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How Capillary Technologies Became a Top Provider of Retail End-to-End Customer Engagement Solutions

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Editor’s Note: Launched in 2008, Capillary Technologies is India’s largest provider of end-to-end customer engagement solutions for retailers. Co-founder and CEO Aneesh Reddy discusses the company strategy, tradeoffs in the race to market, and the advice he follows.

SandHill.com: Please describe your company’s product and differentiation.

Aneesh Reddy: Capillary provides end-to-end customer engagement solutions powered by cloud + mobile + social technology to retailers and consumer-facing businesses. Our focus is on high-quality data capture, actionable analytics, instant cross-sell solutions, and instant gratification to generate a far higher ROI on customer engagement for retailers.

Our flagship product is called !nTouch, a cloud-based CRM solution, which is integrated with billing and point-of-sale outlets of retail chains. Using !nTouch, SMEs can access and use purchase data to entice buyers with loyalty programs and discounts. Last year we launched another product, TruTouch, which is an easy-to-use, self-serve style product for SME retailers.

One of Capillary’s key differentiators is its patent-pending technology. We have multiple Provisional Patents including a patent for “automated customer lifecycle management for clustering micro-segments” and another for “point of purchase-based instant cross-sell.”

Another of our key differentiating features is instant gratification. Using our products, the retailer can engage customers in store and encourage additional purchases, not having to wait for the customer to come back for a second visit days later. Capillary’s platform also allows the retailer to integrate social media at the point of sale, giving it a competitive advantage over others.

The technology is so robust that it can capture better customer data than any other mode, creating a bigger, better database to work with. The social and mobile technology helps to reach out to customers at the right time, which increases the sales. The superior analytics tool helps retailers to create more accurate marketing campaigns, magnifying their impact. In the end, we deliver more profit for each dollar spent by client.

SandHill.com: What is your business model? How do clients access your products?

Aneesh Reddy: The solutions are SaaS based and powered by cloud technology and completely compatible with clients’ existing point-of-sale (POS) systems, so there is absolutely no up-front capital expenditure. Retailers pay per month, per POS, and begin realizing a return on investment in two to three months.

!nTouch has a small application that is installed in the cashier computers and connects it to the cloud server. It captures data and manages engagement activities centrally. Our clients can access our Web-based tools and operate everything from a single-view dashboard.

SandHill.com: How did you get your company’s first customer?

Aneesh Reddy: Our first client was Indus League Clothing Limited, a Bangalore-based apparel retailer with several national and international brands in its portfolio. What clinched the deal for us was our fresh approach to customer engagement using mobile technology. The fact that it is a SaaS offering was also very appealing to the client.

SandHill.com: You now have clients on several continents. Please describe your company’s origins and how you expanded your business beyond India.

Aneesh Reddy: Yes, our solutions are deployed in more than 10,000 stores for 150+ major brands across the Middle East, United Kingdom, South Africa and Singapore.

My co-founders, Krishna Mehra and Ajay Modani, and I have been friends since college at of Indian Institute of Technology, Kharagpur (IIT-KGP) and had always been passionate about starting up a company. Two years after college, we decided it was time for us to go our own way. We brainstormed a lot about the startup and eventually quit our jobs and started Capillary in August 2008.

Besides being CEO and responsible for business development in India, I have been instrumental in expanding the business to England and currently head the Capillary subsidiary there.
Krishna Mehra is Vice President – Products & Services at Capillary. Prior to co-founding Capillary Technologies, he worked at Microsoft Research, where his contributions led to six patents. He has been instrumental in expanding the Capillary business in international markets. Ajay Modani is Vice President – Operations at Capillary. Earlier he worked with Danieli, a multinational company, as a technical coordinator for Myanmar and Indian projects in the field of building plants for the steel industry. At Capillary, his expertise spans over Operations and Client Servicing.

SandHill.com: If you could go back and do it all over again, what would you do differently the second time around?

Aneesh Reddy: I would have started on our international expansion efforts much earlier. We ventured into overseas markets two years after launch, despite the fact that we had a great product and there was a demand in these markets. Had we started earlier, we would have made a significant presence in all these markets by now.

The other thing I would have done differently is to build a lead-generation engine faster. That would have helped us to accomplish much more than what we have today.

SandHill.com: Is there a story behind your company name?

Aneesh Reddy: In our early days, we had a lot of ideas on how to name this company. We wanted a name with a fresh sound and something that would help us to stand out from the numerous technology companies in the country. After spending weeks brainstorming over hundreds of names, Capillary was the one that everyone liked. There is no defined concept behind it, but we all felt it would have a clear brand recall among the audience.

SandHill.com: Did you make any tradeoffs in your race to market?

Aneesh Reddy: To get the product out in the market as soon as possible, we developed features keeping the apparel industry in mind since we had more potential clients from that segment. Due to this strategy, developing features for other retail categories took longer. Today our largest share of clients is from the apparel retail business, but we are also doing very well in other categories including mobile, shoes, restaurants, hotels, etc. Had we developed our products simultaneously for all categories, we could have gained more market share in a shorter time.

SandHill.com: Did your company change direction at some point during product development?

Aneesh Reddy: Yes. Our first idea was to launch an SMS-based, location-based discount search business. However, in our initial discussions with potential customers, we realized that discounts were fine to attract customers, but the retailers were looking for something to retain them for the long term. That’s when we went back to the drawing board and started working on a new product, which resulted in !nTouch.

SandHill.com: Who is your personal software company or software executive role model?

Aneesh Reddy: I admire Bill Gates a lot. The way he built up Microsoft and redefined technology is really inspiring. I also have great respect for his contributions through his charity, which saves millions of lives around the world.

SandHill.com: What is the best advice you ever received?

Aneesh Reddy: The best advice I ever received is that “you fail only when you give up.” I have lived by this advice since our early days and it has always given me strength to push through difficult times.

SandHill.com: What have you found to be the most challenging aspect of being a software startup executive?

Aneesh Reddy: In India, there is no value for ESOPs. Most of the people like a risk-free, well-paying job and aren’t interested in ESOPs. This makes hiring good talent very challenging for startups.

SandHill.com: What advice do you have for fledgling entrepreneurs?

Aneesh Reddy: Follow through with your idea; think of all the dynamics involved in order to have a complete business plan. Do not be very secretive; share your ideas with prospective clients, ask for feedback, see if they will pay to use your product. Finally, an idea is only as good as it is implemented.

SandHill.com: What do the next 12 months hold for your company?

Aneesh Reddy: Our strategy is to increase the number of offerings to our enterprise clients. With time, we plan to extend it to similar solutions like Inventory Planning, Social Media Integration, Rewards Planning, Inventory Linkage to customer inflow and Customer Complaint Management System etc. Some of these are already in development and might be launched in the coming months.

We plan to double or triple our growth in the next 12 months by adding new clients as well as selling new products to the existing clients. We also plan to expand to international markets rapidly in coming years. We also will focus on growing our partner business extensively. In India, we plan to have a partner network in 100 cities across 30,000 stores in the next two years. This will help us to grow much faster and establish ourselves in new regions.

Aneesh Reddy is the co-founder and CEO of Capillary Technologies. His expertise spans key functions such as business development and managing the company’s business interest in India. He has also been instrumental in expanding the business to England and currently heads the Capillary subsidiary there. Before starting Capillary, Aneesh worked for ITC Limited as project engineer and headed up the machinery equipment management for ITC’s Bangalore facility. Earlier, while attending IIT in Kharagpur, he developed the Robotics competition, which now draws over 1,000 students from 100 engineering colleges. He is also co-founder of the Entrepreneurship Cell of the institute. For more information, email him at aneesh@capillary.co.in.

Kathleen Goolsby is managing editor at SandHill.com

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