How Harshal Katre built Profitbooks from 0 to 65k+ customers in less than 8 years | Front-Runner Stories
This article comes from the podcast interview I did with Harshal Katre
You can listen to the episode below
I’ve taken key points & insights from our conversation and turned them into this article for easier accessibility, clarity & readability...Enjoy!
What’s your background? How did you get into tech?
I started getting into computers & IT in 1999 when internet first came to India. I got very fascinated about kind of information or kind of the stuff that we could do using the computers.
At that time programming was new, we started with C Programming and all those stuff and I was really fascinated because —
whatever we could think we could do code that stuff and see that happening on the screen.
So that was very fascinating. Then it kind of became my passion.
Later on after graduation, I got a job with multinational companies like HSBC and Barclays. And during that time I was exposed to various financial aspects financial domain as a whole.
What motivated you to start Profitbooks?
How Profitbooks started was — my brother is a chartered accountant and he had a lot of clients in the small business category.
One of his clients had offices in three parts of India, one was in South India, one was in Mumbai, and one was in Pune.
And for him, it was a nightmare to get the basic reports like sales report from all three locations.
His accountant used to spend three days just to get the sales reports or all those transferring reports from all three locations and consolidate and prepare a common report.
So at that time we thought, let’s solve this problem.
Let’s build something which is easy to use, that can capture invoices, sales transactions and make life of a businessman easy.
And it should be online so that the data is in sync all the time.
So if you have multiple locations, you don’t have to worry about what is there in stock or the product that you’re selling is in stock or not or how much my sales were at the end of day or at the end of month.
So we got together and built this custom solution for that company and it was a very successful implementation.
Then we thought if this is working for this customer, why not convert it into a product and reduce the price and make it available for wider audience.
And that’s how a project started.
What challenges did you face in the initial years?
Our application was predominantly an online accounting software.
And at that time there were a lot of challenges like mobile connectivity or internet connectivity was not that great, broadband speed was at maximum 2 MBPS.
And people used to prefer an offline accounting software.
Rather than explaining the features about our software, we had to assist them in getting an internet connection and telling them how online software is going to be the future.
We faced that challenge in 2012, 13 &14 and then things dramatically started improving after JIO came in. And that’s when the overall broadband penetration started.
In the beginning we faced a lot of challenges but the journey was very eventful.
And yes, it feels great.
Now things are a lot easier than they were in back in 2012.
Profitbooks VS other accounting softwares
I’m not from commerce background and I don’t understand all the technical aspects of accounting.
That’s why we wanted to create a software where people can manage their finances without any prior accounting knowledge.
Most business owners want to focus on generating more sales, they are not focused on maintaining day to day books or managing accounts.
When we started, Tally ERP9 was a dominant player.
The software is very flexible, very nice, feature rich but it is mostly designed for the accountants.
For example: if you deposited some amount of cash into your bank account, it’s a simple accounting entry, but in Tally it is not that simple.
You need to have that accounting knowledge, you need to know each accounting rule to record this entry correctly.
With Profitbooks, we made it super simple.
In profitbooks you just have a simple screen that says:
This is the bank account, this is the cash account and this is the deposit or withdrawal transaction. That’s it.
You don’t have to know about contra entries or about which account should be debited or which should be credited.
You just need to know plain English, that’s it.
That was the whole idea.
We present a very simple easy to understand interface to the business owner. And at the back end, the entire heavy lifting accounting is taken care of.
The unfulfilled gap in the accounting SaaS market
Anuj: What do you think that makes profit books and your team different from all the people who have tried to do what you were doing and failed miserably?
Harshal: The time we started there were not many accounting software’s though the major player Intuit QuickBooks they entered in the Indian market around 2014.
And that time also it was mainly a US based application brought into India. So it was missing a lot of Indian centric features.
It took them a couple of years to catch up with what Indian businesses want.
But another credible player came into the picture in the form of Zoho.
Zoho books was created from India and they totally understood what Indian users want. We see Zoho as a competitor.
But what we have noticed is that business owners, at the end of the day want simplicity, they don’t want features.
All those accounting softwares are stuffed with a lot of features.
If you open any accounting software, you’ll get totally confused.
We collect some anonymous data and based on the feedback that we get from customers we realized that only 20 to 30% of features are used 90% of the time.
You know, that Pareto principle (80/20)
What happens with the accounting software is you might have 100 features, but business owners care only about those 30 features that they use every day.
And we focus only on those 30 features.
So when you open Profitbooks you don’t feel scared, you feel at home.
You know what to do.
There is everything that business owner needs and nothing that they don’t need.
So that is what separates us.
How to manage customer feature requests
It’s not that we don’t get customers who ask for features, we do get a lot of inquiries and they tell us that we want this project management, they want this ERP some things and so we tell them that we are not going to complicate or blotter the application.
This is going to be as simple as it is right now.
And if you want more features you can go for other ERP based solutions.
And we politely tell them that this is not something that we do.
It helps us to focus more on a certain section of the Indian business owners who want this kind of solution.
This basically separates us from the other players who are chasing features, we choose customer success.
How important is customer feedback for profitbooks?
We are so passionate about customer feedback.
I still remember we used to go to expos and I personally used to meet 2000, 3000 people in a single day during those expos.
We used try to understand what they really want us to analyze what they the language that they speak, what features that they want.
It was interesting even inspirational to talk to those business owners understand their problem. And that’s how the whole application was shaped up.
We we did not build this application by looking at what Intuits or Zohos are doing in the world. We built the application based on what we heard from business owners (our customers)
What are your favorite hobbies outside of work?
Actually this is the hobby that had developed while working on profit books.
I got very passionate about online marketing.
When we started profit books, we didn’t have a lot of money to market the application. So I started learning marketing on my own.
I started reading about SEO and all those paid ads and all those things. And then I really got interested in that.
Even if even while I’m not doing, actually working on profit books, I still love to read about marketing, what is going on in that search engine optimization space?
All the technical aspects of it, that really fascinates me.
I keep reading books on that and I follow on Hubspot rigorously.
And there are employees or founders of a Hubspot that have written a lot of books on inbound marketing.
I keep reading those books, I follow their blogs.
And so marketing has become kind of my side project. I really love reading about marketing, sharing my knowledge about marketing.
Creating a valuable marketing course out of passion
I’m connected with a lot of entrepreneurs, and we do a very good job with respect to a search engine optimization and overall marketing.
Then I started learning about Facebook marketing because we tried to hire a few agencies and we did not get the desired results.
So I started to learn that on my own.
While learning I realized that there was a lot of technical stuff floating around and business owners don’t need that technical stuff.
All they want is to know how to put their product or services across their customers.
We started doing that and after some time a lot of my friends, they started asking me how did you do this?
Can you teach my team, how to set up Facebook ads and things like that.
And these requests started becoming very frequent.
So one day I decided:
“Okay, I will take a week off and at home I’ll just go ahead and start recording whatever I know”
And then I came up with this course.
Then there was one Institute they conducted a webinar and surprisingly, almost 200-250 people turned up for the webinar.
During that webinar, I talked about this course and what they should do with Facebook ads and how Facebook ads can help them market their product at a very minimum cost.
Everybody loved that.
And then they also got into this course and they loved the course.
So that is still there (link to the course)
I to be very honest, I still don’t know how to market, whether I’m going to market that course, but people are pushing me to create another course on email marketing or how we do onboarding and all the stuff related to SaaS.
So that is one area that I’m going to explore now.
I love sharing knowledge so maybe I’ll keep doing that.
People start businesses for wrong reasons
When I talk with my colleagues who are still in a job or are trying to quit their job and start a business and when I ask them —
Why do you want to quit your job and start a business? Or
Why do you want to start a business?
Their answers are not very encouraging.
They they tell me I want to start a business because I am fed up with my job, I want to be my own boss, or things like that or I’m not making enough money on my job so I want to earn a lot of money.
That’s why I want to quit my job and start a new business.
Then other reason is that my father is running this business, he has this jewelry shop or real estate business so I should also join him and start growing his business.
These are all very wrong reasons for starting a business.
And when these type of people start a new business, eventually they fail.
Multifold-consequences of a business failure
(Cont’d) And then that is very bad for the economy and bad for them.
Because when you create a business, you also create employment and when you shut down a business only you are not affected, a lot of other families are also affected.
Which is very bad.
And then again you invest five, seven, ten years into that business, so you lost you lost that time also. It’s a multi fold loss that happens.
That’s why I talk about success of a business depends on the person running the business and not exactly the type business.
Instead of looking at others, for example: this guy has opened up a new restaurant so I should also get into the restaurant business instead of that, you should try to find out:
- Do you really enjoy cooking?
- Do you really enjoy food?
- Do you really, really enjoy being surrounded by chefs or food?
If that fascinates you, then get into restaurant business.
If that doesn’t fascinate you, then don’t even think about it. It all depends on your area of interest and your passion.
If you’re not passionate about something, then eventually you will get bored with it because running a business is not an easy task.
Today, it sounds very fancy to run a startup but it’s very stressful…
And you need to have a very strong person to handle that stress.
Sometimes you don’t know how to deal with employees, sometimes you don’t know how to deal with your vendors or your customers so you need to be a very strong person to handle all these things.
We have seen difficult times when you have to shift offices, we had no place to place for our employees.
And sometimes the the cash flow was not great during initial years. And people used to leave the company, leaving the project in the middle.
There are so many challenges you’re not familiar with, and you’re not taught how to deal with them.
So your personality comes into the picture at the time.
And only if you’re passionate about that, only in that case, you face those challenges and look towards a solution.
Otherwise, you just move on and do nothing about this.
Example of a restaurant
Suppose you open up a restaurant and things are not working in initial two to three months.
And if you opened is only for making money.
What you will do is your business mind will tell you that this is not a profitable business, it doesn’t look good on spreadsheet, let’s move on, let’s sell this stuff and start another business.
But if you’re passionate about it you will face that challenge, you’ll talk to customers, get to the bottom of this situation like why people are not coming, why they don’t like your food, what is happening. You will try to solve those problems only because you are passionate.
Otherwise you will leave that thing early & quit.
Number one cause of failure is lack of persistence
I see this very often around me like we had a lot of blows in past few years, like there was demonetization then GST, all that stuff and now COVID’19.
People who are weaker, who are not passionate about their business, they shut down their business immediately (when challenges arise)
They don’t even cool off for six months. Six months is a very long period for them.
But the people who put their heart and soul into the business, they don’t care whether they’re making money or not.
They only care about providing their services to their customers and eventually they become successful.
The point I am trying to make is that if you have passion you will continue with that business and eventually that business will become successful.
And you will do justice with that business and provide quality services.
Otherwise you’ll be focused on money, and then profit and then margin and all those stuff.
Everything is a commodity, nothing is unique
(Cont’d) See in today’s market nothing is unique. Even if you go around, there are a lot of bakeries and restaurants out there. But out of those bakeries, there is one bakery that really sells very good cupcakes are pancakes, right?
Because the owner of that bakery is passionate about making them.
And that bakery of course makes a good business. Same with the restaurants.
In this competitive market, if you’re not passionate about it, if you’re not putting your heart behind your product or service, then eventually you’ll lose that edge.
And eventually you’ll play on pricing and then lower your pricing and eventually, you will get bored with it.
And at the end of the end of day, you’ll end up shutting down that business and losing all that money and time for yourself.
How can people find their passion?
There is no book that can teach you about passion and finding your purpose. There are a lot of books out there, okay.
But none of the books will tell you how to actually find your passion or actually find your purpose.
There is a very simple answer. And I’m sure that a lot of people will not like this answer because it doesn’t sound right.
But the only thing that helped me was trying out different things.
And when you try multiple things, one thing immediately clicks and you know that this is what I want.
That’s the only way to find your passion, nothing else.
No amount of books or no, no videos, online gyaan will help you find your purpose or passion.
Harshal’s personal definition of success
Personally defining success for me, it’s totally personal so for me — I get really high when I see that there are a lot of people that are impacted by whatever I have created, or my company has created.
Every morning, when I open our business dashboard, and I see 1000s of employees online using the application, I feel I get that different kind of high, I feel successful.
It doesn’t matter how much money I have in my bank account how many employees out there, it doesn’t matter and everything is enough.
Nothing matches that satisfaction of serving a lot of people, that satisfaction of creating something which is used by so many people.
That is success for me.
Why Profitbooks is totally free
(Cont’d) And after crossing 50,000 customers, we decided to make our application totally free so that more and more customers can use it.
We have other avenues to make money. We have other additions and other verticals where we make our money, but I really wanted to take this to as many people as we could.
That’s why to serve more people we made the basic version to totally free.