Nami Zarringhalam, Chairman Truecaller chats with Amit Somani, Managing Partner Prime Venture Partners.

Nami, Born in Tehran (Iran) and moved to Stockholm (Sweden) at the age of 3. Studied Computer Science (M.sc.) at Royal Institute of Technology (KTH). He is Chairman and co-founder of True Software Scandianvia AB and Truecaller, Truecaller is a leading search technology company that is transforming the phonebook with a set of intelligent and useful services. Truecaller was founded in 2009 and has offices in Stockholm, Bengaluru, Mumbai, Gurgaon and Nairobi.

Listen to the podcast to learn about:

01:40 Starting Truecaller with his friend Alan.

06:39 Lessons learned on solving problems

09:29 Finding investors

11:52 Nami on growth of Truecaller

14:57 Viral loops fueling the growth

18:55 Building customer empathy

23:27 Monetisation model

29:09 Nami's message to young entrepreneurs

Read the complete transcript below

Amit Somani 0:29

Welcome to the Prime Venture Partners podcast. We are really delighted to have with us today Nami, Co-founder and Chairman of Truecaller and I’m even more delighted that he’s chosen to dial in all the way from Sweden just a few days before he’s off for a few days off. So thank you Nami for coming on the Prime Venture Partners podcast.

Nami Zarringhalam 1:05

Thanks Amit. Thanks for having me. It’s a great pleasure.

Amit Somani 1:09

Yeah, Nami, so almost everybody knows about Truecaller. You have several hundred million monthly active users. In India, it’s a phenomenon. I have it on my phone. I’m pretty sure everybody else does, too. So maybe you can talk to us a little bit about some of the interesting inflection points in in building Truecaller over the last 10-12 years since you’ve been at the journey, some memorable incidents, perhaps maybe when you started, maybe along the way, maybe some early entry stories about getting into the India market. So that’ll be helpful for our listeners.

Nami Zarringhalam 1:40

Yeah, sure. So great to be here. I think maybe I’ll start with talking a bit more about how we got to start Truecaller but also the first kind of the journey in the first couple of years. Truecaller is actually the third company that me and my co-founder, Alan started. The first one, we built when we had just gotten our university degrees. And we were kind of moving out from our parents’ place, got our own apartments and stuff and wanted to buy furniture.

And we realized that there were a lot of furniture stores around in Sweden that had a lot of products they were online, but most people would just buy stuff from IKEA, etc. So we built this search engine that basically indexed all the furniture of different furniture sites, and did price comparisons and stuff like that, and then, would lead back to the businesses.

So that’s how we got started. While we were working on that as our evening project and all that my co founder, Alan was working at a startup which had very racist Co-founders, well at least two of them and they would continuously put Alan through a bunch of really negative stuff and say negative comments and stuff like that. And, we were brought up as immigrants in Sweden, we were thinking, if your employer says something, just shut up and take it, because, you might have to leave the country any day. So that was kind of the mentality that we had. And as Alan was complaining to me one evening, he was explaining what they did and what they said, We had the idea of building something where the employees could review their employers, and this was back in 2007. I think it was before Glassdoor and all that stuff. So we built it as a kind of side project to the side project.

And a couple months later, that company got acquired. We got a random email from someone who said he had a grand vision for it, and he wanted to acquire it. So we got a small amount of money that we used to buy our first smartphones and a server. And once we had these smartphones, we were always kind of tech geeks and smartphone or mobile phone geeks. But the fact that you could develop for these phones really opened our eyes and as another fix to our own problems. So the first problem was that we wanted to buy furniture, so we built a service for it. The second one was that we had complaints about the employer, so we built a service for it.

And then the third one was that we were getting spam calls and calls from unidentified numbers. And so we built a service for it. Now, the interesting thing about that was that the first two projects maybe had between 2k to 50k unique visitors per day. And Truecaller within the first week of launch had over 100,000 downloads, and this was, before the App Store, so you had to download the CAD file for Windows Mobile, you’d have to sideload it into the phone and all that stuff. So we built Truecaller, and noticed that it was kind of a global problem. And that’s when we decided we would just stop doing anything, everything else and focus on Truecaller, because it seemed to be the project that was actually successful and needed by more people than us more people than existed in Sweden.

Amit Somani 5:49

Very fascinating. And given that it’s your third company I did know about your job review company and you got a very quick early exit. I don’t know about the Interior furniture. But I’m sure now lots of young entrepreneurs come to you for mentoring and other advice. So how do you think about just discovering ideas that have customer potential? Have you learned any lessons along the way? And I’m sure Truecaller itself has launched so many more things, right.

Last year you launched payments, you guys have entered the other markets. Of course, if you get 100,000 downloads in a week, 10 years ago you know that. But have you learned anything around or any kind of insights around figuring out, what are interesting customer problems or consumer problems to solve? Or you just experiment a lot?

Nami Zarringhalam 6:39

I think the way we approached it back then was naively that we’ll keep building and we’ll keep doing whatever we’re doing, and we’ll be open to experimenting a lot. And then whatever works but at that point of time, I should also mention that our motivation was not to build Initially a big kind of an enterprise or a big company or whatever.

Well, our motivation was actually that we both had. And this is one of the things that me and Alan connected deeply on, which was that, we both had parents, especially mothers that worked really, really hard when they came to Sweden. And we wanted to give them the opportunity to work because they want to not because they need to, that was our motivation. It wasn’t necessarily about building something fantastic. It wasn’t about the money per se, because it wasn’t for us. It was for something else. You know, we experimented a lot. We didn’t really know what we wanted to accomplish, and should mention also we were studying at university at the Royal Institute of Technology in Stockholm. And while it’s a known and good university in Stockholm, it has its own silos and majority of the entrepreneurs you see in Sweden, they either come from that university or University of Economics in Stockholm.

So and they are majority of the entrepreneurs from there that you’ve seen in successful companies like Lorna, the payments company, or Spotify, Daniel Ek etc, they have in common that they were largely, Swedish origin and entrepreneurs and they hung out in the same group of people like they kind of knew each other. Me and Alan, we were different. We were two guys that were kind of the record for everything else. While that was great for us, in that we found that friendship, it was also difficult for us when we were raising capital, because no one knew us there was no way to get references on us and it was difficult to raise money, knowing that there were so many other entrepreneurs that you could back that where you could get those references and where you could kind of do peer reviews or checks and like they were known in the entrepreneurial kind of ecosystem.

So we were kind of off radar a lot. And I think while that helped us in keeping our heads down and building and doing a lot of cool stuff. It was negative from the perspective of being able to raise capital and those kinds of things.

Amit Somani 9:29

Fascinating. So what was the turning point? Often when we are advising young entrepreneurs who want to fundraise, you can either tell a story and be a very charming, charismatic, visible person and in your metaphor, like be connected, or you can have a great product or you can have great metrics. All of those work to find these things. So what was the turning point? Or was it just traction and a great product that got you noticed eventually or that got you to your first check? Like the first institutional check?

Nami Zarringhalam 10:00

I think not only when it came to the first angel investors, but also to the first institutional checks, etc. And even some of the subsequent ones, I think the biggest reason why we were able to raise capital was mainly because of the numbers. The fact that we could basically go home and we would continue to add users because we were not spending money on user acquisition.

We had the growth coming organically that we were blessed with that many companies fight for from a different perspective. Obviously, we fought for it as well and fought to grow it even further. But in terms of some of the other pain points that other entrepreneurs have, when it comes to growth, we didn’t need to struggle for that part. That part we got through the product that we just kept iterating etc and we kept showing the numbers for it as well, like retention went up and all these things. So I think it was a blessing in disguise in some way.

Amit Somani 11:10

Sounds great. So, that just triggered another question for me Nami, which is, often people talk about this virality factor and k factor, right? And how much for every user that’s on the system, how many more users do they get and retain? And inherently, I would think your product is highly viral, highly word of mouth driven, right? Because as soon as I see the benefit from it, I can share it with somebody else. Did you ever compare yourself to the likes of WhatsApp or Spotify or others, which had a virality coefficient? Was there a conscious effort to try to work on that, or it was just inherently viral and word of mouth driven, then you kind of just continued to build a great product and it grew.

Nami Zarringhalam 11:52

No, we did work on that a lot. And I think as the first year or two passed, the way of the initial days of Truecaller, our ambition level grew tenfold. So then we needed to live up to our own expectations. And I remember very clearly this was back in maybe 2011 or so we were having some 5000 downloads per day.

And this was, back in the day when you were looking at downloads, you weren’t looking at DAUs, MAUs or retention or stuff. It was downloads, that was a big thing. We’re having some 5000 downloads per day. And WhatsApp did a press release that said that they had 50,000 downloads per day. And I was thinking the day when we reach 50,000 it’s going to be such a fantastic day and we can compare and then you know, a year later, we did have 50,000 downloads per day, but I didn’t even think about it like it didn’t even register until we reached hundred thousand. Oh, yeah, we passed the 50,000. So it’s weird how that target moves, and you become partially blind to the success and just look for the next growth opportunity.

So there was a lot of fighting for growth and making sure like me and Alan would look at the log tables and figure out in which countries, which prefixes to carriers, users were signing on to that were failing, so that we could find a better OTP provider to onboard the customers that were failing. And these are some mistakes that I see a lot of entrepreneurs today, they just take these things for granted. They don’t necessarily look at this stuff like oh! it’s just 20 users from this obscure carrier in Nigeria, but we really, really cared about every part of those details and we dug into them, and we really tried to solve each and every part of those friction points and create efficiency in the boarding and utility of Truecaller and all those things, which is kind of what I think drove the virality of it as well that you kind of didn’t have to do anything for Truecaller to work for you. We didn’t just remove friction, we made it work for you in a preemptive way that I think gave us a lot of that virality.

Amit Somani 14:31

So, actually, you’ve seen all these viral loops, right? So Twitter used to have this thing that when you get 30 followers, the exponential kicks in Facebook used to have a thing that once you post 10 photos or make seven friends on Facebook, talking back in the, late 2008-9-10 era, were there early loops that were there in your case that accelerated the journey or any anecdotal things that you remember.

Nami Zarringhalam 14:57

Yeah, during our company onboarding whenever we have new employees, I always talk about this. So I’m glad you brought it up. We did see a viral loop for us, which was basically if you make 10 searches, how many of those searches do we return an accurate response to. And the first time we noticed this was by the end of 2011, when we had amazing growth in Lebanon. And we couldn’t figure out why Lebanon because we didn’t have any connections to Lebanon, we didn’t know anyone in Lebanon, there was no reason why Lebanon was growing so strongly. And it was an unknown market for Android or iOS phones or Symbian, whatever. Like it wasn’t just a no market for mobile apps like that. And what we noticed was that we started to look at a bunch of KPIs that we were tracking and we were kind of overlaying them on top of each other, looking at the historic growth and looking at what could be the cause of this and where was the inflection endpoints and we noticed that there was two different inflection points.

One was when we returned a certain number of names to phone numbers, then we would move from having one to two star reviews to having three to four star reviews. And another one, which was a much higher number where we started to move to four to five star reviews. So basically, at the end of the check, we thought that we had a theory.

And we started to experiment on another market. If you look at today, like our hit rates, as we call it, like the number of successful name responses that we give to a search, Lebanon is still number one for us. We have like some 97% hit rate and the second market is Jordan, which is where we spent about 2000 Euros which was our full marketing budget for 2012. We spent that on Jordan to see if we could accomplish the same kind of, or if it was that hit rate that was causing this. So with that in mind, we were super happy. We thought, we’ve figured out a way to create growth. Now it’s just up to us to raise money to make sure we spend that money so that we acquire those users and we create growth globally.

And while that didn’t necessarily happen as I thought it would. The main reason being that it was really hard for us to raise money back then, I mean, 2012, this was when emerging markets were not a thing. It was not important. Like we went and spoke to every investor in Europe, and even some in the US. And all of them said, When are you going to grow in the US? I don’t care about the Middle East, whatever you’re doing there doesn’t matter. You come back to us when you have growth in the UK or US that’s what we care about. So we had a really difficult time raising money with that. But then, again lucky string of events happened, which led up to India growing organically. And so the next time it wasn’t that we were looking to raise money, it was actually Sequoia India calling us and saying, hey, guys, take our money. So it is kind of an odd turn of events.

Amit Somani 18:23

Fascinating. I want to go back to Lebanon, Jordan, and now the India story. And the question I have from a lot of entrepreneurs, like how do you build customer empathy for customers that are sitting so far away? You’re an immigrant into Sweden, doing your current startup now your users in probably like 100 plus countries, including Lebanon, Jordan, and India. So can you talk a little bit about that and an ongoing basis, not just in the early days. How do you build products for Indian users or users in Jordan or all other parts of the world?

Nami Zarringhalam 18:55

Yeah. So initially when Sequoia flew over to Sweden, they asked us how often do you guys travel to India and we’re like, we have never been there. I think they were actually a bit afraid of investing because of that, that was kind of a turn off. We didn’t know anything, but they asked the same question. And the only thing that we could do was diligently going through all the logs, making sure that we’d speak to customers and we perfect the product as much as we could. And that was kind of our contribution to it by speaking to customers, reading reviews, or contacting the customers doing one on ones with them phone calls, speaking to them, etc.

But then later on, that started to evolve, of course, we started to go back and forth to India quite a lot. And between the years 2013 and up until, recent times with COVID, etc. I lost track of the number of times that I fly to India, but it’s probably like every two to three months that I’ve been there. And when I go there. I don’t generally speak to users who are tech savvy. I mean, they might be tech savvy, but not necessarily working in tech is what I mean.

So for instance, the cab driver to and from the airport, person working in the reception area in the hotel, just really random people, in the market, like we go to the these stores, small stores that sell phones, like sell smartphones, and we asked them, like, how do you which apps do you recommend? Why do you recommend them? What does this solve? Why do you do this, etc. So all those things we’ve kind of been doing and there’s been a lot of fantastic input coming from there. On our first trip to India, we asked the cab driver if he used Truecaller and we asked him what do you not like about Truecaller? And this is another thing a lot of entrepreneurs like to ask, what do you think of the product and open ended questions like that? I don’t think that they’re useful. The question that you should care about is what doesn’t work for you? Why do you not like the product? Or is there some even if you like the product, what is it in it that you don’t like? What can we improve? And so this cab driver, he told us yeah, if there’s one thing I have to complain about, it would be the fact that you guys blocked some calls that I want to have. And we’re like, oh, that’s odd.

Can you share a bit more insights about what kind of calls that is. He gave an example, where he had applied for a credit card, and the bank called him to tell him that he has been approved to get that credit card. However, that call got blocked from truecaller. And he said, I understand why it’s blocked because the majority of people don’t get the credit card and they get pissed off and they mark it as spam and they move on. But it affects my ability to get this when you are blocking the call. So eventually, I called the bank and I told them, Hey, what happened to my application? They said, Yeah, you’ve got it, but you didn’t answer our call.

So, we immediately picked up the phone, called the team back in Stockholm and told them that you guys need to disable auto blocking, it has to be an opt in for users. We have to always give the user information and allow them to make the smart decisions themselves. And if they want to have auto blocking, they can, but they should opt into it themselves. And so these kinds of questions are usually what we ask. And we’ve tried to instill it into the organization to do that, more of that, and over time, now we have more than 120 employees in India and about 100 in Sweden. So it’s actually a larger organization in India. And up until 2016 we barely had any people in India like we had, some sales, some marketing and some BD and stuff, but it was a very small org. It wasn’t until we decided that we wanted to build the product specifically for India, which happened then at the end of 2016. We said, now, you know, global growth is great. But India is like the motherland. And we have to keep doing that. And that’s when we started to build org in India and try to instill into them the same kind of product thinking. So for us, it’s build for India first.

Amit Somani 23:27

That is really heartening to hear. I switch gears as before we wrap up here and Nami and talk about one of the other things I’m sure you’ve heard a lot about, certainly from investor types, is monetization. And this is true for a lot of utilitarian apps where you have a lot of usage, but either there is just ads as a monetization, or there’s no obvious monetization angle, but the app is very, very useful and very helpful. How did that journey kind of go about both in your mind as an entrepreneur and along the way, maybe the last five, seven years on the monetizing bit.

Nami Zarringhalam 24:00

We started to monetize the app back in 2013. Actually, right before Sequoia did the investment and the reason we started to do that was because we couldn’t raise money. As I mentioned before, like we couldn’t raise money. So we started to do ads, and we started to do a monthly subscription fee thing. And back then, the ads were interstitials, they were the type that would pop up in your face on top of everything else, and those kinds of things. Because we were really in need of monetizing, I think the positive thing that came out of that was the confidence that we can monetize. Maybe not in this manner that we did back then. But the confidence was there that we know that we can monetize and we actually almost broke even in just four months that we started to monetize.

And during that period, we reached some 82% to break even. So we would have definitely been able to continue that. But, again, the reason why we wanted to take in money was to accelerate the growth even further. So we decided to scale that back then at the end of 2015, we restarted that engagement. And first off came ads monetization because we had confidence that we can do this. And we have a good set of large amount of users, and we have a large amount of engagement and so on. So we can monetize this. But then that’s always kind of the first thing and I don’t think that it’s always necessarily the right thing for all entrepreneurs to go in ads. Proof of that is now in the last three months with COVID-19, ads spends has plummeted and I’m sure a lot of companies are seeing that a lot of companies have stopped spending even if they don’t have necessarily ads for monetization.

We started about two years back to diversify our revenues as well. The next thing that we did was again, because we had confidence in it was to do subscriptions, so that our subscription business has grown tremendously and is very successful. And it’s the thing that kind of held the ship together during this huge kind of downturn that we experienced on the ads. So if you have that time or the luxury of diversifying your revenue streams, I would definitely recommend that and we’re doing that even more like within FinTech, some other areas as well, small businesses, etc. So we’re really investing in these things, and it’s things that we’ve always wanted to do, but just didn’t have, capacity to do.

Amit Somani 26:48

One last question on this. When you said, as soon as you started monetizing, you got close to break even. Was that because you were always growing organically and not spending on marketing and it was mostly just engineering and whatever, cloud and other costs, were you always kind of just frugal and no marketing because otherwise, that is the biggest challenge, right?

Nami Zarringhalam 27:10

Unfortunately, I don’t have a comparison in terms of how other companies manage their spend versus their revenues. But we didn’t have any costs associated with acquiring users. So that was obviously a luxury for us. But at the same time, we were always very frugal and the team back in 2013 we were 20-25 people, so huge costs that needed to be covered either. And even with those 20-25 people, we used to have some 20-30 million MAUs.

So we were in a good place, I would say but that was because we had that product market fit obviously. I think, I have experience from two products that failed and they didn’t have that product market fit or like I think in reality like even though the problem like our problem was solved, and we were happy about that, our passion wasn’t there for those products like loved about Truecaller was the fact that it was on mobile like first day me and Alan met in university and we became friends was because he had a smartphone, I have a smartphone, he walked up to me, I had a Windows Mobile smartphone, he walked up to me and he said, I have this Nokia One, can I try yours? And, you know, we started to talk about that stuff. And then we became friends. We were always very passionate about that area. And so we got to spend time on that thing. And I think that was part of the reason why we were more successful in that product. So it kind of came from the heart as well.

Amit Somani 28:42

That’s clear, both the stories about your parents and particularly your mom, that purpose was way bigger than just this thing and then the passion for the product and the passion for mobile came across very well. So one last question. Nami I think we’ve gone a little bit over here, which is if you had to give some advice to the Nami of 2010 or 2009, or any young entrepreneur today, what are one or two things that you would recommend beyond what we’ve already talked about?

Nami Zarringhalam 29:09

I think one would be, you know you can feel it almost in your heart when you’re working on something that you’re really passionate about. Just be true to yourself about that part. The second part is that as you are successful, and you keep building these things, your relationship with your investors and shareholder agreement, like all the stuff that you initially may not care that much about, or you may think that you don’t know enough about so you’ll let other people like lawyers or whoever take care of those things they become increasingly important. I’m not saying that you should necessarily dive deep into that stuff from the beginning. But if you have the capacity, then I definitely think it’s worth doing that. Especially if you feel like you’re on the right track and raising money etc. I think that’s worth spending time on. Because it also makes you smarter. And it gives a lot more confidence both to the investors actually hearing you talk about these things, but also to yourself in terms of the business that you’re building.

Amit Somani 30:16

That’s a fantastic highlight to end on, be true to your true calling. Thank you so much Nami. This has been great. I really appreciate you being on the prime Venture Partners podcast, and I’m sure our listeners will as well. Thanks again.

Nami Zarringhalam 30:31

Thanks, Amit

 

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