“After working in different companies for 2-3 years, the 8 of us friends decided to start a company. We had no idea what product to work on, or what market to target. But we started the company,” narrates Unnikrishnan Koroth, co-founder and CEO, Foradian Technologies.
Typical advice to a company starting out would be to have an idea, have a business plan, execute and make it work. Unni Koroth and his team of 7 founders broke this myth. And how.
The company that was formed was called Foradian Technologies. Their product Fedena currently helps them with revenues of a million dollars, a good profit margin and has over 40,000 schools and colleges using it worldwide.
How did a company with little idea about their initial product, from a small town in Kerala make their product a hit across India, Latin America and Africa? Fedena is an example of what can happen when necessity, opportunity, and 8 entrepreneurial minds come together.
Fordian was formed in small town Kasargod, Kerala in 2009. 8 friends who had met at various points across their lives wanted to do something different from their peers, and decided to become entrepreneurs.
They started Foradian Technologies – a company that delivered web-development services and branding services. It was during the course of their work that a visit from an official from a school nearby that forever changed Foradian’s story. The school had wanted Foradian to provide services to help them manage their institution.
“So as usual, we went online and searched for a free solution with which we could provide services. Instead of having a product on our own, we needed some other free and open source product to bundle our services with and sell to the school,” says Unni. “That’s when we understood that there was something missing in the market,” he adds.
The company realised that the existing ERP solutions either costed a bomb (SAP, Oracle), or were cheaper ranging between Rs 1k-1 lakh, but, sacrificed quality and usability.
“There was a missing element here, so a quality software, in the price range of Rs 1 lakh. This was the huge opportunity that we noticed. That’s when we thought ok – instead of another software, let’s build one of our own,” says Unni.
But it wasn’t as easy as that.
Plan of Action
“Only after we started developing it did we discover the actual problems in the market. As with any other startup, we were immature at the time,” says Unni who used to work with Idea Cellular before the venture.
The company had 3 key problems to solve in terms of their product – customisation, improving usage rate and servicing. Personally, they faced a deeper, more difficult problem says Unni – staying focussed while staving off societal pressure.
Foradian used to customise Fedena for every school initially.
“Schools aren’t the invention of the 20th century and we didn’t know the concept of scaling, so we thought ok – if your school needs customisation, we will do it. After selling to 10 schools, we understood that this business is not going to work in this way,” he says.
They discovered that scaling would require Fedena to be a single product to be sold to everyone. So they solved the problem with plug-in architecture. The two other problems that Fedena faced were increasing usage rates, and servicing an education institution. They solved the problem of usage rates by developing a simple UI and UX. When asked how they managed to get schools – a place where people other than students are the least tech savvy – on board, Unni remains secretive.
“That’s a secret. I say if you have an entrepreneur’s mindset, you will find a solution to any problem. And we did. It is an idea that evolved and we did not come up with it in a single day,” he says, explaining that it took them 2-3 years to find an answer to the problem, “We had raised money from angels in 2010, but the money had vanished by 2011 all the money had vanished. In 2012, we came up with this idea and never had to look back,” he adds.
Keeping Off the Beaten Track
The initial days were not easy for the 8, especially since they hailed from Kerala – a state where engineers are a dime a dozen. Unni says that the most difficult personal hurdle that each of them had to overcome was the pressure that they faced from society. While their parents supported them, it was difficult surviving in an environment where entrepreneurs weren’t given respect.
“Parents usually want to say ok my son is working in the US or at some big company. When it came to this, our parents didn’t even know what to say. It was a difficult thing to overcome,” he narrates. “But if you keep thinking about what other people are saying, how they are going to judge you – you won’t get anywhere. It’s a mind game that you’ll have to overcome. It’s very difficult to do, but you will have to do it,” he says.
The other part that the company had to overcome was sticking to their vision in the long-term and motivating the team. He says that those who have faith in the vision are the ones who will stick around with the company.
The good that came out of their immense struggles both personal and technical? Surviving the startup valley of death. Unni terms this period as what happened after the celebration was over, and there was a dip once the money was exhausted.
“We survived around 6-8 months with a salary of less than Rs 5,000. We generated profits only after that. We should have closed the company and gone, but we never did that, because we believed in the product and the company,” says a proud Unni.
Surviving Open Source
One of they key factors to Fedena’s popularity and immense global success is the fact that it is open source. Apache certified Fedena currently has 80% of its revenue from Latin America and Africa.
So how do they make the open source – profitability equation work? The company says that while their core software is free, plug-ins are paid for.
“If you need a basic software to run your institution, go with the open source, it is free. But if you want enhanced features, there is a Fedena Pro version which is paid with an average pricing of 1 lakh per institution,” he says.
In India alone, the company generates Rs 10 crore from the proposition.
The Marketing Luck That Was The Kerala Government
Foradian also got on-board another game-changer – the Department of Education and the Government of Kerala. The company is now successfully being deployed in over 15,000 schools in Kerala thanks to the contract they won with the Kerala Government.
“You cannot sell a software to a Government, it’s not easy. Because when an open source software is available in the market, how can you sell a paid software? There will be opposition from the market,” says Unni, “We did it with a pure non-profit mindset. We aren’t really making any money, nor are we making any loss. We are just getting a lot of users,” he adds.
The lesson Foradian learnt – The Government is a double-edged sword, it’s better to keep away. But, they do believe that the implementation is what got them the most traction.
Vision Going Forth
The company has shifted their office from Kasargod to Bangalore once they realised that location was crucial to growth. They registered a 400-500% increase in revenues once they made the move.
Going forward, the company plans to expand into more saturated markets like the US and Europe with their products. They also plan to become one of three billion dollar companies in India by 2020.