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The Financial Insight That Built a Rental Empire | Geetansh Bamania (RentoMojo)
155 Plays5 years ago
"Renting is something like lending itself."
This single, powerful insight from Geetansh Bamania reframes an entire industry. It shifts the perspective of renting from a simple service to a scalable financial product, allowing a capital-heavy business to be built with an innovative, asset-light approach.
Geetansh Bamania is the Founder and CEO of RentoMojo, India's largest furniture and appliance rental company. He has scaled the company to nearly 450,000 customers, generating ₹195.8 crore in revenue and ₹22.1 crore in profit in FY24 alone. An alumnus of IIT Madras, Geetansh has grown RentoMojo's assets under management by over 150x, cementing his place as a pioneer in India's rental economy.
Key Insights from the Conversation:
- The Asset-Light Innovation: RentoMojo's scalable model was born from necessity, partnering with financiers to fund assets rather than owning them, which significantly reduced capital expenditure.
- Resilience Forged in Failure: Before RentoMojo, Geetansh built and shut down two startups, learning invaluable lessons about product-market fit, the importance of sales, and market timing that he applied to his future success.
- The Criticality of Market Size: A key reason for exiting his second venture was the realization, gained while fundraising, that the market was too small for his ambitions—a crucial lesson for any founder.
- The Founder to CEO Evolution: Geetansh discusses the personal journey from being a hands-on founder who solves every problem to becoming a CEO who builds a great team to solve those problems.
Chapters:
[00:00:00] - Introduction: Geetansh Bamania's Vision for Renting
[01:32] - Early Life & First Entrepreneurial Hustles
[03:59] - The IIT Madras Experience & The First Big Idea
[09:17] - First Failed Startup: Lessons from Click2Skill
[15:25] - Second Venture: Why Market Size is Everything
[24:14] - The "Aha!" Moment: Seeing Renting as a Financial Product
[27:46] - Cracking the Asset-Light Business Model
[32:25] - The Journey of Raising Venture Capital
[41:21] - The Personal Evolution from Founder to CEO
[43:47] - How COVID Became an Inflection Point for the Rental Market
[55:04] - The Next Big Challenge: Taking RentoMojo Public
[57:11] - Actionable Advice for Aspiring Founders
Hashtags:
#GeetanshBamania #RentoMojo #FounderThesis #StartupIndia #Entrepreneurship #RentalEconomy #AssetLight #BusinessModel #VentureCapital #Bootstrapping #FounderJourney #StartupAdvice #CircularEconomy #Fintech #Ecommerce #Leadership #IITMadras #StartupLessons #MakeInIndia #IndianStartups
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Transcript
Career Confusion and Early Entrepreneurial Journey
00:00:00
Speaker
Akshay, did you always knew what you wanted to do when you passed away to the MBA? I was all over the place. Sort of, what about you? I was confused about your career choices, wondering what steps to take next.
00:00:18
Speaker
In this podcast, called Beyond Campus, Saurabh Garg, founder of C4E and Akshay Dutt, founder of Unati, are on a mission to crack open the career success code for the youth. So, let's turn the dream into reality.
00:00:40
Speaker
Hi, I'm Gitaan. I'm the founder and CEO for Rentmojo. We're the largest furniture and appliances rental company in India. Have you ever thought to yourself that you want to be your own boss? Our guest for today, Gitaan Shbomania, was bitten by the entrepreneurial bug quite early. He began hustling in his school days by selling comics.
00:01:06
Speaker
it was only a matter of time from decided to enter the business arena. Through his startup, Gitaash has sought a major headache of the urban population of making their rented properties habitable without huge investments. Listen to Gitaash share his journey of becoming a successful entrepreneur.
Influences and Education at IIT Madras
00:01:29
Speaker
So, Gitaan, tell me about your childhood. Where did you grow up? What were your parents like?
00:01:34
Speaker
I grew up Chhattisgarh, that's in Belay, a typical town where either somebody becomes a doctor or an engineer. These are likely the two professions that most of the people kind of go into. Yeah, so my mother's a doctor, father's an engineer, my brother is graduated from IIT Bombay.
00:01:58
Speaker
So I think that set the path for me as well to pursue graduation and engineering itself. And I graduated from IIT, Madras. So growing up, was there like an entrepreneurship? Or was it like you were inspired by your parents to follow the path of engineer or doctor? No, nothing like that. I don't think I had an aspiration.
00:02:27
Speaker
I remember vaguely that I wanted to be an astronaut or something like that, you know, at childhood, but I was always involved in something or the other. I mean, I was renting out comics at that point in time. I was creating smaller events. Then I was creating a lot of cricket match competitions between several streets that I think I had that I
00:02:53
Speaker
I don't know, I wanted to do something off the hook or outside the box, outside my daily routine or work. So that was always there. But I never thought that I didn't even know entrepreneurship or mostly becoming from a service class, you tend to think or you get pursued towards. So I think that was the thought process
00:03:22
Speaker
at my house as well. It even took them some time to actually come to terms with that their son is pursuing startups.
College Life and Business Inspiration
00:03:32
Speaker
So why did you decide IIT? Like it was clear that engineer one night was the best second night. That was about it. I think that was the only path which was there because my brother had already. I basically wanted to go out and I wanted to go out to Bombay or Delhi or something like that.
00:03:53
Speaker
So these were the means to go out of the city at the end of the day. Of course, everything I did about college. So how was that experience at IIT Madras? Was it like a transformational kind of an experience? Did you have a lot of fun? Did you study hard? What were the highlights of those? A mix back there also. It's not that I was a nine-pointer or so, but I was fairly involved in
00:04:22
Speaker
I possibly sang for my hostel five years in a row. I was in the choreo team as well. Like Bollywood songs? Yes, Bollywood, English. I mean, I was a lot into porcupine at that point in time. College made a lot of sense when I was a kid. Because when I was a kid,
00:04:52
Speaker
I was trying to help a friend of mine get a house in Pune at that point in time. I just realized that the process for that is so cumbersome. So I don't have to travel to Pune to help somebody out. So I thought possibly a platform like that can be good.
00:05:17
Speaker
and cut to sari platforms like housing.com and common floor and all of these essentially happened magic bricks was already there. I think slowly and gradually, if you face a problem and you try and figure out a solution for it, I think that what turns into a business, if the problem statement is scalable and large enough
00:05:45
Speaker
And your solution is scalable as well. That forms a very good business at the end of the day.
First Venture Challenges and CFA Decision
00:05:50
Speaker
They are converting into some or the other venture. So I started thinking at that point in time.
00:06:07
Speaker
Okay. So did you have any side hustles in college, any extracurriculars? Like you told me school where you started a cricket competition and a comic rental business. So college, you know, whatever we could earn from it, but, but nothing major as you know, as such college went into, you know, all these extracurriculars and specifically, I think,
00:06:35
Speaker
By the time I realized that placements are on, the only I think a little out of the box hustle that I did is possibly I was the first one to be a CFA level one qualified in my college at that point in time because of Apagar, Apagar 8.10 and 9.10 year, so you need to stand out in the placements, so you need to do something about it. At that point in time, my brother was giving, you know,
00:07:02
Speaker
I think he gets level two by then. So I thought, you know, this would help me stand apart. So I, you know, apart from engineering, I give finance as well. You know, when that really helped me in my placements.
00:07:17
Speaker
So you did a CFA inspired by your brother to some extent as a way to stand apart during placements. Did you have an inclination in finance or it was just that you felt that, you know, your brother's advice would be good and so you did it? The core, I like math. So finance was mostly maths only at the end of the day. So I don't think it was, I mean, it was good. It was interesting. Anything new is interesting for me. I mean,
00:07:48
Speaker
That's the fun of it. I really liked, I enjoyed the time while I was preparing for it. Sort of a complex challenge. Any complex problem to solve, I think that that piques my interest. So at that point in time, just the challenge was that if I can make use of my summer vacation in the college and, you know, get the exam and crack it. I think that was a, you know, that was, I don't know. I mean, that was a good challenge that I wanted to pursue and sort of happened
00:08:15
Speaker
So you did an integrated BTEC, EPTEC program. So that would be like a five-year program. So this you did in your fifth year? This I did, yes. Okay. Okay. Then what happened during placements? Where did you get placed?
Product Development and Business Model Shifts
00:08:31
Speaker
I went into KPMG. So I was consulting for two to three months, roughly, but I realized that I'm not the best fit there.
00:08:42
Speaker
because it's a lot more bureaucratic in nature. Big companies have to be at the end of the day, unfortunately. It's difficult to execute your own ideas. At that point in time while I was consulting, I was consulting a lot of people. Being a fresher, I used to consult my brother. I used to find out for most of the complex problems that were coming towards me since they were new.
00:09:12
Speaker
I used to reach out to other people for finding out how to get this done. So I thought if I'm doing this, if I'm consulting others to consult a bunch of my clients, why not create that into a platform where two folks can consult each other, like a tooling in profile can come together and consult each other. So that's the platform that I wanted to build.
00:09:37
Speaker
And that's what I jumped onto. I think I joined Flipkart for a, you know, quick while just to keep funding that project parallelly. And I, the moment the project was ready, I kind of launched with it, which nowadays, you know, there are many platforms like an Academy and, you know, there's several who are in the same domain. But I think the idea was a little, uh, you know, I don't know, maybe the execution was not that great or maybe the idea was a little ahead of time.
00:10:06
Speaker
How much did you spend to get the ball rolling? What was the initial product that you built? Spent around 4-5 lakhs, took some capital from my parents, my mom and again my brother took some capital from both of them and floated this out.
00:10:25
Speaker
So what did you build as your initial product, like a site where people can list the skills that they want to offer and other people can search for consulting on those areas, something like that? So at that point in time, LinkedIn Auth was a lot more open. So basically you need to log on to the platform and if you log in through LinkedIn, it used to essentially fetch all the information
00:10:49
Speaker
from your profile and used to just mention the skill sets essentially the kind of experience that you have and you had to of course choose whether you know you are in the profession of you know you're a lawyer you are a financial consultant or you're an accountant etc etc so depending on that you know folks could have you know if I have a certain query let's say I have some query on taxation
00:11:17
Speaker
I can browse around, I can pick mentors that I want to book my time with, and I can get on a call with them to understand that query, and possibly I'll be charged for that call. In those days, I was trying to do both a call scheduling, a calendar scheduling, or a webcam interaction. So I was, of course, seeing a little more response for webcam interactions.
00:11:46
Speaker
Okay. And they would pay through the platform and you would keep a commission. That was the revenue model. Yeah. Initially I was just, you know, in the initial days, I, you know, that's, that's what I think we built a good product, but you know, I think the DNA for sales and marketing was a little, uh, was not there so much, uh, you know, so, uh, uh, we kept on building a good product thinking that people are going to come, uh, on the platform themselves.
00:12:13
Speaker
So initially we didn't charge consumers for this kind of a service. So it was pretty much on a freemium basis, but slowly and gradually as we went forward, we started charging the consumers and for a commission out of it, but initially it was all free.
00:12:31
Speaker
So your goal was to be a platform where lawyers, financial analysts, and maybe HR consultants, management consultants, all of them would start earning from your platform by providing, by selling their hours, essentially. Yeah, selling their hours. And it could have been a platform, which is safe to actually go and select a mentor.
00:12:59
Speaker
and pay as well. So those are some of the things that I wanted to work upon. Okay. And you were doing this with other co-founders or you were alone here? I was alone. I was alone. But I had a team of five or six. How did you fund the salaries? This was from that initial capital which you had. Yeah, from the initial capital that I got from my brother and my mother. That's how I funded the program for a little while, paid salaries,
00:13:29
Speaker
grew from about two people team to over to seven to eight people team but you know but unfortunately the revenues were dipping okay so when so when did you decide that this is not working out and what did you do next so we were trying to get all these mentors as I said we were not using a lot of capital for very innovative marketing at that point time you know so what was happening
00:13:58
Speaker
was what we realized. I mean, the insight that we got was if the mentor's profile is good enough, people are flocking in themselves because, you know, the mentor is, you know, sort of the profile itself is good. And so we started getting fairly high, you know, high valued guys, which are, you know, possibly have sold companies, et cetera, et cetera. I mean, so those kind of guys.
00:14:26
Speaker
But they would not have, you know, sold one to two hours slots in return in exchange for some sort of a remuneration. So because these are these were any major high-profile guys. So, you know, what we started doing with them was that whatever you do this consultation and you know, whatever proceeds from that call or from that event, we will give it to a charity of your cause.
00:14:53
Speaker
So that kind of became a slight bit of a business model in which, you know, some sort of a revenue happened. But that started pushing me towards the direction of, you know, thinking more philanthropic platform. But by then, you know, we were, I think runway, we were, you know, starting to get into some sort of a runway issues, etc.
00:15:15
Speaker
And with no, you know, you know, proper capital in hindsight that was becoming seemingly like bit of a challenge. I along with one of the one of my mentors, I that I knew his name was Sadat. He was the founder of Web Chutney. So with so because I was already thinking in philanthropy, I kind of joined hands with him as my second venture.
00:15:45
Speaker
And he was already trying to do something on the philanthropic space with his venture was called Hope Monkey. So I joined
Philanthropic Ventures and Exit Decision
00:15:52
Speaker
hands with him. Basically, he was trying to raise a lot of capital for a bunch of NGOs. Yeah, so I initially was thinking CSR budgets. But when we joined, what we realized was that the CSR is not the best way to fund the NGO.
00:16:13
Speaker
You know, because it's sort of a division. It used to be a confused division. Even today, I don't think, I mean, most of the companies really focus on CSR as an activity altogether. So, you know, in terms of decision making, if somebody, you know, needs to take out a certain capital out for, you know, charity, charitable purposes or, you know, CSR purposes, it's a very difficult budget to take out some, you know, capital out from.
00:16:41
Speaker
Essentially, so that's what we realized. And so what we, so we pivoted a little bit and we started thinking that, you know, why not create, go to NGOs, let's say, and, you know, make a good amount of content from those NGOs. I mean, in terms of how they're performing, who are they working for?
00:17:06
Speaker
what's really causing them to walk towards this. And if that story aligns with a certain brand, like a Coca-Cola would align with a certain NGO, Google would align with a certain different kind of an NGO, which is possibly helping street children learn coding, right? So that kind of an NGO, and I remember there used to be a guy in Delhi who used to have a live class within a certain metro station.
00:17:32
Speaker
So we took that and we made that into a good content went to a couple of brands and one of them started funding it through the branding budgets instead of a CSR. So that became a good business module that you know, rather than the CSR budgets will give you a lot of traffic because the content that we are producing lot of traffic will come on your platform and you know, you can assign a certain CPC or impression cost and maybe you can donate that to the NGO.
00:18:01
Speaker
If somebody is actually transacting on the platform and donating, let's say 100 bucks to the NGO, you match it and top it up by saying that, okay, let me provide 400 more as a brand. So which will bring in a certain brand loyalty connect, etc. So that that kind of worked in and we raised a decent amount for a bunch of NGOs in a span of six to seven months itself. Before which there was a, you know, somebody like a large conglomerate want to acquire us.
00:18:31
Speaker
So I think post which I somehow was feeling that the growth rate was not that high. Maybe the GDP per capita in India is so less that this is possibly somebody would think about charity as the last resort once your basics are covered. So maybe that was the reason I felt that possibly
00:19:00
Speaker
I should step out and do something else. Okay. Was it also that maybe there was a misbalance of power like you were the junior partner in that relationship? Did that play into the decision to move out? If I think in any relationship, if you are getting enough freedom to execute your own ideas, I think that's what challenging and I think that wasn't a concern there.
00:19:26
Speaker
for sure I think it was more market that I was thinking that you know can be you know is relatively a little smaller so that's why I kind of moved out
00:19:41
Speaker
So, you know, I've seen most founders don't have that kind of objective way of looking at the market and saying, this market is too small because they are attached to whatever they've done so far. How did you get that level of objective outlook and, you know, to say, OK, this market is too small and I should move out?
00:20:10
Speaker
So essentially it's it's when I think we're not trying to raise capital teaches you a lot of things. I mean whether to raise capital or not. That's a very different debate altogether. But raising capital typically means you need to get into a market which is large enough. You have the you know, high caliber team to pursue and you know, really create a differentiation in that marketing.
00:20:34
Speaker
in that market and really are able to have a defined execution plan so that you are able to return that capital to the investor at a certain you know with a certain IRR that's that so raising teaches a lot of you know business skills as well at the same time for sure you know which I think comes very naturally to some of the folks those who have been doing businesses although in a slightly different
Capital Raising and Role at Pepperfry
00:20:59
Speaker
model
00:20:59
Speaker
But you know most of the traditional businesses knows how to run the businesses But they don't know how to raise capital raising capital is slightly different one But you know kind of teaches a lot to you about the traditional businesses I think depending on different format whether you're going for a venture capital capital or a private equity capital I think both teaches you very different things
00:21:22
Speaker
So when you were essentially attempting to raise funds for Hope Monkey, that's when the realization hit you that this is too small an opportunity. Yeah, because largely, which is that one philanthropic company which has become a billion dollar? I know that's a very materialistic thing to think of, but at the end of the day, if the business needs to scale, the market needs to be quite bigger.
00:21:46
Speaker
And I think at that point in time, I was thinking more from that standpoint that considering the age that I was at, et cetera, I wanted to get into a market which is large enough and which can actually become very big. So then you went back to a job after almost more than two years of being an entrepreneur. So how was that experience like going back into a job? Yeah, I mean, I wanted some time for sure to, you know,
00:22:16
Speaker
I think I think I will be very difficult for me to go back. I think it was I've never thought about anything as a job or not a job as long as the problem statement is really challenging and you know, I'll be able to yeah, I mean if I like doing it, I'll I'll get into and do whatever is required if it's challenging enough. So, you know at that point in time I for the for the role after that I was
00:22:45
Speaker
about to get into a new industry and it was building things from scratch again. Tell us about the role after that. I got offered a role at Pepperfry to build a private label in furniture from scratch. So that was a very good experience in itself. I thought the role is going to be pretty challenging. Furniture is a very different category.
00:23:13
Speaker
And this was not entailing only a certain section or a product or just building a platform around it. This was working with the product team. Essentially, I was owning the P&L for furniture altogether. So that means we're almost running a company and working with product guys, marketing guys, et cetera, all the folks within different divisions and then working it out. So I think I felt this is, again, a very similar role, which is that the market is big.
00:23:44
Speaker
you know, most of the platforms were pretty much the vertical at that point in time. This was one horizontal play. Can you explain what do you mean by a vertical play and a horizontal play? I mean, horizontal is across the categories. Vertical is just, you know, focusing and, you know, doing a deep dive into one category altogether and becoming an emerging as a leader in that. So I think, you know, I felt, you know, something can, you know, this is going to be materialistic, very challenging.
00:24:14
Speaker
But while I was at it, again, I think a problem statement hit me and I thought possibly rental can be a better offering for a guy like me who's been constantly changing cities, changing jobs, pursuing different aspirations, moving and wanting to keep the life flexible. I thought that this is a, so renting can be a better lifestyle.
Rentmojo's Inception and Business Strategies
00:24:38
Speaker
But when I started looking at the economics of renting, I mean, it just really, I think all the,
00:24:44
Speaker
learnings that I had you know back in college because of you know in finance really helped me to imagine that you know how renting is something like a lending itself you know that I'm not giving somebody you know let's say of 30 000 rupees so that in terms of loans so that somebody goes and buy a bunch of products and I'm giving somebody 30 000 worth of products to him and essentially collecting a monthly installment back
00:25:12
Speaker
So it's very much like lending. The contours for the business is very much like lending. So, you know, and the kind of economics that I was seeing compared to any lending organization at that point in time was just very, very superior. I thought this really makes sense. And, you know, that's how I kind of left at Pepper Fry and started Interpojo.
00:25:32
Speaker
Did you like, you know, first make a business plan and then look at like the economics of it and all of that and then quit or did you decide that this looks exciting? I made my own version of business plan. I don't think it was as sophisticated as one would. I mean, after this experience of running this entity for five and a half years, I mean, it's very different now if I have to make a plan or
00:25:59
Speaker
you know, sort of a forecast or even a projection and the kind of questions that I'll, you know, possibly look for that point in time, it was a basic one, you know, because the data also was not there. But when we, when you're starting off, it's, I think that's why it's the most risky is because you don't have a lot of data. You need to somewhat pursue, you know, sort of a gut understanding as well. But, you know, at least at the unit level, you understand, and you can do the quick maths that, you know, how
00:26:26
Speaker
how much you will be able to spend in terms of acquiring the consumer or what what will be the basic Marwadi business that you can run and you know, try and see if it really makes sense and you know, what are the counters around it. Of course, there were many challenges at that point in time on running that business as well. You know, the biggest problem was the cost cost heaviness of it that you need a lot of capital to be put into a bunch of products, which you will be renting out out to consumers.
00:26:55
Speaker
So that was a cost-heavy business at the end of the day. How to work like a bank, keep borrowing from the market, and then converting that into a bunch of products and then renting it out to the consumers and essentially making a spread is something that we realized later on in the journey. But when we were starting all, we were just imagining, OK, it's going to be 5 o'clock, it's going to be 5 o'clock, it's going to be 5 o'clock, it's going to be 5 o'clock, it's going to be 5 o'clock.
00:27:33
Speaker
So those were the crude calculations that one day, you know, I made a prototype of the platform and floated it out. And, you know, apparently within the first one, one and a half month itself, some decent number of orders started coming in. And, you know, then we hit the bigger problem of solving for this capital effectiveness.
00:27:51
Speaker
I in fact reached out to, I remember. Okay. And so how did you solve the capital problem? Because I think you would have realized very, very early that your own, that you can't bootstrap it. Yeah. So that was the problem. So I think, you know, I think again, we were running into some sort of a capital problems. And so, and we had a couple of payments that we were pending for,
00:28:20
Speaker
that we were supposed to clear off the POs for invoices for a vendor and the assets which we have already deployed and we were generating an Intel against it. So I think the business model came out of the problem that we were facing at that point in time because what we told the vendor is that we'll give you a portion of the Intel that we are generating rather than paying off your invoices.
00:28:48
Speaker
So that's almost like somebody giving us a loan for the assets that you have given out to a consumer and essentially a fraction of what you are making is what you are giving back. So they will make a smaller return versus what you will make, but you will essentially make a difference of what the vendor would have made and what we were making monthly. So that became the business model and that pretty much is the business model when you go to a bank also.
00:29:17
Speaker
I mean, the bank takes the capital from a normal citizen like me and you for about a six to seven months. And they downstream give loans to several of the large, I mean, for larger projects. And essentially, they make an arbitrage in between. So that's what it is. Essentially, that's what lending is all about. And that's what sort of renting is all about as well.
00:29:46
Speaker
So how many months in did you like figure out that this is the way to scale up? Like, did you like finalize this as your business model? I think three to four months, you know, we hit this problem and we were able to figure it out three to four months in. Yeah. Okay. So how did you get people to agree to that? And you know, I would imagine a lot of vendors would say, why do I need you to do this? Then I can do this on my own.
00:30:13
Speaker
Yeah, so it started happening because he had the necessity. I mean, he wanted some sort of, you know, square off of the invoices that we had. So he had to do it because we said there is no other option at the end of the day. But that gave us an idea to not reach out to vendors. We started reaching out to a bunch of high net worth individuals like Marwadi who are looking out for interest. So that worked out because if somebody is putting in a mutual fund for 7%, 10% or 11%, we were promising a much higher return here.
00:30:43
Speaker
you know basis the projections that we used for checking out so that really worked out with a lot of you know people those who started putting in a couple of lakhs into the business into the assets
00:30:58
Speaker
So these H&Is would fund the purchase of furniture and you would pay them back a percentage of the rental that you're running. Yeah. Okay. So first year, how much did you make? Like, was it profitable from year one itself or, you know, what was the first year like for you? I mean, at every other scale, most of the businesses can turn profitable.
00:31:21
Speaker
You know, at that point in time, we were generating decent capital, but you know, because we raised capital, we want we started growing fast and we of course started bleeding. So, you know, so venture capital is possibly after using venture capital, definitely we wanted to move and grow fairly fast 100% and in 50% year on year. So that's that's the kind of a growth rate and that comes at a certain degree of cost.
Venture Capital and Business Growth
00:31:46
Speaker
So we of course, you know, from the
00:31:49
Speaker
I think first year we would have made something because it was just I mean financially or first it was just about six months six to eight months was the journey for the financial year but for the second financial year of course we bled because by that time we would have raised capital round we raised equity round and we started growing fast we started increasing our infrastructure etc etc and that so I don't think so now we are fairly close to profitability but
00:32:18
Speaker
At that point in time, you know, yeah, of course we burnt away to the growth. Okay. So what was the reason for taking on VC funding and how did you go about closing that round?
00:32:33
Speaker
I think that to most that seemingly is the next logical step when whenever somebody doesn't, I'm not recommending a certain path. There has been many fabulous guys and I respect them quite a lot to us being able to build businesses without taking any external capital and some of the best ones are out there. You know, you talk about Zerota, you talk about Zoho's or the world. These have done some phenomenal job, kudos to them.
00:32:59
Speaker
But to most of the people, those who don't come from the effluent background, I mean, you know, taking capital, external capital seems like the most logical way to, you know, sort of graft your product into something more meaningful so that it reaches a little larger mass. So how did you get success in the efforts to raise funds? Did you already know VCs or did you have to knock a lot of doors and hear a lot of no's?
00:33:27
Speaker
No, I didn't know anybody in the ecosystem. So I had to knock a lot of doors, meet a lot of people and something on the other click. We had a business model which was seemingly scalable that people were funding these assets and we were making a quick spread in between. That turned out to be a pretty good one. And that's when I think we got funded.
00:33:51
Speaker
So what lessons do you have for other young founders trying to raise funds? Like what did you learn, you know, based on whatever notes you would have heard before you heard a yes. I mean, to, to, to converge on a capital, right? I mean, how to the capital. Yes. Yes. You to raise your first round. Yes. Yes. It's more like, you know, finding what is good for your business and really, really able to understand the expectations of the investor as well.
00:34:20
Speaker
At the end of the day, all investors are looking out for IRRs and crazy IRR so that they can return some sort of capital to their LPs at the end of the day. Essentially, what you need to showcase is whether the business will make some sort of a profit or not. Now, at different stages, the objective is slightly different in the initial days.
00:34:43
Speaker
If you're raising a seed round or an angel round, it's more about whether this company can raise a series A or series B, sort of a situation. But post the series, post you have raised a series A, it's mostly a question about, can you exit tomorrow? How big are, so it's all about, as I said, it depends on the kind of investor that you're going to. But you should never, I think, you should always ask
00:35:11
Speaker
you know, what does your business really truly needs? And whether your expectations is matching with the investor's expectations and if there's an overlap, which is happening or not. Because, you know, not every other business is also, you know, helpful with respect to VC capital. And not in some businesses truly, I mean, I feel venture capital is mostly useful for companies
00:35:41
Speaker
which have network effects, you know, something like Facebook or something like a TikTok, something like share chat, maybe, I don't know, I mean, businesses which can grow on a network effect, you know, sometimes, you know, growing slow might be a good thing for the business as well. So it depends on what your business is, what your expectations are of the businesses and, you know,
00:36:04
Speaker
And what are the expectations of the investor? What kind of investor are you reaching out to? And what does he want? What kind of businesses does he want? What kind of returns that he needs to give it back to their LPs? And if he sees that, okay, investing into this, I'll be able to make my crazy returns or moderate returns or meaningful returns, depending on what kind of investor he or she is, then I think there's a match.
00:36:28
Speaker
So every other business at the end of the day, you know, to prove this is all about whether the market is big enough, whether you have a very short team and market is big enough sometimes for a market which is, you know, sort of has comparables. You know, sometimes you're creating something absolutely very new. So in those days, it's mostly how you're able to really convince that the team is great, you know, lands you the job.
00:36:54
Speaker
versus sometimes the market is fairly visible that it's huge and more and more number of people are getting in. So if the industry is hot and you're trying to do something there, so automatically some of the good ones gets picked up and then it depends on their execution capability on how they'll be able to truly deliver on the execution. So I think, yeah, depends on that. Market needs to be a big, team needs to be fairly laser sharp, strong.
00:37:23
Speaker
And as you go forward, your execution truly matters at the end of the day. So tell me something. Can one really convince a VC that this market is big or does one look for VCs who already believe this market is big? Of course. I mean, it comes both ways. Some, I think investors keep doing the study on which markets are big and then
00:37:45
Speaker
There is an outbound that happens. But in a lot of cases, if you're starting something new, you need to prove that there is a market. At times, it's easy. At times, it's not that easy. I mean, at the end of the day, V1 is looking out for empirical, you know, some sort of numbers to prove that the market is there. You can't just say that the market exists. Market is big. Trust me. So who invested in your seed round and how did you close the deal with them?
00:38:11
Speaker
IDG, Accel, you know, where the seed round providers, then Bain Capital came in after a certain point, Samsung Ventures have come in, GMO, Mitsui, you know, these are some of the Japanese investors who have come in into the round. Yeah, so, you know, fairly a strong, you know, big cap table that we have.
00:38:33
Speaker
So how did you close the deal with them? Was it very easy to pitch and convince them, or did you have to do a lot of follow-ups? How easy or difficult was that? I think when it doesn't happen, of course, it looks difficult in hindsight. But when it happened, it took possibly one and a half to two weeks.
00:38:57
Speaker
It was a line, they thought process. And you know what we were thinking at that point, I was fairly aligned. They were already bullish on, you know, rental as a market. So it kind of worked out pretty well. Okay. And then with Bain Capital, like how did that happen? It was a cold calling. I mean, I reached out, I dropped a small note to somebody, you know, I invested in US and he replied back, I was
00:39:21
Speaker
going to US at that point in time and one meeting and we sort of liked the proposition, they liked the proposition. They asked me to meet another gentleman called Renault, who's the founder of Lending Club. Somebody I respected quite a lot. So I reached out, I met him, he liked the business and subsequently that was fairly fast. I won't say easy, but at least the journey with Bain Capital was fairly fast.
00:39:50
Speaker
Okay. Okay. Okay. So, what was the scale-up journey like? You know, if you can share some numbers like from year one to year six, you're now currently on year six, you know, what has the journey been like? Journey has been, you know, I mean, it's always a roller coaster ride. We've grown, you know, almost, I think we started off with a small,
00:40:20
Speaker
AUM, we have grown over 150x in a short time period. I think more than 150x. Just in the case of AUM itself, in between, we partnered with a lot of big banks, NBFCs, and institutions to fund the assets.
Leadership Evolution and Market Focus
00:40:42
Speaker
It has been a pretty good journey.
00:40:45
Speaker
Okay. And what is like the low point of the journey, which, you know, you typically like, you know, what you would say as near-death experiences, I'm sure you must have had a few. So what were some of those? Yeah. So many, I think most of the businesses goes through that kind of, you know, a couple of near-death experiences altogether. But, you know, coming out of it is fairly fruitful because you always learn coming out of
00:41:15
Speaker
Yeah, so we have our fear of near-death experiences as well. How have you evolved as a leader from year one to year six? What were the learning that you had along the way? Journey is more of a founder to CEO. I think that's the kind, that's how I would put it.
00:41:37
Speaker
Initially, you're trying to solve a lot of things. Slowly and gradually, you start building a great team to solve things. You don't necessarily solve things yourself and you start solving some other things. Market comes into the picture as you scale. People come into the picture as you scale. When you're a small team, it's mostly more hustle work, more problem solving, et cetera, as you grow.
00:42:04
Speaker
Market dynamics, perception in the market, you know, how to manage, how to bring in the best of the best teams who can take the responsibilities, how you can really get yourself free from any of the activity would define a great CEO at the end of the day. So tell me about some bad calls you took or some mistakes you made and what you learned from those. Plenty, I mean, you know,
00:42:34
Speaker
I think rather than getting into more, I think as you scale up, a lot of focus is also required. So I think the entrepreneur's mind is all about what new thing that one can do. Once you start scaling up, a lot of focus is required on the things that are working. That's why I said the journey from founder to CEO is very, very important because you start focusing on a lot of variables in the business that are working.
00:43:03
Speaker
rather than going offshoot and trying to do a lot of things all at once. So I think that's been one of the learnings for us as well. We know what really works now and how to make it scalable rather than really thinking about very innovative wacky ideas which have done that in the past. One of the wacky ideas that we came up with is short subscription that you can get used shirts, a couple of shirts every month
00:43:33
Speaker
I mean every one week you'll get around 7 to 10 shirts at around 500 to 600 rupees a month. So that was fairly wacky that you are getting 40 to 50 shirts. But yeah, I mean in hindsight, I don't think there was a need to do that.
00:43:47
Speaker
So how has Covid impacted you? Have you seen it impacting negatively or positively? And I mean, you know, there are both types of businesses. Some like tech companies are obvious winners, whereas companies in travel are obvious losers. So how has it been for you?
00:44:08
Speaker
So I think for us, it only is beneficial because the work from home demand is suddenly shot up 5,000%. Imagine an economy where most of the people are cash tricking. They have lesser cash than earlier because of the job loss and the salary cuts. And there's a lot of uncertainty in the market that where will I be in the next couple of months or so? Will I be in the same job?
00:44:38
Speaker
different job in back to my hometown, etc.
COVID-19 Impact and Future Predictions
00:44:41
Speaker
That is the breeding ground for any rental to flourish because you don't want to invest into a lot of Capex. So, you know, this will be your inflection point for renting as an industry as a whole. But of course, you know, the way COVID has been handled, you know, of course, some of our consumers are also moving back. I don't think the cities will truly normalize.
00:45:02
Speaker
And all the economies, I mean most of the businesses that I know, except those who are completely ed tech driven or mostly tech would have a positive spin. I think the maximum of the economy is at a max of 70, 80% in terms of the revenue. I think some are even at 40, 50% right now. So I don't think, and for the economy to get back, these cities needs to get normalized as quickly as possible.
00:45:29
Speaker
So I think but apart from that I think most you know when it comes to us demand is back you know at the cost to acquire consumers is fairly cheap now is quite less. Why is that? Less marketing budgets we know across I think you know less number of people less less budget is going on. Yeah yeah yeah yeah yeah essentially you know this is a great market for somebody who has a good amount of capital to acquire new consumers altogether.
00:45:59
Speaker
Are you seeing more rentals happening post-COVID compared to what you were saying in February or March? Oh yes, we are at much lesser budgets and we are already back to the demand levels that we were doing pre-COVID.
00:46:20
Speaker
Okay. And so you have a certain view on lockdown for which you also wrote a fairly lengthy article on LinkedIn. Tell me about that. Yeah. So largely what I feel, which I've conveyed in the article as well, that the more and more interstate travel is not restricted. Lockdowns will never really help us and the cities will never come back.
00:46:48
Speaker
The you know, you look at I mean the state authorities should ensure that the cities are coming back to normal and you know, but tackling that is fairly straightforward. I mean you need see you can't do a lockdown at the country level if you keep having folks from other countries getting inside the country that I mean the first action that any of the government took was to shut the borders, you know at the country level because you don't want contamination or transmission to get in
00:47:19
Speaker
when you are keeping and restricting mobilities across the nation, because it's counterintuitive. If you keep both the things open, you will have a 14 days quarantine within your boundary, but within that time period, there will be new transmission that will be getting in as well. And that was one of the biggest reason to shut the borders and then do a quarantine, right?
00:47:41
Speaker
Now, that same philosophy that you undertook at the country level, you are disregarding it at the state level, when the states are as big as some countries. I mean, Tamil Nadu, Maharashtra and Karnataka is as big as some of the states like UK and South Korea, the population and the size is as big as these states. So the states, I feel, I mean, when we look at India, we need to look at it as a combination of multiple countries.
00:48:11
Speaker
which are which are having their borders restricted at the end of the day so that the transmission doesn't come out in and out of the state very very easily. You need to check them for covid negativity and that's when you should allow somebody to pass on to the other state. I'm not saying interstate goods movement. I mean the economy for optimizing the economy. You need to keep the you know, interstate goods movement on and that to any which way you know, there is no transmission happening there because one guy is moving around in his truck
00:48:41
Speaker
They will deliver the goods and possibly will go back the true problem happens when you put a lot of people within a very small concentrated volume like a bus train or a air air travel which has a huge probability of transmission and then you move them from one state to the other since the efforts pan India is not coordinated enough. It will be a nightmare for us to stop transmission. And that's what we are possibly seeing happening in Bangalore.
00:49:08
Speaker
You know, it was taking care of things very very positively till the time till May but suddenly now You know the the number of new infections have gone beyond 2000 per day This is a very grave number and that largely happened post the you know opening up there of the interstate travel through train and air flights so might you know what I tried to convey through that article was fairly simple that
00:49:33
Speaker
You know, we need to restrict the interstate travel and we need to discourage as much as of intercity bus travel, etc And once we do that, I think it's going to be very difficult I mean if if you keep the mandatory mask usage on Then and and keep the high density, you know travel within the city, you know at the minimum and shut the borders in terms of at least transmission
00:50:01
Speaker
I mean, not shut the borders, at least restricted with the, you know, mandatory COVID testing, then automatically things will, you know, the transmission is going to take, you know, it's going to be very difficult to transmit. So what do you think the new normal will be like? And you might have heard or read about Zoho's founders, they're talking about
00:50:26
Speaker
like a movement to villages, like encouraging his employees to go back to their villages and work from there permanently. Do you think things like that will pick up or is this just temporary? I think it's very, very temporary because cities have a lot to offer at the end of the day.
00:50:45
Speaker
One thing is definitely once the offices stabilizes, one, you're here because of certain degree of lifestyle. And second, you want to be closer to your office. Some companies can definitely, some large companies can definitely move to remote areas and can start generating the employment there. But anybody, I think most of the industries like tech, et cetera, are set up in the major cities right now.
00:51:15
Speaker
So I think the moment the city stabilized, I feel a lot of those guys would come back and would want to work from the offices. But having said that, a few people would form a offices in elsewhere, maybe possible. It can be done. Infosys have done that. I think they have an office in Mysore. But I feel that's generating employment for folks in Mysore.
00:51:39
Speaker
It's not that folks from Bangalore or those who were in the city or already has tasted the lifestyle of a city are moving suddenly to Mysore and started working from there. Do you think the concept of an office itself is going to get outdated? 100% remote will be quite far-fetched, but maybe a 30% remote will be the new normal shore.
00:52:03
Speaker
I don't think people that regular behavior of coming to the office will exist. People would typically want to come to the office because they want to have a fine line between personal and professional because you still have seven o'clock or eight o'clock. When it gets over, you get back thinking that your professional day is over. Of course, you can stretch if there's a certain interesting project, but that deadline is very important. And what I'm hearing is people are finding that
00:52:33
Speaker
are different, a lot more problematic. The thin line is suddenly gone and people are stretching more and more. So that's gonna be a problem. But people would typically use offices more as a brainstorming session that people will get together, brainstorm and go back. And I think a lot of tech companies would move larger, but the demand for offices is not gonna go. I mean, it's not gonna be 100% ever. I don't think so, even after coming back to new normal.
00:53:03
Speaker
But I don't think it's going to go to zero. And I don't think it's going to be something like more than 50% is going to be suddenly remote. I think more than 50% will still be office. People would still want to have that touch with each other at the end of the day. Okay. And whom do you see as your biggest competitors?
00:53:28
Speaker
I think the market is too small right now. Any competition coming in will only help. There are two players. We're the largest in terms of the subscribers, in terms of the revenues, etc. And I think, as I said, the industry is not too small.
00:53:52
Speaker
And when only I hope this year is going to be inflection for rental altogether. So how do you underwrite the consumers to whom you're lending?
Current Business Challenges
00:54:04
Speaker
What data do you look at? What is your approach over there? How many data? I mean, across some 130 variables is there. I don't know if I can elaborate more on that. A little sensitive, but some 130 variables is what we look at.
00:54:21
Speaker
So when someone wants to rent from you, you ask them to fill out a form which has all these fields and that gives you this data. No, that's the magic that, you know, we can't ask the consumers a lot of details, but, you know, we need to have a lot of details for verifying it. So what is one question that you are searching for an answer to? You know, a question that you personally are trying to find an answer to. When will this, you know, when the cities will normalize?
00:54:50
Speaker
When will the city normalize right now? That's sort of a question that I'm spending a lot of time trying to imagine. And what next for you as a person? Like what is the next level of learning that you are looking for? You've had one level of learning moving from a founder to a CEO role. What do you see are things that you need to learn next? I hope moving from CEO to possibly listing this company is going to be another big challenge that is driving me.
00:55:19
Speaker
I think this is the kind of a business that can be listed in a couple of years and that's what drives me a lot. So what did you learn about building a team and hiring people? What were your learnings in making that journey from a founder to a CEO? What were the learnings on this part, like how to hire and build a team? So the hiring is definitely, I think,
00:55:43
Speaker
A common goal and a vision is going to be very, very important to bind the team. I think nobody works for anybody these days. People work for an objective and have shared vision at the end of the day. So forming a shared within vision with very high caliber people is fairly very, very important. I think that's one of the most important roles for a CEO. So when you hire someone, what is your way of judging if this person is the right person to hire or not?
00:56:10
Speaker
I'm still learning that I mean I have at least I have a caliber team who's able to judge the person fairly very well has to be analytical has to have a but having a great energy is very very important being trustworthy and having a supreme energy is I think supremely important you know to get things done you need to have that ownership attitude and a lot of energy and at the same time you know if somebody is not
00:56:39
Speaker
straight-minded or you know people call it clever or you know not uh rightly bent and and they're smart then a lot of damage can also happen to the company how do you judge energy do you like do you base it on how energetic they are in an interview you can feel it right i mean when you talk about ideas and everything you can feel it when you talk about problems you talk about solutions when people talk about the work that they have done you can sense the energy
00:57:10
Speaker
Okay, great. So any last advice you would like to leave our listeners with? People who are aspiring founders and entrepreneurs. Keep trying, you know, by being there is there's never a good time to start off. There is never a, you know, so that's one. Choose your partners very, very carefully, really try and understand what do you want to what expectations do you have from the business? And most of all, I think,
00:57:40
Speaker
Rather than making a lot of mistakes and learning I think you know very important is to you know learn from other people's mistake quite early because You know one of the important traits that I've seen is you know almost all CEOs make a lot of mistake But slowly and gradually, you know, you're forced to make a prediction at all times But most of the time the successful CEOs make a right prediction
00:58:07
Speaker
So one need to learn that as quickly as possible. And that largely happens when you are a good listener. You're a great listener. And of course, rest is hygiene. Analytical sense and everything is hygiene. You need to be a great listener and really consume some of the best learning from people, those who have made mistakes, so that you're always keeping your predictions very accurate.
00:58:35
Speaker
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