Kapil Rana, Founder, HostBooks Interview on Building All in One Software for Accounting, GST, E-Way Bill, TDS, Tax, POS, & Payroll.

Meet Kapil, The  Founder of HostBooks, born in an extremely rural village in western UP. He is currently running a startup with 200+ employees. His business solution aims for 2 million paid Indian customers by 2025.

He describes himself as humble and transparent + a firm believer in Karma.

Let us read through the inspirational story of this aspirational farmer’s son …

YC – Kapil, welcome to Yellow Chapter! The idea of the interview is to talk about your journey from the beginning. Where were you born? What were your parents’ expectations of you while growing up? Some childhood memories?

Kapil – I was born in an extremely rural village in western UP, Nirpura village, located in Baraut tehsil of Baghpat district to a poor farmer’s family. I have two siblings, an elder sister – Anju, and a younger brother – Amit.

We had a very, very simple life. We used to go to our farm early in the morning to help our parents, then head towards school, and later in the evening, we would play with our friends.

I hardly interacted with my father. My mother, on the other hand, was a very soft, committed, practical and logical lady. My father and uncle never studied much, but my grandfather was very good with numbers. He was a math genius!

I was not very good at studying, but I had a curious mind. In the ninth grade, I started developing a lot of interest in Mathematics. I spent hours understanding and solving various questions. Seeing my commitment, my teacher offered me special classes on Sundays. I quickly grabbed the opportunity.

One thing I was very clear about from the time I started to understand things around me was that I had to move out of this place. My life cannot be an extension of my father’s life. My maternal family is into business; I was very fascinated by it.

After class twelfth, I wanted to pursue engineering, but there were financial limitations.

@ Family

1997-2000 – I joined B.Com @ D J (PG) College, Baraut (India). I did pretty well in graduation – I was among the top five students in the entire batch.

2004 – 2007 – I joined –  CA, Assurance / Attestation & Advisory @ The Institute of Chartered Accountants of India

When I joined articleship I saw a lot of gaps:

1. The accounting system was manual, due to which the same transaction details were entered in different places. Tally was the only available software.

2. Physical account system – There were hundreds of files everywhere. Locating the file was a huge challenge.

3. Back then, there was a lot of compliance to be filled. Each state has their own taxes to be filed.

2005 – 2008 – I did, LL.B., Legislation @ Meerut College, Meerut (India)

2012-2013 –  CPA, Accounting and Finance @ Institute of Certified Public Accountants in Ireland (CPA Ireland)

2018-2021 –   PhD, Strategic Management @AIMA-AMU 

After completing my CA, I started my own practice. I ran it for two-three years, but I needed more.

2011 – My friend (Sumit Tomar) registered a new company – iN Technologies. We started pitching our services to US clients and generated good business. We worked together for four years.

2015 – I started my own outsourcing company, iRexx Technologies Ltd, offering Software Sales and Services. We picked up work like accounting, compliance and payroll for US clients. Working with US clients, I learned how accounting functions in the US. Software penetration was way too high compared to our Indian accounting system. 

2016 – I started working on my product.

Fortunately, in July 2017, GST – Goods and Services Tax (India) was implemented in India. With GST, the entire nation is on one tax which was a massive opportunity for CAs in India.

We (Amit, Nitesh, Harvinder, Sandeep and Mayank) quickly launched HostBooks Limited both in India and the USA market. We ran some campaigns in India and started getting business queries.

Let me tell you one more thing – when I started my chartered accountancy, I made a website http://www.kaps-india.com/  (it is still working), to help European, American and Canadian customers establish their shops in India. 

This SEO knowledge came in very handy during HostBooks.

YC – What is the critical thing in marketing?

Kapil – Based on my knowledge and experience: 

1. You should know who your audience is. It doesn’t make sense if you’re running a campaign and your audience is not looking at your ad. 

2. What is their problem?

3. What solution are you offering?

Marketing is simply a game of persistence, + having a good team is the key.

@ Friends

YC – Five Suggestions for fellow founders?

1. Be very good with people: your family, employees, customers, vendors, all of them.  

2. In business, you either solve a problem or provide an opportunity. Be aware of what problem you’re solving or what opportunity you are providing to your customers.

3. Be aware of your competition. 

4. Manage your working capital well. Financial dependency is not a good thing.

5. You don’t have to be 100% sure. An entrepreneur solves problems through persistence + intuition.

YC – Can we talk about some numbers?

Kapil – There are around 1.7 Crore registered GST users in India. With the vast penetration of payment apps, even small vendors like chaiwalas, panwalas, plumbers, electricians and others, will have to fall in line, sooner or later.

Before GST, one major accounting software in India was Tally Solutions. They have got approx. 2 million paid users. With a minimum ticket size of 20,000, Tally’s turnover would be 400Cr. – 500Cr. BUSY, another accounting software, had 100,000 or 125,000 paid users. Their turnover would be 10Cr -15Cr. 

But they were not providing the option to trail all the transactions, only HostBooks gave such an option. In 2021, the Government of India made this mandatory. 

The current TAM would be 15,000 – 20,000 X 1.7Cr, quickly increasing with increasing payment service transactions. 

CAC – For a warm lead, we spent Rs.100 on average in India. Converting a warm lead to an actual customer is a long process.

Conversion rate – 8% to 10% from 100 warm leads.

Competition – There are multiple players, some solving for PoS, some only for GST, some for accounting, some for compliance, etc. But HostBooks is a comprehensive cloud-based platform for all the accounting and compliance functions, including Accounting, GST, E-Way Bill, and TDS.

Intuit is our global competitor. It’s a $170 billion company with more than 85% of the US market.

The ideal customer for HostBooks is SMEs. We are a one-stop shop for all their banking, accounting, tax, and compliance needs.

Right now, we are serving around 200,000 in India. 5% are big companies like (Punj Lloyd | Haldiram | Sagar Ratna, Gaursons India Private Limited etc.). The number of paid customers would be around 6000. In the US market, there are about 22000 customers, of which 25% are paid.

YC – How do you market your product?

Kapil – We use all the channels:

1. Channel partnership

2. Digital marketing

3. Floor sales and 

4. Affiliates. 

In India, it is tough to get paid upfront. People want to try it first and will only pay if the product solves the real problem. So for India, our focus is to get more users on board. Conversion is secondary.

The US customer, if convinced, is ready to pay upfront. So we deal with them differently.

 90%+ is the retention rate.

Targets🎯🎯- We are targeting a half million paid customers in India by the end of 2023 and 2 million paid Indian customers by the end of 2025.

@ Amazing Experience

YC –  Kapil, I genuinely believe many people contribute to where we are in life. They are our family, friends, teachers, mentors etc. Who are some people you would like to thank for your journey so far?

Kapil – The first one is my mom – Kamlesh. She taught me an important lesson: your peers will decide your destiny. If you choose to hang out with farmers, you will be a farmer. You might be a good farmer, but you will be a farmer. But if you study well and get the opportunity to move out of this place, you can explore the world and achieve things that none of us have.

Secondly, if someone is holding you back, they are a loser or have failed somewhere. Look for successful people.

My cousin, Arvind. All my teachers, special mention to Late. Mr Jagbir Singh. I really admire Maharana Pratap. I like Elon Musk; he is a hustler.

Lastly, and most importantly, my team @ HostBook. Special mentions to –  Biswajit Mishra |Avtar Monga | Neeraj Kumar | Bharat Bhushan | Raj Kumar Mishra | Dhruv Dudeja | Manish Tiwari | Subhash Singh | Varun Tanwar | Khalid Zia.

@ Team HostBooks

Book recommendation – Tough Times Never Last but Tough People Do, by Robert H. Schuller.

Movie recommendation– Pirates of Silicon Valley.

Kapil, it was a great conversation. Thank you for your time. Yellow Chapter wishes you every success in all your future endeavors.

Leave a Reply