Aakrit Vaish, co-founder and CEO of conversational Artificial Intelligence (AI) startup Haptik, has kept away from the media over the last two-three years. This seemed strange, given that the startup has been part of the Mukesh Ambani-owned Jio Platforms for over three years. “We were not sharing much about our journey. But now we believe this is a good time to start talking about what we have accomplished,” admits a relaxed Vaish, 36.
He has good reason to sit back and enjoy his success. In April 2019, Jio Platforms announced it was buying an 87% stake in his startup for $100 million (around ₹780 crore now). The deal made many industry observers sit up and take note for a couple of reasons. The first was the way Jio Platforms was breaking out of the mould of telecom services provider. Second, the deal heralded the coming of age of conversational AI in India.
For Vaish, it marked the close of a six-year period of “struggle and experimentation” to make his product a “market fit”. Building an AI-powered automated chatbot that can also make money has been an uphill task for Haptik. “When we started out in 2013, the timing of the idea was wrong,” says Vaish. The idea was that chatbots could perform all the tasks that assistants, concierges and customer care staff could. “People had great expectations but the technology was not quite there,” he adds. But Vaish and his team never lost sight of their core mission “despite pressure on us to pivot and even dabble in areas like e-commerce”.
What helped was Vaish’s familiarity with the struggles associated with entrepreneurship. His father was a serial entrepreneur who had dabbled in everything from steel to textiles. “Hence, I grew up in an environment that was constantly entrepreneurial but also familiar with struggle,” says Vaish nonchalantly. His parents “chose to make their biggest investment when they wrote their biggest-ever cheque” to send Vaish to the US for undergraduate studies. He did industrial engineering from the University of Illinois Urbana-Champaign.
Once he graduated, he got a job with Deloitte in San Francisco but soon realised that “the consulting stuff was not made for me. So, within six months, I started looking for something else”. Vaish’s life changed when he joined a listed startup in San Francisco, in the space of mobile advertising and mobile analytics. “I joined as employee No.20 and those two-and-a-half years that I spent there were my startup education—how to grow a business, how to become a leader, how to run a team, etc.,” he recalls.
It was at this point that Vaish roped in his “college buddy”. “He (Swapan Rajdev, a co-founder and chief technology officer at Haptik) studied computer engineering. We got together and decided to make it big by starting Haptik.”
That was easier said than done. Haptik had to go through many iterations in its business model. From 2013-17, for instance, Vaish and his team were trying to build a direct-to-consumer (D2C) mobile assistant chatbot. “You had the Haptik app. You could download the app and get a concierge or butler service. We did that for four years, and raised about $15 million between Kalaari Capital and Times Internet,” says Vaish.
Somewhere in 2017, though, they learnt that “sometimes products are a vitamin but not a painkiller”. Vaish reasons that while search engines and social media sites existed before Google and Facebook made it big, these two succeeded because they “made it a lot better and easier to access and create the consumer distribution”. In Haptik’s case, there was no distribution platform on which to build conversational AI or chatbots. So, Haptik began building an app and organising its own distribution.
It was challenging. “People’s expectations were very high from the chatbot—this is my butler, my Alfred, my assistant, my everything. Look, it can do everything for me—I can order food. I can order groceries. I can book a flight. Unfortunately, that was not the case back then. And it is still not the case,” says Vaish. Moreover, they knew fully well that tasks like ordering food, groceries or paying bills could be done on a normal mobile app or website— so the Haptik app was “not a must-have”.
They continued experimenting in phase 2. “We experimented with a business-to-business (B2b) chatbot, a conversational advertising chatbot, and also a content app,” he recalls. The third phase began when the B2B chatbot idea seemed to click. “We have since been building a B2B SaaS (software-as-a-service) platform for conversational AI,” says Vaish.
By early 2019, Haptik had about 10 customers, giving them hope that the idea “has legs”. Money, however, was drying up. The Haptik leadership “thought of value recapitalisation (restructuring a company’s debt and equity ratio); bring in a PE (private equity) player on board; or have a large corporate acquire our business,” recalls Vaish.
Jio was not on their mind. In March 2018, however, Reliance Industries Ltd (RIL) acquired music company Saavn, signalling its transformation from a telco to an entertainment, software and internet services company. Even then, Vaish did not see much synergy with Jio. But in June 2018, when Jio acquired AI edtech Embibe, Vaish realised RIL was committed to diversifying in the internet space and would be the apt strategic partner.
Reaching out to it, though, was a challenge. A determined Vaish pulled out all the stops. “It took a month or so to make it (the introductions) happen. When we met them, we simply told them that you (Jio) want to become an internet company and we have great technology to make that happen. The chairman’s office and key persons at Jio gave us a lot of confidence. Besides, they were very gracious in terms of the commercials too, besides being very open to all our ideas,” recalls Vaish.
The funding has helped Haptik acquire firms and grow. It bought Buzzo.ai—a Mumbai-based conversational commerce startup—in September 2019 and acqui-hired the founding team of Los Angeles-based AI startup Convrg in July 2019. Vaish maintains Jio gives Haptik the right “amount of autonomy, freedom to do things.... We meet them (the Jio board) roughly three-four times a year. They reiterate at every single meeting that you guys know this business—we are merely here to support you. That has been the most refreshing part of this relationship.”
Haptik, which now provides AI chatbots that can automate customer conversations on the internet, in apps, and on social media channels like WhatsApp, Instagram and Facebook, also got a boost with the Facebook investment in Jio in 2020. Haptik, he says, has “entirely built the JioMart-WhatsApp experience. Later, we were the ones who drove the entire experience of how the shopping on JioMart within WhatsApp would look like, etc”.
Since Jio also has a large enterprise sales team in India and other countries that engages in enterprise solutions like fixed line broadband, etc., Haptik’s products can now be bundled. There is no need, then, to build a sales team. And on the infrastructure side, “when it comes to things like cloud hosting with Azure, you get very good support and competitive pricing because of their (Jio’s) scale and leverage”, Vaish explains.
Having tasted success, Haptik is now entering “phase 4, which I call the ‘scale-up phase’”, says Vaish. Currently, close to 300 brands across 12 countries subscribe to its service. About 50% of its revenue comes from India, 25% from the US and the remaining from other parts of the world. Part of the Reliance Group, Haptik is now a deemed listed company, or a private firm that is a subsidiary of a public one. “We are hoping to surpass $25 million in ARR (annual recurring revenue) by end of March 2023,” insists Vaish, adding that the company is “targeting $1 billion over the next five-seven years”.
But what about profitability, which is a pain point with most startups? Vaish says Haptik’s core India business could be profitable “but we are expanding to other markets and also investing in regions like South-East Asia, Middle East, Africa, and now we are going to start investing in Europe. As a result, investments are going to continue for the next two-three years. Yet, the target is that within 18-24 months, we will have at least operational breakeven across all markets.”
That said, Haptik does face stiff competition from unicorns (private startups valued at over $1 billion) such as Uniphore, Gupshup and Yellow.ai, even the smaller Gnani.ai. These firms are flush with funds and offer similar products and services.
Gupshup, for instance, raised $100 million from investment firm Tiger Global Management in April 2021. Over the past year, it has also acquired other startups, including AI firm AskSid and cloud-based telephony firm Knowlarity. Uniphore raised $400 million in a funding round this February, bringing its valuation up to $2.5 billion. Like Gupshup and Haptik, the Chennai-based startup also deals with conversational AI and has raised over $610 million till date. Yellow.ai leverages its NLP (natural language processing) platform to provide voice and chat-based bots. It raised $78.15 million in a Series C funding round last year, from investment firms WestBridge Capital, Sapphire Ventures and Salesforce Ventures.
Haptik, though, does enjoy an early-mover advantage and the backing of the Reliance Group. “It is one of the early NLP AI companies in the country, which has given it a chance to fine-tune its solution(s) to be market-ready with a relatively high amount of accuracy. Their early entry and relatively-stable platform is what attracted a player like Reliance Jio to acquire Haptik,” says Jayanth Kolla, founder and partner of deeptech research and advisory firm Convergence Catalyst.
Vaish doesn’t take the competition lightly. “ Many companies are doing similar tasks. My field is NLP, and this too is getting commoditised,” he admits. He believes the world is moving towards “verticalisation of software”, which means you must customise NLP and integrate it with the existing systems of a firm that wants to implement it—“a big challenge today”. Vaish considers this “domain-specific NLP” to be Haptik’s main strength. The only way to grow, he says, is to “continuously disrupt ourselves”.