Meet Dulith Herath, the award-winning founder and CEO of Kapruka. In just over 11 years of operation, Kapruka has evolved by leaps and bounds, scaling from a humble website running on a laptop to a billion-rupee icon of success and disruptive innovation. Dulith, too, has been through a lot – in the past three years, he’s been called everything from a visionary genius to a bootlegger to con artist to the king of Sri Lankan e-commerce. We met up him to find out about Kapruka – but more importantly, about the man behind the wishing tree.
The Whiz Kid
Dulith’s childhood is every gadget-head’s dream. A string of experiments, ranging from the normal to the undeniably cool, dot his history. His very first projects, driven by a need to know, were to take apart his toys and household gadgets and put them back together. This quickly evolved into an obsession with technology.
“I was doing crazy stuff,” he enthuses, reminiscing over a cup of coffee. “I took apart everything to find out how it worked. I was even building robots. In year nine I built a walking, talking robot: it had an ahaskura (firework rocket) mounted on its arm and a light bulb filament behind it. I gave it power from a 9 Volt battery and it would fire. The firework would get under a bed or cupboard and my mom would scream. It had a face made out of car stereo and a cassette tape that would play stuff I’d recorded. It was amazing.”
Dulith he managed to infect others with his passion for electronics, setting up a group called Wiz Kids at Royal College. The Wiz Kids were kindred spirits to the Model Railroad Club of 1960’S MIT: a group of young tinkerers and hackers obsessed with finding out how things worked. Demonstrating an early aptitude for leadership, Dulith assigned them ranks, protocols, even mandatory IDs, with himself running the show. “I’d do anything as long as there was no harm to anybody,” he recalls, regaling us with old exploits.
At one point he recalls his room: “I had like nine computers, and screens, and an absolute ton of gadgets, broken and working. My childhood was awesome!”
But one day, he came to find all of his room stripped bare and all of his gadgets boxed away.
“I’d fallen behind in studies. My father took everything away, even the wires, because I wasn’t concentrating on my studies. That woke me up. It was a huge slap on the wrist and I realized how behind I was. This was about two years before A/Ls. I threw myself back into studies and actually passed really well – I became island 7th in Maths. I wanted to do artificial intelligence. My parents managed to get together the money to get me to the US, to the University of Kentucky.”
There the crunch set in. With no means of sustenance, Dulith found himself running four jobs to fund himself – delivering pizza, working in the cafeteria, being a librarian and grading projects – while taking on a massive 18-credit workload from the university: a full 5 courses that saw him staying up late every day. On top of all this, he was terribly homesick.
He took his timeouts in the form of side projects – ideas that he spun into action over late nights fuelled by pots of coffee. One of these was sithiyama.com, a Java-based site that would pinpoint places on a map of Sri Lanka. To do this, he painstakingly scanned in real maps of Sri Lanka, assembling a massive image piecemeal, and had his friends assist with the data entry – everything from schools to bus stands.
This was in 2000. Back then, Google was still just a search engine.
The art of selling CDs
Sithiyama turned out to be an unprecedented hit. Indeed, it was so impressive that it landed Dulith a job at Microsoft, a fantastic break. Dulith went in as a software architect. Suddenly, the situation seemed much more promising. He was making good money: he no longer needed four jobs. Soon, he had an idea for yet another project: Sinhala email.
“At that time, sending emails in Sinhala was difficult. We didn’t have Unicode. You had to have a Sinhala font, then you type, then the person on the other side has to install the font . We didn’t even have great fonts like we do today.”
He came up with a unique workaround: a web-based app where the server provided the font and a typing interface. Any user could log on and type in Sinhala. Once they were done, the message would be converted to an image, which anyone could access and read without the hassle of fonts. Everything ran on his personal computer, which was running pretty much all the time. Dulith got a ten-year patent for this, much to his parent’s surprise. The patent scroll arrived in a regal box. Delighted, he began to work on getting the service online. Now, he realized, he needed a website.
This took him a long time. Dulith wanted a name: a name that would take him a long way and would be hard to misspell. Something effective. In his own words, “Amazon was my idol at the time.” He admired how well the name worked.
“So I started thinking. Sinharaja? No, obviously. But then I realized: Kapruka. It’s a tree that gives out everything you wish. It’s the Kalpa-Ruksha in India, you know. It’s a wishing well. It’s seven letter word and hard to misspell. I took it. And so Kapruka was born.”
Dulith quickly saw that his new service was being mostly used, not by Lankans, as he had assumed earlier, but by expatriates living abroad. He quickly realized there was a userbase. And that he could sell something to them. He quickly contacted Sugath, a telecom engineer he’d met through the Sithiyama project.
“I called him and said ‘I think I can sell stuff on this new website of mine. If I get some orders, can you ship stuff to Sri Lanka?’ He agreed. I had realized that the first thing you miss when you go abroad is CDs and books. So I got to work.”
Dulith channeled his love of developing into building the necessary for the new venture – including a payment engine, all built in Java. On February 1st, he sent the site online.
On February 5th, he got his first order. It was his birthday. Dulith still remembers it: an order for 3 CDs, from Neil Dias, living in New York. He was beyond himself with excitement. He promptly called Sugath and promptly had it sent over.
At this point, the two were working on an unspoken agreement – it was a mutual desire to work together than anything monetary. The site scaled steadily, with Sugath procuring and shipping stuff.
“Then, for my mother’s birthday, I wanted to send her flowers,” says Dulith. “I went to 1-800-FLOWERS and checked. A dozen roses to Sri Lanka was a whopping 300 dollars. I thought, ‘What the heck, I can do this myself’. So I called Sugath and said, ‘If I add flowers, can you go to Pettah, buy some flowers, get a three-wheel guy to deliver it to an local address?’” Sugath agreed.
“So I did it. I downloaded stock photos of flowers and added a gift delivery section with flower arrangements. And it worked. Suddenly this new thing was getting more attention than books and CDs put together. I was selling flowers for much cheaper than any of those sites ever could – and I was making a large profit off it.”
Things expanded. Dulith added cakes next, starting with Little Lion and eventually adding Fab products as well. Kapruka started evolving into a lucrative online store for many businesses. “Today, just to put things in perspective, Kapruka sells over 2.5 million rupees worth of cakes from the Fab alone. That’s sometimes over their monthly targets for brick and mortar stores.”
Then Dulith did the unthinkable: he banned Sri Lankan IPs. Sri Lankans could receive things through Karpruka, but only Kapruka’s global audience could access the site.
“It wasn’t my market,” says Dulitha with a grin. “My market was the expat community. I didn’t want or need the attention of a Sri Lankan audience. For four years, we flew under the radar.”
This, Dulitha says, was one of the best decisions I made. So many people were trying to clone Kapruka at the time: he left them to fight over Sri Lanka’s yet-to-boom turf while he focused on his core market. When Kapruka returned to Sri Lanka, four years later, it was with a bang: an established company, appearing out of nowhere like the prodigal son.
In the meantime, the growing Kapruka had to deal with teething pains. They got an annex: when that started getting cramped, they upgraded. They got a Kapruka three-wheeler; a Kapruka-branded bike; more employees. Dulith was making a sizeable amount from his work at Microsoft, enough to pay Sugath a decent full-time salary while adding fuel to the fire whenever the operation needed funds.
And then they stared making a profit. Kapruka blossomed. “The thing is, Pettah would charge me three hundred rupees for flowers. And I could sell them online for fifty dollars! Because I was competing against a 300-dollar service.”
The first profit-share was five hundred dollars. They both took fifty percent each: Dulith eventually invested that money and more back into Kapruka.
From maps to wishing trees
Today, Kapruka is 200 people, handling 500 orders a day and over one billion rupees a year. It’s a cash cow, Dulith explains honestly, pulling up the numbers, and it works.
The Global Shop is the second chapter of Kapruka’s operations, one that’s propelled Kapruka into the limelight in Sri Lanka. In one sense, it’s totally disruptive innovation – a seemingly simple idea that nobody thought, cared or capitalized about until Dulith arrived and made it work, flipping over a sizeable part of the retail economy on its head in the process. Perhaps it is Kapruka’s most controversial aspect as well. For every customer served well, it seems, there is another grumbling or making dire threats: in fact, Dulith himself points me in the direction of a thread on Elakiri full of hate messages.
The Kapruka Global Shop was the response to a question: “How do you do e-Commerce in Sri Lanka?”
But at the time, most Sri Lankan consumers simply weren’t ready for e-Commerce. There was a minority – perhaps 1% of the 1% – that would order stuff from Ebay and then wait for a month for the package to arrive: as a whole, people were – and are – still used to hit the shops, see the product for themselves, maybe haggle a bit over the price. He saw two ways to make this work: either give them a thumping discount (similar to what anything.lk does) or give them something they can’t get anywhere else: choice.
“51 million items on Amazon alone,” enthuses Dulith. “22 million Sri Lankans: 51 million items! I’m not talking about the difference between a white phone and a black phone – I’m talking about the difference between a white phone and a brick!”
Dulith worked on this for two years, building what he calls “the import simulator” – a program that can accurately calculate the costs, duties, and taxes of importing any item into any country based on data given on the government regulations and the item. As of the time of writing, it’s not available anywhere else. Ebay, for example, can tell you it costs 45 dollars to ship an item, but nobody knows what’ll happen when it hits customs. The simulator processes the byzantine regulations of customs and calculates, with 99% accuracy, the exact cost of getting any item from the seller to the customer. It also throws up flags for problematic items – for example, drugs, stethoscopes – it’s at the heart of the Price Checker tool that the Global Shop now uses. “
He then contacted DHL to negotiate discounted deals on air and sea shipping. DHL came through with a fantastic price. With 5 employees, great software and an extremely lean operation, the Kapruka Global Shop became a reality.
Of course, it’s not perfect. Kapruka has, over time, accumulated quite a bad rap for delays. Dulitha acknowledges this.
“Customs, you see, is not perfect,” he says. “We bring lots of items in large shipments. That’s how we minimize costs. And when you’ve promised a customer that his item will show in two weeks, and it doesn’t, you look bad. We’ve changed all that: I’ve told my team to be completely honest with the customer – if there’s bad news, break it to them quickly.
Sri Lanka, you see – we have a very unique culture. You go to a stranger’s house, they will offer you tea. Nowhere in the world do you get this. People are very forgiving here as long as you’re true and honest with them. I want to be honest. It’s easier this way.
“There’s a conspiracy theory going around that we accept payments for items, delay them, invest the money and somehow make quick bucks,” he says with a pained smile. “You see, we don’t. We don’t lie. We operate on 5% of the item price – that’s out cut. We pay the duty. We pay the taxes. We provide dirt cheap shipping. The customer doesn’t even have to pay the whole price upfront. We’re challenging everything – I’m competing with everything from Pettah to Singer to Abans to Softlogic. We take responsibility for items. And we do it at a price that nobody else can match. The target was two hundred thousand rupees of orders a day. We’re doing one million a day.”
How does everything work out so well for Dulith? People, he says firmly. It all comes down to people.
“You see, most people are like this,” he says, sketching a hasty graph and drawing a line an inch off the bottom of it. “And then there’s the top performing guy” – he draws another line, four times higher than the rest. “So what do you do? You either bring everyone to his level, or you get better people. When everyone’s working at their best, amazing things can be done.
Right now I have 200 great people handling the work of 800 less effective people. These guys and girls, they’re constantly on the ball. When something goes wrong, they get to it even before I do. This is the success of Kapruka.”
“I can be the most intelligent guy on Earth, but what use are my ideas if I don’t have a great team? What use would my ideas have been if Sugath wasn’t there? This team is my best asset. All my innovation comes next. We work as a family.
That’s my success: I’ve created a family.”
Indeed, Kapruka has a rather unique corporate culture, bolstered by a sense of generosity and sharing. “I believe in giving freely and generously,” says Dulith. “When I give a gift to someone, I give it with no strings attached. I enjoy the giving. That’s the only true way to make it a gift. And that attitude is shared by all the people I work with. That’s the awesome thing about all this.”
As I type this, I scan Dulith’s Facebook page. It’s fronted by a cover picture of the Kapruka team at Hikkaduwa. A flick downwards reveals a social profile filled with photos of his employees. Two men with wide, disbelieving grins look upon those two brand-new Toyota hybrids. A young employee in a Kapruka T-shirt smiling as he clutches a batch of Nexus 5’s. A tribute to mother’s day, done by the Kapruka creative team. 45 photos of Kapruka’s annual emplyee awards night. All of plastered with loving comments from customers, well-wishers and staff alike.
This, then, is Kapruka: a company that believes in its people. And this is the man – or rather, the geek – behind it all.