTap’s initial goal of creating a master database had evolved into creating a Unified Data Layer.
CleverTap’s clients benefited from this significant differentiation. Using the Unified Data Layer, it was now possible to collect data from multiple sources, such as call centre data, CRM, and POS systems.
This was especially important for clients. They now had user visibility across multiple channels thanks to this data.
Companies were able to provide a magical experience to their user’s thanks to these insights.
As customers had more options, user retention became key. When users are engaged, they feel compelled to return and interact. Higher engagement results in higher conversion rates.
CleverTap accomplished this for its clients by utilising the Unified Data Layer.
For example, the hero client BookMyShow leveraged CleverTap’s solution and sold over 1 million tickets one week before the film’s release. They did this by generating buzz through real-time triggered contextual and interactive push notifications on mobile devices, using tech to engage, re-engage, and retain app users and build a customer journey beyond ticket sales to keep the momentum going.
CleverTap’s solution was designed to be sticky for its clients. This was the key differentiator when compared to platforms like MoEngage or Mixpanel.
CleverTap was successful in combining analytics, segmentation and engagement into one product. That meant that development and marketing teams would look at the same data set as an app or brand owner.
In most companies, product and marketing teams have different solutions even though they target the same user set. CleverTap enabled them to see things through a single lens.
This was important for the client’s success!
The more clients used the data, the more they relied on CleverTap’s products. This increased stickiness while also providing CleverTap with clear revenue visibility and pricing power.
This is what the SaaS industry required, and CleverTap accomplished it deftly through its product being built for six years.
As the company entered 2019, the Clevertap product began to take shape.
It identified key features to integrate into its product suite that supported behavioural analytics, segmentation, engagement and lifecycle management amongst the varied services by mobile analytics services.
CleverTap set out to build the market with its behavioural analytics, omnichannel engagement, and lifecycle optimisation tools.
The solutions were delivered across three pricing plans – Growth, Advanced, and Enterprise with varied features across the plans.
CleverTap’s goal was to build an automated ecosystem where all the data was processed, and human effort in marketing and data analytics got significantly concentrated.
The future of marketing could combine human creativity with tech-enabled insights like that of CleverTap or become even more automated where the creative and thinking process is also rendered to the software.
CleverTap was betting on the former to win big
By mid-2019, CleverTap successfully empowered the mobile marketing initiatives of more than 4,000 apps, including a diverse base of startups, SMEs, and enterprises. They added Fandango LATAM, Discovery Kids, Cars24, Lenskart, Ooredoo, Truecaller, Vidio, and others
Entering and expanding into North America, Singapore, Europe, and India markets happened against the backdrop of scaling its customer success team in 100+ countries with the proper hiring, technology, and KPI tracking.
CleverTap kept shipping more products and innovations to ensure success.
Karlo Duniya Mutthi Mein
As Clevertap entered late 2019, it raised a Series B of $26M for enhancing the product and functional capabilities through big data and AI.
At that time, it had served over 8,000+ apps and generated $2B in incremental revenue for its clients.
CleverTap launched CleverTap4Good to enable non-profits and social organisations to voice out their cause better using the power of effective mobile marketing. A leading global crowdfunding app, Ketto, increased revenue by 30% by re-engaging users and personalised messaging.
The goal of “Product Innovation backed by Data Science” came strong for delivering users a proactive, empathetic, and ubiquitous engagement that built a unique brand presence for their customers.
A Series C of $35M followed in the same year, taking the fundraising for the company in 2019 to $61M.
Incredibly, CleverTap was profitable and cash flow positive
This was the first in the category and size they operated in. They had a $45 million ARR in less than six years of monetisation with an astonishing 235% CAGR. It also had a healthy gross margin of 72% and a fantastic 120% Net Recurring Revenue.
Operational efficiency kicks in for the SaaS business when a scale is reached. CleverTap’s story is no different.
Before 2021 could generate $1 of ARR was generated for every dollar spent by CleverTap. However, CleverTap increased ARR by $2.5 for every dollar spent in 2021.
This was a rare feat in marketing efficiency. The marketing salesmen were achieving dreamy marketing goals themselves.
Capital-efficient growth was the need of the hour, and CleverTap achieved that.
CleverTap was building a solid foundation that would last decades. CleverTap was building SaaS in India for the world.
SaaS from India to the world was about to blow up.
Making It Finger Licking Good
With a $13 billion IPO in 2021, Freshworks put the Indian SaaS ecosystem on the global map.
But Freshworks was not alone. At the same time, India had around ten pure SaaS businesses focused on India with an ARR exceeding $100M.
India’s SaaS ecosystem was still in its infancy compared to markets such as the United States or Europe. The question for CleverTap was how to continue growing and scaling beyond where they were.
CleverTap focused on two aspects to accomplish this: geographical diversification and the creation of up-sell/cross-sell opportunities.
During the first years of monetisation, CleverTap built the organisational muscle to operate in multiple regions. Along with India, the emphasis was on South East Asia, where the startup ecosystem thrives.
By 2021, India and Southeast Asia accounted for 65% of revenue with 35% from rest of the world. CleverTap concentrated on India and SEA but did not ignore the rest of the world.
CleverTap needed a significant presence in geographies such as the United States and Europe to enter the next growth phase. These geographies have a higher dollar value for CleverTap’s SaaS services, resulting in a significant margin improvement for CleverTap.
However, CleverTap understands that diversifying geographically does not help because newer markets take time to generate revenue.
CleverTap was looking for ways to move faster in international markets while strengthening its organisational structure.
CleverTap acquired Patch in 2021 to power branded In-App Voice with trust, security, and privacy. Leanplum acquired in 2022 will help CleverTap to offer multi-channel customer engagement service to the US market.
CleverTap identified opportunities to cross-sell and up-sell to its existing clients by leveraging these acquired capabilities. This helped in further expanding revenue.
The aim was to hit an ARR of $100M by 2022, $500M by 2025 through product and geographic diversification.
The goal was ambitious, but CleverTap was a company that doubled revenue.
Marketers Run on Clevertap
Accelerated by the pandemic, the world is changing quickly.
There has never been such a massive shift to digital. Some brands will adapt better than others to this shifting landscape.
Companies are looking to simplify their growth stacks in favour of unified complete platforms rather than piecemeal solutions.
There appears to be a growing emphasis on hyper-personalization for user retention.
CleverTap claims to be the first marketing technology (Martech) company to recognise the need for differentiated, modern technology with an end-to-end platform that leverages user data to provide actionable insights, personalisation, journey optimisation, predictive segmentation, and experimentation.
CleverTap’s goal is to create the World’s #1 Retention Cloud.
The Series D fundraise of $105 million demonstrates how excited investors are about this.
To scale, CleverTap should focus on three fronts: marketing, product, and sales.
CleverTap must identify marketing opportunities to enter new industries to provide a solution. It must innovate, just as it claimed to launch one feature every two weeks on average, with customers sending 1,200 campaigns per day. Negotiating higher-value contracts will be the sales lever.
Executing this will come down to scaling the culture. CleverTap has taken baby steps in that direction by hiring key personnel and expanding and improving its offerings.
The industry is noticing CleverTap’s.
CleverTap has been named a leader in G2’s Summer 2022 Mobile Marketing Report. Consistency compounds beautifully, and for the 12th time in a row, CleaverTap accomplished this feat.
CleverTap’s ambition to become a global SaaS company is an attainable goal. The company has worked extremely hard to get this far.
From starting small, it has now become a money-making machine.
CleverTap operates in an extremely promising market. It has laid the groundwork and now has the golden opportunity to become the global retention engine for marketers.
As companies globally tire of running on the acquisition treadmill, they will look for more ingenious ways to retain customers. CleverTap can become the Clever Tap they turn on to retain customers.
Writing: Anisha, Keshav, Parth, Rajiv and Aviral Design: Omkar and Shelley