Quick Heal is forging a space for itself in a market

By Shruti Chakraborty

Remember the floppy disk? The behemoth of a desktop with a fat CPU under the monitor? Remember playing Dangerous Dave on MS-DOS? Around then, in 1990, Kailash Katkar, 47, was repairing calculators, ledger posting machines and facet machines in a shop in Pune. The latter two were complicated beasts and in some ways were more troublesome to repair than even computers back then, Katkar remembers.

Katkar has come a long way from then. Today, as CEO, he heads Quick Heal Technologies Pvt. Ltd., a domestic brand in the global field of internet and computer security, which has defied skeptics to become a major player. In 2012-13, the antivirus software provider clocked about Rs. 214 crore in turnover. Katkar does not disclose his bottomline figure, though he says that the company is profitable.

The company started in 1993 with a few annual maintenance contracts from companies for repairing printers and printer heads. Eventually, he was handling similar contracts for computers. “My background in working with the ledger posting machines and facet machines helped me with that,” he says. At that time, the Indian IT landscape was one of chaos-as any nascent industry would be. A new day could bring new discoveries as much as it could bring new fires to put out. It was a time for opportunists. Katkar was one of them. As a provider of repairing services, Katkar also looked at this little problem of viruses. “Virus-related problems were very few at that time. In 1993-94 we had about four to five new viruses in a month. Small companies couldn’t afford antivirus software. So they expected us to handle that,” he says.

The computer lab
Sanjay Katkar, 42, Katkar’s younger brother, is now the CTO at Quick Heal. In 1992, Sanjay finished his Bachelors in Computer Science and then completed his Post Graduation studies in the subject in 1994. “Even getting computers for practice was tough at that time. Even if the college computer lab had computers, there was either no electricity or there was a virus and the computers wouldn’t work because so many people were using it,” Sanjay says.

So Sanjay began to work on the computers that would come to Katkar’s shop for repairs. Katkar says “the computers would work fine when Sanjay was at the shop, but would invariably show a problem when he wasn’t around. When I asked him about this, he told me that the problem was because of a virus and that he had written a program to get rid of it. But when I inserted an infected floppy, the virus would come back, giving me the problem.”

Soon enough, Sanjay began developing tools to tackle the virus-related problems that Katkar would find in computers that came for repair.

The tools he created evolved into Quick Heal’s first product which was antivirus software for DOS that hit the market in 1995. “Players like Norton and McAfee were already there in the market back then, but these products were very expensive for Indian customers,” points out Sanjay.

Glitches booting up
Sanjay did most of the technical development on his own at that time. “Colleges do not provide any training on security [issues] even now,” he says. With no internet access, Sanjay’s research was based entirely on actually working on a virus when he found one. Pit that against players like McAfee and Symantec, who had multi-million dollar budgets, and you can understand the position of disadvantage they started from. “Also, these companies were based in the US. When developing an antivirus, you are working with system software. You will face challenges. Companies like McAfee and Symantec could just set up a meeting or call Microsoft and discuss these,” Sanjay says. The duo had to rely on e-mails and letters to Microsoft, but never got a response.

Becoming a part of international bodies and associations took time as well. Sanjay is now on the board of directors of the Association of Anti Virus Asia Researchers. He also works with the WildList Organization, which maintains a list of reported viruses from around the world which antivirus companies can prepare against.

“In 1995-96, we needed funds [to grow] but couldn’t get a loan from banks or a cash-credit facility because we had nothing to show for stocks,” Katkar says, adding that he had to keep his annual maintenance contracts business going until 1999 to fund the antivirus business. In 1996, Katkar says that Quick Heal had revenues of Rs. 10 lakh and profits of Rs. 50,000.

The tide turned with the millennium. From 2000 to 2010, the company’s business grew 100 percent year-on-year. The company’s growth has since slowed down though. In the last two years, the company has grown at about 35-40 percent and is expecting to grow about 22 percent this year, Katkar says.

Growth globally
In time, Quick Heal has become a major rival to global players in India. According to Katkar, Quick Heal now has 30 percent of the market share in the Indian consumer segment “We had to give value additions to customers in India initially to gain acceptance. Most people don’t trust Indian products and many people don’t know that Quick Heal is an Indian brand even now,” Katkar says.

To gain acceptance in the Indian market, Katkar distributed the products through his friends who were in the computer maintenance business, because customers trusted their maintenance person to suggest them a good antivirus. Also, the first product was introduced for Rs. 500, which was much lower than the products offered by the international players. Another aspect Katkar focussed on was keeping software updates smaller in size, and continues to keep it that way because most people do not have very good internet bandwidth.

Talking about one of their USPs, Katkar says that most antivirus products in the market protect the computer from viruses. “Our product doesn’t ask the user to delete an infected file, but instead cleans it to retain his data. In India people don’t back up their files, which is a common practice in the US,” Katkar says.

Eventually Quick Heal also relied on a strong after sales service by setting up their own branches instead of relying on dealers. “Dealers and distributors couldn’t provide the kind of service our own employees, who were trained by us, could,” Sanjay explains.

As of date, Quick Heal has three products for consumers and four for enterprises which covers gateway security and endpoint security, based on different platforms. Currently about 65 percent of the company’s revenues comes from the consumer segment, while about 30 percent is accounted for by enterprises. The company has sold 10 million licenses so far.

Until 2010, the company was entirely self-funded. In 2010, Sequoia Capital India invested Rs. 60 crore in the company to build its global footprint and expand its product portfolio. Mohit Bhatnagar, Managing Director, Sequoia Capital says that they “invested in Quick Heal because of a strong brand and distribution channel.” Quick Heal now also has an office in Japan, besides 23 offices in India, and partners in various other countries including New Zealand and countries in Africa and the Middle East. About five percent of its revenue comes from international operations.

Technology research firm International Data Corporation estimates that the global market for cyber security solutions may grow to
$870 million by 2017 and with the international expansions, at least in theory, Quick Heal looks prepared to cash in its share of the pie.

People and freebies
Sequoia’s Bhatnagar points to a key challenge for Quick Heal and its growth plans, which is to continue managing “a large number of security threats as cyber criminals get more sophisticated.”

Unfortunately, while cyber criminals are getting smarter, the people expected to combat them are not-at least not by education. One of the biggest challenges for Quick Heal is finding talent. “College education in India is not tuned for product companies since Software-as-a-Service [SaaS] companies are the ones that pay higher salaries-colleges prepare students for that. These students get hired by a Cognizant or Infosys,” Sanjay says.

For developing products like theirs, Sanjay says that the students need to be proficient in C and C++ and reverse engineering, but most of today’s students are not.

To counter this, the company spends a year training new hires and has now tied up with colleges to create a syllabus that prepares students better to work with Quick Heal. Another challenge for the company is one that is faced by the computer security industry as a whole-the problem of free antivirus software. “This is a big problem in the US and here as well. But such antivirus software is not good enough against security threats that come through the Internet,” Sanjay says. But still, these do eat into Quick Heal’s market at a time when the drop in computer sales in India too is affecting Quick Heal’s market adversely. To counter-balance this, Quick Heal also began offering mobile security solutions in October 2011.  A tablet security software is also in the works-in its beta phase right now, Sanjay says.

In 2011, there was talk of Quick Heal filing for an IPO but the plan was put off for later owing to market conditions. “An IPO may come in the next two to three years,” he adds. Till then, as Bhatnagar puts it, Quick Heal needs to stay on course to create market leading products-all else will follow.

25 percent of bot-infected computers in India were located in tier II cities, according to last year’s Symantec Internet Security Threat Report XVII

> Entrepreneur India May 2013
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