Select excerpts from Subscribed Podcast with Sandeep Jain, Founder & CEO of Leela Labs.
Sandeep Jain is the Founder & CEO of Leela Labs which has built a podcast search platform, and Leela Kids, the world’s first kids podcast app. Sandeep also just launched his own podcast show around Customer Support.
Prior to launching Leela Labs, Sandeep worked in Engineering, Product Management and Business Development with leading tech companies such as Cisco, Palo Alto Networks, Juniper Networks, InMobi and Microsoft.
We talk to Sandeep about the ongoing transition to “as-a-service” business models, customer support, and his recent Medium article on “the next $10 billion opportunity in enterprise IT.”
Tell us a little about Leela Labs, the Leela Kids podcast app, and the main reasons you decided to start your company.
I believe the way we consume information is broken. When you go to Google to look for information, the [search] engine returns websites. You have to then figure out what information from these websites is relevant to me.
Where I was going with Leela Labs was to see if you can create a digital concierge that returns the information, irrespective of format. I also believe that audio is the most natural way of asking and consuming information.
What made you write your Medium piece, “Why has Quote to Cash become a complex problem and why has nobody been able to fix it meaningfully?” And what did you find out?
I wanted to build a billion-dollar business and I was exploring different markets. The market I was looking at was business-to-business customer support. I was told by somebody that their subscription billing was broken. I looked at billing vendors and then I realized, hang on, you guys don’t exist in isolation. There is something that comes before you, which is the CPQ system (configuration, price, quote). And then I realized, this conversation doesn’t stop there. This entire journey from CRM to ERP is called “quote to cash.” It was kind of serendipitous how I came to quote to cash, but it was like peeling one layer of an onion at a time because I didn’t find too much information online in terms of blogs where people are explaining it from a vendor-neutral perspective. So it was kind of interesting to get this information, and I thought I’ll just put this on a Medium article.
We often see that companies try to manage their Q2C processes within their two main systems, CRM and ERP, but that doesn’t work for subscription businesses. Your observation was that for subscription or consumption-based businesses, this model tends to fail or to at least require massive customization. We kind of share that view. At Zuora we talk about having a third cloud between CRM and ERP. You called it an enterprise monetization platform. Can you elaborate on that?
I see CRM as a system of record for customer information. I see ERP as a system of record for your financial transactions like a ledger. The challenge is that the existing CRM and ERP systems companies are using are not subscription-oriented.
I think it’s going to be hardest to re-architect an existing ERP system and make it subscription-ready. It needs to have your product catalog, your pricing engine and an ability to create these dynamic bundles. From my research, I was told that it takes companies, and I’m talking about billion dollar companies here, it takes them around 30 days to create a new SKU. And this is from when a sales guy says, “I’m willing to make a sale at that point.” So this process of creating SKUs, needs to be done in hours, not in weeks or months. I believe a next-generation ERP should allow you to grow your revenue, not just manage your revenue.
So in the near term, I do think that there is this third component that needs to be introduced. I call it EMP, or enterprise monetization platform.
The traditional way of thinking was, there needs to be a CPQ system, there needs to be a billing system, there needs to be an ERP system. To really solve this for enterprises, somebody needs to take a look at these three problems simultaneously. I think this needs serious investment.
We’ve heard a lot of this kind of thing from companies we work with – that relying on CRM and ERP presents difficulties with things like handling amendments or other changes to orders over time, for example. Tell us a little more about what you learned here.
In terms of the problems that the companies have to deal with, the first was that they do not handle amendments very well. It was a one-way street. You do the coding, do the sales order, and that is recorded in the ERP. But subscriptions change this thing and that workflow is not designed to handle those amendments.
The second thing I heard was around scalability. So if you’re selling, depending on how complex your product is, I was told that, if your number of lines in your configuration exceeds as few as even 200, your system starts breaking. And I kind of found it hard to believe, but there is a scalability problem in the systems that exist.
And the third problem was extensibility. It was kind of unique and everybody said the same thing – because our business processes are so different, no one product can do everything that we ask for. But as long as the product does around 40%, we are willing to do the 60% work ourselves as long as it is easy to extend that system.
What would you say were the two key takeaways from the research you did for enterprises struggling with this problem? And for vendors, like Zuora, out there trying to help solve it? What should we do more of and what should we avoid doing?
I do believe that quote to cash is a strategic differentiator because that’s how companies make money and that’s how companies make it easier, or difficult, to do business with them. What I would recommend to enterprises or IT teams is that there needs to be one quote to cash team responsible for CPQ, billing, everything. One team does that. So that’s number one. Number two is, they need to treat the quote to cash as their own product. It’s not a thing on the side that enables you to do your business. You need to hire the best people in terms of architecting that for you.
As for takeaways for vendors, I think it’s, once again the same thing. There needs to be, call it an operating system team, which manages the pricing catalog, product catalog, or the pricing engine, and the CPQ. Number two is, don’t try to be everything for everyone. I think vendors need to have one laser focus and one vertical. The third point is, I see most vendors starting from mid-market because that’s where it’s easy to get to customers, and then moving up into the enterprise. I feel that if a company wants to move from one way to another, it needs serious thought about how the product is going to work. It’s not about adding five things that enterprises need.
For more on all things subscriptions, check out previous episodes of the Subscribed Podcast here