Founder and CEO Madhav Krishna on three key turning points in the journey of Vahan, India’s largest blue collar recruitment platform

By the time I started my course “Strategic management of technology and innovation” in September at IIM Bangalore, generative AI had come down from the peak of the hype cycle. It had been a couple of months since the MIT Media Lab report was out, highlighting that ninety-five percent of genAI investments are seeing no business returns. I started looking for a concrete use case where genAI is making a difference in India today, and I wasn’t optimistic in my search. That’s when I came across Madhav’s interview on YouTube. Madhav Krishna is the Founder and CEO of Vahan, India’s largest blue-collar worker recruitment platform. Vahan enables over 40,000 placements per month. The Vahan team is proud to have Airtel as a strategic investor, and it was part of the 2019 cohort of the Y-Combinator accelerator program. Through YC, Madhav met Vinod Khosla, and now Khosla Ventures is one of the investors. Through Khosla Ventures, Madhav met Sam Altman, and now OpenAI is a strategic partner.

In this current scale-up phase of Vahan, Madhav must have been very busy. However, he graciously agreed to come and talk to the students in my class (On September 25). Madhav shared three turning points in Vahan’s journey.  Here is a summary:

1. Moving from offering vitamins to painkillers: Madhav started programming at the age of 12, did an MS in AI from Columbia University, worked at E-commerce and Edtech companies for 7-8 years before returning to India with an ambition of making a real impact on society. Vahan was started in 2016 with a voice bot offering for learning to speak English. Anybody with a feature-phone could call Lakshmi, the virtual teaching assistant, and practice speaking English and get feedback. Then, Vahan created verticalized training programs to train the sales force and drivers, etc. They got paid pilots from Uber and FMCG companies. However, pilots didn’t get converted into contracts. That’s when Madhav and team realized that while spoken English is a nice problem to solve for blue-collar workers, the burning problem is finding a job. It is the difference between a vitamin and a painkiller. Vahan decided to go for the painkiller and pivoted to the recruitment space.
   


2. Aligning with the dominant business model: India has 600 million blue-collar workers. 200-250 million are in Agriculture and related areas. And the rest are in construction, logistics, retail, etc. Recruitment of blue-collar workers is a highly unorganized market, and hiring is done mostly by thousands of local agencies, especially in tier-2-3 towns. Vahan was able to repurpose the technology built for skilling towards lead generation. Initial customers started paying on a per-lead basis. However, this business model received pushback from the market. In India, hiring services don’t get paid on a per-lead basis, especially for blue-collar jobs where the churn rate is high. You get paid on a per-hire basis. The Vahan team tried pushing a pay-per-lead model. Lead generation is where they have more control. Moreover, in the pay-per-hire model, payment happens after 30/60 days to rule out the place-and-churn tactics. However, after a year and a half of fighting, Vahan finally embraced the dominant pay-per-hire model. Zomato, their lead customer, agreed to send the recruitment dashboard daily. Initially, not every customer was willing to put effort into preparing and sharing recruitment data in real-time. Vahan guys had to chase them. But over time, the process got automated. Now, Vahan gets live data from almost all customers. Madhav says, “Generally, it is not a good idea to fight a dominant business model, especially in markets like India.”


3. Solving high-value problems in a low-trust society: With the pay-per-hire model, Vahan started scaling. However, they realized that the efficiency of the product was low. From the set of candidates Vahan recommended, only a small number got hired. Given the hiring requirements of these companies, this was puzzling. Vahan decided to probe further. Ultimately, they realized that the root problem was a lack of trust. In India, especially in the blue-collar segment, hiring happens through referrals. It is a very human-driven discovery process, either through friends, family, cousins, etc., or through local recruitment agencies. These are typically solo entrepreneurs with a small team. And they will be on the phone all day making calls. Most high-value expenditure in India, like opening a bank account, buying insurance, a loan, a car, or a home sale, etc., happens through humans, not digitally. In fact, 60-70% of customers of Zerodha, one of the leading stock brokering platforms, are brokers, not retailers. Vahan tried personifying the bots, but that didn’t work. Eventually, they decided to build a platform for recruiters, and that worked. Today, Vahan has a network of 2000 recruiters who use the platform, access demand data, match candidates, and track the progress of the hiring process. Recently, Vahan re-introduced their original offering, a voice-bot, in a new avatar. The bot talks to candidates, asks basic questions, qualifies them, and answers FAQs. It currently supports English and Hindi, and Vahan is planning to extend the support to at least eight more Indian languages and their dialects. This voice-bot has increased recruiters’ productivity. Madhav feels that in low-trust societies like India, it will be human plus AI play for some time. AI will automate the repetitive tasks, but humans will play an important role.

As Vahan scales, it will need to grow its recruitment network and offer more value-added services to recruiters, recruiting agencies, and blue-collar workers. Personally, it was a great learning experience, and I am sure the same was true for students. I wish Madhav and Vahan the very best in their future endeavours.