From a meagre Rs. 30,000 start to clocking 30 crores revenue, this Goan startup is making it big.
Here is the story of Homdroid, straight from the founder Lucio Mesquita. He shares how they started just with Rs 30,000 in 2011 and are now targeting a growth of Rs 100 cr with an annual growth rate of 20%.
The startup using IoT technology automates homes and says that its installation is about one third the cost of a conventional home automation system without any wiring requirements. Well, now who doesn’t want a home like that?
1. You started more than four years back with INR 30,000. How did you pave your way in the industry?
Lucio Mesquita: When we started in Sept 2011, we tried our hands at some ERP solutions which did not really take off till late 2012. This is the point we decided to enter into the mobile apps space with our own apps as opposed to building apps on a SaaS (Software as a Service) model. We conceptualized, designed and marketed our first app in Feb 2013. This app did not get much traction at which point we came up with the idea for “Bible Inspiration” app. In this app the user would get an inspirational quote from the Holy Bible everyday along with a quote to suit his/her mood. It is with this app that our marketing efforts paid off and we were able to get a lot of traction and users.
What set our app apart was our attention to great design, a great user interface and an innovative marketing campaign. All these factors put together plus given the fact that there was space in the “Spirituality and wellness” domain made sure that the app had a lot of downloads and a lot of user retention. As the time passed, based on the user feedback and based on ideas given by our users we were able to come up with more apps which were quite well received too.
It is during the growth phase that we wanted to scale up faster by expanding our marketing budget, so in late 2013 we started looking for investors. In end June 2014 is when we started negotiations with the German company who eventually after seeing the user base, the growth and the high user retention rates decided to acquire our apps portfolio for a sum of 1 million Euros in Feb 2015. This was our first big break and a first for a Goan technology company to be acquired in a deal of this size.
2. Tell us about your startup journey. You had great success with the app – why this then?
LM: There are two reasons why we went into home automation after our success with the apps. We love the concept of IoT and automation and we always wanted to get into it. There is a huge opportunity in the automation and IoT space. A report by the McKinsey Global institute states “Our bottom-up analysis for the applications we size estimates that the IoT has a total potential economic impact of $3.9 trillion to $11.1 trillion a year by 2025. At the top end, that level of value—including the consumer surplus—would be equivalent to about 11 percent of the world economy”
3. How did you make your first sale?
LM: We launched Homdroid in Sept 2015, we tried to sell it in Goa but the market response was not what we had hoped for. So we decided to try out in Bangalore.
In Dec 2015 we spoke to a few system integrators (companies who stock and install home automation systems). These meetings went well because our product was cheaper, faster to install, and had no flicker issues(when dimming lights). So in Jan 2016 we got our first purchase order for 75 automation units (1 unit typically is a 2 BHK house). From then till now we have got 2655 pre orders worth INR 30.3 cr and we are receiving a lot of enquiries and dealership requests.
4. What is your current growth rate and how do you plan to grow in the next few years?
LM: From Sept 2015 till date we have 2655 confirmed orders that is INR 30.3 cr in under 6 months. Our target for financial year 2016-2017 is INR 100 cr. We plan to grow this at an annual growth rate of 20%. We will also see more growth coming in from our infrastructure automation projects especially ones linked to the Smart City concept.
5. Key lessons learned – your tips to founders out there?
LM: Don’t let a failures stop you. The only failure is to give up.
- Don’t get over excited with your idea. Test your idea with your potential customers, listen to their feedback. Go to the drawing board all over again if your idea is not accepted by the market.
- Don’t get carried away by the negative feedback you receive once you fail.
- Don’t cry for money because money never cries for you.
6. Are you bootstrapped? What are the key challenges you have faced and what are the key lessons you have learned?
LM: Yes, we are bootstrapped but we are currently looking to raise INR 6 cr of investments. We have a lead investor and we are talking to more investors and we are hoping to close this round of funding by 31 March 2016.
- This is a business with a high capital entry barrier, so our challenge was to find the money to enter this space. We have funded this entire effort through the first tranche of funds received from our app acquisition.
- Keep costs low through better marketing efforts.
- Don’t overspend money even if you have it. Spend carefully.
- Always plan for contingencies. Things can and always will go wrong. Plan for it.