Adnan Imtiaz Halim is the co-founder and CEO of Sheba Platform Limited. Sheba is a fascinating company with fast-growing products in three different verticals: B2B commerce, on-demand service marketplace, and enterprise SaaS. While three businesses namely sManager, Sheba.xyz, and sBusiness appear separate from the outside, the company says there is an underlying thread that connects all three and that it is building an ecosystem.
Sheba turned five in July last year. Began as an online service marketplace, it has evolved into an entirely different company with a controlled service marketplace and multiple B2B software products. Past years have been eventful for Sheba with expected and serendipitous turns and twists, which makes for an exciting story.
In this excellent interview, Future Startup’s Ruhul Kader sits down with Sheba CEO Adnan Imtiaz Halim to dive deep into Sheba’s journey so far, where the company stands today, its strategic ambition going forward, and much more.
This was a much longer interview. So we had to break it down into two parts. This is part one of the interview. Please return later next week for the next installment. Enjoy!
Ruhul Kader: Thank you for agreeing to this interview. Let’s begin with a question a friend suggested I ask you: how does Adnan Imtiaz Halim think? You are into several different verticals: B2B commerce, logistics, and the controlled service marketplace. What is your thought process? How do you make decisions? How do you juggle all these different verticals?
Adnan Imtiaz Halim: I generally use two dimensions in my thinking. The first is time - whenever I look at a project or an enterprise, I look at it from a 20-year perspective. Secondly, I consider impact. Therefore, my X and Y dimensions are time and impact. As I look into the future, I try to predict what changes will take place in say 20 years and understand how best we can impact it.
As a country, our digital ecosystem is at a very early stage. So if we want to create the kind of impact we want, we need an ecosystem, which isn't there. So we have to build the ecosystem first. To that end, we're not building our businesses alone, we're preparing the ecosystem as well.
For example, we're working to bring small businesses under financial inclusion. A big part of that is access to finance. But when you want to give loans to these small businesses, you must first determine if they are creditworthy. To determine their creditworthiness, you must understand whether they track their financial data, etc. This is where the whole thing gets interesting. Because to keep track of their finances they need digital literacy. Therefore, we have to build multiple things to accomplish one goal. We need to build the entire ecosystem. We can't achieve many of our long-term goals without an ecosystem. As a result, some of our work doesn't make sense right away because you won't see the results for at least five to seven years.
When it comes to impact, you can't do it alone. Therefore, I pick the right people to work with. It might look different from the outside, but I don't work alone. For instance, I no longer manage Sheba. I rarely take part in operations. Over the years, Sheba has built a team that can run the company.
We have three separate business units at Sheba. Each business unit has a separate office and a leadership team.
If you know where you want to be in twenty years, you can back-calculate where you want to be next year. When you do that, you can determine the kind of people you need to meet your goals. Your job then is to find and onboard these individuals. But they can't just be employees. They must be like the founders. You must prepare them and turn them into believers.
Despite your best efforts, everything will not go smoothly all the time. When you delegate and innovate, you will fail some of the time. Cumulatively, I would say we have been successful.
In one line, what we're trying to do is to build another organization like BRAC. The social impact of this organization will start with the microentrepreneurs. BRAC has always been about creating ecosystems. BRAC has helped bring small businesses under financial inclusion through BRAC MFI. BRAC Bank works with SMEs. bKash reaches people that banks can't. On the other hand, Aarong helps these entrepreneurs access the market to sell their products. They have built an ecosystem.
BRAC has used the technology. BRAC has the most advanced fin-tech company in the country. BRAC has the most extensive distribution network. There is no location BRAC can't reach. The whole thing was made possible by Sir Abed's vision. It took BRAC 40 years to accomplish this. Many things had to be done manually. Now we have the technology. We live in a different time. Thus, if we can build an ecosystem in 20 years, we will consider that a success.
My goal is to build a sustainable ecosystem around small businesses and entrepreneurs and solve their problems. We want you to succeed as an entrepreneur if you can think, are honest, and work hard. Most small businesses have problems acquiring customers, obtaining credit, and complying with regulations. To address these challenges, we're bringing these entrepreneurs under financial inclusion and digital inclusion. Our goal is to build a one-stop solution for all these problems.
Every business has two main challenges: access to customers and access to finance. We have developed products such as sManager and added banking solutions to address access to finance challenges. Similarly, we're generating sales for these same businesses through marketplaces like Sheba.xyz. It's an ecosystem where everything is connected.
We have never done anything based on hype. Anything we do, we look at least 10 years into the future. Today's technology could be outdated tomorrow. The smartphone or mobile device may become obsolete in the next ten years, but what we're building will still be relevant. The solution must work. This is what we do.
Ruhul: In that same vein, how do you reconcile risk, because when you are building something futuristic, it comes with a lot of uncertainty, as well as how do you organize the required resources?
Adnan: At any point in time, we experiment with one idea. You can't gamble on everything. Our strategy has remained the same over the last five/six years. The remaining initiatives are sustainable. Consequently, resources are distributed rationally and risks are kept to a minimum.
We're now working full-fledged on sManager. Ninety percent of our investments are now going into sManager. We have reached sustainability at Sheba.xyz. One of our other business units is also performing well. That is how resource allocation works. Not too many risky bets at once.
Ruhul: What are you busy with these days?
Adnan: I'm working on taking sManager to the next level. sManager was launched in 2019. Back then, people didn't believe that SMEs could be so crucial. Things have changed, however, in recent years.
We came here from Sheba.xyz. Our pilot for Sheba.xyz was based on a BCG report. Due to the readiness of our pilot locations, our pilot result was great. But we couldn't expand it outside those locations. For example, we found that most of the Sheba.xyz customers are from Dhaka north. We had a high customer acquisition cost of almost $20. It became clear that we couldn't scale the business and realized that the market wasn't ready for a service marketplace.
We have been in the market for six years now. We launched in 2016. Most of our investment came from local investors. We have raised the highest amount of money from the Bangladesh market. Most people didn't even think that we could raise this much money from Bangladesh. We don't have any problems with any of our investors. We haven't yet paid any dividends. But we didn't sell the wrong thing. We remain true to what we promise and deliver. Our shareholders are patient and understand the kind of business we're building.
We realized in 2018 that the kind of market we predicted for Sheba.xyz would not mature until 2025. With that understanding, we changed our strategy and instead focused on quality and building a sustainable business.
However, we needed to grow Sheba. We then began to think about alternative innovations and eventually came up with the idea of empowering small businesses. Through Sheba.xyz, we were already helping many of these small businesses go online and find customers, but we weren't solving their offline problems. We designed sManager to address the offline challenges small businesses face. We ran two years of R&D between 2018 and 2019. Our user base reached 50,000 by the end of our research phase. The coronavirus pandemic has accelerated our growth over the last two years. Today, we have a user base of 11 lakh.
We're now working to take this to the next level. Last year we upgraded our entire technology stack. We didn't build our system to support 11 lakh users. We are now rolling out the new features. In collaboration with banks, we have developed a new payment solution for these small businesses. Banks usually don't want to give loans to small businesses. We have made the entire thing efficient and reduced their cost of doing business with small businesses. As a result, banks are now willing to partner with us.
In addition, we're trying to obtain a payment product license from Bangladesh Bank so that we can better serve these businesses.
If you want to understand sManager in a single word: it is a pocket ERP. Many small businesses don't have access to laptops and desktops. They have mobiles. We have built a pocket ERP that you can run on your mobile phone. You can call it Oracle for small businesses.
We have both free and paid versions. You will be surprised to know that last year 44,000 users paid us for software — we can claim to be the biggest SaaS company in the country. We handle 35,000 calls daily. We have users in 450+ thanas in Bangladesh. There are other alternatives in the market. There are Indian products that offer free versions. But people are using our product and paying for it. Our pricing makes sense for small businesses which go as low as 1 taka per day if you commit for two years.
The penetration has changed the landscape. These small businesses now understand business software. But they use multiple software for running their business: one software for accounting and a few more for banking and other functions, etc. Some of them use bKash and bank apps and others do banking manually. We're bringing banking within our ERP. So the same software keeps your sales account, generates invoices for customers, keeps payment accounts, reconciles with banks, and your accounting is done in the process.
You can also create an online store using the same software using your offline inventory. You can upgrade the domain for your online business. You can integrate payment and logistics. You can do almost everything in one place. We're working on a version that will address all these challenges small businesses face. Once done, I think it will make everything easier for small businesses.
To be clear, we're not providing or building all these solutions ourselves. We have built the platform and some of the solutions. But we're partnering with other players to add more solutions. we're integrating all these solutions in one place in a seamless manner. You can manage everything: accounting, inventory, PoS, invoice, online store. We currently have a total of 16 modules.
Ruhul: Can you tell a bit of detail? Say, for example, you have integrated banking, how does that work? How many banks do you have now on the platform?
Adnan: We currently have partnerships with eight banks.
Ruhul: From what I gather, small businesses can use sManager to manage their offline business and can also go online if they want to, how does it work?
Adnan: Our target is to take every business online. If they have an offline shop, they will now have an online store. Even if they don't have an offline store, they can create an online store. Then they can integrate with Facebook. Many people have Facebook pages. But a Facebook page can't be your shop, it can be your sales channel or fan page. Facebook can be risky for running a business. They can shut down your page or change their algorithm. We're saying you have your own store online where you will have greater control.
Ruhul: That makes sense. Now when an offline business opens an online shop, will it be on the Sheba marketplace or they can do it independently? How does that part work?
Adnan: Initially, he is opening his own shop and then we help connect him with other platforms. Ideally, he will be able to connect with all the marketplaces in the future. We're working with other partners for this purpose. It isn't only Sheba.xyz. Yes, he will be able to sell everything on Sheba.xyz. We're working on this at Sheba.xyz and plan to launch it soon. And he will also be able to sell anywhere be it an e-commerce marketplace or a payment app.
Our objective is to open up more sales channels for these businesses. Our goal is to open up the knowledge. And then give you every tool to operate and run your business.
We want to see fewer retailers, more manufacturers. More real businesses. The key to my motivation is that SMEs contribute only 20-25% of Bangladesh's GDP. But if you look at markets like China, 60% comes from SMEs. Ultimately, you will have to be a small business-driven country. And fewer retailers are better. More retailers aren't a good sign. More retailers mean we don't have our own product, I sell products of a large conglomerate. We need more manufacturers.
Adnan: The first thing we do at sManager is to help you keep account of your daily sales. Track your every transaction. If you can track this, you can reconcile the cash balance from there. We were surprised to find out that very few small businesses maintain profit and loss accounts. If you ask these businesses, they can't tell you their profit or loss. Our system will automatically generate a profit and loss account.
Every business needs to understand their profitability, we help you to do that. From sales data, we're helping them to prepare their account. This product is accounting software for a non-accounting person. So for bookkeeping, you don't need to learn anything. The learning curve is zero.
You can take digital payment anytime. When you are doing transactions, you can enable digital payment. You can offer EMI to your customers. We have enabled everything. Your payment becomes smooth. If you need a bank account, we help you open a bank account effortlessly. After that, we encourage people to do inventory-based sales. Now you understand the basics of your business, now rearrange your PoS and sell based on your inventory. You keep track of your inventory.
You can do all these things automatically on sManager. You can now create an online version of your store. Once you do that when a customer asks you about a product, you can send them a page, ask them to order online, and make payment online. Once the order is confirmed, you press another button, and logistics will come and pick the product from you and deliver it to the customer.
We're also adding peripheral services. For example, if you need a trade license, we connect you with a third-party service provider. If you need marketing support, we connect you with a third-party agency. You don't need to go anywhere.
We provide a dedicated account manager for each small business. The account manager will help you with everything. You will not need to manage multiple bank accounts. One account. We're integrating our banking partners on the back end. It took us a long time to come here. Banks initially didn't want to listen to us. We persevered. Now Banks' API has improved and they are giving it to us. One of the common threads of our work both at Sheba and sManager is that we're building an ecosystem. We're making the whole thing easier for everyone.
So feature-wise. This is our PoS, sales tracker. It has both a calculator version and an inventory version. You can generate an invoice in 15 seconds. Due tracker allows you to track dues. You can apply for loans from our banking partners.
We have added services like mobile top-up, etc. If your business is going through slow sales, you can activate these services and customers can take mobile recharge from you. We call these services lead magnets that small businesses can use to generate more sales.
In digital payment, we have partnerships with 22 banks. You can collect EMI and install digital payment.
We say a business has four pillars: start, sell, manage, and grow. We support businesses in all these four stages. Our main feature is PoS. We then created a due tracker, inventory, bookkeeping, and HR management. We have built these features.
We're now building several other features in the supply chain, banking services, digital sales, and online store. We will create these things within 2022. By 2023, we want to create social media integration, e-commerce, credit, overdraft, and BNPL.
Ruhul: You mentioned you have 11 lakh users and 44k of them paid you last year. How does your pricing model work?
Adnan: We have a freemium model. In the latest version, we're making almost all previously paid features free. We plan to introduce more free features in the coming days. You will only pay for premium features. We propose that you first see whether you benefit from our product, if you see the benefit, only then do you upgrade. Otherwise, you don't need to pay.
Before, our pricing was between BDT 90 and BDT 1500. In the new version, we have made a lot of paid features free. Now our pricing begins from BDT 150 and the highest is BDT 15,000.
As our product matures, we plan to make more features free. Paid users will get even greater benefits. For example, users who purchase BDT 15,000 packages don’t have to pay for marketing separately.
Adnan: When we're working on sManager, which isn't visible is that we're working with policymakers as well. Our policymakers are advanced and farsighted. They are smart people and they understand. I think we're going to build an excellent ecosystem. Since we're now entering the fintech space as well, we're looking to work closely with the regulators.
Ruhul: You work with partners at sManager who provide some of the services that you offer to small businesses, how does your relationship with them work?
Adnan: We’re working to establish a unified model. We didn't have one before. We have built the technology but our partners provide most of the services. We currently have more than 40 partners.
We have three models for working with partners. One is a fixed rate basis where we get into a wholesale relationship with these partners. With some partners, we have a per transaction commission-based relationship. Finally, we have a revenue-sharing model.
We’re figuring these models out because many of these relationships are new and it depends on the type of partner.
Ruhul: If you look from a P&L perspective, what are some of the cost centers for sManager? What does your unit economics look like?
Adnan: Technology is the main cost center for us. The second biggest cost center is educating the market. We have a customer service team and a field force who work closely with these businesses. We give trade and other educational materials. These two areas take up 80-85% of our cost.
The kind of revenue we generate now isn't sufficient. It covers one-third of our cost. We’re still investing. We will have to invest for a few more years and speed things up. But at the same time, we want to see a balance.
If you look into our entire ecosystem, we’re one of the most cost-efficient organizations. We have wanted to build a sustainable business from day one. Our unit economics is beautiful. We earn from software where the margin is up to 100% with an excellent revenue ratio. We get some revenue from small users. Be it BDT 5 or 10, it has its upsides in terms of the number of users. We’re now entering into some big partnerships which we believe will benefit us.
Many merchants don't pay us for the services we provide. Instead, banks pay us because banks want to reach that merchant. Networks pay us. I believe FMCG will pay us in the future. We think 60% of our earnings will come from indirect sources.
We don't want to put pressure on small businesses. If we make the solution costly for small businesses, it would not work. Our solution has no upfront cost. You pay as you use. No commitment fee. No hidden charges. We want to make life easier for small businesses.
Ruhul: You have 11 lakh users, what does your retention rate look like?
Adnan: Our retention isn't that good yet. You have to understand these people are using software/apps for the first time in their life. Many users use it inconsistently. But we don't see it as a challenge. Because it will take time. Today, I pay for Google Drive, Netflix, Spotify but it took many years for these solutions to come this far.
Among our users, the segment that has grown habituated, retention is very good in that segment. Retention is excellent among paid users. We’re building this solution for many new entrepreneurs. So we know it will take time. But we make sure that our users don't leave due to poor service or product.
Our small business users did some BDT 550 crore worth of transactions through sManager in the last 25 months. We’re looking to grow this number. This is mostly cash transactions. We expect their digital transaction to cross BDT 100 crore by the end of this year.
Adnan: We have separated each of our business units at Sheba into separate companies. sManager is now a separate company. The formal name is Sheba FinTech Limited. Sheba Platform Limited remains the mother company.
Ruhul: Sheba turned five in July last year. Sheba started as an online service marketplace. Over the last five years, Sheba has evolved into an entirely different company with a controlled service marketplace and multiple B2B software products. Could you please give us an overview of Sheba today in terms of products, services, businesses, and teams? How different Sheba is today from its early days?
Adnan: When we started five years ago, we wanted to build a 100 crore take turnover company. We have achieved that dream. Now our dream is to take it to a BDT 10,000 crore turnover company by 2024. Over time, our dream has expanded. When we started in 2016, our target was to create 10,000 entrepreneurs. Now our target is to create 10 lakh entrepreneurs. We want to bring 50 lakh entrepreneurs to our system.
We have three main products: sManager, Sheba.xyz, and sBusiness. We do a lot of experimental products but not necessarily those are our core business. In sBusiness, we have an HR software called DigiGo. Apart from these, we have several apps and users.
Cumulatively, 20 lakh people use our apps. We’re currently a team of over 450 people.
