Here comes the July installment of the Entrepreneur Watch! I hope to profile atleast one business a month from now on, so watch out for more interesting material. This month, I have on interview, Anurag Goel, Founder of Cactus Communications. Founded by Anurag and Abhishek Goel, Cactus is a company that started off providing English editing solutions for the Japanese market, and has now expanded into related areas as well. Prior to starting their own company, Anurag worked with McKinsey & Co. while Abhishek spent time in Tokyo as an in-house consultant for AIESEC, an experience that proved to have major consequences! I know Anurag briefly and was always intrigued to know more about a business that targeted a seemingly impenetrable market, Japan. So here we go…
To start with, it would be good to know a little about Cactus Communications. How old is it? How did the idea for the company originate?
Cactus started of as “Editage” in April 2002 and was officially formed in October 2002. So it has been about 5 years. The seed was laid when a friend of Abhishek’s (a researcher in Japan) asked him to edit a paper as a personal favor. The favor was done and incident promptly forgotten. Two years later when we were brainstorming on what businesses to enter, this came up as an idea again. And then we took it forward.
What would you say is the crux of the service that you offer?
We focus on providing English solutions of the highest quality. This spans English editing, writing, education and training.
Did you face any troubles starting up? How did you find your first clients?
The first 1.5 years were very difficult. We had identified a niche but we did not know how large the niche was. So there was always this nagging fear that we may be too specialized and is the market large enough.
Our first client was a friend of Abhishek’s. He introduced us to a few more clients. After this there were some very difficult business trips to Japan where we tried to convince people to give us work. All we had at that time was an office in an industrial estate, with 3 employees — we needed to create enough trust and credibility for clients to look beyond this obvious problem.
We learnt a lot from our first few clients and they have been invaluable in supporting us as we have grown.
Why was credibility an issue?
Credibility was an issue, especially in the initial stages. First, because we were a start-up and were trying to sell high value added professional services. Second, because we were based in India. The India-story in 2002-3 had not yet become an accepted one globally, especially not in Japan. And we were at a disadvantage in any new client discussion as we had to first explain why getting high quality English services from us was possible.
Tell us more about the journey – how has the company grown? The challenges that you face now – how are they different from what you faced while starting up?
Hmm… this is a big question. The first 2-3 years were very exciting and heady. It was about building and creating something from scratch. One was involved in all the action at the operational level and you could see immediate impact for your efforts. A lot of passion and self belief, some fear and a lot of perseverance.
Now the challenges are very different. We are about 140 people. The problem I find most interesting and difficult to fix is that of organizational design. How do you create something that can work as fast as a start-up and still grow sustainably?
The fact that our business model is largely retail (most of our clients are individuals) – makes it more complex to manage the growth. So, the challenges now are about managing growth so that we don’t lose the excitement from the initial days, we maintain performance levels and create a stable platform and system for the future.
Tell us a little about the market that you service. Traditionally most outsourcing firms in India look west, while you’ve gone East. How is this market different, what are its peculiarities?
Our primary market is Japan, which accounts for 80-85% of our business. In the last one year we have also made inroads into Korea and Taiwan. The market is more difficult to penetrate because of huge language barriers and cultural differences. So complete localization is very important for success – and that is difficult to execute as a foreign company. What I like about the market is that it is not as purely transaction oriented as in the U.S. — where usually the most important factor is price. The East allows one to build relationships and that makes for a more satisfying business experience.
How competitive a market is this? Whom are you up against and what is your edge to compete?
The market is quite competitive locally. There are established players, typically American or Japanese companies, servicing the education and the editing market. Our edge? I think we try to bring a higher quality to the service levels and we innovate. In editing, our more established service, we are market leaders in bringing better value to clients. Competition is usually imitating us!
What next? How do you plan to grow?
As I mention in one of the earlier questions, new markets is something we are already considering actively. Korea and Taiwan are the main focus this year. Next year will be mainland China. We are actively scouting for opportunities in medical writing which will be our first concentrated attempt to tap into the US market. We are also looking at providing written English training to select Indian clients this year. A lot of things happening – too many actually.
For yourself, moving from a consulting firm to your own business, what was the toughest challenge about making the transition?
It wasn’t really that difficult since it was a thought-out decision. I knew it was a risk and nothing might come off the decision. There were, and still are, periods of insecurity. The one thing that surprised me was how difficult it is to execute well, consistently. The reason this was a surprise was not because it was difficult — since I had already known and expected this– but because I had grossly underestimated its degree.
If you were doing it all over again, what mistakes of setting up would you avoid? What would you do differently?
Hmm… I can’t think of an appropriate answer to this question. I think we are making mistakes every day which we learn from and correct. And I don’t think we have reached that level yet where I can look back and say — we could have grown faster or would have been better if I had not done this or that. I think we need to achieve a lot more, grow to a larger, more sustainable level. I will probably then have the perspective to address this question.
Well, I hope that was an interesting read. I definitely enjoyed the whole process of writing up about it, since this is a business that has now seen a few years and is facing different challenges from what a start-up would. Interesting, therefore, in a completely different way.
For those who haven’t seen it, the first post in the Entrepreneur Watch series is here. And, if you see an interesting business that you think should be featured here, do write to me at aputhebird AT yahoo DOT com