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A Founder's Journey from Transport to Personal Care | Gaurav Agarwal @ Nat Habit
228 Plays4 months ago
Every few years, a new trend in the startup world catches the attention of VCs and this episode features a founder who has successfully navigated multiple such trends in the Indian startup scene. Gaurav Agarwal began his entrepreneurial journey with ZipGo, a ride-hailing startup that competed with industry giants like Ola and Uber. After an exciting journey with ZipGo, which eventually led to its acquisition, Gaurav hopped on his next big adventure in the D2C space. With Nat Habit, he and Swagatika are building a brand dedicated to providing fresh and natural skincare products to Indians.
Get notified about the latest releases and bonus content by subscribing to our newsletter at www.founderthesis.com
Read more about Nat Habit:-
1.Nat Habit’s Personal Care Range Is Made From Fresh Ingredients To Nurture Natural Wellness
2.Nat Habit’s Swagatika Das on being an online brand and the road ahead….
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Transcript
Gaurav Agarwal's Journey in the Indian Startup Scene
00:00:00
Speaker
Hey, hi, all. I'm Gaurubh and one of the co-founders of NetHabit.
00:00:16
Speaker
Every few years, there is a new trend in the startup ecosystem that gets a lot of VC interest. And in this episode of the Founder Thesis Podcast, your host Akshay Dad speaks to a founder who has ridden multiple major trends in the Indian startup scene. Gaurav Agarwal's journey started with running a ride-hailing startup competing with Ola and Uber. But soon he realised the high amount of cash were needed in that business and embarked on his next adventure in the office commute space. Regular listeners of the show who heard this episode featuring a missing of shuttle would recall how competitive the space was in 2015 when Gaurav also launched Zippko.
00:00:51
Speaker
After the roller coaster ride on Zipco, which ended with an acquisition, Gaurav started his next big adventure in the D2C space in 2019. Today, Gaurav is the founder of Nat Habit, which is a D2C brand with a deep commitment to creating fresh and natural beauty and personal care products. Stay tuned for this fascinating conversation with a seasoned founder who has had an amazing ride and remember to subscribe to the Founder Thesis Podcast on any audio streaming app.
00:01:24
Speaker
So I want to start with understanding your backstory as a founder. You've been a founder for more than a decade now. So how did that end up happening? post engineering, the default choice ah would do either to ah do a job or to do an MS. ah Given the limited means, I chose to ah take a job ah in a company. I was very, very intrigued by the idea of building things.
00:01:55
Speaker
right However, I still felt it in India, I couldn't get, I did my engineering from electrical engineering, right? And I didn't find great jobs at that time. And hence, so ma I would say at that time, pretty much there was a boom for software. And hence I took a job in the software side of the world. I worked... This was my year 2000 when you passed out. Yeah. So I worked my ass off. I would say, mom I would... probably been maybe working 14, 15, 16 hours non-stop. I would code. I was still building e-commerce platforms for the US retail clients. Spent a good amount of time working in ah US as well.
00:02:38
Speaker
ah I think at that time there was no but that there was no desire or even a dream to say, hey I want to do something of my own. I came back to India and I changed my job. ah When I did that, i e it was a big shift for me because at this my last previous organization, I was working ah crazy hours and all of a sudden ah i was i I didn't have much work to do. ah Even though the climb there was Sun Microsystems, which was very looked upon, um but I realized it was free. And that was the first time I think doing something of my own kicked in, right?
00:03:20
Speaker
So and I and my friend just dabbled a little bit into it and I ah realized I actually didn't have any kind of business skills at all, right? And that is what made me think about actually doing an MBA. Even though I had been working for like six odd years, I felt I wanted to do a two-year course ah versus the one year because I wanted to spend time with me. And that was a primary reason for doing an MBA from US. I did my MBA from US from Darden School of Business. I didn't work in the experimentations during that period of time. During the peak recruitment time, I actually studied in China. I worked with the engineering professors thinking about how do you take these scientific
00:04:18
Speaker
innovations to market. I worked with the patient office there and so on and so forth. right um However, when it came to actually doing jobs, I didn't want to take a tech product job. I thought I'll take more of a business-centric job um so that I build some of my understanding around that space. I worked at Capital One for a couple of years. I would say post to that, I think the journey has been, I would say driven by luck or whatever money you might say. You joined the Capital One after your MBA. Yes.
00:04:50
Speaker
And Capital One is like this very, very innovative fintech in the U.S. A lot of founders have actually started with Capital One. Yeah. So I think ah clearly they have ah but the they have a very strong analytical approach of doing things ah that innovation mindset is there. ah so And hence there is a lot of rigor that there. It has a very concisely kind of a background. um So to say right so and it was at this period of time.
Founding of Zipco and Expansion Challenges
00:05:20
Speaker
I'd been I think working for two years one of my school friends who had a very similar kind of a part pinged me and saying say But luckily I'm Thinking of running a cab business in India. um What do you go ahead and invest? ah ah My default answer was yes
00:05:39
Speaker
So I did that investment and that's how I started interacting with him and working with him. This was like an Uber for India business plan? No, it was not at that time. It was basically cab services for ah within the five kilometers of it. So basically going from your home to the local market and so on. That is how it was. And there was no app, there was no tech, nothing there at the time. ah And then, obviously, we saw what was happening ah in the U.S. there, where you could reserve a cab at the click of a button, and that's what
00:06:17
Speaker
ah helped us to say, hey, maybe we can do something like that. right um Ola, taxi was sure in the early days ah too. right and but Primarily, the bookings at that time were happening using consent terms. That's when he said, let's go ahead and build an app. ah and That's what we started. and He said, hey, why don't you help me code, given that you were good in coding at that time. um And I think that's how it all started. And I started building the ah the mobile app, the backend systems, and so on. And I think it was probably in 2013 when the the app was kind of ready and we started ah operating in the NCR, primarily. It was only days we ah
00:07:04
Speaker
We didn't get some term sheets, e etc. but But however we didn't ah take it it at that time, we felt we would probably um build it on our own, scale it on a little bit more um before raising money. and Do you regret that with the power of hindsight? I don't know ah with the mind. At that time, I would say the decision seemed right to me. But today, if I kind of think about it, maybe the outcome would still have been the same, I would say, right? Because if I kind of look at the tabbed market and how it has played out, ah what you saw and observed was there was a lot of money that was pumped in.
00:07:40
Speaker
Right. And hence, I'm not sure what the real outcome would have been. Right. And post which I think we were not able to raise so money in India. Right. And that's when we said we missed that moment because by i I mean, you know, by the time taxi for sure was going for like a second or third round, ah even and they were struggling to raise funds. Yeah, the last round, I think they they had a tough time. They had gone to the US, etc. That was a lot of media at that time. However, what happened was, hey we said, hey let's focus outside India, and that's when we started focusing on ah the Middle East market.
00:08:18
Speaker
ah odd this of the day ah je ah cairo and so on ah We were interested in what was happening was the whole cab space was exploding. There were a lot of people who wanted to build that. um We had built a ah good enough solution ah at that time. ah It was multilingual, multi-currency. It had all the kind of features that were there and needed in Indian market for that matter as well to say, hey, you could do an audio booking and so on. um and ah And that was one of the reasons so ah we could raise money from a rinse in Saudi Arabia.
00:08:57
Speaker
ah so he was the and ah an American educated but had the um and a modern mindset. And he wanted to do something ah in the cap space in Saudi. ah However, we having spent some time in Saudi, we realized, hey, this this was not the market that we wanted to be in. ah and hence ah we decided to sell Adubai entity out of the prisons. Similarly, we had actually incorporated a Singapore entity. ah From the Singapore entity, we ah did a software and deal with Huawei in Myanmar. Huawei is like Make My Trip of India. And that seemed to be a decent outcome post that and that's the
00:09:52
Speaker
ah One of the reasons post which where we felt like taxis were for like the top 1% of the population, ah we wanted to do more. ah The association with the middle class was much higher. And hence we said, hey, let's do something for buses. ah The intent there was still in India, 99% off to people travel in buses. Our cities were getting ah crowded. And in fact, if people are given a better option to travel, um they would fundamentally move to buses, primarily for one big use case, which was office commute. So that was the basis of actually building something of that sort.
00:10:31
Speaker
ah It was pretty much on the idea itself where we were able to raise money. i one One question here, sorry, before you come to that. ah I can see on your LinkedIn, you were still with Capital One in the US till 2015. So 2013 to 2015, you were like doing like a job in the daytime and then working on the taxi business. Yeah. So I the now so far i had that through from ah the management of Capital One um to go ahead and work on a startup which was something which they were very open to. Right.
00:11:11
Speaker
yeah and ah when did you finally decide to take the plans go to your job um i was it i was in insane now No, I think it was when I was in the taxi pixie itself. That is when I decided to move to India. And when did both these sales happen? The Dubai entity getting sold? I think all of them happened when I And came back to India. when did It was in you finally decide to take 2015. the plans, quit your job, come?
00:11:43
Speaker
but yeah And yeah when did you raise the round ah for Zippo, the pre-seed round based on the idea alone? So we finished the close the chapter for tax epixie. And that's when we raised funds for Zippo. OK. Yeah, immediately pretty much immediately after that is what ah we did in that. How did you manage to raise you raised the 3 billion pre-seed round just on like, it was essentially like a napkin round idea on a napkin. with yeah How did you manage that? I think at that time, I think there was a boom, I would say.
00:12:21
Speaker
ah One, two is the I would say there was a little bit of credibility that was associated given that taxis were a tough market ah to be in and being able to get some kind of an outcome ah to it. Three, I think as a team, but the well we were great. ah The idea was my other co-founder, who's Jitender, had a good educational background and everything was there. And hence it became, it obviously we didn't have a lot of operating.
00:12:58
Speaker
ah ah experience person in hardcore operations in the camp business and that's when the investor suggested that hey we get at least one person on board ah who could actually bring in the strength in the operation. So that was the condition that was kind of put in ah when we got the term sheet, right? And it was post that ah when we ah spoke to multiple people to see here who could become the third co-founder for that. who could basically go ahead and ah lead the operations side of it. And that was Pritish? It was Pritish. Okay. Okay. Okay. Okay. and this a time he had a He had a background in Ola and so on. So that's how ah it but manifested over a period of time. But yeah, originally we said it was just two of us ah that were there ah to kickstart it.
00:13:52
Speaker
Okay. And, uh, when you raised your round, uh, what their competitors because shuttle also started. and did that but Yeah. I think shuttle had started earlier, a little bit shuttle had started somewhere in, I think April of 2015. Uh, I would say, uh, and yeah.
00:14:10
Speaker
Okay. So, so in a way there was, uh, like that were probably helped as well, right? Because they invest to see that there's already one funded startup in this space. And yeah, yeah I think it was only for them also. I'm a, I don't remember the amount of money that they had raised, but yeah, it was kind of early, uh, from that that space. Obviously I would say the transportation space was. Hot. Uh, it had probably peaked. I would say rather, uh, And people did definitely realize that there will be a lot of money that is needed to build that out. oh
00:14:50
Speaker
So yeah, so that's how but we kick started Zipwoop. And it was an interesting journey. We specifically moved to Bangalore for that. um We felt Bangalore was a tech hub. ah We felt the technology adoption was ah much better. We had seen how um the fortunes of the Ola had changed when this stuck. now moved to Bangalore and so on. And that's one of the reasons we felt, hey, let's go ahead and build it out and in Bangalore. How did you launch the first shuttle service? first I think a lot of it was primarily given the fact that
00:15:32
Speaker
It was a primarily used case of office commute. Two, I would say, there were a couple of thought processes that we had. One was that we always felt buses would make money when they run long distances. right Hence, the intent was always to run long distance versus a short distance service. ah And hence we picked up a tech park in Bangalore, which was Bagmanning. What we also figured out was, yeah are there multiple tech parks that we could fundamentally connect? Because that is when you one can go ahead and get the density. And then what we did was we connected it
00:16:14
Speaker
to one of the farthest ends of the city, which was Manchankari, right? So the first route was from Manchankari, Vayakur, Mangla, Indranagar, Domalur, until Bhagmanetak part. So that was the first route through which we had ah kind of built. How many kilowits is there? That route. um might be around 2530 at least. So that is the first truth. na Why the thesis that bore kilometers because
00:16:49
Speaker
To me, as an outsider, I would be neutral to both. You could have short distance, but multiple trips also versus one long trip. Sure. so buses The way what happens is today how ah any of these BMTC buses or DTC buses work is people hop in and people get out, right? It is very hard for you to say, hey, you can get people for for just one particular route. 2 is also the now the but running buses. You have to run buses continuously if you run to one dense spot which is office location. right And if you have to go back, you literally have to go back to the pickup point empty.
00:17:33
Speaker
Right. You didn't want to do that, right? Because you're wasting 50% of your time, not picking up passengers, right? So the enhanced intent was to do long roads rather, what to say, Hey, can you extend it again to some other place? Because the intent had always been to the, Hey, you shouldn't be able to run at least 200 kilometers in a day. Right. and well do And every time you are running, you would want that you are able to pick up passengers.
00:18:00
Speaker
And were you required to get some sort of a license to run this or like, how did you getting it off the ground? Sure. So i the yeah there were certain clauses within the contract carriage, which could make that happen. Obviously it was not to do with how one interprets the law. Two is how do you use technology to meet the needs of the law, right? And we were actually doing both from that perspective, um from a contract carriage perspective, it said, you need to have three defined list of passengers up front. And that was being done using tech, right? However,
00:18:48
Speaker
dri in Yeah, so when you're trimming it, so it's already defined at the start of the trip, right? So those are the certain constraints that we had put in. The contract was actually there, visible on the app ah itself, ah for that matter. ah However, and I think we had a great traction, I would say. um We probably were doing maybe 3,000 orders a day in a period of roughly 45 to 60 days. um We had spawn on multiple routes and so on. There was a good amount of um visibility, et cetera, that was there in the city. And that didn't necessarily go well with the transport department, wherein they felt ah it would go ahead. In fact, ah the VMTC buses are negative. And I think that's when ah things didn't work out very well ah for us. so But there there were a lot of stuff
00:19:39
Speaker
Did they Interestingly, ah they understood the law very well. um we We wanted them to give us notices and so on. That didn't happen. ah At a period of time, we would um they would maybe catch the buses, they would keep it. would then for like ah 13 days, 14 days, whatever is the period that is defined. They will not challenge it, but they will not necessarily take it to court. And on the 14 days when they would go ahead and release it. I think in the hindsight, when I think about it, I think we did not handle and we did not work well with the government bodies. ah I think there is still a big need for this kind of a solution. The government bodies themselves, I keep seeing
00:20:24
Speaker
But thinking about it, I've seen this multiple times come up in Delhi to say, hey, we need to enable app-based bookings and so on. It is very much needed in a city like Bangalore. But yeah, it didn't necessarily go the way it should have. i Like, wouldn't the government have even entertained you at that time? I mean, we're talking of 2015 where yeah startups were not seen as friendly co cooperators. No, the taxis, if you look at it, taxis also had same face, the same heat, right? ah um And the heat was actually a lot more in Bangalore than any other cities, right? You will go back. However, in case of taxis,
00:21:06
Speaker
the go to part and was yeah The government bodies themselves were not running yeah the taxis. right It was the age-old Calipari and the ones that were being felt threatened ah to it. and Hence, then the objective there was to set up maybe policies and structures around it ah so that but or all the parties no ah don't feel threatened.
00:21:38
Speaker
is the way I thought about it. Okay. if it's you What you're saying is that this was A step between a taxi and ah a municipality bus, like a municipality bus service is like a more mass market product where you're not guaranteed a seat. A taxi is exclusive for you, whereas this bus is a bus where you are guaranteed a seat at a slightly premium cost, not as expensive as a taxi, but not as cheap as a municipality bus. yeah i my number Yeah. Okay. Okay. Understood. Okay.
00:22:14
Speaker
that I thought you hit 4,500 orders, with you said within two months. Was it on the back of word of mouth or was it marketing? I'd say here we had a very interesting ad play that worked very well. ah If you see the buses run on a road, Okay. Generally what happens is the people who are, I might be using their own transportation or maybe using the dormant buses, go on to that same route. Right.
00:22:49
Speaker
So but you in Bangalore, what would happen was that you would have, so there's a footpath example in the middle of the road divider, which is there, and you would have um some kind of advertisement opportunity that was there. So that was with one company ah and the they were not be using it well. Okay. ah And what we did was we literally took holdings on that road, complete whole path there, right? So each of those holdings costed at, I think, 7,000 rupees a month or something, right? And we did a bulk deal with them. ah And I think that worked very, very well. um Because i i don't I think from a use case perspective, it was
00:23:41
Speaker
bang on because you were otherwise what happens with holdings is the holdings are not as effective as a medium for advertising. right But in this particular use case, what we realized was that holdings did a great job in communicating the value proposition that there is a service which is there. ah You are able to target your audience very, very effectively. And hence, the outcomes were much better than using a Facebook or Instagram or any of those channels. Instagram was not there at the time, but yeah, on any of the Facebooks and Googles at that time.
00:24:20
Speaker
All right, amazing. So where did the journey go from there? You were at 4500. So we were having the issues. So we actually wanted to go deep in one city and build that out versus thinking of multiple cities and so on. That was never the thought of it. However, because of these frequent issues, we had to say open up another city called Semambai, right? And then you have to divide forces and so on. And hence, I would say the fundraising became a challenge. One, obviously, everybody had seen how the transportation had played, um that that you needed a lot of money and so on to build it out. Two, you would see that the business would go up and then go down because there would be shutdowns. Then it will go up and then go down. And hence, from an investor's perspective, they were not very confident of taking a bet onto it.
00:25:11
Speaker
Two is I would say it was a highly gross margin negative business, right? Even though um we had worked to continuously improve it, but it was still a gross margin negative business, right? um The CACs are very low. ah this And hence the CAC was not necessarily a problem, right? But given that the more you were scaling, the more you would lose money was the bigger challenge that was there, right? ah so what what's the What's the way out then? like like Did you see a way out? Because negative gross margin means no matter how much money you raise, ah it is fundamentally the wrong business to be in. it like True, true. Until the only thing was that if you're able to build the network, wherein you're able to run the buses for the complete 200 odd kilometers, you will be able to get that efficiency, right? um Because then you're operating per kilometer cost would go down, right?
00:26:08
Speaker
today the pur So there is a fixed amount of money. The bus driver doesn't care whether you're running him for 200 kilometers or whether you're running for 80 kilometers. He needs a certain amount of money to run. He's living because he has a certain EMI to pay and so on. He's more than happy if you run him for the day. i ah And the only way you would do it is if you're able to lower down your operating cost. right And that is when you would actually make money. So the thought was to say, hey, you built it
Transition from Zipco to Nat Habit
00:26:40
Speaker
out you where you're able to lower down your cost per kilometer. And that's when you can actually start making money. But that was a harder problem to solve for.
00:26:52
Speaker
Why was that a harder problem? but Like, wouldn't you just be able to solve it by increasing the run? Yeah, so you did that. usinging the room So you were able to get too very close, but you were able to get too very close. Maybe you were operating at, say, mom maybe the gross margin versus maybe on minus 10 percent, right? But you're not able to cross that. So given that you're not able to cross, the more you would scale, even if it's a minus 10, you would need money. oh to operate, right? And that's when we went ahead and did our series around as well, because we were able to show that maybe we are getting it closer. We were able to go ahead and um reduce the burn. We were able to continuously improve our gross margins. ah And that was a thought of doing it. But I i feel that was still,
00:27:44
Speaker
the bigger road to block ah that was there. ah We would still continue space issues with the transfer department and if it was the experience different in Mumbai, Mumbai was um um one they different. um Yeah. um if In Mumbai also you would face issues, but nah I would say you were able to operate it. You were not necessarily able to do a full fledged marketing and so on to operate the business. So one needed for scaling the business, one key thing that is needed is that you should be able to operate really. You should be able you are able to freely market.
00:28:29
Speaker
um the service, right? Because then is when you are able to increase the length of the trip, that is when you'll be able to get customers, right? Otherwise, it becomes a catch-22 situation. And what was the restriction on marketing? ah Because you're not able to see, if you operate, if you do a lot of advertisement, for example, right? The transfer department comes back to you. So you're pretty much running it in a hidden manner per se.
00:29:01
Speaker
me so okay but you You told me the law says that if you have a... Like a deal with a set of customers in advance that you don't need a registration. Sure, but the the government bodies need to ah angry agree to that, right, as well. like and yeah And the government decide advertising, then there is a potential for them to dispute. Yeah. And if you look at it there,
00:29:29
Speaker
Oula pretty much had the same issues when they were offering trying to operate buses and manual. Everybody wanted to operate there, but none of them were able to operate it dead. We didn't want to go ahead and get into a like a competition, uh, per se at that stage of business. And hence said, Hey, yeah, let's shut it was operating in Delhi and Sierra. It was like, Oh, you also go ahead and start operating. You still, you your businesses are already gross margin negatives. And that whole process, you will end up probably losing a lot more money.
00:30:02
Speaker
but And this mobile rollout happened after the 6 million series A funding? or before I think you started it a little earlier to cushion it up because otherwise the investors wouldn't get the confidence of saying that hey you can go ahead and operate it. Okay. So what kind of numbers did you hit after your series A? That 4,500 rides a day. mean We did cross the 10,000 bytes a day. We even started intercity operations for long distance travel. The intercity operations alone was probably maybe doing one to crores a month. I don't remember the numbers at the top of my head right now.
00:30:49
Speaker
okay okay and seems like we were all milk good now kind of yeah bu what what ah we were doing a lot of ah delhi manai um television nigger ah and so on yeah so These are two different businesses, right? I mean, why why did you... ah Not just focus on the office use case. daily but you are getting zeing to That's where you were getting a lot of ah um regulatory issues. of issues so hi Then what, like 2016 series A after that?
00:31:21
Speaker
i series a So, yeah, so we tried to scale the business up. We opened another city Hyderabad. We started in city as I was saying. We thought it was at any of these periods you scale and you still operate. ah and you are able to break even or whatever in some manner. But I think that that and that was not happening. We were not able to fully market and run the service per se. For example, when I say fully market, it could mean that the buses could be branded for example. We're not doing any branding. I mean the i would say the landscape changes the moment you are able to write the name
00:32:06
Speaker
onto the bus itself, I would say. right true If you're able to do that, that itself is a very strong and ineffective marketing, I would say. yes If you're not able to do that, that itself puts in a lot of challenge, I would say. right And so that is one of the reasons in at that time, ah this ah the group, but the Z group approached us for an acquisition offer. um They wanted to get into the transportation space. They felt it it was a very big opportunity. There was a transition that was happening. ah Things were moving towards ah electric ah electrification, and they felt ah the they can actually make something really big in that space. ah They gave us an acquisition offer. We went ahead to arm with that.
00:32:55
Speaker
Okay. Okay. And by the time I sell came in, uh, what was the, uh, how was the business doing? Like what kind of, yeah. I think we might be doing now 60, uh, crores. Yeah. Like five crores a month. Okay. Okay. Okay. And, uh, how many rides a day? I don't. Okay. Okay. Okay. No problem. Got it. Cool. And, uh, so this was, did you also try to raise funds when the offer came from? a different d well Obviously, obviously before, uh, before, uh, uh, taking, uh, uh, taking the acquisition offer, we did definitely attempt, uh, to raise one. Even I would say series a was a challenge. Uh, we would have probably spoken to.
00:33:47
Speaker
pretty much i everyone which is within the Indian ecosystem um ah to raise funds. Hence, it was definitely a challenge ah to raise funds. At the time, series Bs was pretty much the same, I would say. ah there was ah There was an issue in raising funds, first say. Was it the, the business water was flawed? Everybody realized that there's a lot of money that's needed in the transportation space. One two is, uh, uh, and if you look at the whole transportation space and the investors in this, the larger pays that already put their bets, right? Uh, whether it was Ola, whether it was a shuttle. So the larger, but it's already been done in place. The other players, you, what you needed was somebody with deeper pockets to the back.
00:34:34
Speaker
Right. Until unless that happens, you would need to be able to go ahead and operate that. Okay. yeah Okay. Interesting. Okay. Got it. Why is it that, you know, this space still doesn't have a large dominant player, like shuttle also eventually has, I think they've stopped operations now. Sure. Or or maybe they've been acquired, I guess. so yeah They've been acquired, right? They could have been acquired. yeah So I think I feel not fitted purely because one is, and I think the same is the issue that you would you would have seen um from the camp space, right? If the regulations are removed or modified and you're able to run freely,
00:35:25
Speaker
yeah I would say the likelihood of you getting a better service likelihood of you making money in that business will be higher. I think that is one of the biggest reasons why you see today. Ola not being able to fully capitalize on the cab business itself ah and the same whole school. and And I would say it is much harder to do it for buses, specifically for within the city travel. and Even for intercity buses,
00:36:08
Speaker
There are a lot of gaps. It's the unorganized people who can fundamentally make money. I would say organized people will have a tough time making money because you are trying to follow what is written in the law. Okay. So the cost of compliance is too high. That's the main reason why this like cost of regulatory compliance is so high that an organized player cannot really succeed. Yeah. Okay. Interesting. Interesting. Okay. Understood. Okay. So what next? I said Rup came in and did they ask you to stay on or what happened? Yeah, they did. They did ask us to stay. ah So not all three of us the ah ah were there. I was... mom wanted to stay. ah Maybe it's just because I felt closely associated with this whole idea of building the bus service ah where you could help the cities, where you could help consumers and so on. um So yeah, so the intent was to stay. However, ah the deal didn't fully go through.
00:37:18
Speaker
um They made part of the payment and after that I think there were a lot of issues within the SRE group itself. IFL had crashed, crashed, they had pledged their shares, the banks are after them and hence the deal got stalled. And that's when you decided to move on. Yeah. Yeah. OK. And it was at that time, it so pretty much at that time, it was more about, hey, what do we do next? ah And that's when a lot of um brainstorming with respect to what to do and kickstart it. Yeah. So how did you meet Swagitika, who's your current co-founder? And how did that idea come out of that habit? but
00:38:02
Speaker
sopa You are, Tika is I think one year senior to Pritish in IIT, I think. ah And that's how we come to know each other, she was in process of winding down her business. And it was at that time, um we would talk about what to do next. And over a period of time, we felt that natural was one space that we feel very associated with. And that is where we felt there was a gap that was there.
00:38:42
Speaker
The intent at the time was not to necessarily say, you wanted to do something really big. ah the Previously, I would say my choices of business ideas were made on the decision of saying, hey, can it be a billion dollar idea? However, this time it was a little different where it said, hey, you want to do something, you want to make something sustainable, ah can it be long lasting? ah and not necessarily think it from the perspective of saying, hey, you want to make it a billion dollar idea. The intent was to say,
00:39:16
Speaker
do it well, but if you're playing in a bigger category, it will fundamentally grow. So that was the thought process around ah are choosing NetHabit. It was one space that i we clearly felt ah was a gap. ah it was We were not thinking about saying, hey, we want to do personal care, I would say. ah The ambit was still natural. um Amongst the different things in the natural space, we felt personal care was the hardest one to do versus, say, a food and so on. And that's one of the reasons we said, hey, let's pick up food, where we clearly felt ah that if I kind of look at the rather the personal care and actual personal care space, right, I would say there are three pillars that are there, right?
00:40:03
Speaker
There is a pillar of saying you want efficacious product. You want safe products. And the third pillar is of natural. I would say most of the companies with the brands are generally pushing on the first two pillars. And the third pillar of being natural is something that is not being pulled. And hence, we said, hey, that's one pillar we want. What we would see is companies telling consumers that the products are natural. Right. We wanted that the consumers feel the product.
00:40:35
Speaker
Right? So that when you feel it is natural, it's a marked difference. You don't have to sell it to the consumer. And being they basic not but and not and thats and that was the key thought process around building and doing things. We realize it's going to be a hard battle because you would have to build your own products. You have to think about it formulated. You have to take the harder route of ah manufacturing it and so on, but we felt there were very strong modes to the business. And in general, the thought process has always been that you want to do things which have strong modes around it, right? Clearly, I would say
00:41:20
Speaker
We both are engineers, and right? We've not built the brands. ah And hence, ah we wanted to do, and we don't have a lot of brand building experience per se as well. And hence we felt if you're able to do something which is not more challenging, it will make it difficult for people to copy. Uh, that right. And this thought process has been there and in building a lot of things that we do today. Right. Uh, yeah. What is the difference between beauty and personal care? ah You said not habit is in the personal cares category. Right.
00:42:00
Speaker
um So but beauty is a much bigger, I would say, a lot of the color cosmetics um also come into that play. We have categorically chosen not to play that. We have chosen to say we will stick with the personal care space, which is your day-to-day usage of products for either cleansing or nourishment.
00:42:34
Speaker
ah so those are buckt Like a double, mama, these would be personal care companies. Yeah, they wouldn't be personal care, but the mama, say for example, plays in the cosmetic space as well. So they are more in the beauty side as well. So they do a lot of personal care, but they do beauty as well too. Okay. okay i just so You said that this business has modes. What are the modes here? So, okay, so interestingly, what we do is we manufactured these products using a lot of whole ingredients and fresh ingredients. So what do I mean by that? I mean by that is if I say a product has lean, literally put that lean leaf into it. If I say a product has milk, literally put that milk into the product. yeah This is something which does not happen in the industry. And hence,
00:43:31
Speaker
Typically, brands say, yeah, we'll go to a contract manufacturer and get it made. i Say, if you go ahead to a contract manufacturer to get this made, I think it's going to be hard. Most likely, you will get no as an answer. The reason you will get no as an answer is because this person doesn't even procure main leaves today. He doesn't have the infrastructure to deal with the leaves. ah And then putting that main leaf into the product is even a harder problem. So all throughout yeah somebody needs to have the DNA of an entity or somebody needs to feel passionate about that problem statement to be able to go and solve that. Otherwise it will not happen. Okay. So that whole production manufacturing, huh?
00:44:22
Speaker
Sorry. Yeah. so So the whole idea of manufacturing itself is one big bottleneck, right? The end product that you have made today, again, it's a very strong, but it's very difficult for you to go ahead and build that out. began
00:44:38
Speaker
The, there are certain other things that you have done, even from like the packaging, et cetera, right? You have kind of thought about how do you actually go ahead and differentiate each aspect of it. How do you make sure that this stands out ah in the consumer's mind? You go to the lens of saying, Hey, can you make the product more beautiful? Right. And you do a lot of those things. You're able to do a lot of those things. Primarily because you're manufacturing upon your own.
00:45:07
Speaker
So the more one is the product itself that yeah it is hard for somebody to just get a contract manufacturer to make that kind of product. And the second is the the packaging is also something which again, you're making it in house. No, no, I would say the whole manufacturing is one big mode for the business. And the product is also a board because what you have been able to create is not easy to create. so Okay. You might be able to read the ingredients and so on, but making that product has, there's a ah lot of science that goes around building that. As on date, what percentage percentage of your products are manufactured by you and what are done through contract manufacturing?
00:45:54
Speaker
Uh, there are only two products that we don't manufacture today. Uh, which is basically a human stone and a new for rest. All of the products are something that we manufacture. And hence today, I would say on a daily basis, you over a hundred products in an eight hour window.
00:46:20
Speaker
Okay. So the manufacturing starts at 5am in the morning and the manufacturing gets over by 2pm.
00:46:32
Speaker
Okay. Why is that? Why doesn't it to run like till night, for example? So so but one can choose to run it at night. ah I am a a believer that ah humans are made to operate and work in mornings versus late at night. ah I feel that's when you are more efficient, you do things well and so on. ah And hence I've kind of kept it in that manner was one two is interestingly what happens is whatever I'm able to manufacture on the same day I'm able to ship it out to the consumers so what literally happens is you're able to manufacture by 2 p.m my shipment happens in 7 p.m whatever I have manufactured can go out to the consumers it is back the same day and hence
00:47:27
Speaker
everything is built and done in a sequence, right? Everything is programmed and given that we manufacture hundreds of these in every day, there is a strong process orientation that is there, right? To say, this these are the things that have been done every week. These are the things that have to be done the previous day. These are the things that you have to do today. ah This is how this this is how And this is a sequence in which you will go ahead and make these products because this is what the demand pattern looks like. Right. And hence I would say today I operate at a finished wood inventory of just one to two days. Right. I operate in the leanest possible manner.
00:48:12
Speaker
that
00:48:14
Speaker
Okay. Interesting. Um, I'm torn between whether I want to know
Nat Habit's Unique Approach and Growth Strategies
00:48:20
Speaker
more about what you do today or whether I want to hear the journey of it, but ah just take me through the journey first and then I'll kind of zoom in on some of the things that you're doing today. ah how did you How did you take out and launch your first SKU? Did you decide from the very first SKU that it will be made in-house? a Or did you try to do it through contract and then try it in-house? and i mean There must have been a journey of your market journey.
00:48:48
Speaker
sea Sure, sure. So the way it all started off who was ah one was we conducted long surveys with women. I would say maybe one one hour long, one and a half hour long surveys with. maybe like one 50 odd women understanding on what do they do within their homes to take care of themselves, right? Head to toe understanding of it. And that is what made us realize that there are a lot of things that they do in the house using a lot of kitchen ingredients, right? And that is what made us believe that this is something which will be workable. Okay.
00:49:31
Speaker
Two was to say ah which products to start off from. and right ah We started off with the simplest products. We didn't take up the complex ones to start with. And that has been the thought for us as you're kind of building it out. eight ah The thought was to start with simple products, ah which didn't need a lot of complexity to know that the consumers can associate themselves with. right um Four, I would say, things that can actually give some kind of an instant feed, or a good factor, or an instant feed back to the consumer to say, hi, ariya chah hai. So some of those elements were there, air which made us say, let's go ahead and pick some of those, which was basically a face mask and a hair mask.
00:50:21
Speaker
um which was basically an opening and then here masses were the two products that we chose. ah We did attempt to get them made by a contract manufacturer. the These products were made fresh, right? Rather, these products did not have any preservatives. Rather, when we started off, you actually needed a cold-chain delivery to do it. You had to manufacture it every day. And hence, the manufacturers were not willing to do this.
00:50:53
Speaker
good And that was one of the reasons you said, hey, you have to go ahead and do it on your own. right If you want to do something daily, if you want things not to have preservative, if you want that, hey, there's a cold storage, the cold delivery, everything was there. And hence, we were actually running a delivery fleet when we started. Right. So in the morning, the delivery people would come, we would create a roaster to say, Hey, these are the addresses that you have to go and deliver it. We would put ice boxes in them. And that's how it all started. But we also realized that this is not something which is scalable because you're running multiple businesses at the same time, right? You're running a tech.
00:51:33
Speaker
website to get customers orders, you're running your own manufacturing, you're running your own delivery. And this is not something that you would want to go. And hence the intent was to say, Hey, can you longer get the shelf life of the products? Can you do something so that, uh, you'd be not, you don't need a cold. delivery. So that is what do we work so that today you can send these products ah to the consumers homes in India um without the need of a cold delivery and that is was one of the biggest reasons for a push and growth in the scale. right um So that's how it all started.
00:52:14
Speaker
And ah how did the SKUs expand? So you started with the face mask and the hair? Sure. So ah as I said, the intent had always been to do. Okay. So, okay. I'll tell you when we started off, I would say on the the website, the EOV was like a hundred. Okay. And we really realized that the EOV has to be upwards of 500 rupees for you to make money.
00:52:42
Speaker
and hey average or they yeah yeah ah And hence, we said, hey, we have to add in more products. And hence, we started saying, hey, let's add a moisturizer. Let's add, we had created a face and create a bath. We said, what are the other maybe accessories that we can add? Can we add a comb? Can we add a loofah? Can we add a facial oil? And hey, So that's like a... always average order.
00:53:13
Speaker
Florajal, which is basically like a mist, or like a toner. So those are the things that you kept on adding on a regular basis. And think at that time, given that you were duba launching simpler products, your NPD cycles were a lot faster. right And hence, you were able to an continuously add products. Hence, we added a product which is called as Henna, which is for hair color. ah So you added a lot of those over a period of time. yeah ah and that resulted in today, it will be in over 700 rupees.
00:53:47
Speaker
and okay ah so that's so So you kept on adding, you realized that. And here, I would say also one of the thoughts had been how do you make the whole website experience to be better? How do you make the consumer? um So if you look at it, our product packaging is very different than most of the brands today. They're all very colorful. They don't necessarily have the same brand language in all of them. right Might not necessarily work for an offline space.
00:54:20
Speaker
But it works very beautifully for an online space, right? The consumer likes to browse. that i the When it's browsing, that monotony goes away because things keep changing, right? Just the way you're browsing when you're and doing it on, say, an icon or somewhere else, right? So you've done all of that, and you put those things there on the website. And what you've done is today, a consumer ends up buying four items. on an average when it comes to the website. like So we've done all of those things to drive ah that. And today, the website plays a very key role ah in doing that. It gives us 50% plus of our revenue every month. Wow. And what's your monthly revenue? So we do eight crores a month. Wow. So at that scale, which is like 100 CRs, if you're still
00:55:16
Speaker
at 50% of this is your own website is pretty impressive. Most brands by this stage are like maybe 10, 20% own website, 80% marketplaces. Yeah. There are some very interesting metrics ah as well. If I look at say today, ah Delhi NCR, my RTU percent is 0.2. Okay. And RTO is the products not delivered. Yup. Returns. Okay. Yeah. So this is that undelivered or this is where customer is undelivered. No, undelivered. So that is point two. Typically consumers tend to order and
00:55:56
Speaker
that don't take the products, right? This is a big problem. And you see a lot of startups trying to solve for this. If you look at today, I'll go quick. He's doing this. It's predicting that consumers that will not the purchase and will not take the right? So people have that upwards of 10% are today, right? ah And I think a lot of it is with respect to when you're buying, whether you're able to build trust in the and the product of the consumer because if the customer feels trusted, he feels he wants it, the likelihood of it being saying, I don't want it.
00:56:33
Speaker
will not happen once you've purchased it, right? So yeah, a lot of those things that have kind of built, I think, well on the website today. It's it's ah it's a custom website. It's not on Shopify. It's not WooCommerce, BigCommerce. It's all built in-house there. But why, why reinvent the wheels? Why it's, I'm not reinventing the wheel. It's the whole experience that matters, right? You're going that extra mile for each thing. Even if there is a small thing, which is there, you're going that extra mile for it. Right. Um, I could, we started off with Shopify. It's not that we didn't, right. Uh, but we realized that the whole experience was not great. The speed that you get is not great. Right. Um,
00:57:28
Speaker
And we didn't want that, right? And everything that we do today, we want to go that extra mile ah for the customer, for the whole experience that goes along with it. We build a lot of personalization and so on there. what What does building your own website give you? What are the reasons that ah you did that instead of using a Shopify or something? I think the whole experience, I would say that's the speed, your conversions, your ability to upsell, cross-sell on your website. did Like standard features for most of these like WooCommerce, Pajetto, Shopify,
00:58:12
Speaker
and ah two no Okay, so I'll tell you but multiple. the One is we used a headless CMS. We wanted a headless CMS. So headless headless CMS means you want to service content as APIs. okay You want that same content content to power your website, you want the same content to power your apps. okay okay ah Shopify two is trying to do that. Well, they launched hydrogen. I think they've come up with something else for that as well. Uh, we feel that makes things a lot more efficient, right? the team should c mis means it Any update you do is simply reflected across all places. Yes. And the teams are not seen. My point is today you've got, uh,
00:59:07
Speaker
but i'm From a skew, you do like variants and so on, you probably might have like 500 odd skews in the system today, right? If your content content team is sitting and managing those, that's a lot of overhead. For doing it for app and website and so on, right? We didn't want that. We want leaner structures, leaner teams and so on. And I'm telling you, it's not a lot of work, frankly speaking. We just have a three people tech team. Okay. It's not that you have a large team who's building things and so on. Uh, this has been built by a three people tech team who are actually two or three years of experience. Right. So yeah, so there there is, uh, it, you just need to be patient. You need to just build it, right? Right. And I would might be probably the one.
00:59:57
Speaker
who might be a not necessarily following the norm. i would say i would Even if my investors, if you talk to my investors, they would say, I don't move out from shop, sorry. But we clearly felt it is much better to do it. quote We feel, now ah given that it's a strong part of our business, we wanted to make sure it is right. Okay. I guess this is also a reason why 50% of your revenue is sent from website. What kind of repeaters do you see? So we see over again, 55% of my monthly revenue comes from a repeat users. Wow. Amazing. And, uh, how do you drive traffic? g Like do you spend on performance marketing? Sure. We do. We do. I would say around, uh, uh,
01:00:50
Speaker
40% of the traffic is organic. 60% is paid. Uh, with paid, I would say, uh, 75% is on the metapat forms and 25% is on Google. Okay. Okay. And what is your attack to LTV ratio? So LTV to Jack ratio, uh, might be close to around three. Oh, maybe even yeah more than three. Okay. Okay. Okay. I understand. I understand. So take me back to, you know, we were talking of the journey of reaching here. You wanted to make it on your own because you did not find contract manufacturers. So what did you do? Did you like rent a factory, like rent a, provide says build a factory there or was it like garage or a kitchen phase initially? So no, I think from a law perspective, no need to
01:01:46
Speaker
have a factory space. When I say a factory space, you need to have an industrial space in which you are you choose run a factory. You cannot go ahead and run it in your kitchen. You cannot go ahead and run it. um in a shop or whatever, right? From a law perspective that is there, all the products that you manufacture and have to be licensed and so on, right? And which is the regulatory body that governs this personal care space? Sure. So there are two bodies that are there in India. One is FDA and then there is Ayush. There are two bodies ah that go on that. Okay. okay ah And you need a license from them before you can sell products? Yeah. yeah
01:02:27
Speaker
I think we have changed this is the third unit ah now. ah We started off with a smaller, I would say maybe a 1500 seat kind of a space in which we had a few machines and so on. We probably were in it for
01:02:50
Speaker
maybe a couple of months, six months or so, ah COVID hit in and so on. And after that, we moved to a bigger space, which was just the manufacturing space was around 3,000 square feet. That is there. Today, we have a manufacturing of around 10,000, but the total space that we have is around 40,000 square feet of space. ah We have In all these ones, we have you've quite taken the space bear shell, and we have modified it to our means. We have an in-house team of engineers,
01:03:44
Speaker
maybe an electrician, plumber,
01:03:50
Speaker
fabricators and so on. Just go ahead and do a lot of work as well. ah We take an external help as in it, but yeah, we do a lot of things on our own as well. Who handles production, like, you know, in terms of researching how to make make a product and then how to increase the shelf life of the product and stuff like that? Sure. So there are parts to it when you say one is obviously the R and&D ah side of things to formulate things. And then there is a production side of things. ah There on the R and&D we have a, when we have an R&D team, we have an R&D head,
01:04:32
Speaker
ah na We are kind of that's where we do a lot of experimentations and so on and build the products out. They define what the process should be and then there is a manufacturing team which goes ahead and executes on those.
01:04:51
Speaker
But between you and Swagitika, who's beforehand? Swagitika started off were were taking on the R&D side, yeah on the initial days. ah Now, I think it's been probably maybe eight, 10 months is where and I take care of the R and&D. As well, I take care of all the man all the operations manufacturing. it Okay. okay and so And what was the way in which you increased self-life? but what ah What are the ways in which you increase the shelf life? um
01:05:26
Speaker
I think there's a lot of things that go in to increase the shell flies. Can't necessarily tell you all, but I can give you examples to kind of help you understand those. I'll give you, say, for example, if you use beetroot, say, for example, beetroot juice, if you see today, and if you leave it, ah it uses its color in probably three years, and get degraded to three days. um irrespective of the amount of preservatives that you might put into it. The truth has got something which is called as anthocyanins, which are very rich in anti-oxidants, but they're very unstable.
01:06:11
Speaker
right um you've been able to figure get out ways to say for example stimulate it right and all using natural then you can do some kind of encapsulation ah and the beetroot juice is inside say like you know there's a shell out outside the the juice can go inside something and there's an outer shell inside so you could do that and you could actually elongate it's like night. So there are different things that we do, for example, too. So it's not necessary to just think it in terms of our preservatives, I would say, there's actually a lot more that go into it. There are a lot of natural things that are available to to kind of bump up your
01:06:55
Speaker
uh shelf life right you do not want certain things to say for example who's out water so if you use say a cucumber and you put salt into a cucumber what you see is it will tend to lose water right now you would have something say for example you have uh do you know uh the like an isab bowl, like an husk, which is there. yeah and and yeah You could incorporate that into the products. so For example, you could do a lot of those things. You can use a lot of natural ingredients itself so that you're able to play around and build a stable product.
01:07:33
Speaker
not us ah no There's a play of pH, there's a play of maybe sugars, there's a play of so and there are a lot of natural extracts, et cetera, that come in play to bump off the shelf lives. Okay. Interesting. What are your hero products?
01:07:54
Speaker
ah Today, I would say 20% plus of our, okay, I would rather say ah we're pretty, we're stronger on the hair side as compared to face and body today, right? I would say 60% plus of our revenue comes from here, can't agree, and 40% comes from here. face and body almost this I would say 20-25% comes from a hair color which is henna another I would say 20-25% comes from the hair nourishment category which is your um hair masks and hair oil. And why do you think like hair is more popular than face and body like
01:08:47
Speaker
I think it's a function of the product strength. The hair products are more unique and, uh, yeah, this I think, i'm find yeah, yeah. Yeah. I think we need to work a lot more on, uh, the face side of things, uh, as we're kind of going along. Is there a ah process now of your new product releases, like, you know, in terms of from identification of what to release next all the way till the ah shipping? I think but the way we kind of started thinking is, one is obviously there needs to be an overall ah strategy for the company to say, hey, these are the categories in which you want to play. ah And for each of that category,
01:09:37
Speaker
or the products view, per se, to say, hey, why do we think we will win in those categories? And why should we play in that? So I think that's the first step of the whole process, is to define which category, which view, what in which where do you want to play, and why do you want to play? ah And if you want to play, how do we think we can win in that space? um That's the first part of it. On basis of that, um we have a product team ah which basically attempts to understand what is happening in the market, ah what are the other products that are there, what do consumers want. ah They would do a lot of surveying, speaking to the consumers. ah if so For example, if you're launching a face wash, would the consumers be okay to have, say, a face wash without a phone?
01:10:25
Speaker
um What is the need for for now how important is ah the fragrance of the smell ah to them? Are they okay with the texture that is there, ah which has a basin into it and so on. So they do all of those ah kind of studies and on basis of that, they prepare a doc to define what is the ideal product that they would want the R and&D to build.
01:10:56
Speaker
On basins of that, they would they would have said, hey, this is the price point at which you want to play. okay And this is what the COGS for the product needs to be. they ah What should the RTBs be? And so on and so forth. So that definition is there ah with the R&B team. on basis of, so basically there's like a roadmap of saying, hey, you want to launch this product in this month or the year, so there's a roadmap for the year, or there's a roadmap for two years for that matter, right? on And then the product team works on each but particular one of them, creates a brief um and gives it to the R&D. And then the R&D team basically goes ahead and does
01:11:37
Speaker
loads and loads of experiments and I would say for any any product today I would say at least you end up doing at least 500 plus different experiments for them to build it out to define what the base should look like first before even you think about varying the ah then So you define what the base should be, you figure get out what the weight range should be. You do a lot of testing on those. Now you do in-vitros ah to see whether it they're effective or not. What is in-vitro? So basically what what can happen is... Suppose you want to ah check for hair growth, right? So you can do, instead of putting it on people, you could fundamentally do it on a tissue cell ah okay in a lab, right? In which you can put it and you can see actually whether there is an increase in the marker protein.
01:12:36
Speaker
that's there, for example, for you to identify whether this product is going to be effective or not, right? So you can go ahead and do some of those, or it could mean tests. Say, for example, you're doing certain things to, say, you're in for reducing the roughness. You could have a test to check whether the hair and ah brittle or not, or whether, ah so that are there's a diastron machine which can actually help you figure that out. So you do some of those tests yeah to see whether the product is behaving in the right manner. no You do consumer trials. If you feel good about all of those, that's when you go ahead and launch it.
01:13:20
Speaker
okay And you would, I'm guessing always launch on your own website first before you take it to the other sales center to get the customer feedback. and Yeah, I think things are kind of evolving and changing there as well. I would say, for example, now there are times we hear from say Anika or Amazon, hey, why don't you go ahead and do a launch exclusively on their platforms and so on. So things are kind of evolving, but yeah, you should, you're right. Usually the first thing is to go ahead and launch it on the website. Okay. So what's going to be your path from a hundred CS right now, you're at a hundred CS to a 500 CS. yeah
01:14:03
Speaker
What's the path? for that yeah or part parts from a part. So I think pretty much the way we kind of think about it, there are three key leavers. Uh, one is products. Uh, second is channel and third is brand. Right. Um, there are still a lot of larger categories that we don't play in today. um We don't play in shampoo, we don't play in conditioners, soaps, body washes and so on. so There are lots of larger categories today that we don't play in. The intent is to launch products in these kind of spaces ah so that you can tap on to the
01:14:49
Speaker
more recurring um products that the consumers use. ah Two is from a channel expansion, now we haven't today 100% of the business is online. The intent is to get into the offline side of things. Third is the brand side shortening of the brand comms, maybe spending more on top of the level ah awareness
01:15:19
Speaker
Those are the three broad things that can we need to do to undermine growth. Even on the current product portfolio set, um not we feel there will still be a continued set of growth. um that we we
01:15:44
Speaker
And offline will be like, will you set up your own stores or will it be through modern trade or through general trade or what? Sure. I think the whole strategy piece for this is not yet being logged. um I am a little averse to setting up of EBOs. I know there's a that strong value proposition um for the EBOs. Yeah, hundreds wherein you are saying, hey, you can ah have your own shows. It does very, very well from a branding perspective.
01:16:20
Speaker
ah But I am also apprehensive of the fact of the capital investment, ah security deposits, et cetera, that come along with it. know And the profitability pressures on those. so i don't know And hence the thought is to do more via your motor trade or your If you're going to a GT, you're doing more of your beauty stores and so on. ah Leveraging those would be our first bet. EBOs, yes, you can, but they will not be the primary drivers for driving sales. Okay. Okay. Interesting. And ah when you say you want to invest on brand, does that mean like a brand ambassador, TV ads?
01:17:16
Speaker
I think it's still far away. ah We haven't yet. We don't have a brand ambassador till now. We are kind of for and um doing this whole brand strategy work as we speak. And that's when we will probably get to some kind of an answer to say whether we should have a brand ambassador, and if so, who? Till date, we've kind of kept ourselves away well from the brand ambassador side of things. so Okay. okay and so And how much capital have you raised till date? How much capital have you raised? I think of we raised 10 million ah in December. but Prior to that, we had raised maybe around 4 million far in
01:18:09
Speaker
April of 2022. And but prior to that, we had done our seed rounds from by
Long-term Vision for Nat Habit and Team Dynamics
01:18:21
Speaker
the board on the surge, which were for around maybe two and a half million.
01:18:32
Speaker
and this was so like at the pre-product stage, you raised your seed round? No, after that. Okay. You had some early traction to show while raising the seed? Yes. yess is so so We made some products. We had a factory ah and so on. We were probably doing the sales of maybe 10 lakhs a month so when we raised the seed round. Do you need to raise more capital? would we need to raise capitals? ah say my The is to get to an EBITDA neutral stage by March 25. However, the plan is to go to the market to do a fund raise from March 25.
01:19:24
Speaker
probably ended by December 25th. So that's how they're kind of thinking about it as of now. You are operating with a one day inventory. Every day you produce and ship. Is that scalable at a, you know, once you hit like say a 500 CR level, because most big brands would be having like maybe 60 days inventory with them or something like that. I think Kamanan, I would say it will evolve. For us as well. It's not that it is status quo. I would say if we're able to get to that underlake, it gives me the confidence that I'll be able to scale it more. For sure. Obviously, what will happen is the more I move towards offline,
01:20:09
Speaker
more is the amount of inventory that would be lying outside. Is this one day inventory like a competitive differentiator? It is fresh. It is fresh and that is the reason we have chosen to keep it like that. but personally get make quick at any fresh How much is going to put katha in the aim? But its I think we ah the fool the products are almost akin to food to me, right? Given that you're putting that, as as I was giving you that example, you're putting that fresh beetroot juice into it. um And you know that beetroot juice gets degraded, for example. And hence, I am saying ah you need to go ahead and manufacture it often
01:20:57
Speaker
Uh, you need to go ahead and manufacture it fresh. Otherwise that beat would go ahead, deliberate USB brand choice here. yeah because As I'm clearly telling you that antioxidant will be great. yeah It's not a function of the preservative.
01:21:15
Speaker
Okay. Okay. Yeah. i just Understood. Okay. yeah so As far as you can, you would want to maintain this freshness. Yes. The product should hit the customer's home within like say a week or two weeks. of yeah and yeah yeah yeah so good yeah Yeah. Okay. Which is an interesting challenge to solve long term. Yes. like like That could be a very unique kind of a company to bring the very differentiated from the other brands here, but because no other brand is thinking in terms of freshness.
01:21:46
Speaker
yeah yeah so is that your you know You said you're working on the brand strategy and how you want to position the brand. Is that like your reason in terms of how you want to differentiate it from like say a plum, which is also I mean, you know, nature as a USP is friendly common. All of these plants are somewhere saying this is natural and chemical free. and you know so So what is the way in which you see and that habit? being i wouldn't see that yeah I would say, yes, one aspect is freshness and you want to enhance
01:22:27
Speaker
more and more natural things into the products, right? Our belief is that if you're taking things as a whole, you're getting much more nutrients into your system, right? However, the way I kind of think about it, and I think a lot of it is has also evolved over a period of time. If I kind of think, I actually intend to, would be to actually make an innovative company. right The intent who would be to say, can you put using that lens, put India onto to the global map, not on the global map perspective of just saying sending your products, but being innovative. right Just the way Korea stands out for innovation in certain of those things. Can you do the same here? the yeah If you look at today, India, I would say India is predominantly a country in which
01:23:26
Speaker
We go ahead and just apply things. We do not go ahead and do a lot of primary research. What you will see in the personal care space is which is something which is very common to think about in terms of electronics industry that we don't fabricate chips. Okay. We go ahead and assemble chips, something which is, and I say the same thing holds true for personal care. Right. We do not manufacture a lot of the specialty ingredients. We do not manufacture very common ingredients. Like say as anthem come today, we go ahead and all of those are imported in India today. Right.
01:24:10
Speaker
If there is a, that from a research work perspective, if you look at the world outside, there is a very good amount of push on upcycling, right? None of that comes down to India. India as a country cannot afford it, right? All of this research work happens there. All the ingredients are manufactured there and are sold in all the developed side of the world. You don't flow into it. The question becomes, can you as a country, can we as an a NAC habit change that? Can you drive a lot of the primary innovation in India where you can actually use that innovation and sell it to the world? So that's been one of the thought process around which you've been doing it. My belief is innovation happens when you put in a new angle of looking at things.
01:24:59
Speaker
okay ah What we have done is we're putting that fresh that be lens onto things. And hence today, a lot of the problems that you face are not faced by the rest of the world because they've not put that lens onto it. And that is what it drives innovation, right? And that is what we want to build as a core for the company um and we'll do it for long. Interesting. Would you rather invest on increasing your retail footprint in India or would you rather start exporting? ah I would say I am focused to more today on building within India. All the innovation lenses and pieces that I'm talking about are all longer term play.
01:25:53
Speaker
eight The very first thing that has to happen is you need to grow. You need to grow sustainably. You need to make money for any of these innovative thought process to succeed, right? Yes, you have it. You're building it in your DNA. You're doing but research and you building some of these things out. But all of those will can come to future when the company is actually generating money wherein you can pump a lot more money into the R&D. Interestingly, when you look at how much of whether you read the industry report today, if you look at the R&D spent for India today,
01:26:35
Speaker
way way down, right? And with, I would say 50% plus of the R and&D spend is being done by the government bodies. Whereas in case of like the US or China, you would find that to be like a five, 10%. So private companies need to step up on the R&D spend there. And how much do you spend on R&D? ah Out of my total, if my total expense for the year would be 60 crores, I would probably spend maybe just three crores per day. Okay. So that is something which you want to scale up. Yeah. Okay. What's your headcount today? ah We are almost like 220 odd people.
01:27:33
Speaker
with how are they split with I would say 150 in the operations. ah The operations include all manufacturing, all packaging, all batch pasting, QAQC, warehouse, 70 people are part of the other corporate which includes ah your tech, you increase your finance, it includes your sales, it includes your creative product. areing
01:28:10
Speaker
okay you know What are your learnings in building a 100 crore ARR 200 plus headcount kind of a business? Like what what are the top three things you learned while building this business? I think one
01:28:33
Speaker
is a lot of times I hear people saying that organizations need to be more like a sports team to do well. ah
01:28:48
Speaker
And I think I feel the organizations need to be a mix of family plus a sports team, right? If I today look added at least very strongly in my operations team. I think we operated more like a family. there versus a sports team where there is a lot of trust that you put on people. You are able to empathize well with them. They say they want a chutee, you need to enable that to happen. ah If they need money or some loans or whatever their needs are, and you should be able to provide that.
01:29:39
Speaker
you would need to be able to treat them well, where I feel very strongly that you're needing by a heart, right? You need to be able to reward them well, right? The ESOPs need to be there for them too, right? And hence today as an organization, even if somebody does the cleaning job, and if they've been doing that well, the eddy stops in the company, for example. right wow ah And that's where I feel that family comes into me, because it's that family that's been born that does it. And I see that in the day-to-day operations today. A manufacturing person who comes at, say, 5 a.m. in the morning,
01:30:22
Speaker
And nobody tells him to say, ka packaging min deirra artbaja ahi you go ahead and do it. He'll go and stand and do it. but just but And that's where I feel that whole emotional connection with people is kind of needed to run. When it comes to a sports team, yes, when there are a lot of functions which operate in that manner, there is a lot of competitiveness that in there, there's a lot of competitiveness in sales, there's a lot of competitiveness in R and&D in creator because you want to create the best work there. But at the same time, you do not want to feel threatened that, hey, somebody else is doing a job better and I might wait a lot, right? Where you got to back people and big believer in how so many plays, I try to back the people
01:31:09
Speaker
but you take a backseat, let them enjoy the victory, go back and do that. So, and hence it's a mix of both for me. I would say it's a mix of ah a sports team plus this. Two, I would say play long. ah
01:31:28
Speaker
Play long means play, play very, very long. Go deep. ah i Again, like I do, what Roni does, ah If you are able to sustain and you can actually really build and change things there. um When they say leaders he eat less and I strongly believe in that. If you're building it from that perspective, your people, team can actually think.
01:32:01
Speaker
So that would be my ah second piece
Leadership Philosophy and Listener Engagement
01:32:06
Speaker
of it. And the third is, I would say, no follow the right processes, right ways of doing things. ah Don't think too much about the outcomes. ah Outcomes are a function of what do you do um and day to day. the load would be my three things there. Interesting. Interesting. Amazing. Thank you so much for your time Gaurav.
01:32:33
Speaker
And that brings us to the end of this conversation. I want to ask you for a favor now. Did you like listening to the 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 the show? I'd love to get your questions and pass them on to the guests. Like to be at adatthepodium.in. That's adatthepodium.in.