The vision to grow big propelled PeopleStrong to do many things differently. They enjoyed thefirst mover's advantage and were open to inviting external investors from day one
When you are driven by the pursuit of excellence to the extent, that on day 1, you are clear that you want to build a business that is IPO-able, you know you are on the right track. The journey of only 6 years has seen PeopleStrong witness the realm of business ups and downs, from raising fund on day 1 to the tune of 50 lakh, to repeating the same over 4 times, to even considering a close-down at some time and today, standing strong as a business and fast growing.
Unlike most entrepreneurial ventures, PeopleStrong is unique in the sense that it was started by two individuals who have very different personalities and professional acumen. Perchance, their difference is what acted as a reality check at each point, enabling them to successfully stir away from what would otherwise disrupt the creation of a scalable business. Pankaj Bansal and Shelly Singh had a collective industry experience of almost 14 years when they started PeopleStrong. Pankaj drifted away from his successful stint at Hughes Software first, to join hands with Varun Talwar’s then newfound incubator ‘Withya’ to learn the ways of entrepreneurship. And even as Varun and Pankaj deliberated upon the idea of starting the company, Shelly landed up lock, stock & barrel having quit her consulting job at Hewitt Associates. While Pankaj had the right eye on the idea, marketing and strategy, Shelly’s operational excellence was able to create the required initial base for the business.
The duo studied the US market to understand what the scalable businesses in the HR space were and reflected the same on India by meeting with 40 HR heads even before they began the business. As Pankaj said, “We wanted to understand the market gap before boiling down on our service offer.” The feedback from the 40 HR heads pointed out to all HR functions’ common distress over HR operational issues which strengthened their objective to start the first HRO service provider business in India. The market need identification was so strong that the idea was able to attract angel investors from day 1.
The vision to grow big was a critical reason why PeopleStrong did many things differently than other entrepreneurs. They did not approach the markets in the first 2 months and instead, invested the time in creating process maps to provide clients HRO solutions to do things faster, better and cheaper. Being a new business idea, while they had to spend time explaining the need for their service to client organizations, they also enjoyed the first mover’s advantage. Being highly focused on building a large company, Pankaj and Shelly were open to allowing external parties to invest. This willingness and openness to share wealth from the very beginning, helped them to raise money to grow the business fast. From the 50 lakh they raised on day 1, the second round of investment was of 2 crores when they first moved out of Withya’s incubator and moved into their first office with 37 employees, which was inaugurated by Raman Roy.
Then in November 2008, PeopleStrong’s angel investors helped the company raise funds to the tune of 10 crores, which was the next push towards living the initial dream of creating a large company. More than the financial support, what Pankaj and Shelly were able to leverage the most, was the emotional and sweat equity. The conviction of the angel investors saw them investing not only financially, but equally in terms of the amount of time and thought investment of each one to help the business scale.
They got their first client within the first 6 months – LPC was a UK based company that was setting up its back office in India then. While it took 45 days to close the deal and at rock bottom price, it was their first annuity client that had outsourced the complete HRO process to PeopleStrong, and remain their client to date. Being a new business idea, they faced difficulty convincing HR heads of the value they could deliver, until they signed up with Nokia and Microsoft, which set the ball rolling.
PeopleStrong’s executive team that includes Pankaj Bansal, Shelly Singh, Devashish Sharma, Kiran Kumar, Rajesh Batra, Naveen Gupta and Vishal Saha, played a vital role in taking the organization to the next level. As the business grew, they needed to hire more people, and PeopleStrong focused on hiring for the values it stood for – genuinity, ownership, velocity and flexibility (GOVF) – the values they believed were critical for a start-up business. Their good reference in the market was able to attract the right talent. Also, having their ESOPs and compensation plans well-defined from the very beginning also helped attract good people, and when hiring, they strived to connect the candidate’s dream to their own dream. Most importantly, their decisions truly reflected their initial values (GOVF). Shelly shared the enthusiasm of one of their first employee – Anubhab – who was Pankaj’s mentee at MDI and was willing to opt out of campus placements to join a start-up. He was so passionate that he worked with PeopleStrong for 3 months without any pay and wanted to continue. But Pankaj and Shelly dissuaded him as being a fresh MBA, it was too much risk for him to join a start-up when he had the option of better opportunities. So, Anubhab went on to sit for campus placements and joined TATA Motors, but came back to PeopleStrong and is today one of the top sales persons in the company. In fact, the PeopleStrong-Club 5 has 7 members who have stayed with the organization for more than 5 years, which reflects the strong belief and passion that the initial team had on the business.
These initial values were critical in enabling the company to take decisions that were aligned to their objective. These values were also instrumental in bringing on board the right advisors who steered the company from its initial days. This was another unique aspect of PeopleStrong to engage industry experts in their business decisions from the very beginning and leverage on their collective strength. As the company began to scale, the initial values – GOVF – went through a revision in 2008, to emerge as a new set of values that also incorporated how external facing customers and vendors view PeopleStrong. As Shelly affirmed, “We have always been over obsessed with our values and that has worked out very well for us.” The values that drive the business today are integrity, passion, innovation and efficiency, which together lead to ‘excellence’ in everything they endeavor.
Unlike most entrepreneurial ventures, PeopleStrong had the advantage of the duo as it gave them added bandwidth. While Pankaj stayed focused on HR, marketing, infrastructure and investment, Shelly concentrated on delivery, taking care of operations, sales and even calling, if required, in the initial days.
In spite of being a start-up, they operated with the mindset of a large organization from the very beginning and that worked well for PeopleStrong in growing fast. Their focus on management off-sites were able to create a culture of co-creation where the executive team discussed and defined their goals jointly.
However, despite doing everything right, PeopleStrong felt a hit in December 2009, when they realized they had committed mistakes that could lead them to a close down. This was around the time the business had raised funds to the tune of 10 crores. They decided to invest the money on people, technology & infrastructure, in anticipation of payoffs, but instead were faced with recession. Recession, coupled with a committed investment on a new practice – RPO – without an immediate market to sell, was like a suicide mission at that time. At the same time, the company focused on hiring senior management members from the industry.
While the market coming back was a boon, the original value ingredients were reason for PeopleStrong’s turnaround which forced them to revisit their decisions, and restructure the Board. They trimmed their team and today, everyone at PeopleStrong including the internal HR team is billable and everyone is accountable for revenue. The new values that aimed at ‘excellence’ in everything they undertook, led the company to overachieve its 2009 -10 targets by 120 percent when the company bounced back in 2011.The recent acquisition of Summit HR in April 2011 added another wing to PeopleStrong’s flight, taking them closer to the very reason of their existence – to create a large organization that is IPO-able!
So, have these young and new entrepreneurs made it yet? In most senses – yes they have for sure. But Pankaj and Shelly are humble enough to admit that they are perhaps still 3 years away from their initial dream of becoming IPO-able. For an IPO, the critical factors are revenue, profitability and brand value. While they have certainly done well with respect to revenue and brand value, however, at the current stage, profitability has not reached the mark, simply because between growth and profitability, PeopleStrong has chosen to grow and therefore, there will be more investments in the near future.