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, 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.
Last week, we published part one of a fascinating interview with Adnan, where we covered Sheba’s journey, where the company stands today, and its strategic ambition going forward.
Today, we are publishing the second and final part of the interview, where we go deeper into Sheba’s bets in B2B commerce, enterprise SaaS, and on-demand service. We discuss the state of Shabe’s three main products, how each business works, the Sheba ecosystem, challenges and upsides for the company, Sheba’s growth equation, the importance of moving fast, Adnan's lessons in entrepreneurship, and much more. Read part one of this interview here.
Ruhul Kader: We talked about sManager. I want to dive deep into your two other core products. Could you please give us an overview of Sheba.xyz?
Adnan Imtiaz Halim: We have created a place for blue-collar people at Sheba.xyz. We now understand the business. If you look around, 30 plus companies came into this market and they are gone as well. But we’re still there. During the COVID lockdown, we had to shut down our operation. Our revenue was zero. But we delivered food to 50,000 families by doing Mission Save Bangladesh. Many companies were preoccupied with how they could reduce costs and survive. Our business was bleeding but we wanted to touch lives.
We deliver service at people’s homes. So for us, COVID came with a huge challenge. Our response was simple: the safety of our customers and service people comes first. We changed our service guideline 100%. We trained every single service delivery person. We gave them all the safety materials from PPE to musk to everything in between. After doing all that, we started to send them to the homes of our customers. We didn't push for sales during this period. While everyone was talking about the e-commerce boom, we didn't run after the boom because we provide a sensitive service. For us, the safety of our customers and the service providers comes before business. Instead of pushing for growth, we focused on maintaining sustainable growth.
But we’re continuously improving our quality. We’re continuously creating more employment. Business-wise, we’re operating at almost breakeven. If COVID ends this year, we will push for an expansion.
We want to expand to 20 cities but we want to do so when the market is ready. We tried in 3 cities outside Dhaka before, which didn't work out because the market was not ready. When we see that the market is ready, we plan to launch in 20 cities at once. Sheba.xyz is almost self-sustainable now.
Ruhul: How many services do you offer now?
Adnan: We focus on core 5/6 services such as home appliances, shifting, transport, cleaning, beauty, and renovation. We offer several other services but these few services are our priority.
Ruhul: How does the model work? How does the platform work now?
Adnan: Service providers who work with us mostly work with us exclusively. We ensure certain earnings for them. Before it was just matchmaking. We used to connect service providers with customers. Our quality control was after delivering the service if any problem arises. We now focus on quality assurance. We now provide you services with a certain quality standard.
We now offer single price and single quality. We take full responsibility. Customers don’t need to worry about quality anymore.
Ruhul: How many service providers do you have now on your platform?
Adnan: You can say that we have removed almost 90% of our partners. We have brought down the total partners to some 5000 service providers. We don't need unnecessary partners. We want to give work to only qualified partners.
Ruhul: How does your relationship with the service providers work now?
Adnan: Our bonding has grown stronger. Before we used to focus on creating small entrepreneurs. We have moved away from that model. We’re now focusing on individual service providers. We have come to see that when we focused on creating managers, we made the managers rich but other members of his/her team didn't benefit much. We have now changed that model and are working directly with blue-collar workers.
Customers are now more aware and understand the difference, which has allowed us to make these changes. Before customers used to compare us with other service providers. And many managers would send untrained resources to the customers. Some customer education has happened in the last few years. Service providers also understand the whole thing. So we felt that the middle layer is no longer necessary.
As we move forward, we plan to provide real-time service. Now you get ‘booking day’ or same-day service. In the future, you will get the service in real-time. You need a service, you knock us, and our service provider will get to you in real-time.
Adnan: The model is no more commission-based. We now provide a minimum earning guarantee to our service providers. At this moment, we’re going slow at Sheba.xyz. We have a solid business now which is growing steadily. But we’re not pushing things at this moment. Instead, we’re focusing on building a sustainable business. Because we have found that the market isn't ready yet.
We have learned that the cost of doing business is very high when you are ahead of your time. We’re the market leader in the on-demand service vertical. We have a unique position in the market. We don't see any competitive threat to our position at least in the near future.
Our service providers get paid in real-time. We bear all the costs of our service providers for delivering a service. We keep between 10-25% margins depending on the type of service. However, we plan to come out of this margin model soon. Instead, we want to pay our service providers based on their earnings. Many service providers fear uncertainty when they work in the existing gig economy model because they don't get paid when they don’t have work.
We have an algorithm on the backend that calculates payment based on task allocation. We can see how the income of our service providers changes when uncertainty such as COVID hits. When our business gets affected — for example, COVID affected our business negatively last two years — it affects the earnings of our service providers. It creates earning uncertainty. To address this challenge, we’re gradually working on a model where we can ensure a minimum earning for every service provider who works with us.
Ruhul: Something like minimum wage? Will you then treat them as employees?
Adnan: We're working on the legal frameworks. We want to introduce benefits for them such as pensions, insurance coverage, etc. We have seen many different events throughout the last five years such as accidents that destroyed families. We want to ensure a healthy life for our service providers.
At Sheba, we don't want to do business for the sake of making money alone. We want to make sure people we work with have a good life. We don't want to get rich ourselves alone. We don't plan to take dividends from the company unless we ensure that our people have a good life. That's the bottom line. We don't want to do business that does not have an impact. If we earn, it will go to our blue-collar workers first.
You would see that we never faced any challenge with our workers, unlike many other gig economy players. Sheba is the only company without any complaints in consumer rights authority. We have always ensured that we provided the best services to our customers. If any problem arises, we swiftly solve it. We have been able to build a customer-centric mindset in our people. It is in our DNA.
Ruhul: Could you please talk briefly about the business? For instance, how many orders do you serve now? How big is your team at Sheba.xyz?
Adnan: We manage some 15,000 orders per month now. We have a team of 40 people at Sheba.xyz. We have built a lean operation. Our technology is ready. Our processes are ready. As a result, our operational cost has come down significantly.
Ruhul: What is next for Sheba.xyz?
Adnan: We're upgrading the training of our people. We're giving them new dress codes and everything else. Both our customers and our service providers have higher expectations from Sheba now. We're getting ready to deliver on that expectation. We're working on certification.
Business-wise, we want to do 15,000 orders daily. Once the market is ready, we want to expand to 20 cities. We regularly run small experiments in different cities to understand the pulse of the market.
We have learned the business. You can call us a service business expert. We run experiments and sampling in different cities and when we see a positive result, we will expand at once.
Ruhul: What is your observation about the on-demand services market in Bangladesh? How big is the market?
Adnan: Service is a huge market. There are some four and a half crore families in Bangladesh. Of that, we aim to reach 2 crore families. Many of these families don't need on-demand services today. There are still ways to hire help and service providers offline. But social dynamics are changing. People are increasingly becoming busy. To that end, we estimate only on-demand services to become a 2,000 crore market by 2025. The entire market is unstructured now. Of that, we're eying 10% market share.
Ruhul: How do you see the market dynamics and competition?
Adnan: There are some vertical-specific competitions but there is no competition in terms of platform. We expect some strong competitions in the near future.
Our ambition is to acquire some strong companies operating in different niche verticals of on-demand services. For example, the mobile repair isn't a strength of Sheba. But in the future, we might acquire a company that operates in the mobile repair vertical. In the future, I see Sheba.xyz will be more on the investment and M&A mode rather than building everything by itself.
Ruhul: That was a good overview. Let’s talk about sBusiness. What is sBusiness?
Adnan: If you look at sManager, we work with micro-entrepreneurs. sBusiness moves a bit higher in the value chain and works with businesses a bit bigger than micro-entrepreneurs. You can call sBusiness works with small enterprises. Sheba is a mid-level company. We were an early-stage company five years ago. Companies that use this co-working space (the interview was conducted in a co-working space in Dhaka) are small enterprises, startups, etc. These businesses also need an Oracle-type solution where they can manage their accounting, HR, procurement, etc. This is where sBusiness comes in. We're building a SaaS product where these businesses could do all these things. The objective was to complete the ecosystem.
sBusiness started with providing HR and procurement solutions. Our HR solution called DigiGo received an excellent response from the market. We launched about a year ago. We currently have over a thousand customers. In DigiGo, we ended last December with 119 paid customers. Our churn rate is very low.
We plan to add this HR solution into sManager in the future for the small business where they could manage salary, people, etc. Through sBusiness, these businesses will also be able to supply to B2B customers.
Our HR solution is an excellent success story. It is the first employee-centric HR app. The majority of HR apps are employer-centric. Ours is focused on employees and employees love it.
The ambition with sBusiness is to build a SaaS app marketplace. We have many excellent made in Bangladesh software products. We want to bring all these software products to our platform. We want to open up the platform for other SaaS products.
At Sheba, we don't want to build everything. We want to build the skeleton. We believe it is more important to build the integration. Creating synergies is more important. We want to build a place where a small business can find all the software he/she needs. That is the sBusiness. Our next goal is to bring 100+ solutions to this platform.
sBusiness is a good revenue-generating company. We're not profitable yet but the company now generates almost 50% of its own expenses. We hope sBusiness will be 100% self-sufficient by next year.
For the three business units you see now, we hope two of the businesses will be self-sustainable by the end of 2022.
Having said that, we believe sManager has huge potential and we should invest several hundred crores into a business like sManager.
Ruhul: How do you see the market dynamics in this segment given that there are already several Indian and North American products such as Zoho, waveapp, etc in the market?
Adnan: The price points of North American and Indian products are higher than our price points. We want you to pay in BDT and they charge in dollars. Our target is to reduce the costs of these products by 90%. No upfront charge. No commitment. Low cost. We want to be the enabler for the ecosystem.
Ruhul: You started with an on-demand services marketplace. Over the years, you have expanded into several other verticals. As you mentioned, the on-demand services market itself is huge. And I'm assuming you are yet to own a significant percentage of that market. To that end, how did you decide to expand? Of course, you touched upon this question a bit as you said earlier that you expanded into other verticals when you came to see that the services market would take a few more years to get fully ready.
Adnan: This is an unstructured market. 99% of this market is unstructured. So we're yet to penetrate that market. But if you ask about the online market, we own 70-80% of that market. We can’t position ourselves in the unstructured market because it is very costly. So we're waiting for digitally literate customers. Once we see the market is ready, we will then target 10% of the whole market at once.
People will eventually take our service. Let me tell you why. When you take offline service, you don't get any after-sales service and no quality assurance guarantee. But we provide both. In the next few years, people will not purchase anything without after-sales service. Moreover, when you buy something offline, you don't get any other benefits. Sheba offers both: after-sales support and benefits such as discounts and offers and other relevant services.
Ruhul: You have three products. You mentioned some connections between products such as integrating some of sBusiness within sManager. Are there any other connections? How do different products of Sheba connect? How does the ecosystem work?
Adnan: We have already created two marketplaces for sManager users. You want to sell services to customers, you can do that through Sheba.xyz. You want to sell services to B2B customers, you can do that as well. These businesses didn't have this benefit before. Many businesses face challenges with growth and sales. We have created an alternative sales channel for them.
We want to build a complete ecosystem. We want to create new markets for small businesses. In order to build this ecosystem, we're having to test payment, logistics, and so on. We're doing all these things.
Ruhul: How does Sheba work as an organization? Who are the people with power at Sheba? How is the organization structured? Also, could you please talk about culture at Sheba?
Adnan: Being a resource constraint organization, we have to remember we can't always hire the best and most experienced people in the market. Instead, we work harder to find leaders who are impact-driven, capable, and also not that expensive. Second, we prepare the freshers. So we create leadership in the company in two ways: we hire leaders and subject matter experts from outside the organization and we create leaders from within the organization by preparing the freshers so that we balance the cost.
We generally divide the organizations into two segments: cost centers and revenue centers. We call the revenue centers business units. We try to find a leader for each of our business units. These leaders can’t be mere employees. They have to be founder-like employees. In the cost centers, we have either founders or founder-like employees who manage the operations.
We then calculate the overall organizational need for leaders. Our theory is to find the top 20 leaders in the organization by role and continuously groom and teach them how to create the next level of leaders.
There are pros and cons to this. Pros are that our people are empowered. They can make decisions. The cons are that most of us didn't work in very professional companies before working here. So they learn here. So learning becomes a critical part of the entire process and there are challenges to this strategy.
To address these challenges, our People and Organization team is strong. One of their core jobs is to facilitate. Our people love to speak with the HR guys.
Adnan: Since we have separated business units, each business unit has its core teams. Common functions such as finance, HR, technology, have common teams across the organization. Each business unit pays for these services internally.
Ruhul: Who are the most powerful people in Sheba?
Adnan: Technology, leaders of business units, Data, CFO, CEO, HR, these are some of the most powerful positions. But powerful not in terms of the control, rather they facilitate others. They make the decisions.
Ruhul: In every vertical where you operate today, more investment is coming in, and competition will intensify. B2B commerce is now the hot vertical. How do you see the competition? How will Sheba respond to the competitive pressure?
Adnan: We don't see competition combinedly. We see competition business unit-wise. For Sheba.xyz, we have some competitions. For sManager, there is a different set of competition and so on.
In every business we operate, we try to learn from the competition. For example, in Sheba.xyz, we have competition from both structured and unstructured players and we try to learn from both. This is a time-advanced service, so competition is relatively limited.
Contrary to that, sManager has greater competition. When you launch a market-ready product, you gradually move from the blue ocean to the red ocean. sManager faces more competition because the market has improved.
When we're thinking about competition, we don't think about money or what everyone else is doing, rather we focus on who is ahead in customer choice. We want to be the best solution in every vertical we operate in. We want our customers to acknowledge that we're the best product in every category we operate. This is the only benchmark we have.
Ruhul: Do you have a framework to be best in every category you operate?
Adnan: We do three things: we look at our net promoter score, we go to the market and do market research. We continually analyze the products of our competitors and try to understand where we're lacking. Every month or two, we go to the market to see what other products our customers use and try to understand why they use these products.
Having said that, we don't want to see competition as a distraction. We take the lessons and we do our work. But we don't want to preoccupy ourselves with the competition. The competition will always be there. It is good to compete but at the end of the day, I have my own race to run.
Ruhul: If you draw the most important components of Sheba’s growth today, what does the growth equation of Sheba look like?
Adnan: During COVID, our target was to run as efficiently as possible. So components get changed. Now our most important components are users and customer satisfaction. We look into three numbers: NPS, DAU, and GTV. These are my business drivers.
The product is the key for us. Everyone can build software but how good your user experience is, that's the key. We say how short the learning curve is — how quickly you can learn and start using the product. Whether my product is solving a problem, is it easy for the user, and whether a user is excited to use the product — these are some of the things we look into. Tech and product are our ultimate priority and drivers of growth.
Ruhul: What are the goals for the future?
Adnan: We want to see 10 lakh, monthly users. We want to serve two crore customers and we want to build a BDT 10,000 crore business. That's our next goal.
Ruhul: What are some of the major risks for Sheba?
Adnan: We have to move fast. If we can't move fast, even if we do well, we will be left behind.
Ruhul: What are some of the biggest lessons from your entrepreneurial journey so far?
Sheba: You have to be a subject matter expert in the business you want to build. It is better to start with some domain expertise.
Second lesson: don't delegate late and don't delegate early. Delegate fast but make sure your people are ready before delegating.
Move fast. Slow has no value in today’s world.
Finally, whatever you do, don't compromise your values. Some things are priceless.