What drove Rootwork to shut services inspite of making USD 50,000 a month and launch Hyve?

This is a story of the classic product-service dilemma that many technology companies face. Technologists start off as a services company to bring in revenues and this has a few possible outcomes - a) the startup runs for years to come as a services company b) the core team wants to build a product and focus on both (product and services) which, in many cases, yields unsatisfying results c) the company stops services and focuses completely on the product.

The startup in question here falls in the third category. Meet Rootwork. Started by six friends from NIT Allahabad, Rootwork has humble beginnings in Vadodara, Gujarat. Strong on technology, Rootwork did some good work with the Tizen platform and bagged big projects with the likes of Ola and Lenskart. Over time, the company was 25-people strong and it moved base to Bengaluru, where most of its big ticket clients were located.

“ Coming from product background, we did not take the regular 'hiring-and-training-freshers' approach to services business. Most of our hires were through referrals,” says Piyush Rawat, one of the cofounders. This strategy worked well in creating a boutique image for Rootworks and allowed the company to charge premium rates. By March 2015, Rootworks was making USD 50,000 every month. Starting from USD 8 per hour, it reached a point where companies were willing to offer more than USD 40 per hour for the startup’s services.

But then they decided to shut shop. Why? The product bug had bit the team.

“While services taught us the nuances of enterprise sales and gave us a mindset for running a profitable business, the model only scales at a linear pace. Having seen and built apps for some consumer mobile startups, we decided to take the plunge as well,” Piyush told me at YourStory’s MobileSparks conference held recently. “There is no dearth of consumer opportunities in 2015. As entrepreneurs, nothing would move us more than seeing our product being chosen by a customer because it solves a genuine problem in the best possible way. The personal redemption while one does anything, including starting up, always happens out there in the real world,” he adds and the entire team agreed to take the plunge.

Introducing Hyve

Hyve is a mobile-only marketplace for beauty and wellness services. Even the founders were surprised at the choice of the segment. Before our meeting, Piyush shared over email: “Oddly, being a guys-only founding team, we surprised ourselves by choosing beauty as an area of interest. With Hyve, we're trying to build an internet consumer business in the beauty and wellness sector. The selection of the sector partly happened to us, and partly chosen after a bit of research.” The team looked at market size, consumer demand and feasibility of what it could build, and it looked like Hyve didn’t seem to be too out of reach.

The company has more than 1,200 business (salons and spa) listings in Bangalore. The app has 20,000 downloads, 5,000 user registrations and 600 booking requests every month. Salons and spas are just the start, says Piyush. “Think of all the tattoo artists and mehendi experts,” he adds. The idea with Hyve is to not just have independent professionals on the platform but also tie up with chains like Lakmé to enable brands to keep employees engaged and streamline processes.

Hyve is bootstrapped at the moment and has good cash reserves to last it a few months but monetising would be a long-term game. It requires funds to scale up operations and expand its offering. And the market is already getting crowded. I googled ‘book salon India’, and there are plenty of options to choose from: Vbooky, Bookmyspa, The Home Salon, Bellita, Purplle and others.

Globally, Rocket Internet’s Vaniday raised a big round last month, and players like UrbanMassage and Zeal have already been active. In India, Yuvraj Singh’s YouWeCan has backed Vyomo and VanityCube raised $250,000 this week. Hyve’s team has its work cut out but this is also the drive any entrepreneur seeks. Spirits at Hyve are high and the team is bent on making their business a success.

Website: Hyve

Note: Taking reader input into account, the headline of this article was changed from 'This technology startup shut shop despite making USD 50,000 a month. Here’s why' to the current one.