Venkat Viswanathan on life post a record IPO and putting LatentView on the next rung of growth
Pretty much as its name suggests, LatentView Analytics itself was latent till in November last it exploded on the stock market with its IPO. It created history by becoming the highest subscribed IPO at a record 326.5 times while the scrip was listed at a premium of 169 per cent over its issue price of ₹197 on the BSE, making its Founder Venkat Viswanathan a billionaire.
We are curious about the company name and ask Viswanathan, Founder and Chairman, how did the data analytics firm come to be called LatentView? The name didn’t jell for us. But, as he explains, “The way we looked at it, data analytics helps surface hidden insights in a business; it’s all there as part of the business, something latent, which we help bring to the top.”
Viswanathan insists that life hasn’t changed a lot post IPO. “We don’t think much about the impact of the IPO at a personal level; from a company level, we now have independent directors whom we have to engage with so that they understand our business and we are also conscious of the public shareholders, even though they are small as promoters still hold two-thirds of the company,” he explains. Viswanathan and Pramad Jandhyala, his wife and former classmate from IIM Calcutta, co-founded the company in 2006.
Raghuvir Srinivasan, BusinessLine Editor, and I, meet with Viswanathan at the LatentView office in the sprawling and well laid out Ramanujam IT Park in Chennai’s IT corridor. The 600-seater office is mostly empty as most are still working from home, but Viswanathan is in office most days, unless he’s travelling, which is often. Over steaming cups of coffee, we ask him about his early life.
Hailing from a traditional and conservative family, Viswanathan spent the 1970s in Chennai where his father, an accountant, worked in the Accountant-General’s office. The 1980s were spent in Delhi as his father was made project manager for some of the stadia being built for the Asiad, which was held in Delhi in 1982. Later, his father was with the CAG’s office. “1980s Delhi was a much easier place to grow up in than it is now,” he recalls, with a tinge of nostalgia.
Life at IIT Madras
Viswanathan was back in Madras in 1988 when he was selected for a civil engineering degree at IIT Madras. “The four years were a good time. The kind of smart people you meet is unbelievable. Our batch was a special cohort; when I graduated, India had just liberalised, so things were dramatically changing,” he recalls. Many from his batch who went on to the US, were part of the original teams at FB and Google. “Till then in school you’ve never interacted with so many smart people at once. You are so used to be the topper in school and then at IIT you find you are nowhere in the race, till one settles down and finds their own path,” he says.
When Viswanathan graduated, most of his class at IIT was writing the GRE and planning to go to the US to study, but he was looking for a proper engineering job to apply his learnings. The Essar group recruited him from campus. However, his stint there was underwhelming. “I was put in Purchase in the chemical engineering department and did learn a bit of commercial negotiation during my time. But I didn’t enjoy that; it seemed like a tiny thing to do in a big steel plant,” he recalls.
The following year, he cracked the CAT and made it to IIM Calcutta, where he earned his MBA, and also met his life partner and later co-founder, Pramad. “Even though I was a placements coordinator, I didn’t go through campus placement process. At that point it felt silly that students were interviewing with different companies to then jump at the best offer. I wanted control of what I wanted to do so I sat out of the placement programme and went back to the Essar group,” says Viswanathan.
However, by 1995, Essar’s fortunes had started sliding, and Viswanathan soon moved to join credit rating agency ICRA. “At ICRA, we had this opportunity to meet the leaders of business in every sector; our role was to collect facts and bring it to the top management. It was a great learning ground,” he recalls.
After a little over three years in ICRA, Viswanathan met with Lakshmi Narayanan, the head of Cognizant. “Lakshmi spoke to me 30-40 minutes. The first thing he said was don’t learn programming, because I am trying to build a cohort of business school hires for the e.business practice,” he says. Viswanathan spent the next seven years in Cognizant, few of them in London, before he decided to set off on his own.
We move to lunch at the Taj Wellington Mews, which is part of the IT complex. It’s a hot summer afternoon but the sea breeze has set in and is swirling around the clutch of tall buildings. We order some lassi and tender coconut water (TC, as the lady waiting on us tells us!) and Viswanathan orders a health concoction and for lunch we ask for bisi bele baath and a penne pasta while Viswanathan sticks to a boccocini salad.
We ask him why he decided to set off on his own when he did and how he zeroed in on analytics. “I always believed I should build a business, we had been trained for this and then we had all those new role models, Infosys had gone public and Wipro also got high valuations. I didn’t have analytics marked out but I did see early signs of this in Cognizant. When I quit, Lakshmi said you can build your business here, but I said, hopefully, you will hire me back if it doesn’t work!” he says with a laugh.
Viswanathan quit Cognizant in 2005 and took six months off to work on different ideas. He quickly zeroed in on analytics; there were a few players in the space while GE Capital had built a successful data practice. “It was a validation of our business idea,” he adds. LatentView was incorporated in 2006.
The early years were not easy; in 2008 the Lehman crisis had blown up and the plan to target the US market was on hold. The company worked with insurance companies in India during this period: insurance industry was acquiring a lot of customers but also losing many due to mis-selling.
Hard work pays off
But the work Viswanathan did in the US market in the 2008-10 period, meeting with clients in the US, paid off with the first customers being Microsoft and PayPal. “In 2010, in one quarter, we went from 80 per cent of our business from India to 80 per cent of it from the US, because the sheer ticket size of what one can sign up with a large company in the US is very different,” he explains.
For MS the analytics it had to do was around its brand and the attitude and perception studies it undertook and wanted a fresh set of eyes looking at the data. Twelve years on, MS remains among its top five clients. In PayPal it was all about CRM; it had 80 million customers, but only 10 million made them money. “They wanted to know how to find the next 10 million from the 70 million, who could make them money and were worth chasing, and what triggers they needed. The bottom 20 million, we told PayPal they had to stop marketing to them; it was all around customer segmentation,” he explains.
Today, 92 per cent of its revenues are from the US; many of the clients are Fortune 100 companies. “Europe has still not scaled up for us as we went in only four years back. In our IPO offer document that is one of the investment objectives, to build up the European business so that we don’t depend on one country or a single market.”
Lunch has been served and we dig in hungrily; Viswanathan, though, eats sparingly.
In 2014, once the business was taking off, LatentView, he says, made some conscious choices in the business. “We said we will only go to the largest businesses in the US, the Fortune 100 companies and not to mid-sized companies and start-ups. It was a bit of a high risk, high rewards strategy but it was a conviction that the bigger companies have the ability to spend large sums for analytics. We had seen how quickly Microsoft started scaling up for us,” elaborates Viswanathan.
Two-thirds of its customer base is from Silicon Valley with all the large tech companies in its portfolio, including the new-age Valley companies such as AirBnB and Uber, while the rest one-third is split between retail and BFSI.
Rapid growth years
LatentView was featured on the Deloitte Technology Fast 50 as being among the fastest growing companies from 2009 to 2017 for nine consecutive years – the first and only company to do so at that time.
However, growth slowed down in the recent years, 2018-2021, from the 50 per cent y-o-y growth that got it featured in the Deloitte list. “I think part of the slowdown was changes in our market that took us time to understand, and part of it is choices we made in our go-to-market that we needed to correct. The good news is we have had an upswing in recent quarters as our public results bear out,” he adds.
The company reported a total revenue of ₹113 crore in Q3 of FY 21-22, as against ₹82 crore in the corresponding quarter last year. It also recorded a 112 per cent growth in profit after tax (PAT) to ₹49.93 crore (₹22.45 crore).
Our meal is almost over and we fire one last question at Viswanathan: why did the company need the IPO at all as the company has been fairly profitable and cash-rich. “This is not a cash intensive business. In 15 years, the promoters have not been given a single paisa as dividend, everything has been ploughed back. In fact, one of the first thing bankers said is, you guys pay yourselves too little. The fundamental reason for the IPO is I always believe we should raise money when it’s easy to raise it. We can’t go looking for money when we have a problem at hand and we may not get it at the terms we want; also, if we want to do something inorganic, or develop a product where a significant amount of capital is needed upfront,” he elaborates.
Also, as Viswanathan points out, there are many who have spent 10 plus years in the company and own stock options in the company and they needed an opportunity to monetise their shares. The desire to build one’s wealth portfolio is definitely not latent.