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A serial founder's journey towards the light | Shreya Mishra @ SolarSquare
251 Plays3 months ago
As solar panels become more affordable and government subsidies make them attractive, homeowners can now switch to solar energy for the same cost as their current electricity bills. In this episode, Shreya Mishra provides practical advice and insights from her entrepreneurial journey- she talks about her first venture, Flyrobe, and how she joined SolarSquare to build its retail side. She also sheds light on its go-to-market strategy, the challenges of scaling up quality and talks about India's target to equip 1 crore households with solar panels in the next 3 years.
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Read more about SolarSquare:-
1.Startup by IIT Grads Helps Indian Homes Run on Zero Electricity, Earns Rs 200 Crore in Revenues
2.How SolarSquare Is Helping Indians Harvest Solar Power With Its Full-Stack Solutions
3.‘Simplification, policy push has turbocharged residential rooftop solar’: SolarSquare co-founder
4.This Startup Earns Rs 200 Crore By Enabling Zero Electricity Cost For Households
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Transcript
Introduction and Background
00:00:00
Speaker
Hi, I'm Shreya. I'm the founder and CEO of Solar Square.
00:00:15
Speaker
Every few decades, it is possible to build a large multi-generational business thanks to a combination of technology, macroeconomic and social factors. For example, in the 1990s, it was possible to build a large business around inverters and generator thanks to a combination of unreliable supply of electricity and the growing demand for electricity due to the increasing affordability of appliances like TVs, fridges, schoolers and more.
Opportunities in Solar Power
00:00:42
Speaker
Right now, a similar opportunity exists in the space of household solar power plants. Solar panels are more affordable than ever, and there is a government push in the form of subsidies to encourage homeowners to switch to solar. For a homeowner, the decision is a no-brainer. With the government subsidies and easy instalment plans, they end up owning a solar power plant at the same cost as their regular electricity bills. Shreya Mishra, the founder of Solar Square, helps your host Akshay Dutt to understand this amazing opportunity and how Solar Square is leading the pack in the space. Shreya is full of practical advice and insights for founders thanks to her roller coaster experience as a serial entrepreneur.
00:01:24
Speaker
Stay tuned for this amazing conversation and don't forget to subscribe to the Founder Thesis Podcast on YouTube or any audio streaming app.
Shreya's Entrepreneurial Journey
00:01:41
Speaker
Okay, so Shreya, let's start by understanding the trigger for becoming an entrepreneur. Just talk to us a bit about that. so are Sure, sure. So I think, you know, 2010, 11, 12 was the you know first wave of entrepreneurs and tech entrepreneurs were, you know, coming coming sort of front and center in India. And I am an engineer from IIT Bombay. So obviously a lot of them were from IIT Bombay or other IITs. So it was all the chatter in our ecosystem.
00:02:13
Speaker
And my first sort of schist with entrepreneurship um was when, you know, so we had a small sort of education venture when I was still studying in college at IIT Bombay. And we ended up participating in the B-Plan contest of IIT Bombay, it's called Yureka, ended up winning it. But the award was five life rupees. to you know build the business and also a seven-day boot camp at Stanford University, which was an international boot camp where students from student to entrepreneurs from across the world had come in, spend a week at Stanford, attend expert sessions, but also actually visit startup offices. So that is this is back in 2012. This is the first time I actually got a vibe of Silicon Valley. And you know reading about Silicon Valley in news or in books is very different.
00:03:03
Speaker
from actually visiting those offices. So I remember visiting the Airbnb office, Google office, zinga ah you know, a couple of social impact startups as well. And so it was very fascinating. And that is where I decided, you know, this is yeah or nine you know like entrepreneurship is the thing to do. And it's challenging, it's scary, but very rewarding. ah You know, the journey can be very dev rewarding. So that's how I you know decided to be an entrepreneur. Of course, I had already been placed from campus. So I was placed at the Boston Consulting Group, which was also a very attractive opportunity to just pass by. And I thought you know i I should definitely take a few years of work experience before I jump jump back into you know building something. So I graduated from IIT Bombay, joined BCG, wanted to... you know That education venture, ah it never took off.
00:03:53
Speaker
Yeah. I mean, so we ran it. We ran it for about a year. ah And you was it was a nice project of sorts, but I don't think it had like real legs to be a big business. So, you know, I realized that and, you know, decided, hetk like was it an ITJE entrance kind of a business? Oh, no, no, no, it wasn't that. It was actually a business for ti for students from tier two cities. It was a monthly magazine, you know, before EdTech, this was actually a physical magazine that we used to run. And the magazine would have, well, you know, the ah the writers of articles were students from like prestigious colleges like Aims, IIT, law schools, et cetera. And we would talk about a variety of things that somebody in their 9th, 10th, 11th, 12th standard wants to know, the exposure they can get. ah you know So we would write about things like, you know what are the Trinity school exams? or What does a career in law look like? What does a career in sports look like, et cetera, et cetera. So you know just giving them more exposure and information of what's out there. So that was that. was that go and
00:04:57
Speaker
yeah So it was school to school, yeah obviously you know, pitching in a se school assemblies. Correct. Then I would go like school to school, pitching in school assemblies to get students to subscribe. And I think we had some 400 subscribers of the magazine and we would edit it, you know, students from IIT Bombay would be like editors, designers would get it printed somewhere in, now you know, and so, you know, was it was interesting, you know, for the See, the first time you sell something to somebody, you know, whether it's on a lemonade stand or, you know, in a college venture, I think that feeling that gratification is very, very real. kihapukaak there You know, um I think so that is what that venture was for me. You know, I for the first time I sold something to people. So that was you know very, very interesting. What it takes to, you know, acquire customers, so get get their feedback, understand what they like, don't like.
00:05:50
Speaker
That was very interesting. okay So then what? So yeah, after at campus, I was placed in the Boston Consulting Group, so worked at BCG for two years. Then again, thought, yeah, 10 hours a time, let me start up. So I was wanting to do something in the food space at that time, ended up meeting somebody at Yellowstone Capital. They had a large restaurant portfolio. Somehow got convinced, either I can come, or I can start up. Then maybe you go and start up. So I ended up joining them and worked there for a very little time. But this was you know ah interesting to see the world from an investor's lens.
00:06:24
Speaker
How do they evaluate a business across different stages, early stage, growth stage, mature, large, profitable companies. So a lot of interesting learnings, you know just sitting in those boardrooms, understanding how a businesses a health of a business is evaluated or the potential of a business is evaluated. But that was a very short stint. you know I was itching too much to start up. So then I started my you know i ah partnered with two other IIT Bombay folks and started my first venture.
Lessons from Flyrope Experience
00:06:53
Speaker
For the first you know five, six months, you were just researching. kakana Sharing economy was all the buzz at that time. And it sounded like it sounded like so good. Sharing economy is like good for planet, good for consumers, good for an economy, ah better utilization of anything, whether it's cars or homes or whatever.
00:07:11
Speaker
So that's when you know we got onto the idea of building a shared wardrobe for women. And you know there was a company called Render Runway in the US, which had done decent by that time. And so we said, OK, let's build the Render Runway for India and let's build the fashion rental service of India. So that's how Flyrope came into being. And after like a lot of consumer surveys and researches and many iterations, we launched Flyrope in 2015.
00:07:41
Speaker
okay For our listeners, you know sharing economy is not a buzzword today, but Uber, Airbnb, all of these were essentially considered part of sharing economy like around 2015, 14, 15 timeframe, and there was this whole wave of Uber for X startups also. yeah so like Absolutely. You launched it as a pure online play? Yes, so we launched it as a pure online play, ah launched it as a service for like to be like a rotating wardrobe for women that you know you have this you know website with a bunch of you know really good a high quality fashion that you could you know just book, wear, return, you know book, wear, return. And so that's how you get like a refreshing, you know, refresh in your closet because women can never have enough.
00:08:32
Speaker
clothes and also, you know, it's ah the shelf life of clothes and fast fashion is so low. So it's also sustainable, you know, to just sort of where any, you know, loop back or return and get something new. So that's how it started. ah And ah yeah, it was an online only service at first. And okay. Okay. ah Did you find product market fit? Yeah. i Right. So I think that's a, and That's a very deep question. So I would say that our I think product market fit is not a one-day affair. I think there are multiple stages of product market fit. So I think if I start by, you know, first we thought, okay, women would rent for like, you know, office wear, evening wear, parties, ah their social events.
00:09:20
Speaker
And for about a year, we were renting Western wear largely. And you know we wanted to be like this you know rotating closet, like I said. But very quickly, we realized that renting is a new concept. And for consumers to accept it for something you know like more regular routine wear was very difficult. right Where we started finding product market fit was fashion occasion wear. if yeah If I had to attend a wedding or a family function or somebody's baby shower, um etc., that's when the concept of renting was a lot more amenable. So our first state of product market fit was after a year. We had raised our seed round from Sequoia. After a year, year and a half, we realized, you know, year Western wear to nature. like
00:09:59
Speaker
So we shut that and we move to Occasionware. Then when we went into Occasionware, the next layer of product market fit was understanding that Occasionware is very high stakes. If I'm renting something to attend at my friend's wedding, it's a very high stakes event. Renting it online, there's a lot of jitteriness, if it doesn't fit, on the last day, if it doesn't look good on you or if it doesn't fit, you have no alternate. So we realized that an omni-channel strategy will work better where people can try, touch and feel. And for high-stakes occasions, they they're also willing to like, you know, go for really to hire, you know, like our rental would range from 2000 bucks to 50,000 bucks. So there were people who were actually paying 50,000, 30,000 bucks to rent something for a day because it was a 3 lakh rupee designer wear.
00:10:43
Speaker
ah From somebody so we realize that the offline channel worked well the third phase of a product market fit was realizing that women are very emotionally attached about their fashion men Like would really the concept of renting really clicks with men because they have no emotional attachment to their clothes They actually are also quite lazy about dressing up for special occasions. So if you give them something quick ah and easy and easy on the pocket, you know, easy to just wear and return, ah they would actually accept it a lot more. So our third stage of product market with was understanding that, okay, after only channel, you also get into menswear. So we had gone through all of those iterations. It was a three-year journey going through all of that. We raised $11 million dollars in that journey, Sequoia, which is our peak 15 and Chirati Ventures were our investors. A lot of learnings, but ultimately, you know, the I think the question of
00:11:35
Speaker
PMF is, you know, whether consumers want your product, but there's also the question of how large is the market, right? So yes, there is a set of consumers who like what you're selling, what you're giving, but how large is that market? And whether, you know, when you have raised $11 million, dollars ah The TAM better be at least $100, $200, $300 million dollars a year. right And that we were not seeing. So the capital raised in the company, the TAM that we were seeing, and that realization, you know i mean as a founder, ah you are optimistic about a new idea. right like Everything will seem like, oh, it's too new and we don't know the TAM. But as a founder, you have to believe and charge through.
00:12:15
Speaker
So I think that optimism was there for a very long time. And my biggest learning from my first startup was that founder optimism and delusion, there's a very thin line. And sometimes you know you just have to do it. You know you just have to do it, right? If it was that easy to say what will work and what will not work, then you know every entrepreneur would be successful. So I think you know that optimism is also right. But then there's a point at which you have to come and say, OK, I have to now objectively answer. ah whether this makes sense, whether the the market size makes sense, whether the ah you know whether the business model makes sense. So that happened to us at the end of like three, three and a half years. And yeah, so then we decided to exit. So we sold the business in 2019. What was your peak revenue there? or peak yeah yeah i seen i yeah Our peak revenue would be like two, three crores a month.
00:13:09
Speaker
I think that is where he had gotten to at the end of three years. yeah
00:13:16
Speaker
And how many offline centers did you have by then? Were you in multiple cities? Yeah. So we were operating in the big metros, Bombay, Delhi, Bangalore, Hyderabad. I think at our peak, we had four stores, one in Bangalore, one in Hyderabad, one in Bombay, one in Delhi. So four or five stores, I think at our peak. Yeah. Okay, okay, okay. And so you were acquired by Rented Bay, which was on Shark Tank that founded... Correct, correct, correct. So they had a group of investors who had invested in Rented Bay and when they knew that Flyrope, you know, we wanted to exit. So then their investors said, okay, we'll fund the so acquisition of Flyrope and then you run Flyrope. So now when Flyrope is the brand that she runs and so yeah recently she was on Shark Tank.
00:14:06
Speaker
oh good okay yeah What is you know that thing you said about optimism versus delusion? What does it take to decide that ah you want to exit your ventures? ah what What are the signals that a founder should look for? ah you know just to ah For a founder to get that wake-up call that, no, I have crossed that border between optimism and delusion. What signals should a founder look for?
00:14:36
Speaker
Yeah, yeah. See, I think there are two parts to it. One is that you have the luxury to decide yourself because you owe you had capital, but you know, you decided kiabi break likega then this business doesn't make sense. Let me pivot and use that capital. Many founders, by the way, have done that, that they decided to pivot extremely objectively, even when they had the choice to keep experimenting, keep going. Right. I think that is, of course, a good scenario where you are yourself taking that call. Right. And I think a lot of objectivity there, Akshay, right? Because one PMF doesn't happen overnight. So you keep iterating, you keep iterating. And then there comes a point where you're saying, okay, I've tried Hajar Tarika and now this is still not kicking with my consumer, right? You have to listen to the consumer very intently. You have to be very objective about
00:15:20
Speaker
the you know, the the the third the the market size, the conversion that you will get, the TAM that you are serving. So I think that is one. And that objectivity I think comes, you know, doesn't come overnight. I think it's a journey. It's a journey of experimentation and listening to a consumer. And and also sometimes I feel Having strong, you know, that's why I believe mean angel investors are so important to our ecosystem. I don't think an investor can guide you in that moment, right? In those critical moment where it's do or die, where it's survive, where it's taking decisions like, oh, I have to pivot, which is very tough many times, even for a founder to accept because you're so married to the idea that you started and you so much start believing, drinking your own Kool-Aid.
00:16:02
Speaker
that having angel investors who can help you see the facts, who can give you some you know sense of ah you know what is the um what is the real picture looking like, what are the metrics really telling you. So I think that is one. you know Look at the numbers objectively. you know Giving up too soon is also bad, but trying i mean resilience meaningless resilience is also won't get you anywhere. right So but you know be resilient, believe in it, but there comes a point where you have to objectively say, OK, this is not working. Third, I think having good angel investors as mentors can really help you see things, because they've gone through that journey of doubt, where there's no right or wrong. You're just still experimenting. Nobody can tell you the answer. And you have to find that conviction deep in your own gut. So I think those are the three things that worked for me.
00:16:53
Speaker
And I think in our case, we took too long. like how Now I see some folks who are like second time founders or people you know who've worked at startups for a very long time and then startup. They are very comfortable with the idea of pivoting. you know In six months, you don't think this is working, you raise venture capital, you go back to your investors and tell them, okay, I raise money from you, you trust me, okay, I want to pivot. next six months I want to try something else. That doesn't work if you pivot again, right? I mean, the the the legendary story of Paytm, right? Like even Paytm was not Paytm when it started. It was some vast business and then, you know, it changed so many shapes before it became Paytm. So I think being comfortable with the idea of pivoting
00:17:33
Speaker
Sometimes you feel, oh, I've sold this vision to everybody, or this is, you know, a lot of founders struggle with that, right? That I've sold this vision to my team, to my investors. If I just pivot and, you know, shut this overnight, what happens to my customers, what happens to my investors, et cetera, what happens to my employees? But I think, Ultimately you are in this to build something large and it is that temporary pain of pivoting and accepting I was wrong and I want to pivot, but you have to go through that. So I think being comfortable with the idea of pivot but will be the fourth thing. you know it's It's absolutely okay. That is that is why 90% startups fail because the first i idea it wasn't supposed to work.
00:18:12
Speaker
So yeah. Right, right. You had enough cash to keep going or were you running out of cash? So for an hour can you display yeah so in our case, we raised three rounds of funding. So we had enough cash to keep going at it till a point. And then we didn't have cash. So for us, the reason to sell was because we were, we were out of money. Right. So like I said, that is the first camp. You have the choice to pivot or exit. The second is when you don't have a choice, right? More often than not will be the other camp where you don't have the choice, right? Like new investors are not willing to back you. You don't have, you know, sometimes you won't even have and have an exit, right? Sometimes, ah you know,
00:18:49
Speaker
you just like though The toughest part is when a startup just ceases to exist. right For me, I'm still very happy because Flyroam exists. right like The brand is still there. you know It has now 12, 13 franchisee stores across India and you know consumers to use it. like But many times, the tougher part is where there's nobody willing to invest. You can't continue bootstrapped. You can't turn a profit, and there's nobody willing to buy you. So in that case, you just cease to exist one day. right So I think more often than not, it will be the lack of a choice. Yeah, that is true, true, true, so true. And ah did you get any sort of meaningful exit? Not at all. in the When it was acquired? Not at all. So it was pretty much a crash landing you know towards the end. And we were barely able to you know pay some of the dues that we had. So it was a very, very tough six months right going through that exit. And COVID had it when the transaction was happening.
00:19:43
Speaker
So even the acquiring folks, like even they had to arrange their funds and even they, they took a little bit longer to arrange the funds. And it was a very, very tough time. So I think um for us, like the acquisition was, you know, I think nominal, uh, you know, fewros and it was just to pay off some of the bills and debts that we had in the business. So it was just that. and Okay. Okay. ah Okay. Okay. So, uh, how did you, uh, get into solar squish? What is the backstory of solar squish? Right.
Joining Solar Square and Market Insights
00:20:14
Speaker
So, you know, I think that's a lot of serendipity led me here. When I started the Flyrope in 2015, my husband Neeraj, he started Solar Square. So, both of us started on different tracks, different entrepreneurship tracks. he is a ex you know He's my batchmate from IIT Bombay. After IIT Bombay, he joined Deutsche Bank. So, he's an ex-investment banker. He understood finance.
00:20:34
Speaker
and you know Solar was this you know new interesting energy transition that was happening and it was becoming real and a lot of corporates and you know commercial customers were going solar. So he ah he saw he understood that solar will have a lot of engineering and financing because one it is execution of a large solar project which requires design engineering hair etc. but But it also requires financing to sell it because the upfront cost of solar can be high. So a lot of financial you know solutions were coming to increase adoption of solar, even among corporates. So he said, this is like a nice sort of mix between um financing and engineering, both of which you know is an engineer from IIT Bombay and ah you know an investment banker from Deutsche Bank. So he found his own there and he started Solar Square.
00:21:23
Speaker
again in 2015. And in the first five years, and he was very different from the choices I made. So I raised venture funding, had like a hundred member team, you know, million visitors on my website and app every month. And very different, you know, we very different path I took. And he took a very non-glamorous path. He bootstrapped. We put all of his and his dad's savings into the business. He bootstrapped and tried to build a profitable business. So, you know, he was one of the very few people from IIT who were, you know, were building a first generation bootstrap business, you know, in 2015. And it was a gold rush. Everybody is raising venture capital. So for five years he bootstrapped and he bootstrapped it to 100 crores a year in revenue. So by 2020, by the time I had sold Flyrogue, Solar Square was 100 crores and it was bootstrapped and profitable. So, but, you know, he always wanted... How did he achieve that?
00:22:18
Speaker
Right. So I think ah one that that journey of bootstrapping to a hundred, ki like what what market was he targeting? ha and ah you know they Talk to me a bit about that. Sure, sure. So they were targeting the commercial industrial solar segment. So basically, large corporates, Fortune 500 companies, they wanted to go solar because solar was now the cheapest source of power. you know By 2013-14, everybody understood key you know solar is the cheapest source of power. So if you are running a factory or a building, electricity can be a large part of your monthly expense. So people understood your one-time investment. I invest in solar. In less than five years, you will break even. And it gives you 25 years of free electricity.
00:22:57
Speaker
So that is why consumers were you know more and more going for solar. ah He opted to you know do so of like full end-to-end solution for like large companies. So their sort of strength was actually in project execution, designing, engineering. And solar is, you know, like any machinery, right? Like good and bad can have a lot of difference, right? Like, or any like infrastructure project, right? Well-executed and bad-executed, you know, we know how much of a difference can there be on quality or how much repair expenses you have on the performance of rooftop solar.
00:23:30
Speaker
Because rooftop solar, once you install, let's say i'm ah I'm a Johnson and Johnson, and I'm installing this large solar power plant on my factory, ah the performance of that power plant really matters because I only save money when it produces power. So having good good design, engineering, and project execution expertise is what Solar Square stood for. So they didn't have capital. They didn't have a lot of experience. They were bootstrapped. So they said, we'll do the hard grind of being very good executors. right There was no sales guy in Solar Square up until 2019. So I think the first 200 odd crores worth of solar were sold alone by Neeraj. So he would go and you know sell it to like large you know promoters and corporate houses ah you know and decision makers there. and And the word of mouth started to spread for Solar Square.
00:24:20
Speaker
because you know somebody who runs a food business in Gujarat would say, OK, this project was executed so well, then he would recommend Solar Square to another food business in Gujarat. And Neeraj's co-founder is Nikhil. I mean, Neeraj and Nikhil started the business. Nikhil was the engineering backbone of the business. So he is a Pune University grad. He's an ex-R and&D from Panasonic. He's the guy in the details. So he would be the guy who'd really ensure safety, quality, control, execution, control, et cetera. And neither would be the one who would bring the business. So the two of them tagged. It was a 30-member team. ah you know There were you know some ah three, four like senior people. you know They hired on engineering front and projects front. So they got to but be known in the industry for very high-quality solar execution.
00:25:06
Speaker
And I think integrity was another thing. they you know The way they ran the business, ah you know consumers, you know they never miss sold or cheated. Their vendors were all very happy with them. So the brand reputation of Solar Square kept getting built. And everybody would say, who are these 26-year-olds who are suddenly coming to this industry? And Solar Square used to rank ahead of many large solar companies. So by 2019-20, we were ranking as the top five EPCs in india
00:25:37
Speaker
And everybody would say, you know like what is the EPC? ah Engineering Procurement Construction Company. So solar EPCs is what they would be called. All the solar companies which do so solar execution. So there are industry rankings for solar EPCs and they would rank as the top five, top 10, I think three, four years in a row. so so you know that was An EPC is selling ah like an upfront payment service. right like they They don't sell, for example, per unit ah because you could sell solar by charging for the power, like you pay me per unit of power instead of paying me for the cost of asset.
00:26:13
Speaker
god they They don't do that. Correct. So there are there are two models in solar, right? Either you buy the whole power plant, then it is the consumer has bought the plant and every unit is free for him, but right? So he makes he gets free electricity for 25 years. The other model is that you sign like a 15 year, 20 year power purchase purchase agreement. where the solar installer invests in the solar asset. So I will put the investment and I will charge you for the power produced. And let's say you are buying electricity at 9 rupees from the grid, from rooftop solar I'll sell it to you at 6 rupees. So the consumer says I make money and so that is the other model.
00:26:50
Speaker
90% of solar squares business was capex where you would just sell, but 10% they did do, you know, they did experiment with this power purchase model as well. But of course there you had to raise a lot of capital and they were young and, you know, they, they didn't, hadn't raised any capital, uh, you know, by 2020. Yeah, right. I guess I'm plus solar would have been more in the power purchase where I'm plus had raised tons of capital. So fourth partner, yeah. ah yeah So those were the seasoned entrepreneurs, you know, like very senior entrepreneurs and they had raised all the private equity capital. So, you know, at first the question that neither the nickel would get, ki to mar um marhu chali sale you are coming and selling me a 25 year asset, right? Like how do I trust you and remain in business for the next 10 years also, you know, to give us service. So that was, it was difficult, you know, it was difficult to win that consumer trust to get your first few consumers. But I think after the first few came,
00:27:47
Speaker
The word of mouth, you know, really took them ahead. ah What was the percentage of revenue from maintenance? that Typically, like, you know, companies would sell these kind of industrial machinery have anywhere from 20 to 40% of the revenue coming from after sales, service or parts. What was it for solar school? So I think with these guys, it wasn't that much. I think for these guys, it would have been barely like 5% or so, not 4, 5%, not more. um so So solar maintenance is not because at least for five years, the you know in these large industrial power plants, for five years, we would sell the maintenance package upfront to the consumer. So we'll charge upfront to the maintenance for the next five years. And any sort of spares, repairs, et cetera, would be covered by Solar Square.
00:28:38
Speaker
So, you know, maintenance is not, you know, that big a revenue contributor for the solar company. Interestingly, it makes a lot of difference with the consumer, however, because without maintenance of power production can go down drastically. So good maintenance is actually valued a lot by consumers. But, you know, it's just the nature of the industry that, you know, it's not that high in terms of revenue per se.
00:29:04
Speaker
Okay. Okay. So now when your stories intersect 2019, uh, talk about that, like what what was, what did you see as your role in this? Right, right. So, you know, in 2019, basically when I became available and I had sold a fly rope, uh, I was figuring out what to do next. And I wanted to do something entrepreneurial again. You know, it was very tough for me to go back into a job and, you know, like do something, uh, you know, uh, ah something else. So, Neeraj basically said that, you know, why don't you join us? And we are looking to start the retail solar, like most small. So, earlier they would do like large corporate solutions. So, it would be half a million dollar ticket size, one project, right? And he said, hey, you know, we I see this huge demand coming up and S&Es want to go solar, housing societies want to go solar, homes want to go solar.
00:29:53
Speaker
This is going to be a more retail-like business, where you won't do it like ah you know like an EPC company. You'll actually have to execute it like a consumer durable or a consumer business. right So it has to be standardized, high-speed customer acquisition, high-speed ah operations. And it can be a very different beast than what you know we've been doing. So that's when I came on board, and you know I said, key you know let me let me try and see if I can build the that consumer side, the demand side, um you know, of this business. So that's when I joined in and I joined in in 2020 and of course COVID hit, you know, I joined I think in January and COVID hit in March. So, you know, it was a tricky, 2020 was a tricky year. We were still bootstrapped and we were experimenting in a new business vertical, right? As a bootstrap business with no plans to even fundraise.
00:30:44
Speaker
So in 2020, we started our operations into residential solar. And interestingly, like another backstory is that in 2020, Neeraj and twenty nier than I were also expecting our first child. And we went here we went to Bhopal, which is my hometown, on, I think, 17th of March. And on 21st March, Modi Ji on national TV says, all shut, can't go anywhere. So we were locked down. By the time the lockdown opened, I was in my third trimester. I couldn't travel again. So we were locked down in Bhopal. So a lot of serendipity happened. Me joining Solar Square, us getting locked down in Bhopal, and then us deciding to start residential solar experiment from Bhopal.
00:31:23
Speaker
So we said, a lot of homes here, it's a tier two city. Everybody lives in independent homes. Everybody's at home. And there were some subsidies at that time. So it seemed like the right time and right market to start the experiment. So we took an office right across my home in Bhopal. So literally across the road and there's like a you know our solar square office in Bhopal. It's still there. That's where we run our operations from. And so you know we started experimenting. We built a team bit by bit. First 10 people joined us in the residential business. And we started you know our operations. yeah In Bhopal and yeah that you know from there the what started out as an experiment into residential solar very quickly we realized that this is a much larger opportunity than even commercial solar and it was fairly under penetrated at that time opportunity was not very obvious.
00:32:11
Speaker
because commercial solar was this large, you know, like billion dollar industry and residential would was very small. So people were like, yeah yaokway industry to you know it doesn't seem very big. Are homes even going solar? Do you see a lot of potential here? But we saw a lot of future. um We were very clear that, you know, Haridhar solar will be a thing, that rooftop solar will be ubiquitous. Just like you have refrigerator and color TV, you'll have solar on every home. So we saw a large opportunity and we felt the timing is good. ah You know, industry has not yet inflected. So we'll get two, three years to know learn the chops, build the foundation. And then when the demand is there, you know, it will be a wave that will take us ahead. So that was a big inflection point in 2020, you know, and when we decided to pivot. What was it? What was the data you saw that was telling you that this is going to be a big opportunity?
00:33:04
Speaker
Yeah, that's a good question. I think one of my big learnings you know after now being a second-time entrepreneur is that the consumer tells you everything, right? And I think it is the value that the consumer sees in you, how how how much how quick he makes his purchase decision with you, whether he tells five of his friends, yeah men inzaiaa bi sallo I think the answer of your you know product market fit lies in what the consumer is telling you. So very quickly, what we in two or three months of running Solar Square, ah yeah of the residential solar operations of Solar Square, ah we realized that there is this huge latent demand, interestingly, that consumers want to go solar. But because there is more organized professional company, there are only mom and pop ah shops and unorganized businesses, which don't give you a lot of trust. Now, for a family to switch to solar, like a typical ticket size would be 2 to 3 lakh rupees. So you can imagine it's a very high ticket size category. Now, high ticket sizes require high trust.
00:34:03
Speaker
um right So people were not finding that trust in their service provider to say, aamadula group and a now I want to switch to solar and I will make my own electricity. right So it's a big decision for a family also right to say, OK, I'm switching to solar. I'm going to make my own electricity now. um And especially when the category is still new and consumer awareness and consumer myths were still shaping up, right like all of that. So we one thing we realized was that there was latent demand. People wanted to go solar. People understood the benefits of solar vaguely. but they didn't find a service provider who they could trust to take the plunge. So one we realized it was a supply side problem, which is a good problem, right? Demand here, but supply here. So we become that supply, number one. I think number two was how quickly you know how quickly we were able to get to one to two corollars of monthly revenue.
00:34:50
Speaker
Right? And I think it took us less than six months to get there. That too just from Madhya Pradesh, right? We hadn't even opened up our operations plan in India. So we were very clear here for MP like state, which is the bottom 10 GDP per capita states of India. If you can find this kind of demand here, you know, you can find demand everywhere. Number one, number two, very good thing we realized was that we were selling all of this in COVID. you know where all consumer demand had dampened. So we'd also realize this is a very you know recession-proof and evergreen kind of a consumer demand because it helps you save money. they So it's ah you know ah whether the economy is good or bad, saving money is always in fashion. right So we said, ka it is also going to be a very resilient demand.
00:35:31
Speaker
Third, I think are you know the big ah you know the big thing that we were seeing was that it made it just made so much sense. like i Distributed solar is the power, is the future of energy everywhere in the world. right I think it's a trend that is irreversible everywhere in the world. It's most efficient. It's cheaper. It's cleaner. So we said, you know naturally, this is going to be the way the world will you know the world will go. And so this is going to be like a 30, 40-year-old like big consumer transition, and ah you know, for the next 30, 40 years. And so it's a very, very large business can be built here. We also saw internationally a lot of good businesses were created in this category, a lot of, you know,
00:36:12
Speaker
Companies with like billion dollars in revenue, forget valuation, were created in residential solar. So we said, you know, if you can become the number one company of India, you know, you should be able to create a very large business as well, especially given India as a tropical country. toa du bought their sola easilyally bought the chi the So was just a no brainer key, you know, this will be a huge consumer trend and you can create a brand in this category.
00:36:37
Speaker
ah You're talking of, say, like a solar city, this ah which Tesla acquired, which was in residential. or but Right. okay right okay So there is SolarCity in the US, there is Sanran in the US, there is Enpal in Germany, which is a privately held company, but very large. There is Solfasil in Brazil. ah you know So I think Europe has like two, three very large companies. The US has five, six very large companies. Brazil has one or two companies. Mexico has one or two companies. South Africa has one or two companies. China has, Japan has. So it was very clear that this is you know a consumer trend where brands will get created. night So we said you know there is enough there is enough sort of reason to believe that you know ah you something big can be done here.
00:37:24
Speaker
Okay. But there is a entry barrier, right? Two lakhs you're saying was the ticket size. It's a fairly significant entry barrier. You managed to have like a one or two CR within six months at this kind of a price point. Yeah, yeah. And that was very interesting Akshay because we had not even launched consumer financing solutions at that time. So these were people who are actually paying the entire 2 lakh, 2 and a half lakh upfront, right? Because the economics was so good, right? It was like putting money in an investing asset, you know, you put it up in your rooftop solar and you put this 2 lakh rupees and you end up saving some 50,000 rupees every year for the next 25 years.
00:38:02
Speaker
So people were very clear ke guitar sal me pesov opera there and then mukeba you know it is only savings. So people, but but the barrier is for people who didn't have the cash to arrange upfront, right? Because I mean 2-3 lakh rupees is the price of an entry level car in India, right? So usually for such high ticket size purchases, arranging, even though it's a great investment, I know it will save me a lot of money, arranging that capital upfront can have a lot of friction from consumers. So that is where we know we had not even launched financing. And we always knew that we'll have to enable financing for the consumer, because solar as an asset pays back for itself. So why don't I enable him to get like a loan, you know where through his monthly savings, he simply pays his monthly solar savings, say he pays his solar by EMI.
00:38:47
Speaker
So net net solar pays for it itself, right? You don't even have to arrange capital to buy solar. But by it but by six in the first six months, we had no financing solution. So we were still convincing financiers. You know they put hard demand demand hey you should start a solar loan product for homeowners. And none of the banks were ready. ah you know Even up till the first year, we didn't have a financing solution. And we were going and trying to convince so many lenders. Then we convinced one at tech lender. you know He used to lend for you know these ah undergrad and an academy, you know, there's expensive courses. And he was lending against some of that. And we convinced him, you know, the founder there, he had to start a solar product. And so that is how the first, you know, financing we could unlock for our consumers, then like one or two lenders more came by 2020 to 23. But yeah, first two years, it was very difficult to get financing for our consumers. Hmm.
00:39:41
Speaker
to a lender here, are they doing a full, like a single score of the borrower and all of that, or it's an asset-backed loan, so they don't need to do all that underwriting? Right. No, so correct. So right now they have to do a lot of credit underwriting of the borrower, right? See, because there is no secondhand repo market for solar panels or solar equipment. So unlike, you know, with the mic, you can sell it. Correct. So asset backed loans work when you have a repo market, right? So there's no repo market, there's no clear resale value yet. I think it's a science and these are all ducks that line up as the industry matures, right? When the industry will mature, there will be a repo market, but it's a cold startup problem today.
00:40:25
Speaker
There is not enough consumer demand because there's not financing. Because there is no financing, there's no repo market. And because there is, you know, ah financing, ne consumer demand, come consumer demand, financial score, market size, total. So it was a, you know, cyclical sort of a problem. So that's why we said we have to, you know, somewhere somebody has to, you know, unlock it to, so you know, to show the real potential of the category and then slowly, slowly more lenders will automatically come in. So I think we were the first company to convince you know these lenders to come in, create a loan product, which though in the beginning they did it like a personal loan. So non-asset backed personal loan, where they would do the civil check and income check of the consumer and give him this loan. ah Our major convincing point for lenders was that, was this payback for itself. It's not an expenditure, it's an investment, right? So it is, you know, why would I default on my solar? Let's say, you know, because if let's say you take back my solar, if I default on it.
00:41:22
Speaker
I have to go back and pay my grid electricity. So why would anybody default because that's more expensive, right? So, you know, it that it's like, jump you know, the quick commercial vehicle, leta was pretty for both kaut because he owns from his commercial vehicle. but right where the income is linked to it. Very similarly, solar gives you an earning, it gives you a saving. So why would you default on you know something that saves you money? So that was our big you know sort of argument and we convinced lenders and we said, you know we'll maintain this asset for five years, you give them five-year loan, but nobody will default because of asset performance issues. Because a big fear that lenders had
00:41:59
Speaker
Let's say I'm lending against a bike. Now, this bike is made in factory by a reputed brand. It's delivered to the consumer. There's no operational underwriting, right? Nobody can say, right?
00:42:10
Speaker
right Because it's a right it's a finished good. It's a finished good that is delivered trouble you know from showroom to your home. versus in solar, right? Solar is not, it's a system that's integrated, it's a mini power plant created on your home. So I will buy panels, inverter, 100 components and I will design a rooftop solar system and install it on your home and then I will maintain it. So here the operational performance of the asset is unknown. Because you know you are there is so much that can go wrong. right up malario up designed curu install careero maintained thoreau
00:42:42
Speaker
It's not a finished good. I am creating this power plant on your home. so Lenders were worried that if the operational maintenance is not good or the pop the operations of the solar company is not good. The consumer will default on his loan. saying mea bizly na and raya meanra thirty percent companies livera and but up naama So operational and the writing is where lenders struggle. you know How can I underwrite what power plant this consumer has bought? What if he bought from a mom and pop shop who has done a shoddy job, who has installed secondhand panels or who is not maintaining and you know power production is not happening.
00:43:14
Speaker
So for a lender, he can underwrite access, civil score and credit worthiness. That's their strength. He can't underwrite the quality of solar, the consumer bought. So that's why we went to the lender and we said, I am underwriting the quality. I am maintaining this for five years. I am underwriting the quality. You now only underwrite the consumer's credit worthiness. So that's how, you know, by partnering with us, lenders were able to start giving out consumer loans. So even today, like lenders give out loans via very few solar companies in India. It's not like in open market, you can go and get a loan for buying solar because lenders always want to you know be sure of the quality of the solar company. good Okay. Interesting. ah What is the product that you're selling here? ah What all goes ah to the customer's house? Just help me understand what what it looks like. Right. So we are sort of a turnkey service provider for this consumer.
00:44:08
Speaker
Now, when a family decides to go solar, ah solar, like I said, it's a mini power plant on your roof. You install this rooftop solar system. It has 70 plus components and it produces free electricity for 25 years.
Solar Square's Solutions and Strategy
00:44:20
Speaker
So first step is, you know, the design of the solar. Where should it be installed? How should it be installed? Second is the, you know, we procure all the equipment that goes inside. So there are also a lot of quality control, you know, is done by Solar Square that, you know, we are procuring everything and checking the quality of the components that go into your solar. Then we do the actual installation at the consumer's home. And we also help him get all his government permits. Now, just like a car needs car permits to put up solar on your home, you need a solar permit. So there is net metering permit it and a bunch of other permits that you have to do. So we take care of all of the government permits for the consumer, including ensuring that he gets a subsidy. Government of India gives a subsidy of up to 78,000 rupees for any homeowner who wants to go solar.
00:45:03
Speaker
So all the government permits and subsidies also we take care of. We also help him get financing, easy EMI. So that also we will only do. So our sales guys are called solar consultants. When you you know meet our solar consultant, when your family is looking to go solar, they'll book a free solar consultation with us. The solar consultant comes to his home, surveys the rules, understands his electricity requirement, recommends the right solar solution for that home, gives them a 3D design, books their order, and on the spot will check the consumer's EMI eligibility. So, on this part, we'll tell the consumer, okay, you can get an EMI. This will be whether you want a 1-year EMI or 3-year EMI or 5-year EMI. We do all of that right at the point of sale. And then a consumer, you know, pays his booking advance and he books with Solar Square. Then comes, you know, the design, procurement, installation, yeah you know, your government permits everything.
00:45:53
Speaker
Once the solar is installed, for the next five years, we give a maintenance also to consumers. Because our promise to consumers is you are not buying solar, rooftop solar. You are buying peace of mind and electricity savings. For electricity savings, of course, installation is, you know, your job is 30% done. 70% of it is now maintaining it. for the next many, many years, right? So we say, OK, for five years till you break even, I'm going to maintain this rooftop solar for you and ensure you get high performance and high savings. In fact, we've gone one step ahead now, and now we guarantee savings for five years for our consumers. So we tell them, in part, al aka it nabilibanega nahibaana let's say I told you, you'll make 5,000 units of electricity in five years, but you only made 4,900. Solar Square pays you back for the other 100 units.
00:46:38
Speaker
So that is also giving a lot of peace of mind to the consumer because now he's there super sure that you know they're getting a high performing rooftop solar and peace of mind. Okay, interesting. I want to go a little bit into the nuts and bolts of what you're installing. So what is it? Is it a solar panel with wires which plug into the home meter system? or Okay. you know So let me go into the equipment itself. yeah yeah Let's go into the equipment itself. There are three major four major components of solar. Number one is a panel, which is the heart of the system. Doops and bijili, solar panel, ban uppa these blue-black plates that you see on rooftops everywhere. So this converts sunlight into electricity. this is mean This has solar cells inside, which are made of you know silicon. So that is the first component. The power that is made by solar panels is direct current, DC powers fu noparahapa acdc power.
00:47:30
Speaker
the electrical appliances and everything in your home runs on alternating current. So solar panel has given you DC power. You have to convert it down to AC power. Once you convert it to AC power, then you can use it to run appliances at home. So the inverter converts the DC power to AC power. So that's the inverter, which is the brain of the system. Very, very important component in the system. ah Once this is converted into DC power, you basically put that power into your meter. soarkato meter abu me solar ki power a Once you go solar, your meter is replaced with a net meter, bidirectional meter. The current regular meters of they only run in one direction. to capsule bilile
00:48:09
Speaker
When you put up a rooftop solar, you are no longer a consumer of electricity, you are a prosumer, which means you produce and consume. So, the meter is bi-directional. When you are producing, you can put excess into the grid. At evening after sunset, you can take back from the grid. So, this meter goes in both directions, plus minus Dono Chalta, I swear. So, if this power is put into your meter at your home. The third major component is India has flat RCC roofs, right? But is a very social real estate. So 90% consumers don't want to let go of their roof space for rooftop solar. So what we do is we install solar gazebos. So the panels are put on the top but we put like a, you know, like a big pergola or a gazebo on top of which we put the panels.
00:48:52
Speaker
Now, there is the construction of this gazebo as well. So, this is called the module mounting structure. So, the modules of solar panels are mounted on top of this and this is usually 6 to 8 feet in height. So, this is where a lot of safety comes into play because of heavy winds. Designing this ah this for wind safety is very very important. You know, you put up solar on the belief of savings and the two fund me that flies off and it falls on your car or it falls on your roof itself. It can cause a lot of damage to property also to life. So and our pergolas are you know prefabricated, ready to install. We make them in factories and you know they simply get installed on the consumer's roof and they are cyclone proof.
00:49:33
Speaker
So we have designed them, you know, because patti alta gurope lagaa you have to design it for future climate change also. Unfortunately, India is having a lot of cyclones now. So we've designed it to be cyclone proof, 170, 180 kilometers per hour wind speed that nothing happens to your sonar. So this is, and we have trademarked it, it's called wind promote. So that's the third part, the module mounting structure, right? Which is the backbone or the, you know, the spinal cord or the backbone of your system. The last is the cables that go in. Now, because solar panels make DC power, there is something called DC cables. Now, these direct current is, this is a 800 to 1000 volt of direct current here. You can understand how fatal that can be, right? So, ensuring that the cabling is proper, that it is done through conduits, it's covered.
00:50:20
Speaker
ah that external weather condition cables are used, you know, it should not be prone to rodents or corrosion in external environment. You don't want solar, like i to end with our ka haar worldka you want solar. So, ensuring very good quality cables, very good cable dressing, very good conduiting, that's very important. So, these are the four components, but there are 70 plus components that go in solar. actually So you there are many other things that go, right? Switch which gear and you know not bor there's that AC cable, et cetera, et cetera. So that is that. And yeah, like I said, ah you know you replace it.
00:50:58
Speaker
but Yes. So the inverters do have you know SIM card or Wi-Fi connection. So with that, we're able to real-time track performance of solar. So we do track real-time performance of solar. Like when we give a five-year maintenance to consumers, we do monitor the performance of these power plants as well and ensure you know if there is any sort of performance issues or if the internet connection is out, we proactively you know will remind the consumer, please connect to the internet. you know Allow us to track your performance.
00:51:28
Speaker
or if the performance is down, we'll call the consumer saying, can we come and check it? you know what What seems to be the issue? so yeah so There are you know there is data loggers inside with which you can track real-time performance. and Something like, say, cleaning the panel. Is there something with the consumer you direct him to do or you send somebody to do that? but Yeah, so I'm assuming this would be a very regular occurrence. Absolutely. India is a very, very dusty country. So, soiling loss on solar is a billion dollar problem in India, right?
00:52:00
Speaker
ah you know All of our future power is going to come from wind and solar, right largely from solar. And solar performance boost you know drops down a lot if the panels have dust deposits on it, naturally, because sunlight can't reach the panels. So regular cleaning is an important part of the five-year maintenance package that we give our consumers, i do that but not just cleaning. right Electrical, mechanical ah checks are also equally important. Now imagine this whole pergola is put out, but you know, it's an external weather condition, right? There is thermal expansion. So you'll have to check the nut bolts regularly because nut bolt delay was up there. So regularly like structural integrity check, mechanical check, electrical checks, voltage checks, everything has to be done. So what we give our consumers is a five-year maintenance package where every month we do a panel deep cleaning. So we ensure that the dust from the panels is removed.
00:52:54
Speaker
Now, that's also tricky business because the external dust is very hard dust. Now, if you clean it, you know, just like that or throw water, one, it doesn't get clean because it's hard dust. Two, it can cause cracks on your panel if you know amateurs try to clean your solar panels. So, there is a specific brush with which you have to clean the solar panels to remove this hard dust while not impacting the glass on your panels. Because if you scratch the glass, these are micro cracks, you don't see them. If you scratch the glass while cleaning, the warranties go void. When you go to claim a warranty, they say, up nao maintain say inia so I'm rejecting your warranty. Unfortunately, a lot of warranties are rejected in residential solar. ah right Because either you know installers don't maintain it, or consumers try to clean it and cause cracks on the panels. So the regular professional maintenance is what, you know this is a
00:53:49
Speaker
1000 volt, you know, direct current, heto message so it's a high voltage, you know, thing that you have on your roof. ah Plus, you can, you know, yeah sort of sort damage your own panels by trying to clean it in house. So we recommend to our consumers that don't touch anything in your solar. Every month, we will come into the panel deep cleaning. Every three months, the technician also does a full system health check. So we call it a full system health check. And every month we send our consumers, you know, performance report. nabi li banana is my naked kit naba abiha lifetime make it nabana How much have you saved? What is your carbon offset? What is your, you know, environmental impact of your solar? So we give them that monthly report after we do that maintenance and system health check.
00:54:32
Speaker
Okay. What is your bill of material? Because it seems like the service cost would be a lot higher than the bill of material itself. because There is so much extensive service that you're providing. Right. So actually, I think that is the real, you know, sort of business model innovation. So at Solar Square, ah we have such a high density of consumers in a city that Hamara, the density of consumers being so high, one AMC, you know, one after sales technician, visit three to four homes in a day. So that density allows us this, this after sales cost to not become prohibitively high for the end consumer. So we actually have pretty, you know, in a 2.5, 2.6 lakh would be average order value. The after sales of the AMC packages, I think about 15,000 rupees or so. So that, you know, the cost of a five year after sales only turned out to be like 15,000, 20,000, you know, somewhere in that range.
00:55:23
Speaker
So this we are able to achieve, you know, and this was a big problem, right? Because you want to give AMC for good customer experience. But if you only have like 100 customers in a city, the AMC cost is going to be very high, right? So then, you know, yes, I can, you know, as a consumer, I value after sales. And as a brand, I want to give after-sale, but it is prohibitively expensive because the economies of scale don't add up. So that's why we really focused on going deep in a few markets and having a huge density of consumers. That allows us to stock spares locally. That allows us to have after-sales engineers in every city who are you know addressing any queries from any of our customers. And it allows us to offer this you know preventive maintenance package for much cheaper. We typically have 500 to 1,000 homes in a city.
00:56:08
Speaker
So that just allows us to have a very, you know, big density of consumers. So that's the, that's the, and that's also becomes a more ultimately because you have higher density. So your cost of maintenance is low services are better than more customers want to join you. So your service becomes keeps getting even better. Okay. Okay. And ah how do you acquire customers? What is your go-to-market strategy? How do you ensure that density? Right. Right. So, you know, our go-to market is very, very simple. You know, we do digital marketing and that's our go-to market and referrals is our other go-to market. So 30, 35% of our monthly orders come simply through word of mouth. And I think that is the real, you know, juice in the business, right? ah For example, in, and, you know, and balance we do through performance marketing.
00:56:57
Speaker
ah where, you know, we do, you know, Facebook ads, Instagram instagram ads, et cetera. So, for example, in the last, you know, this financial year, we had over 200 crores in sales and we spent only one crore on performance marketing. So, because, you know, the conversions are good, because the word of mouth is high, you know, one of the things we learned very early on actually is that when you're selling something worth two and a half lakh rupees, you can't you can't buy your way through growth. You have to really, really earn consumer trust and you have to be very good in your service. That's the only way consumers will trust you. So, we indexed a lot more on operations excellence than on you know spending money on marketing. So, you know really over-indexed on, for example,
00:57:43
Speaker
innovating on our product like the cyclone proof wind pro mounts I was telling this now about or enabling financing for the consumer or the five year after sales or the savings guarantee that we give. We are the only company in India to give it. So innovating on product and operations excellence is where we have invested but rather than on marketing. so Interesting. What's an average CAC? Like a cost of acquiring a customer. Right. So typical cost of acquiring a customer would be somewhere about 16, 18,000 rupees ah for the consumer which includes the sales, salary and everything.
00:58:23
Speaker
So digital marketing. Because your consultant has to visit. better So digital marketing, like I said, you know on 200 plus crores, digital marketing was just about one crore, performance marketing. and But then you have the sales salary, and you know you have technology that your sales guys are using, and all of that. OK. Super interesting. ah So, you know, what is your, ah like I said, do you focus more on product? So do you manufacture in-house? Is it third party manufacturing? how How is that done? Right. So panels and inverters, you know, that those are like, you know, we work with reputed brands, but you know, beyond the point, they are the commodities. So what we ensure is very high quality inspection from on the lots that are picked up for solar square customer customers.
00:59:10
Speaker
So we work with top tier brands and then we do very high quality like you know quality control on procurement. We do factory inspections. So our ah you know manufacturers allow us to do inline inspection in factory. So any batch that's picked up by solar spread is currently quality checked. So that is you know on the procurement side. ah we are You can think of us more like architects. We will procure different things and ensure quality of material, and then we will install it. So we don't manufacture the panels or anything or inverters. However, the module mounting structure, like I said, WinPro mount is our own trademark design. So that we get manufactured through one partner manufacturer of ours. But that is like designed and manufactured specifically for Solar Square. Because otherwise, in the whole industry, actually like people would
00:59:57
Speaker
create these solar gazebos on site. will lohan broadly ya you spoke artkaring we carryring a people labor put calculation car aka you know fabrication kiterot and a cup fabrication whateverja But we believe when you're designing something for 25 years and it's going to have so much weight of the panels, every panel weighs 27 kgs, plus it's on your roof, so heavy wind speed coboardts are the pro with so we are that's why we developed our own module mounting structures. These are manufactured through precision manufacturing in factories. So they are simply not bolted on your side. So every part is cut and manufactured and zinc coated in a factory. And on your home, you are simply not bolting it together. So that we do fire okay everything else. We just procure. Okay. I guess the true value that you're providing is on the EPC side, the managing the project, the, the government ah approvals that are needed, helping secure the subsidy, because these are.
01:00:54
Speaker
I mean, these are non-trivial problems by themselves. All of these are hard to do. So so our real value-add is on the service yeah as on the service side of it, right? Like the whole like I said, you know I give you an engine and a battery, can you make a car? You can't, right? like There is expertise that goes into creating that that thing. So while we are procuring everything, I am creating the power plant, right? So there is a service involved in how I design, what's my workmanship. solar larato akicha pe water leakage ne wa and tofa merani electrical shock sneil like again you know your kids are playing on the rules you don't want any sort of safety electrical episode So our job is more on the service side of it to say, okay, I'm going to procure and then you have peace of mind when you buy a solar installation from Solar Square.
01:01:38
Speaker
So that is how you know we see it and of course the government permits and getting the consumer financing, easy EMI's, after sales, all of that is anyways there. How do you scale operational excellence? Because like say you started in Gopal, it would have been possible for you to personally ensure ah ah and then as you grow, as you go pan India, ah your ah The distance between you and the person who's installing on the roof is getting higher and higher. How do you ensure that that level of quality is maintained and you know what's the way to ah scale up quality?
01:02:14
Speaker
Correct. So I think that's the real challenge, right? Like if I were to manufacture these power plants in a factory, it's a controlled environment. I can have a shop floor, a factory line, I can have all the quality checks and controls in place. I have to create these power plants on thousands of homes across 10-15 cities of India. How do I ensure the same standard of service and quality? So that is the real, you know, process, excellence, operations, excellence that we are building here. And we are very, very much, we understand that that is the nature of this beast. India's the energy transition will require thousands of power plants on thousands of roofs. So the problem is to solve here is, you know, how do you ensure process excellence and operations excellence? We've done a lot of things. Number one is, of course, investing a lot in training, right? but Nothing happens, do you know, till you have trainings and, you know, ah right environment for a right investment in making sure that, you know, new
01:03:06
Speaker
installation crews on the field, you solar consultants on the field, everybody has undergoes a thorough rigorous training. The second part is, you know, standardizing things. So why did we create wind pro mounts, right? One reason was, of course, we wanted to give cyclone proof and safety to consumers. Second reason was that I could not trust, you know, if there was cutting, welding, civil work, and engineering calculations happening on every home buyer, that too by labor or supervisor, right? A lot of respect for their manual work, but I cannot trust the engineering prowess of, you know, a so site supervisor or an installer or a mason, so to say.
01:03:43
Speaker
That's why we created prefabricated ready-to-install kits. So our solar gazebos are the biggest mistake that can happen is in the module mounting structure, right? So that's why we have prefabricated ready-to-install made-in factories delivered to your home simply not bolted on your home. They are a little bit like IKEA. one part to There are only one way to fit one part in another part, right? So your donkey proves fairly no mistakes can happen, um e etc et cetera, et cetera. Even little, little things actually like how do you tighten the nut bolt? not bold but to lose rest up there So you don't do it manually, we give our crews power tools. So every installation crew will carry its own kit of power tools and so we know use a machine to even tighten that bolt so that no manual error happens, right?
01:04:24
Speaker
I think the third part is auditing. right now After all this installation also something or the other can go wrong. So we last year we acquired a company called PV Diagnostics. PV Diagnostics is you know three IIT Bombay founders and one senior industry veteran. For the last seven years they were they had built a utility scale solar consulting firm on quality and asset performance. So we said, you know, they have the skill set and their skill set, to you know, they've been doing it for utility scale, large solar power plants. But we got the engineering and the muscle ah in Solar Square that team and we acquired to replicate the same quality standards for residential solar.
01:05:03
Speaker
So now they are the ones who take care of our audits and quality controls and SOPs and training, et etc. So we are very serious about quality control and safety standards. So, you know, otherwise, ah you know, rather than, you know, what I, um we don't invest money too much in marketing, we don't invest too much in uh, you know, branding or or other things, but we've invested in these type of things, right? Like in acquiring PV diagnostics, we're a fairly, as a fairly young company, we made our first acquisition, but, uh, we just believe, you know, like these founders have that technical know-how, uh, that they can help us really, you know, keep qualities, quality standards in check and ah help us innovate on, you know, further, like you said, how do you scale operations? Excellent. So through tech, through process, through systems, you know, you scale, uh, these things.
01:05:49
Speaker
So that is the third part, right? The quality audits, which the you know the PV diagnostics team does for us. now Of course, now they are solar square. PV diagnostics looks at the data from the IoT device, or also onsite like on-site, like nuts and bolts. So PV diagnostics has built, you know with after this acquisition, we've built a three-pronged quality control. First is the procurement quality control. So we started doing inline inspection of everything that we procure. So that's the first step of quality control. The second step is on-site audits. right So we do audits of the sites that we install. 20-30% of the sites are audited, then you know we go back, we give feedback. Wherever there are you know issues, you know we rectify that on the site. We used to do 100% audits now you know because we have good quality controls, we have now reduced it to 30%.
01:06:35
Speaker
So that is the second part. The third part is they are but helping us build our asset monitoring technology as well. though you know We are building a full tech stack on asset monitoring. So, you know, ahhaki nabili ban rahe what were are their performance issues, having our dashboards, having our alert systems, um because now we are the largest owner of distributed solar assets in India. So we have more than 10,000 homes and housing societies that are powered by Solar Square. So it's a different beast, right? to To run power plant. I mean, I can run one power plant in a big desert of Rajasthan, right? But to run 10,000 power plants across the length and breadth of India, it's a different kind of a beast, right? So a lot of technology and the systems we are building to manage that. Okay. okay ah What are your tech top cities, like in terms of the revenue or the installation base?
01:07:29
Speaker
and Right, so are you know are naturally um the big cities, so for example Pune, Bangalore, Hyderabad, these are you know the big metros which are um ah you know which are um ah which have like high GDP per capita, high population, et cetera. But we also have a lot of tier one cities, like Lucknow, Bhopal, Indore, smaller cities like that. So even those are big, you know, Nagpur, Nasik, they're all big markets for us. Currently our operations are in eight states of India. Across these eight states, we are servicing about 15, 16 cities. ah Of which like five, six are big and 10 are tier one cities.
01:08:14
Speaker
ah tier one two two You've not gone to Delhi yet. We are in Delhi. We are in Delhi, but Delhi and Bombay, you know, these are two cities, you know, where, where like in Bombay, most people live in high-rise buildings, right. And in Delhi also, like, you know, a lot of people have multi-storey homes, right? Like two to three floors. i in carru The roof belongs to the top floor owner. Sometimes it's a shed. ah you know, rules um ah for ah for all the flat owners, right? So Bombay and Delhi, that's why are relatively smaller markets. But like example, Bangalore has a lot of independent homes. Hyderabad has a lot of independent homes. Pune has a lot of independent homes. We have not yet launched into Chennai. So we're not in Tamil Nadu and not in West Bengal. So two metros we are yet to reach.
01:09:01
Speaker
um Calcutta engine. Okay. okay So there's this is ideally like tier two is a much bigger market for this than Metro's. Absolutely. So cities with independent homes, that's our main market. And I would say tier two, tier three rule, like everywhere where ah you know when there is a roof, that is a market for us. So I think um i think the top 50 cities will of course of India by GDP per capita will be the main markets. But the next 500 cities of India will also be you know, equally big. So, you know, um one of our operational challenges is how do we expand our services to more cities faster? You know, we get a lot of inquiries from many states where we are still not operational. But I think we will, you know, at some point get into a franchisee model for small town India, where we may not be able to, you know, set up currently we're a full stack brand.
01:09:50
Speaker
We do everything ourselves, right? But maybe to start our services, or we can be full-stack, maybe in a deva, sort of a gen with a much smaller town, we may have to go via franchises.
01:10:06
Speaker
Okay, yeah.
India's Solar Initiatives and Market Potential
01:10:07
Speaker
I guess right now is the land-grab phase of this industry, right? like ah Because whoever gets density in an area first will have a very strong vote for that area, for that locality. Absolutely. and i was the right word just So you said 200 crores was last year's sale, ah the B2C sale. Is the B2B business still there, yeah the yeah the legacy business? 200 crores was the total revenue of the you know sales of the business.
01:10:37
Speaker
The B2B business is, you know, our we do now more what we call small commercial. So while it's commercial, the customer is commercial, it's not a home, but it's still very small in nature. So it could be a clinic, it could be a farmhouse, it could be a hospital, it's less cool, etc. So, you know, they are more smaller in nature, we don't do that half a million dollar ticket size type of business, we don't do any more. So even in the commercial side, it's more small smalls scale commercial. Our main verticals are homes and housing societies. So the high rise apartments of Bombay, Bangalore, Hyderabad, Delhi, Pune, they are also a big part of our customer base ah where we do solar for the common area amenities. So the resident welfare association, the RWA, they will do a decision to put up solar on their rooftop, which will power the common area amenities.
01:11:27
Speaker
Because in a housing society, that's how people go solar. So your lifts, pumps, your gym, you have in the society, your streetlights, all of that is powered through the solar plant.
01:11:42
Speaker
so okay Okay. What is the market potential for this business? like you know What's your estimation and like what will be your top light couple of years down the line? What's the roadmap like? um That's a very tough question. i can I can tell you the market potential. So under Pradhan Manjari Surya Karyojna, which is a recent push the Prime Minister has given to residential solar, India has taken out ah you know a target of 10 million homes to go solar in the next three years. Now, to put it in perspective, 10 million is one crore homes.
01:12:14
Speaker
ahbita damage has had like the on so like i right So we are talking of, I mean, last year alone, I think last year alone, I think last year alone, I think last year alone, I think last year alone, I think last year alone, I think last year alone, I think last year alone, I think last year alone, I think last year alone, I think last year alone, I think last year alone, I think last year alone, I think last year alone, I think last year alone, I think last year alone, I think last year alone, I think last year alone, I think last year alone, I think last year alone, I think last year alone, I think last year alone, I think last year alone, So now going from 1.5 lakhs in 2023 to in 24, 25, 26, you know, ah by FY 27, we are saying India will have 1 crore homes go solar. So it's a huge leapfrog, you know, generational sort of a leapfrog tailwind for the industry. um And so to put it in perspective, 1 crore homes, you know, that itself represents a $25 billion opportunity.
01:12:49
Speaker
So the next, you know, three years, you know, it's just a massive opportunity, right? And in India, there are total 26 crore homes with an electricity connection. Out of that, about 7 crore homes can actually put up a rooftop solar. You know, they're independent homes, but car rules say you know they don't have like a thatch roof or anything, they have a pakka roof to put up so large. So six to seven crore homes is the target addressable market out of which India is targeting one crore homes in the next year. I think it's very ambitious. But even if it happens in four to five years, I think
01:13:23
Speaker
India will be all you know will be um one of the world's fastest growing residential solar market ah you know in this decade. ah That much I'm very sure of, that you know this is going to be the fastest growing residential solar market in the world. um And yeah I think from for us, so i mean there are residential solar companies in the world that have a billion dollar in revenues. So for us, we always ask ourselves that if you can have that kind of scale, for which I think our ambition is very simple, that in the next five years, can we have four to five years? Can we power one million homes with rooftop solar?
01:14:04
Speaker
nice So that is you know how we think about it. And we ah one of the reasons you know why we have where that golden number comes from is that you know with that many homes powered, it will help us offset 1% of india India's carbon footprint. And we think that's so and that's a purpose worthy of chasing. you know That's a good enough reason to stay awake at night and you know give all your sweat and heart and blood into building building this business. So that's how we think about it. yeah
01:14:36
Speaker
Amazing. was like ah what What is this scheme doing to encourage adoption of solar? PM Surigar is a sort of new and ah sort of scheme that to our Prime Minister um Modi launched about two months back. It has already turbocharged the industry in a big way. So, you know, the idea is very, very simple that, you know, ah for energy security, we need more distributed solar, right? Otherwise, we'll continue to be dependent on imports of coal and this and that. So the reason for government's push is very simple that, like I was saying, you know, this is the future of ah energy transition, that everybody makes their own power through their own rooftop solar.
01:15:16
Speaker
To enable this to happen, to enable this one crore homes to adopt, I think first thing they are doing is increasing, they have increased subsidies. So earlier subsidy up like for three kilowatt used to be 44,000 rupees, now it's 78,000 rupees. So one is increasing the subsidy. The second is mass consumer awareness, you know, so there are, you see a lot of television ads these days about solar, you also see a lot of newspaper ads about it. The third part of this scheme is to to make it easy to get the solar permits. So Subsidy, for example, now comes directly into the consumer's bank account. India launched the National Solar Portal two years back. PMsuregar.gov.in is the name of the portal. ah you We make all applications for the consumer on this portal. Subsidy goes directly to the consumer's bank account. So a lot of stuff is being streamlined. Some of the government permits are being made deemed approvals. So you don't have to wait for an approval. It's a deemed approval, automatic approval.
01:16:07
Speaker
So, some of that is yet to come into effect, but the simplification of permits is a third major thing that they do. So, you know, they're sort of really working to making it a reality from all ah you know from all angles. I mean, for one crore homes, the number one is like even manufacturing capacity has to go up, right? Do we have enough that many panels manufactured in India to to you know cater to one crore homes? Second, companies like Solar Square and the installation side has to really ramp up, right? I think currently there are, of all the solar companies put together, there isn't in enough capacity.
01:16:42
Speaker
to do this kind of service, this kind of demand in the next three years. So this ecosystem has to really like, we have to train more installers. We have to train more solar consultants. We have to really expand to more pin codes. So you know that's the second thing that you know they've been working on. And they're working with the DISCOMS. I mean, India has 70 plus DISCOMS. So the government permits are taken out from the DISCOMS. So they're working with all the DISCOMS do you know to really ramp up their capacity to you know fast track solar permits, to automate things, make it paperless. um I think It has been phenomenal for me as an entrepreneur to see how the government machinery is working. I mean, they're working like a private company. you know like They're solving every problem. They are on top of issues. They are really doing policy changes that affect at the last mile. And I mean, when there is you know government will and policy tailwinds, it's incredible to see how we are really accelerating India's energy transition.
01:17:40
Speaker
you know, so through this home solar, you know, sort of category. Do you have direct competitors in India in residential solar market? Of course, see, there are, ah you know, actually, it's a, it's a mom and pop, you know, unorganized industry, right? So we have a lot of unorganized, you know, players. So then they're mostly city level or regional state. There's no, like, funded competitor. There is no funded you know sort of residential solar competitor, per se. There are OEMs like Tata and Vari and Luminous and Exide. There are these large OEMs which are into manufacturing. They either manufacture panel or inverter or something in the value chain. And they have their dealer distributor network. So through their dealer distributor network, they also do the last mile servicing, this installation of the power plant. right Now, for them also, like because none of them are full stack, you know when the consumer is buying, whether he's buying from a
01:18:32
Speaker
unorganized player or a you know dealer distributor or one of these OEMs manufacturers. For the end consumer, he's ultimately buying from a mom and pop shop. na So I think as in terms of having a sort of a professional brand, a full stack professional brand on the installation side of things, so we don't have. So we have manufacturers who are of course large organized players and then we have mom and pop installers. So on the installation side, that's where we are creating a professional brand.
01:19:01
Speaker
Okay, amazing, amazing. This ah IoT a device on the inverter which gives you data, is that a source of a mode in future? Like what would be the ways to use that data? Right, right.
Advice for Aspiring Founders
01:19:14
Speaker
So see, I think right now, you know, that data we we have, this IoT comes from the inverter manufacturer itself, the the data loggers and all. I think where our mode is in having access to that much or that many homes that are producing power in a city in a pin code, right? So for us the mode is going to be on how are we build this data layer to give better savings guarantee to you know to bundle it with better financing, better insurance product.
01:19:40
Speaker
for our consumers, right? So for us, it really increases our ability to, for example, underwrite loans, it increases our ability to give savings guarantee to our consumers and really be on top of, you know, like through data and machine learning. For example, we can know in a pin code, you know, Sharmaji and Mehtaji, you know, why is one solar not performing as well as the other, right? So I have that comparative data because The weather changes within three kilometer radius in the city, right so sharmaian method you in one pinco ya butrahora <unk> you know chori and ra pin ko la bar ne right? So how do I really use this data to create analytics on site performance? A lot of magic at the back end, which ultimately you know becomes ah becomes a consumer mode because you know i'm able to for the consumer, I am translating it into a savings guarantee promise.
01:20:31
Speaker
Okay, amazing. ah Let me end with this question. What's your advice to ah aspiring founders? And you are a second time founder now, so you know your advice will be more seasoned with the experiences that you have gone through, so I'd love to hear that. Right. So I think if you are thinking of starting up ah for the at that camp, like just do it. It's scary. You'll never be 100% sure. But I've seen a lot of people really try to intellectualize on ideas before actually hitting the ground. ah The real you know test of an idea is when you hit the ground, when you have consumer feedback. So for those who are on the fence, like you know startup, there's never been a better time. Even if you fail, like failed entrepreneurs are
01:21:15
Speaker
very well respected and you know you won't have to worry about a job or anything so you know i think there is no better MBA than you know being a failed entrepreneur um so please go for it and you know have some real learning so i think that's one for those who are already starting i think you know i'd give that you know that one advice only to be brutally honest about your product market fit i think um you know not uh sometimes we focus on all the other problems you know get a char me and you know How am I acquiring customers or what is my operations or what is this or what is that? Till you have product market fit, absolutely nothing else matters. right Don't worry about raising funding. like To find out PMF, you can even do it bootstrap. right If you can do it bootstrap, if you need some funding, raise it. But be brutally honest about your product market fit and raise your focus on it. Nothing else matters till you have product market fit. I think that is
Conclusion and Listener Engagement
01:22:11
Speaker
the other advice. yeah
01:22:12
Speaker
Have you raised funds for Solar Square now? or What is the fund raise plan here? Oh, yes, yes. We have raised 120 crores in Solar Square. We raised a 30 crore seed and a 90 crore series A. ah We are backed by our elevation capital and lower carbon capital, which is a climate tech fund. Elevation capital is a consumer of finex as fund. based out of India. And we also have like a whole bunch of angels. So we have Nitin Kamath of Zerotha, who's an investor. We have Vinitath Ray of Micho, Ashish Goyal of Urban Ladder, go find founders and no broker would founders, no broker founders. So yeah, a lot of angels also in the capital. As a second time founder, I knew my, I knew that the, you know, on tough days and, you know, in difficult situations, it's the angels.
01:23:02
Speaker
you know, whose advice I really thought of the LIO. Amazing. Amazing. Thank you so much for your time, Shreya. It was a real pleasure. Great. Thanks. Thanks, Shreya. And that brings us to the end of this conversation. I want to ask you for a favor now. Did you like listening to this show? I'd love to hear your feedback about it. Do you have your own startup ideas? I'd love to hear them. Do you have questions for any of the guests that you heard about in this show? I'd love to get your questions and pass them on to the guests. Write to me at adatthepodium.in. That's adatthepodium.in.