Insights from a true Valley company

In conversation with Shanil Fernando of Leapset

For many of us, the Valley is simply an idea. With the recent flourish of tech-based success stories in the global landscape, mention of the Valley too has entered the mainstream. Often, Silicon Valley is spoken of in the same breath as contemporary technological icons in the calibre of Facebook, Apple and Google.

The Valley is simply where success is bred, born and raised. An unprecedented majority of phenomenally successful brands have been churned in the mills of Silicon Valley. In this context, it exceeds all expectations to imagine that a locally conceived technology developer is rubbing shoulders with the Apples and Twitters of the world.

When Shanil ventured out in 2010 from the comfort of a highly successful career as a founding member of Virtusa, the idea that a Sri Lankan Valley story is in the making may have seemed a distant possibility. Today, against the odds, Leapset – the brainchild of former Yahoo executives and Shanil is an undeniable example of success.

Leapset is based in Redwood City, at the heart of the Valley with offices in Austin and Colombo. In 2012, the company raised its first round of funding from global food distributor, Sysco. In the following year, Sysco acquired Leapset through a majority stake buyout. The journey thus far has been long in the making and true to the founding vision that Shanil intended for the company from its inception.

“What excites a very smart Engineer in the Valley is not the idea of just a well-paying job or the technology they will be working on. Exceptional talent is looking to change the world by means of disruptive technology. This is the premise of all Valley successes and certainly was the founding intention for Leapset.”

As a seasoned veteran in the field of technology, Shanil understood the importance of innovation at the very outset of formulating Leapset. Although the founding team engaged in consultancy services in the years leading to the incorporation of Leapset in 2011, the idea of ultimately entering product innovation was the persistent driver.

At the turn of the decade, accessibility to the internet began revolutionising the enterprise landscape. With cloud services and digital means at their disposal, the small and medium scale merchants were redefining their prominence in the business-place. This change in dynamics provided Leapset the initial foothold into the market.

“We understood that with the advancements in technology, SMEs are inevitably poised to transform their customer relationships. Suddenly, businesses found themselves in an infinitely connected operational landscape with multiple communication channels to reach masses of potential customers in a very personalised way. Naturally, technology was going to bridge the digital divide and usher in the new age of digital and social connectivity.”

Restaurants and dining in Shanil’s opinion and that of the growing Leapset team held great promise in this context. The competition in this space lacked the in-depth understanding of the market necessary to facilitate a comprehensive solution for restaurants.

Leapset has identified five primary customer touch-points that are critical for the successful operation and subsequent growth of a restaurant business. This spectrum of touch-points spanned from the point of discovery, to reservation, point of sale, payments and loyalty.

Typically, restaurant operators are required to deploy multiple technologies from multiple providers to address the requirements of each component in this spectrum. These disparate systems introduce a painstaking dimension of synchronisation and integration, a manoeuvre many merchants are unwilling to undertake.

In stark contrast to convention, Leapset provides a modular, cloud-based, highly scalable platform able to service every component of the customer interaction spectrum. However, among the many challenges of designing an end-to-end composite technology, the need for unfailing stability is perhaps the most emphatic.

The Leapset platform is required to meet rapidly fluctuating levels of demand at precarious operational points such as the point of sale. The POS system being the core of a restaurant business, its function is mission-critical. An erroneous POS system is capable of bringing the entire operation to a halt.

Leapset has succeeded in delivering unfailingly under such trying conditions, consistently exceeding expectations in terms of performance and stability. Presently, the Leapset platform sits an approximate 6 million diners per year in the US through its reservation engine. Further, in the preceding month an estimated $ 70 million worth of transactions have been processed through the Leapset POS system. To paint a more elaborate picture, a peak volume of over 10,000 transactions are processed through the same system with a near real-time latency, a feat that firmly testifies to the capability of the platform.

“A Valley company is characterised by a few aspects. Firstly, such a company should be disruptive in the product their building, for example by way of changing an entire industry. They must also be prepared to embrace change and adapt quickly and fail fast. Finally, the company should be based in the Valley. We’ve continued to satisfy these criteria from the very outset.”

Exemplary of the company’s ability to relate strategically to other Valley successes, Leapset emulates a Hardware design process very similar to that of Apple. System designs are developed in the Silicon Valley and once the design is completed, multiple rounds of testing and prototyping happen in collaboration with the engineering team in Sri Lanka and the manufacturing partners based out of Taiwan. Leapset has a team based in Taiwan to ensure good alignment and integration between the manufacturers and the design and engineering teams. The finalised design is then mass manufactured in Taiwan and shipped directly to customers. As a result of this stringent process, the software is very tightly aligned with the hardware.    

Armed with a hard-to-beat value proposition, Leapset recently rolled out its previously California-centric operation across the US. The move is in line with the company’s vision to have at least one of its products in each of the 1 million restaurants in the US.  “The US restaurant industry generates $ 660 billion annually. Last week we saw one of our closest competitors – Square, a six year old company, list in the NASDAQ at a valuation of just under $ 4 billion. This is the market, the opportunity and the challenge in front of us.”

The alliance with Sysco has provided a mutual strategic benefit for both Leapset and Sysco. For Sysco, Leapset is a value addition, allowing the global food distributor to strengthen its offering with a fully integrated product platform. On the flipside, Leapset stands to gain from the established 45% market share enjoyed by Sysco. Given this strategic alliance, Shanil and the Leapset team are optimistic of penetrating the challenging US market in a short span of time.

“Ahead of our rollout across the US, we implemented a major rebranding exercise. The objective of this rebranding was to better align ourselves to our market segment. We want to assure our customers that we understand their needs on a fundamental level and we are geared to cater to them. Our new branding conveys this message very effectively. The rebranding is in effect in the US already and will be rolled out in Sri Lanka very soon too.”

Shanil and the team at Leapset have kept their sights set firmly on the local talent even as they scoped the global markets. Leapset has partnered and initiated many measures that set out to support and encourage entrepreneurial thinking in the island.

“The past six months have been very interesting for us as we have seen a great surge in the local start-up culture. The current IT industry of Sri Lanka is skewed towards providing BPO services. We need to move out of this service model and place emphasis on product innovation. Israel has succeeded in establishing itself as a product innovation hub. They are now credited with the most number of NASDAQ listings behind the US. We need to implement this model in Sri Lanka. The best plan of action is to use the local market as a test-bed while keeping our sights firmly set on the global market.”

As a proud Sri Lankan representation in the mammoth Valley technology landscape, Leapset is setting an unprecedented benchmark, paving the way for many innovators hot on the trail. Shanil and the team are excited not only for the future of Leapset but also for the future of the industry as a whole. With the future in sight, Leapset is proof that the American Dream is alive and well beyond its shores.