A million dollar company built on a failure

A million dollar company built on a failure
Prasanna D Zore | October 23, 2007 | 16:57 IST

He started his first Internet Company, Radio FM, a streaming online radio portal, when he was a mere 17-year-old.

His father was not happy that his teenaged son was wasting most of his time online, rather than preparing for his exams. His stand was vindicated when his son's maiden venture failed to produce any profits.

But Vishal Sampat, now Ceo of Convonix.com, wasn't about to give up. He maintained his faith in the Internet, and transformed Radio FM into Khopcha.com which, in turn, became the genesis for Convonix.com, a search engine optimisation company.

Today, Convonix is a one million dollar company and by March 2008, Vishal is confident of doubling his company's turnover.

As somebody who has gone through the trials and tribulations of starting an Internet business and learning from his failures, here's what the 25 year old CEO of Convonix?has to tell budding entrepreneurs: "The world will never believe in you till you achieve something. But if you believe in yourself and what you are doing is right and has a future, then you should persevere and work honestly towards your goal. If you do this you will surely be successful one day."

Can you tell us about your early days in school, college and the time you started your first online streaming radio venture, Radio.com?

I was born and brought up in Mumbai. I studied St Xavier's?School and completed my SSC in 1997. After that I did my engineering.

I started my first online radio streaming business in 1999-2000. Those were the early days of the Internet in India, when it took half an hour for someone to get connected online. The reason we started this venture was we believed that there was a huge audience abroad who would be interested in Indian music and, for that matter, in knowing?what's happening back in their own country.

A cousin of mine who was into radio got for me some audio capsules which I could play in between the 20-30 minute programme. We used to have songs as well as the RJ capsules in the middle.

Basically, none of us knew what we were doing and I had no money. So what we did was we got free space from various free web hosting companies that operated at teh time, like Geocities. We managed to get the load balanced with these servers and got our online music channel going.

How much money did you put into in this venture?

I invested Rs 3,000-4,000, with my father footing the Internet bills (laughs), which at that time was very expensive compared to what it is now. He wasn't very happy about that though (laughs).

Did you make any profit out of this venture?

No, we didn't. We did succeed in getting?around six and a half million visitors, but it was too expensive to carry out this business online. Of course, being in college and having no sense of economy helped us make no profits (laughs). Finally, this website transitioned into another website named khopcha.com, a portal for teenagers.

Though the portal is still online, we don't maintain or update it regularly now. It was this experience that helped me start Convonix.com. The first venture, however, still has sentimental values.???????

What inspired you to start this streaming online music portal then?

It was something that just struck us. It was this huge market that was waiting to be tapped. The late 1990s and the early 2000s was an era of the dot com boom and everybody wanted to be online then. This venture was something that we thought we might try and make a lot of money out of, which actually didn't happen.

What did you learn or gain from this failure?

You can't call it a failure as such.?It was lot of fun. When Radio FM and khopcha were both online, we did not have money to market the product and services we offered online. This was the genesis of my current venture.

I used search engines to market both the services; I used online portals; I learned about banner exchanges; all kinds of online marketing tools. This experience helped me a lot in offering various products under the Convonix name now.?

Can you explain Convonix's business model? Who are your competitors globally?

Let me first explain the main business of Convonix, that is, search engine optimisation or SEO.

Suppose you are a bank who wants to sell credit cards. When people search for such services online, they get a list of links on which they click to avail the service. What we do is we consult the banks that want to do business online and get maximum traffic directed to their portal.

SEO helps such institutions to maximise the use of Internet as an active marketing tool to sell their services and products. What we do is we identify who is searching for their products and services, estimate the number of searches, what are the key words they are using for their search and where they are looking out for their requirements.

Convonix helps these businesses to get their portals on top of such a search list. This is SEO and its benefits to the potential customers.

Well, that's our primary service but we are also into Internet marketing like social media optimisation, which includes crawling the blogs (which are very huge nowadays) to find out who wants what. We are also into paid advertising business.

Our competitors would be ad agencies who are getting into online marketing business. Apart from that there are a couple of big players as our competitors. However, we have the first mover advantage and there is lot of work going around.

Also, SEO is a niche field and it will be very difficult for a traditional ad firm to compete with us and build the core competency needed for this business.

What are the fundamental principles that guide Convonix?

One of our biggest principles is Under Promise and Over Deliver. You will never find one of my guys coming to you promising the world and then failing her/his word.

We'd rather play it conservatively than go over board and fail to deliver. We promise only what we believe can be done, and?then we?do a lot more?than that.

Secondly, we follow a very consultative approach. My team members would first ask you about your business, your goals and then say what we can do about it. Very frankly, we have gone ahead and told many of our customers that a certain thing cannot be done. Of course, we have lost business because of this discipline of ours (laughs).

It really makes no difference if we lose some business because of this, but we don't want to cheat on our clients.

How would you define your role and responsibilities at Convonix, you being the founder of this company?

My basic responsibility towards my company is to see that it grows as planned and all my employees are happy working with the company. Get talented and skilled people on board, strategising on novel ideas to expand my business. I no more look after the day-to-day operations, which I used to do just a couple of years ago.

How many employees do you have?

We have around 50 employees spread across our two offices in Mumbai. We have just purchased a new 10,000 sq ft office in Navi Mumbai that will help us to triple our headcount.?

What kind of turnover and profit margins are you looking out at in 2008?

Our turnover last year was around a million dollars, and we are looking at double that figure in 2008. Our profit margin is very healthy, as we use a lot of consultative approach, but it is difficult for me to give you a number on that. It could be safely assumed to be 30-40 per cent of our annual turnover on a conservative basis.

80 per cent of our revenues are generated from businesses based out of India. We started the partnership model when we started this business, as it was the best way to get some foot holding in the markets abroad then. We tied up with overseas marketing companies and web solution providers. We handle the sales there and manage all the campaigns from here.

A few of our clients in India are Just Dial, Apnaloan; we have also worked with Indian Hotels, Eitihad Airways and currently we are running a campaign for Sun Pharmaceuticals.

Our clients overseas include the best names in the hotels, airlines and travel portal business. We also do business with ClearWire, which is a listed company on the US stock exchange.

Are you the only owner of this company and do you have any plans of taking Convonix public in the near future?

Yes, I am the sole owner of Convonix. About the other question, we have a strong revenue model and cash is coming internally to fund our expansion plans. In the near future we don't have any plans of going public. Even the money to fund the 10,000 sq ft facility that we bought came out of internal accruals. What's more, ours is a debt-free company.

Can you tell us about your interesting journey from an online radio streaming business to a one million dollar company Convonix?

It was indeed an exciting and interesting journey to begin with. Every day we learn something new, and adapt it to improve our businesses. Initially, when I started Radio FM, people didn't know what I was doing. To add to it I wasn't making any money from the business. And I was wasting a lot of time online, according to my dad, instead of studying (laughs). That was difficult, but from 2002-2003 when I started explaining to people about my first business the germ of Convonix started taking roots.

It was me and two of my colleagues from school, Pallav Jain and Sarfraz Khimani -- the former passed out from IIM-A and the latter will pass out from IIM-C in March 2008. I had pulled these guys midway from their engineering courses, and they were firm on completing their academics. We are still very close friends; we used to work out of my bedroom. That's when the revenues started flowing, and that's when my parents started believing in my business. After that everyone started supporting me.

The reason why I am here today is because I got the best team that I could have ever got and great support from my family and friends. ????????????

What would be your advice to budding entrepreneurs?

First thing would be, if you believe in yourself and that what you are doing is right and has a future, then you should persevere and work honestly towards your goal. If you do this, you will surely be successful one day. You will get a million people who will laugh it off and discourage you from doing what you are doing, but you have to persevere. The world will never believe in you till you achieve something. That perhaps is the most difficult aspect for the people who are starting on their own.