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Building India's Biggest D2C Furniture Brand | Ankit Garg (Wakefit)
238 Plays2 years ago
"Failure hurts, but it is the bitter medicine of failure that leads to a healthy and sustainable business."
Ankit Garg's journey exemplifies this. His first venture failed miserably, teaching him invaluable lessons that paved the way for building Wakefit into a home solutions powerhouse. Embracing failure isn't just about bouncing back; it's about learning and building resilience.
Ankit Garg is the Founder of Wakefit, one of India's largest and fastest-growing home and furniture D2C brands. An IIT Roorkee graduate, Ankit led Wakefit through remarkable growth, achieving 3x revenue increases for four consecutive years while maintaining profitability. Wakefit is on track to cross ₹1000 crore in revenue, manufactures nearly 99% of its products in-house, employs over 4500 people, and was recently valued at ₹1800 crores.
Key Insights from the Conversation:
- Embracing Failure: Ankit's first startup failure provided crucial learnings about B2B credit cycles, managing manufacturing challenges, and the importance of resilience.
- Customer Obsession: Building deep customer connections, actively seeking feedback (even through post-purchase calls), and letting customer needs guide product development are core to Wakefit's strategy.
- Operational Efficiency: A relentless focus on efficiency through backward integration, lean manufacturing inspired by Toyota, in-house logistics, and technology drives cost savings that are passed to customers.
- Building D2C: Ankit disrupted the traditional offline mattress market by leveraging online channels like Amazon initially and then building Wakefit's own successful D2C platform.
- Strategic Growth: Expanding methodically from mattresses to sleep solutions and now full home solutions, driven by customer feedback and a vision to be the "most loved home solutions company".
Chapters:
- 00:45 Introduction: The Value of Failure
- 01:55 Ankit's First Venture: Foam Innovation & Harsh Lessons
- 15:15 The Emotional Toll & Aftermath of Failure
- 17:27 Rebuilding: From Pasta Sales to Learning E-commerce at Akosha
- 18:58 Spotting the Mattress Opportunity & Launching Wakefit Lean
- 29:09 Early Wakefit Growth: Customer Connection & First Principles
- 40:46 Scaling Wakefit: Explosive Revenue Growth & Profitability
- 43:33 Product Expansion: From Mattresses to Full Home Solutions
- 56:29 Building the Engine: Lean Manufacturing & Packaging Innovation
- 1:01:55 Operational Excellence: In-House Logistics & Carpenter Gurukul
- 1:11:45 Customer Obsession & Unique Feedback Loops
- 1:22:15 Funding the Dream & Vision Beyond Valuation
Hashtags:
#FounderThesis #AnkitGarg #Wakefit #StartupIndia #Entrepreneurship #D2C #DirectToConsumer #Ecommerce #IndianStartups #Failure #Resilience #CustomerObsession #HomeFurniture #Mattress #MakeInIndia #SupplyChain #Logistics #Manufacturing #BusinessGrowth #Scaling #Bootstrapping #VentureCapital #IIT #BusinessPodcast #StartupStory
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Transcript
Introduction & Zencastr Shoutout
00:00:00
Speaker
Before we start today's episode, I want to give a quick shout out to Zencaster, which is a podcaster's best friend. Trust me when I tell you this, Zencaster is like a Shopify for podcasters. It's all you need to get up and running as a podcaster. And the best thing about Zencaster is that you get so much stuff for free. If you are planning to check out the platform, then please show your support for the founder thesis podcast by using this link, zen.ai slash founder thesis.
00:00:27
Speaker
That's zen.ai slash founder thesis.
Who is Ankit Garg?
00:00:31
Speaker
Hey, guys, this is Sankit from the founder of CFTC.
00:00:44
Speaker
If there is one thing you will learn from this episode, it is simply the value of failure. Failure hurts, but it is the bitter medicine of failure that leads to a healthy and sustainable business. And Ankit Garg's experience of failing miserably in his first business is what led him to building Wakefit as one of the largest home furniture companies in India.
00:01:06
Speaker
Wakefit is on track to cross revenue of 1000 crore rupees and you may find it hard to believe that 99% of what they sell is manufactured in-house.
What did Ankit Learn from Failure?
00:01:16
Speaker
This means that Wakefit is really competing with an old school furniture company like Goldrage rather than any online player. This conversation
00:01:25
Speaker
He really is a masterclass in embracing failures and making the most of them. And Ankit shares some amazing insights into building a customer-obsessed business that lasts. Here's Ankit talking about his first failed attempt at entrepreneurship.
00:01:55
Speaker
I assumed that you are able to figure out how much you are able to pay. That was the time I realized that something is possible. Because I was doing a lot of diversified investing and all that. So I figured out, yeah, this is possible. And then I picked up my inner tools, whatever I learned, and I converted my room into elaborate. For the first six months, I actually closed the doors.
00:02:15
Speaker
I would have lock and key. I would not allow anybody to go in. And I started getting some casting, metal casting, finishing, buffing, all of it. So I'll come back, I hit six o'clock from my job, and I'll go to that small industrial area where Yara's Lawful Works happen, late machine and all of this. And I'll come back really dark in the night because all those crease and all will be all over you. I worked like 7 to 10 degrees in those five days working there. So somehow I'm making my mind for six more like creative product and then that's how it started.
00:02:43
Speaker
But what was the product you created? It was again a phone, but a cheaper phone. It was better in properties compared to a traditional phone, but at the same time cheaper than that phone. Why wasn't Bayer already doing it? Big MNC, big research department. It was not Bayer. It was the customer. There was a cost between a fixed cost and a variable cost. If you invest a decent amount of money in fixed costs, you can reduce the cost.
00:03:12
Speaker
But if you're comfortable with high variable cost, then also you can do the business. A lot of people prefer to choose a high variable cost business and low, let's say, kpix business. What I did is that high kpix, I designed a way to reduce that kpix by one third. For example, if you were to invest one crore rupees, you can just get me by investing 30
Ankit's Entrepreneurial Setbacks
00:03:32
Speaker
lakh rupees. So for that six months, I created that way. So I was able to convert that into
00:03:38
Speaker
That mold I created, I think it's an aluminium mold, it will be too technical, but when I created something... I want to get into the technical part. I'll ask you questions because I have a leave, man. So, where did you buy it? Where did you buy it? They were selling chemicals, which was... And those chemicals were used to make foam.
00:04:00
Speaker
So at the age of home, what's growing used to be built by two technologies of that. One is TDA based, one is MDA based. So a lot of people are making MDA based. And what is the difference between TDA and MDA? Both are different types of polymers. Like TDA is a crude TDA. I mean, very technical, different types of, you can, you can say different types of petals. One is having higher lead, one is having low lead, sort of a thing. But for one, you need a very sophisticated car. And for one, you need an ordinary car.
00:04:27
Speaker
So a lot of people chose to not invest a lot in the car, but to choose a traditional petrol to kind of run that.
00:04:40
Speaker
No, no, the mold, the dye. So you have to cast, for example, the shape of the foam is when on chair, I think it will be contoured chair, right? It will have 3D shape. For the 3D shape, you need a dye to cast your product. There's dye in a chemical injector or a chemical field, somehow through chemical reaction, no foam. So there are two ways to do it, either use MD or TD. In MD, you can get a cheaper cost mold.
00:05:07
Speaker
And today you need a very high precision mode because the air leakage is there a lot of technical stuff to that also. So what I did is I created that highly sophisticated tool in a very cheaper price. How about one fifth of the price? So typical metal mode will cost me, let's say 70,000 rupees for a specific size. I was able to create an applicant 10,000 rupees. So that's where I got into the meta-investment of let's say double of those traditional modes. But my cost saving is about 20% on normal.
00:05:35
Speaker
How does this save cost? Like if you use this kind of mold, then the variable cost is low. How does it cut variable costs? So what happens is a TDI-based form has a higher mechanical properties compared to an MBI-based form. And what do you mean by higher mechanical property? Like your hardness will be more, your resilience of the form will be more, life of the form will be more, stuff like that. Okay. Now,
00:06:02
Speaker
So now what you can do is let's say for example you're getting three mechanical properties hardness and compression side. Compression is basically linked to life. So at a 40 density of MDI based foam you can get let's say XYZ properties. You can reduce the density of foam to 32. Let's say by 20% you can reduce the density. You can still get the same properties.
00:06:23
Speaker
So what I did is, I reduced the density of that foam. I got same mechanical properties and also due to the market. And of course, if I'm using 20% lesser input raw materials, of course, I can set it 20% less in the market. So that was the technology. Okay. So what did you want to sell? You wanted to sell foam or you wanted to sell the technology? No, I wanted to sell foam because I wanted to keep the technology is not really
00:06:51
Speaker
It's not a costly technology. It's a way of manufacturing the mold. So if I were to send it to anybody, anybody can copy. So I had to keep it. That's why I closed my room and did all of that stuff. I did not share. How did I make that board? If I open it up, then people didn't copy. There's no trademark. I at least did not have access to trademarks and IP and stuff. I knew it by the time I would apply, somebody will copy it.
00:07:13
Speaker
Okay. And today, is this common knowledge, what you did back then, or is it still an answer? Well, it's a common one. Now, a lot of people, in fact, companies like Yama, Maruti, and all of that, they also use a lot of software. So they all work in this, I don't know, TDA-based technology. But when you did it, you were like the first person ever in the world. It's funny to me. And funny to me, I'm the first person to do it. But people were doing it for other use cases. For automotive, they were able to do it because they were able to afford high cost stuff. Yeah.
00:07:43
Speaker
You saw that how they were doing it in other sectors and then you were able to bring it into this sector at a lower cost. That was a disruption and that's why when I opened up my shop, I think I was first. First one table and I was able to do a 10 lakh rupees sale. Second one was 80 lakh rupees. I was growing like crazy. I used to get calls from the automotive guys.
00:08:04
Speaker
So, but then later on, this became a comedy. Well, I want to understand. So, form is sold not, it's not like a sheet, not just a cotton, a paper, but it is set as per a mould.
00:08:18
Speaker
What do you mean you opened the shop? When I say opened the shop, I met, I opened up my factory, I started selling. So when I started selling, I got a lot of inbound interest because I was very cheap compared to the market. Of course, we do people, people are looking at same space, give me cheaper, of course, the other man's hand, right?
00:08:37
Speaker
When I did that, I did that. One question here before. How did you get money to set up a factory? Out of that six months of work at my home, I was able to show it to one guy in the industry. He was able, he used to come to the industry. I showed him that phone. That day itself, he gave me a rupees check.
00:08:57
Speaker
So he said, yeah, this is quite disappeared. Yeah. He came on as an investor. He was an investor. That time we did not understand anything. So I gave him 70% of my credit.
00:09:27
Speaker
And because you knew sales, you were able
How did Ankit Transition to Wakefit?
00:09:30
Speaker
to get orders. But essentially,
00:09:32
Speaker
I think sales of chemicals is very different than sales of a foam sheet because the consumers are very, very different. When you're selling chemicals, you're talking to industries, very large industry. When you're selling foam, you're selling to let's say a small chair manufacturer, a small bus seat manufacturer, a small bike seat manufacturer.
00:09:51
Speaker
So you get into very small shops. And I think that's where the biggest problem came into my business. I did not realize that all of this unorganized industry is going to ask you so much of credit that you can't survive.
00:10:04
Speaker
So even beyond, let's say, getting that significant cost reduction, they wanted to work on credit because the whole scale cycle was set like this, which I did not exhibit at all. And secondly, the first time you became an entrepreneur, now you're going to a factory and used to work in a very set up culture of MNC. The moment I walked into my factory, I was the one guy and they were just labor.
00:10:31
Speaker
I can't talk to anybody. I can't eat my lunch with anybody. And if there are some, because factories go through multiple failures, right? It goes through some challenges in the beginning of whenever you started up. Now imagine you're first time doing it and something fails. Your heart breaks like crazy. So I could not control my emotions at that point of time. So I felt very, very lonely. I felt very, very lots of like, for example, I could not eat my lunch in my factory.
00:10:59
Speaker
because I felt I can't be here anymore. Something failed and you're so stressed out, you can't sit at that place and eat lunch, right? So for about six months, not six months, actually, for about three months,
00:11:12
Speaker
I kept on taking my car out for lunch and park it somewhere under the tree, open up the gates. I don't know why I felt like getting an open air is quite important and all that. I opened up the gates. They used to be hot somewhere. I'll eat my lunch very calmly and easily and come back to society, right? Where was this? Where did you set up your factory? This was great.
00:11:33
Speaker
I used to live in Greater Florida. I used to live in Sector Pi. This was an eco-tech near Yama. So that's where I used to do a lot of stuff. But I think that early phase of an entrepreneur, let's say, something is getting broken and there's nobody to actually support you. But the problem that got you so down? Yeah, so we got die meat.
00:12:03
Speaker
Then I got it made from some local manufacturer. And then I was making foam by putting the chemical insect. The foam was not coming exactly the right shape. So there'll be pockets of holes, or there'll be some cavity formed inside that foam, which can't be used directly. So I used to have 20% rejection. So making 100 seats, 20% rejected.
00:12:25
Speaker
would die manufacturing the problem. Later on, I realized that this guy's undercut it. Later on, when I decided to sell it off, that guy came to buy my factory, did some goofs off somewhere. But later on, I realized that there has to be a minimum amount of pressure which a dyke in the state and he had kept in certain hollow cavities to reduce his cost, which ended up compromising on the
00:12:47
Speaker
You know, the quality of the product, it was coming out, which I did not realise. I kept on doing a lot of experiments, styles and stuff. But every day was a broken day. Every day was a stressful day. I think that first time I wanted to be on ship, at that age, I think I was very amateur. How old were you that day? 24, I think. 23 or 24. 23 or 24.
00:13:15
Speaker
So essentially, you were in losses, you get 20% of your output was defective. Yeah, and I was not able to control this losses. That was the biggest thing.
00:13:25
Speaker
And then when I get sales, because pricing was nice and all that, but every month I'm losing sales, I'm losing. And then you realize you need a lot of credit. And then you realize, scary, the industry is very small. When the industry is very small, you feel like, what will I do? Beyond a point, for example, if I found some innovating thing, I lost it, I sold it to the market. Now what do I do?
00:13:48
Speaker
I can still use my abilities or whatever innovation that I did to do something even better than what I'm doing. So I realized B2B business is also driven by businesses, not by entrepreneurs, which means a business will tell me to make my SS suite when I get the AAHA. What I can do is nothing beyond just giving the product payment a better price.
00:14:08
Speaker
So beyond a point, I felt like it was both a side story. And then, you know, I'm very immersed with that point of time when I was not able to control that factory. And then, you know, all of this put together, I decided, you know, yeah, we just let go. And within six months of opening it up, we closed it. You sold it to the guy who made the die for you. No, no, we did not sell it to him. We found another buyout. So the other guy was able to connect it. So I sold the technology, I sold the machine, I sold the dies also, and I sold my customers also today.
00:14:35
Speaker
So, in fact, I recovered almost all of my money because I sold my customers also 15, 20 lakhs a day. Yeah. He got a running business. He got a running business. He got existing setup and everything, right? And I sold my machine to someone else I knew in the industry. Somehow, in total, I could manage to get out of this, but I lost some all over. What about 15, 20 lakhs more I invested? Nope, I lost all over.
00:14:58
Speaker
And then when I started looking for jobs, I had to do something in my life. So I think that was the lowest point in my life. I didn't think anything. I had to go through that point in time. And I feel good that at least I was so early, 23, 24, 25, that I had to go through otherwise. At this point, if I had to go through that phase, it would be scary. But I went into depression.
00:15:23
Speaker
Obviously, I mean, you lost every penny you had in a way. Badravi slag is massive. Yeah, dreams are gone, pennies are gone, your trust, your friends started laughing at you. Whenever I'll go for, let's say, some snacks with them, they'll laugh at you, they'll make jokes.
00:15:43
Speaker
So all of that, it kind of really demotivated me and then I started getting restless. We'll wake up at two o'clock, four o'clock, go for a walk for two, three hours. I don't realize I'm working for two, three hours. I'll come back home and food is lying in front of me. Anyway, that's when I started living with my parents.
00:16:05
Speaker
So, they knew I was going through certain problems. So, the food would be in front of me. I will not have it for two hours and I will not realise. I am just sitting on the table and thinking something. My mum is also looking at me and she is also like, he is going through some difficult times.
00:16:23
Speaker
She will also not cry, otherwise she will not cry. I mean, those two, three months will really, really scary. And I think somehow, around three months, I came out of that phase, but I realized that my parents are now getting into that phase.
00:16:40
Speaker
Like I started realizing that if I'm waking at four o'clock, they are actually getting zookan up at three o'clock because they are aware, even I got to know that some of the times, my father used to follow me when I was going out for walks because even if they were referring...
00:16:59
Speaker
So then I realized, they are going through even worse time than I am going through. Then I took up a job, which was paying me six lakhs rupees a year. And that was some pasta sales where I was, I left at 14.
00:17:16
Speaker
I was a chemical guy, so there are not many chemical companies out there. There are very few. So you don't really get a job as fast as any other guy will get. That too, you're a salesman, not an engineer. So sales chemicals are very long-term contractual work instead of on-spot selling.
00:17:37
Speaker
14 lakhs salary, how do you afford to win? Correct, so my interview didn't look like this, but this time I took an offer of 6 lakhs and I went to Mumbai. I started selling past 10 lakhs. My work was to do the sampling of past 10 models.
00:17:53
Speaker
So i'll go in the mall set up a stall along with a guy and i'll do sampling in that mall. I'll go and replenish inventory in malls, travel-in, bus and all. I think i went through again another miserable life story and unfortunately they were also a start-up. Unfortunately they did not pay for two months also.
00:18:10
Speaker
So it was even worse. But at least I was out. I think they made me stay in their place. They gave me food, whatever they did. They somehow took care of me. And then this company transferred me to Bangalore. And then I got into Bangalore. Then again, Bangalore.
00:18:29
Speaker
I'm sorry, I'll not be able to take the name. But in Bangalore, I got this.
Wakefit's Growth and Strategy
00:18:32
Speaker
Another friend came in. He was studying in Bangalore. He took care of me for almost two months. Since somehow four months, I survived without getting paid and you know, still getting back to life. By that time, I already started weekly. So when I got my first job,
00:18:46
Speaker
I had to meet somebody who was doing an online sale of mattresses. First job you've been there, or the pasta? This is the second job, sorry. After my first field, I got my first job. After the pasta, I got my first job. This company paid me 12-14 lakhs again.
00:19:02
Speaker
Okay. So after Pastor, you left that company and you joined like a proper job. But I'm saying by the time, because I was going through such a bad phase of my life, I used to keep on meeting entrepreneurs and asking if I would like to meet them. And there was one really nice guy where he belongs to the dynasty. He said, this is the matric industry. And he showed me what he does. And that's where I picked up all the online business. And he was selling matrices in fact online. And they said he was selling online. 70,000 rupees, 80,000 rupees. This really
00:19:31
Speaker
made me crazy, like, how can people buy 60,000 rupees, come after Google, like, is there any more in my life? Then I started doing my research, he cancelled my industry, and he used to send 10 matters a day, 60,000 rupees, yeah, buy boss, you know, what are you doing? And in fact, he was making some three full likes every day, that is the profit he's making, when he like bought this, that is three full likes rupees of profit every day, I was like, seriously surprised.
00:19:56
Speaker
that this is also possible. I'm going through such a miserable life of mold. There's just so much work and this guy smartly has put up a small shed and kind of doing the business. By the way, he was at 57, 58 and that was his fourth business. Every business has been successfully.
00:20:17
Speaker
So he also, you know, gave like a gadget. And then he actually gave like, every evening I'll go to him and he'll say, while you were doing that job, like, that job was again a sales job, like, chemical sales. This job, you know, that only different job, this is not a field.
00:20:44
Speaker
So that was, well, I'll come to that job, but I think this guy's in Cape and he showed me how he does the business. He said, you can also do something very similar. You can figure out what you want to say. And then I started doing my research, then I figured out, okay, problem camera, you know, all that, then they could start it. But by the time I got this job in this new company, this company was a startup. I can name it. It was called Akosha. I checked Epson. They changed three names over a period of time. Right, right, Akosha. Yeah. Yeah. And that was the first point in my life where I learned
00:21:14
Speaker
e-commerce. By that time, I was a user of e-commerce. I would buy something from Flipkart on Amazon, but I did not appreciate e-commerce at all by that point of sight because I thought, can I use my get click? It's my guy.
00:21:30
Speaker
Right. But then when you walked into that e-commerce startup, I think they were building an app. It was called a super app where you can do e-commerce shopping, grocery shopping, movie booking and stuff like that. They were doing a lot of stuff. Like before they went B2B, I think they eventually went B2B, but they started as B2C. They started as B2B. They also progressed into B2C. B2B is still running by the way. And then in that company, I got an advisor to get into Crocs and Excellence Road.
00:21:57
Speaker
where they taught me something new was coming up, like they were starting some chatting system where they were to hire 500 people. So I had to build processes, get along with people to kind of do the chats with people, understand something. Then I was transformed into a category manager where you have to take care of a little bit of, get on the side of the demand also. The problems of a customer, the journey of that category. So I learned a lot in those nine
00:22:20
Speaker
I think I worked for, but that was like really 180 degrees of what I did because I came from Roorkee. Roorkee again is really far from Mumbai in Delhi where you can see a lot of stuff happening. Our founders, our seniors are also a lot of IAS officers, IPS officers, so you happen to kind of aspire to become an IAS and IPS.
00:22:38
Speaker
But here, if you go to Mumbai, all you see, everybody's doing is startup. So by then, I had no clues of starting up in a good planet. Had you started Wakefit officially, like launching a website and all? Yeah, it was all live. But again, this time, I did not take this. Again, it came from a learning that you can't, unless you've built a little bit of business so that it can survive financially, it doesn't make sense to leave job.
00:23:03
Speaker
So I kept on all the people in the factory. I kept on paying from whatever I used to own from this company. How did you get it off the ground? So you learned Mattress Kese Banate. And I think because of your background in form, it should have been relatively easy for you to learn Mattress Kese Banate. And then you saw this guy selling Mattresses online at a very high premium.
00:23:28
Speaker
So, you know, so talk to me about how that led you to launch Makefit. And what did you launch? Yeah, I was talking about this. See, I was helpless at that moment in time when I had to do some business. So I learned from this day how to do this. I started doing markets and figured out the market was a problem that people are offering really off prices.
00:23:48
Speaker
like really, really bad prices for the mattresses that people sell. All the branded companies that you name in the market would figure out, you know, for example, if your cost of raw material is, let's say, 30 rupees, you're selling at 30 rupees. So I figured out if there's a lot of online market, you're even offline. Offline market. So mattresses were traditionally sold offline. I think I was the first kind of India, or let's say, second kind of India who started selling it online. But family, it was a distribution of mattresses where people would make, like, for example, a retailer typically makes 35, 40,000 margins.
00:24:17
Speaker
then there's a stockage, then there's like a lot of people in the value chain were just getting being fed for almost zero value addition, if I can call it. So I realized that there's nowhere that people can actually sell the matters without having a retail shop. And then sell it at a cheaper price. And then of course, online was booming at that point. At America TK, Amazon is just taking a cut of 10% on its time selling matters. I said, what better than that? From day one, I was able to manufacture almost at the same time that these were manufacturing.
00:24:44
Speaker
or let's say a little bit higher because I was buying foam and fabric and stuff like that. They were backward integrated. They were making their own foam. So I was, let's say, manufacturing at 10% higher price. But because my cost of selling was only 10%, but their cost of selling was, let's say, 50%. So I was able to discount my matters by 30%. So I started, I launched all five, six types of matters which are available, like core matters, data matters, spring matters. I just launched it because I thought, you know, it's an easy price reception game.
00:25:12
Speaker
where you can just, you know, be very, very lean. And this offers a product, same product, which is available in the market. And that clicked. You sold through Amazon, like that was the strategy. Yeah, Amazon was the platform to kind of go, hit and trial, zero cost. I was the one who was selling, accounting, financing, buying, everything I was doing. You literally have to do catalog management on Amazon, everything else is taken care of.
00:25:38
Speaker
So we happened to do that. And then, you know, first month was, of course, very bad. Like, you sold like seven mattresses in one month, but then it was also... But seven is not bad. But like, you know, totally new brand. Like, I did not do anything. And I was surprised to see that, you know, my first few buyers were actually, 50% of them were foreigners.
00:26:03
Speaker
So those who had already tasted Amazon, like, for example, my first matter, I still remember there was a couple who was staying in Japan and they were from Germany and they came to Japan and they wanted to buy something latex for natural products. So they bought my product from Amazon. So they were early believers of Amazon and they thought, you know, matrix can be bought online. Plus, you must have done a better job at listing than other traditional companies. No, actually, I was really bad at that point in time. When I launched, so this was before joining a closure, I was in
00:26:32
Speaker
you know, she used to do something in my life, so I just lost. So in fact, my first mattress photograph was very different than the actual mattress because I picked up the mattress. When I picked up the photograph from Google, I picked up random photograph from Google. I said, this is my mattress. And I sold something else altogether. Like inside, everything was okay, but color finishing was very, very different.
00:26:56
Speaker
Like then, then you go through that learning, customer calls you and says, you know, you have least understanding of a customer in the market.
00:27:18
Speaker
If you like to hear stories of founders, then we have tons of great stories from entrepreneurs who have built billion dollar businesses. Just search for the founder thesis podcast on any audio streaming app like Spotify, Ghana, Apple Podcasts and subscribe to the show.
00:27:38
Speaker
But that's the best part of being an entrepreneur, right? You get driven by things which you don't understand, right? And I think that's the blessing in disguise because if you understand a lot of stuff, then you really can't do anything because you will get complex. You will see AKA problem, vote problem, you follow. Like today, for example, if I have to open up a new company altogether, because of so much of knowledge that I've gained in the last six, seven years, I feel it'll be very difficult for
00:28:03
Speaker
Like taking decisions would be a problem. But at that point, I think that's how it started. It started because, you know, I had to pay my bills. I had to pay for that sweet, nice omelette that I used to have. So I happened to just launch all the products which are possible at a different cheaper price than these.
00:28:29
Speaker
And then I sold seven mattresses first month. How were you manufacturing? This was alternating. Because I come from this industry, I knew a lot of people who are actually mattresses. So I happened to visit factory. They were looking at me and they said, you know, they were very supportive of me. They were like, you come and pick up the mattress. You will support yourself.
00:28:55
Speaker
So, and then three, four, six months, it came to a point, I started selling let's say 23 matters every day. Within let's say six months of time, I was able to sell two to three matters every day. And then if you were to calculate, I started making 1000 rupees per matter. So that was a good amount of money, right? You're making 3000 rupees per day. And then somehow I got that confidence, I'm done for this industry. But in Akosha, you were learning at a very high speed.
00:29:22
Speaker
you were learning about how to talk to customers. Because this was the first time in my life, right? So you can imagine how first time I would behave on an online world. You're thinking about it's a Facebook message, it's a budget message, it's a targeting message, it's a Google message, right? So they were selling, let's say, movie tickets to the stores, they were selling the recharges. So I was writing recharge category there. So we used to do some 9,000 recharges every day.
00:29:51
Speaker
So then you have to figure out how do you get the transaction done? How do you load the wallet? How do you integrate with those suppliers? How do you do credit? You learn a lot of online stuff. And then the customers are not failing to charge each other, failing. Then you have to talk to customers. Then you talk to the product guy also. Then you give the feedback. So you get into all of that learning of how to build a digital product and tell it to a customer.
00:30:14
Speaker
So that that learning was amazing. So I couldn't leave that company. But you know, this is the best. I don't think I have enough money to kind of get off the job and again start it because you should at least build some more. So two, three lessons were there, which I learned during that period. One is you should start. There's a saying in the market that you should
00:30:31
Speaker
fully get rid of whatever you're doing and do 100% in the business, then only if it's speed driving. Don't have your feet in two boards. No, not two boards. I think not two boards, but I think it is better to be financially sound than financially stressed and then underperforming and what you're doing. So it's always better to be financially sound and then only take care of your business or the new identity. Otherwise, if you don't appreciate that, it will do something.
00:30:58
Speaker
And the second part I felt is connecting with customers and really learning from them. So what is working, what is not working is absolutely critical. So what I learned at Akosha, I used to call 30, 40, 50 customers every day. I will hear from them. I am not getting that. So you somehow figure out how to talk to customers and figure out why they are not buying stuff.
00:31:22
Speaker
So those are learnings came and I think people get very grounded and connect to customers. I think they are the best people to tell you what to do in life, other than anybody else in the community. And I think you should have a protest of money, which can help you take better sleep at night and sleep better. So I think I took that, again, after that 12 months of time, if I remember directly, I saved
00:31:47
Speaker
close to Kled and I enlisted pre-lets from that business and opened up a small factory. This time I started to go into the factory and then at that point in time I met my co-founder. Where did you come from? Where did you come from? Where did you come from? Where did you come from? Where did you come from? Where did you come from? Where did you come from? Where did you come from? Where did you come from?
00:32:14
Speaker
I'll tell you what I did. I did a lot of jugaar stuff again. For example, if today I buy a machine at Rs 5.50 for cutting foam, that time I did some jugaar mechanism, I constructed a machine in Rs 12,000.
00:32:29
Speaker
Like, which was just a Juga. Somehow, your basic, whatever tools that you require, I started doing that. Today, I have a machine which is a crore of these words, which does an automatic laying of new on the matrices. At that point in time, I bought a 30,000 rupees compressor plus can I use to manually spray. So, you do all, you figure out all those Juga when you don't have money, right? So, I ended up doing that. Somehow, I started with this. That wasn't bad, but I think this was, this time I was very determined that I have to open a package because
00:32:54
Speaker
I realized in those 12 months of working that it's very, very critical to control the quality.
Wakefit's Expansion and Innovation
00:33:00
Speaker
With my other supplier, when I became a de-scientific, when I was selling 10, 20 matters every day, the supplier, which was a good friend, in that point, I started minting money by either giving me a poor quality product, or let's say compromising on timeline, or let's say not really listening to the companies that I'm giving. So then I realized it's better to kind of start.
00:33:18
Speaker
some small bit of that. I think that's how we could start it in the Android. Then I have to meet my co-ponder. I think he was doing, he was doing customer care head there. He was taking care of those chatting agents. In a kosher. In a kosher. So we find about two months to get a meeting.
00:33:35
Speaker
And then we became gold friends, we started talking, he was also played art and that's how we started. And then he became my angel and mister actually. When I fully left the job at Atosha, I asked him if he would be having to brighten stairs to a kind of point. And then he became my angel and mister. And that point of time he was working another startup. When he left, he also left Atosha.
00:33:53
Speaker
and he started working on another site. And he personally had a digital firm, which can do a website building for you and can also do a little bit of moving marketing. So he had some 4-5 member team and he was kind enough to extend that. But he supported me well on doing the developmental website, doing some initial content writing. Later on, he joined me.
00:34:22
Speaker
But this is how we started it. When you started the factory, you started the kiti sale on Amazon? No, I think it was, it used to fluctuate between 3 and 4 and it will go up to 14 actually. It used to fluctuate a lot.
00:34:44
Speaker
I have raised like 2-300 in a month types. Yeah, yeah. 200-300. Yeah, there'll be time when the labor is waiting for you that you know, that could sort of even make to order that 110. So now I'll get 2-300.
00:35:06
Speaker
We will manage the fact that that part of time was very exciting. I think, again, because of whatever learning that I had passed, all of that great startup, then again, e-commerce learning and all that connected customers.
00:35:22
Speaker
when he bought in the market. I think this time I was very, very strong. And that one time I got married also. So my wife supported me very financially. So she took care of all the expenses. I was not able to drive Sally from that venture, but she was able to take care of the home. I think she managed over almost nine months, financially independent, but then more, you know, passed through that time. And then I started making money. I started paying Sally from the factory for the week. So I think then, you know,
00:35:49
Speaker
It went so smooth. Now looking back, I feel if I had those learnings for my first venture, I think I could have moved. So this also leads to me that another learning that you know, having mentors in your life, having a right set of people around you, those were constantly guiding you. Because what you're not seeing, what you're not seeing, like we don't know what you're not seeing, right?
00:36:12
Speaker
I think it becomes very critical that people around you are mature enough to handle you at that, because you're emotionally very weak when you're running a startup. People around you should be, let's say, well-connected and understand the ecosystem around you so that even they can guide you in the right manner. I think a lot of learning came during that period, and I think that's why I was able to pick up myself and get stronger and stronger.
00:36:34
Speaker
So which month and year was it when you quit Akosha? When I quit Akosha, I was talking to some phone man. So for example, if I have to talk about product, I think there was one gentleman. So this guy used to teach me every time whenever I have a problem of how to print the right product.
00:36:51
Speaker
So he would always put customer first. But then he kind of imbibed that customer first approach in being when it comes to that input. You don't think how the mattress would look or how you want the people to perceive the mattress look like. But I think the best part is to put the indigence inside the mattress and when they sleep and close their eyes, they should feel they're sleeping on their own.
00:37:13
Speaker
I mean, that product-led approach, I think I kind of learned from it. Every time I would want to commit some mistake, you'll come back and tell me, hey, you're doing the right thing. I used to talk. In fact, I...
00:37:25
Speaker
I also became fan of reading at that point in time, because I started appreciating books. Most of my mentors, if I would say, would come from those books. I read about, I read Pupan Ambron, I read about Big Basket, Flipkart, Nike, and all those books, right? Those are how these all big brands have been played, how octopuses have behaved during the year. I think that seems to give me a lot of inspiration on how to think,
00:37:51
Speaker
how to strategically build teams, how divide teams are important, where at what point you should pay funds, how aggressive goals you should build for yourself, how you mature yourself when you are a complete great player. I think a lot of mentorship, or I would not say mentorship, I would say inspiration came from those books.
00:38:11
Speaker
with all those fundamentals on which everybody has built. So, for example, one of the fundamentals that Breakbit has picked up is, we always have went somewhere because we say that ultimately, every business which will come in market will come because it will gain any efficiency in the market.
00:38:30
Speaker
Right? Some of the other form of inefficiency will get killed. So I think that is what I picked up from Amazon also at Walmart. They all kind of... They get off the road. They get off the road. Yeah. They get off the road. Yeah. They get off the road. They get off the road. They get off the road. They get off the road. They get off the road. They get off the road. They get off the road. They get off the road. They get off the road. They get off the road. They get off the road. They get off the road. They get off the road. They get off the road. They get off the road. They get off the road. They get off the road. They get off the road. They get off the road. They get off the road. They get off the road. They get off the road. They get off the road. They get off the road. They get off the road. They get off the road. They get off the road. They get off the road.
00:38:57
Speaker
For all these amazing fundamentals on how the business came from those books, I think somehow this was the narrative in me about the customer opposition, when we get to get the hints from customers who didn't want any business. I think that was, I don't know how I picked it up, but maybe from whatever I picked up, I picked up this very, very strongly. So I was the first, if I can recall, because I started in 2014,
00:39:25
Speaker
where I had put up a team of people.
00:39:28
Speaker
who were there to call customers to collect feedback after delivery of product. I think that part of the time I used to talk to the media and say, have you ever seen a company who delivered a property when they called you after, let's say, one month to ask you, hey, how do you feel? And everybody was unanimously saying, no, we have never bought a car. But we were the first one because of customer opposition. Even if the product has to be right, people have to see the value of the product that it gives. Otherwise, the word positive won't happen.
00:39:56
Speaker
I'll go and travel and meet customers in person. For example, many of the YouTube videos, almost 12 of the YouTube videos, which a million views now on YouTube.
00:40:06
Speaker
They were all shot by me directly. I went and have no problem in the morning, took my camera, did the recording, had an open button to submit the customer, recorded that, put it on YouTube, know what people think about the record. So I think all of that customer operation came in, inherited IPT, and the inspiration came from the book. And of course, do not come first with the product. The mentorship came from that guy who bought me that, you know, never ever compromised on the product.
00:40:32
Speaker
You can compromise on anything but the product. When you're into this, like when you're into being full-time, you were earning enough to take out a salary. So what kind of revenue were you doing? How many mattresses were you selling? Yeah. So the first year we did the revenue off after, let's say, putting the top first year revenue was closed.
00:40:53
Speaker
1, 2.1 crores. This is with like 2015. Yeah, I think 2015. We did 2.1 crores. Then we did 7.1 crores. See the triple. We did triple and then we did 21 again triple. And then we did 81 again triple. And then we did 200 again almost triple.
00:41:15
Speaker
For almost 4-5 years, we kept on doing 3x, 3x, 3x, and we were surprised to know this, that every year was profitable. We were paying income tax almost, we were generating 10% profit after that. So for the first 4-5 years, we were highly profitable, high growth, and people were loving us. We had a 4.8% star rate for our product on Amazon because of this extreme obsession about building the right product. Almost every customer praised us for the work that we did.
00:41:46
Speaker
So when you were doing 200 crores, that was which year, like 19, I guess? Yes, 19. And the product range, tell me about the product range. How did it evolve from 2015 to 2019? Yeah, we started with mattresses. Then what we realized after talking to a lot of customers is that people were really not looking for range of mattresses. So what we did is we cut down the couple of products that we sell. We actually went down from six products to 32 products.
00:42:02
Speaker
Mm hmm.
00:42:17
Speaker
We realized that people looking for comfort, not for looks, not for, you know, but actually they were really worried about if I sleep on it better, I'll get put dreams on that.
00:42:28
Speaker
So this kept on helping us trim down the extra fat that we'd get in terms of the number of bacteria off it. But then when we talked to those customers, they were inbound queries, why would you guys sell pet cheats, pillows, like your early adopters will always kind of freeze you. So initially a lot of people will come to my small factory, they'll talk to me and say, why don't you sell it? We want pet cheats. All of your good, first time customers, good.
00:42:53
Speaker
the appreciation of what a young autoblogger would do and that they are first time autobloggers too. And they'll give you enough feedback so that you have enough parts to develop. So we kept on listening to them very, very closely. And every time we used to hear that, you know, this is something unanimously coming out, hey, why don't you sell pillows along with matters? And we started developing pillows.
00:43:14
Speaker
Then of course it went on a journey of kind of getting better and better depending on that. Then we launched protectors, bad sheets, comforters, and then we realized, you know, we want to become a complete sleep solution company, which meant anything around sleep is what we would like to do. And then we, that's the time I think we clocked 2012.
00:43:33
Speaker
So by the time you clocked 200, you had this whole range, like below bed sheet, comforter. And then from there, we started thinking that if the matters or the sleep solutions market might not be sold, it helps the funding to both react every year. And that's where we picked up the other category. We said, let's start looking at bed. Because there was also an in-market restaurant. People wanted to buy bed, also get to buy bed. We also want to know that people are buying.
00:44:01
Speaker
a bite from pepper fry or amazon but they're buying mattresses. So we realized you know our customers are going to buy stuff which we can also take. So we again put up a very small platform in 2020 and that's where we decided to get into and for the products of mattresses which is bad wardrobe and stuff like that. And then in 2021 we declared in a company that we're going to be a complete
00:44:27
Speaker
furniture company, which means we're going to sell you everything which comes with furniture like faux pas, dining chairs, tables, shoe racks, everything like that. I think we've been progressing with that concept for almost 18 months. And then recently, we have pivoted ourselves on, let's say, extended offers to calls and phone solutions company, which means that we are now seeing anything inside the wall you come to as well as a company.
00:44:51
Speaker
Now, there has been extended curtains, to apartments, to door lights, to rugs, to decor, to lighting. We've gone very, very deep into the number of problems that we believe that the vision has now become the most loved
00:45:09
Speaker
you know, a furniture company. Most companies, like, we should be, and then the mission to carry out that would be to, you know, really be able to fulfill needs of customer in terms of personalization, personalization, and extremely affordable. So, the original fundamentals of the company being, you know, staying on, being very, very suitable on the product design development that you bring from a customer acquisition partner to customer first point of view. But at the same time, we are always backward in ticket because we believe that if you're backward in
00:45:39
Speaker
not only able to keep code quality, but able to put right prices for the customer, which a customer would love to do that. So if you were to compare, our furniture costs almost 50% of the traditional furniture shop that you would see, 50% of the price that we give, but we give you either the same or a better quality than the other. So this all comes because of the backward integration. In fact, today I'm sitting in a factory where we invested $240,000.
00:46:05
Speaker
And this all is all iCloud voltage machine from Germany. So we have put together a really large set up. I think it's going to be India's largest financial factory in the world, and because of this factory, we believe we could really use the new milestone of hitting organ growth, which is going to be the biggest financial company in India from a DTC perspective.
00:46:30
Speaker
I think that's our ambition of this project, but a lot more to come in the next two years. We already have a lot of things in fire. Generally, what we do actually is we prepare for what is to work after two years today. So we start getting into an experimentation mode today, because we believe with the experiment project, we failed this year. Next year, we'll learn and we'll do a little better. And then next year after that, we should get to disrupt it.
00:46:53
Speaker
But then we are already writing something which is going to work for us, let's say two years from now. But we are totally creating one furniture that we had put up a full pack on. Next year, we're fully betting on creating a production, which means you can buy an entire range of anything. So, yeah, everything is manufactured in house, like a bed sheet or curtains or... Okay.
00:47:15
Speaker
And even sofas and all? Yeah, we manufacture sofas, dining table, bags, everything. So almost 98 or 98.5% of our overall sales is the product which we have managed. So we do a little bit of trading to understand the market. You know how the market works and how the product meet by now that we do trading for a small
00:47:36
Speaker
And then eventually we get into backward integrity. So for example, we have got into trading of lights as of now. Lights means decor lights using pandemics and stuff like that. And now we're learning the behavior of a customer, what is the light, what is the hay. And parallelly we're also thinking about building a factory for the lights. So then eventually next one year we'll put up that investment and we'll disrupt that market of light.
00:48:00
Speaker
I think this is how we tried to do it. So you did 200 crore in 2019. What are you going to end this year at? What is your estimation? We did 430 crores. After that year, we did 60 crores. I think we are going to stop at close to 650 crores.
00:48:22
Speaker
Okay, amazing. So you're not too far from 1000 crore, maybe a year away type. Yeah, next year we're targeting close to 1100. Well, and so you said this is the largest by turnover. This you are including like a pepper fry kind of a company in that or they are just a market. No, no, I think including that also actual invoice to the venue that we're talking about, I think the biggest companies in space somewhere to
00:48:52
Speaker
If you talk about G2C, direct to consumer. Which is the biggest company in this? Is it Pepperfront? It's Godrej. Godrej, okay. Yeah, Godrej is the biggest company. Then comes other company. But I think we tend to pass in the tier in Pepper.
00:49:10
Speaker
Wow, you'll be bigger than Gautrej this year. Okay, amazing. Why are you qualifying it from a D2C perspective? What else is there? Well, they do a lot of office business. But in home interiors, you will be the biggest company to stop home. Why home solutions are not home interiors?
00:49:36
Speaker
So home interior is something we are looking at from now. The difference between home solution and home interior is the same. So home interior is basically when you do your kitchen and wardrobes and TV units where you call a carpenter, you give a plywood and he does a lot of that. That is called home interior's business unit.
00:49:56
Speaker
own solution seems that you want curtains, you want lighting, you want shankers, you want sofa, bed. So imagine anything which is loose in form. This home punch. Just make up, we call it home. So all of your fixed furniture, let's say, wall carrying, that little GOP work that you're painting, all that, that is all home materials. Anything which is unwrapping, let's say, dismantle it and put it somewhere else.
00:50:23
Speaker
or move furniture. Okay, got it. So you're saying you'll get into this home interior market like making modular furniture and stuff like that. So our research is and studies and experiment is already started. You put together a small team and once you get the pulse of the market, you start experimenting.
00:50:47
Speaker
then we pick it up when we learn. So we know that we're going to fail it for the first attempt. So we make sure that for the first step, we should definitely fail. We should behave like an entrepreneur who knows nothing, if I can say that I have to accept the mark. So we divide our journey into 0 to 1, 1 to 10 and 10. 0 to 1 is an ambitious entrepreneur who's going to attempt the mark. And then we go and launch product.
00:51:12
Speaker
that 1 to 10 is where we kind of get ourselves lost in the space where customers will throw us away, they'll not come and talk to us. We do a lot of mistakes and then we will do post correction in that and build the philosophies of who that person is. 10 to 100 is where we have learned it enough now more to scale it. So that's how we divide the chart. When 0 to 1 happens in first year, 1 to 10 happens in second year.
00:51:37
Speaker
next year. That's why there's a two year period of any industry that we pick up. You know, so far everything that you're doing is easy logistics. But modular furniture and all will have complicated logistics. It's generally made to measure and installation. So the logistics will become quite complicated with that.
00:51:59
Speaker
Yeah, so actually, if you would notice in what you have done, and again, this is coming from an inspiration from, I think, the guy from Walmart said it. Only the hardest thing is something that no one will pick up. Almost everybody will come to the village. Let's say that one year from now, everybody will try to do whatever is easy work.
00:52:20
Speaker
We said, let's say trading is the easiest work, right? So everybody said, I'll become a brand blip. I'm sure it's not easy work, but people will think if that's all done with a TV net, then you can become a brand, right? That's the easy work. So I think since we have gone through all of these fundamentals, we've very strongly felt that we have to choose only the problem, which is the hardest.
00:52:42
Speaker
So home interview, we figured out, you know, one of the basic rules that it is a very hard problem is you have to go and win customized furniture in the time without fault and satisfying a person for almost 30, 45 days of time.
00:52:57
Speaker
Somebody has to go through that phase of building the integrals of the building, when somebody is building the project. So there are a lot of expectations mismatch, there are a lot of improvement, stuff like that. But we realized that it was a very difficult work to continue and you can really start off into one or two projects a lot.
00:53:19
Speaker
But if you have to do, let's say, a thousand projects a month, you really have to build a cycle and it can take purpose. So that's why we're very inspired. This is something that, you know, this is what we are paid for. This is what we love. In fact, you'd be surprised to know, I'm not sure whether you use a belt, but almost all the category managers that we have, process excellence guys here, all of us sit in a factory.
00:53:42
Speaker
All of these guys come sitting just next to me, they'll operate out of factory, they'll be sweating day and night. And I think they've also understood this hard thing that, you know, today's condition, if you go and start taking interviews with people, you know.
00:53:59
Speaker
you want people to hire, you want to hire people for this job. And when you talk to them, you figure out, most of the people have not gone through that hard journey of really going through the factory, understanding the raw materials, building the product by yourself, doing the testing, going to customer outlet and taking the feedback. So we hire people who are almost faster from the college, from already good colleges.
00:54:21
Speaker
and we put them through one of your hardcore training where they go through and prove that, you know, if you talk to our guys, they'll talk like a CEO, they'll talk like me because they've learned everything almost from the space, those fundamental understanding of the market, building the P&L, I think the super rich in terms of knowledge. So I think this is what we aspire towards. We believe that the true talent comes from doing the real hard work and doing it by yourself, not by the real hardcore.
00:54:49
Speaker
So that would put you in competition with, say, LiveSpace, which I believe is about to be a unicorn. They are also into that space only. And there are others also, like, I think there's Design Cafe and a couple of others which are doing that. But they are only the momentary stuff. I think we are a little bit different. We're calling ourselves the computer. This means it's like, so much on both of them.
00:55:18
Speaker
I don't know if it's a big deal or not. The idea is that literally we want to give you everything inside.
00:55:31
Speaker
a great quality product and extremely affordable price. Most of our customers, if you really ask them, so for example, we call 100 customers who don't buy from us, they'll put product in the cart and they'll not buy from us. And then we'll call them to figure out, hey, why did you not buy in the credit store? Almost 30% of the customers say,
00:55:54
Speaker
We go through a very different part of that. We have to convince the customer that not all good products are cost-free. We are going against the wind and saying, hey, we are building factory, we are building logistic, this is very efficient. We are doing a lot of innovation in terms of packaging, dispense, manpower. All the brains of the world are actually working on building the operations part of the company. So it's very different.
00:56:17
Speaker
What are those innovations you're doing in operations, in driving efficiencies? Like how are you driving efficiencies in logistics, in warehousing? So I think really we are of the most priority when it comes to manufacturing. We are the first one in India learning green contact manufacturing and at some point post.
00:56:38
Speaker
was actually done it. So when I say lean manufacturing, imagine your factory running identity agency of 97%. Like for you to Gates, let me give you a framework. A traditionally furniture package you want to pick up in India will work on in the pens. For example, they got me 24 hours to get an output energy, that is 100%. For example, one person, let's say making 600 rupees of labour, can create
00:57:04
Speaker
100 rupees value, but it's actually creating a 60 rupees advantage. We do a lot of improvisation with whatever process it is, he starts making 97 rupees. He started creating more product in that small period of time, that's what he did. It's not innovative as such, but it's actually learning from the giants of the world like Toyota, hundreds of factories around the world.
00:57:28
Speaker
And then they are able to so easily and peacefully replicate their success every country they go through. I think we get inspiration from them, and that's what we're doing. We are building on zero packaging waste, which means that, for example, in furniture, you have 7-8% of the cost as the packaging cost because the furniture has to prove from A place to B place to B place. And the furniture is very personal. It's fragile.
00:57:56
Speaker
It's fragile. It has to come with those thick, corrugated boxes. Now we are building noise-to-flow under the that we want to have zero percent as packaging costs. Zero percent. How is that possible? Fragility? Hey, what's up? That's a little bit of a trade secret. But what we are building is we are talking about recycling.
00:58:18
Speaker
So we go, for example, we buy product from us, we deliver it to you in a very safe form, and then we take back all the trash that is getting collected out, recycle and put it back. So almost zero percent generation of waste, which is again a seven percent save rate. So this is another innovation. We have figured out innovation in marketing. All, if you look at, let's say, so my commission costs, people work at 15% of the market, we operated by six customers.
00:58:47
Speaker
So that's again. What does that mean? Like agar saurope ke cheese, bhechriyatubho, 5 rupees is the cost of acquiring that customer. And in other D2C businesses, it's 15-20 rupees. 15-20 rupees.
00:59:03
Speaker
That's again, a lot of hard work that our team has figured out how to target the right set of people. We do all those hard work, traditional. So we take inspiration from actual teams. I think they are the ones who have really created large G2C brands. They really have an engine too. Like every year they create 2-3 brands.
00:59:24
Speaker
and almost all of them, 50% success rate is greater than 1000. But then we take inspiration from them to how do you create those powerful brands? How do you create those right fundamentals of talking to customers, the right product, the right branding? We believe that if you are not efficient,
00:59:42
Speaker
Someone else will be more efficient than you and he will subdue. So I think we always try to get ourselves to the next level and figure out how to make a customer. So we think very stupid way. One of the ways to tell you is that customers go to the store and they have to go to the store.
01:00:01
Speaker
And that too, I have to make 5 rupees out of that 15 rupees. Between I have to work at a month. So we go circles and circles and circles. We go daily nuts. And we figure out what the team can do with the packaging. So let me do some quick months of work, put a team together who can create a knowledge system which can handle zero wastage impact. Then we go to more factories, start lean manufacturing. So you do a lot of back-end work.
01:00:31
Speaker
which is all the smart world that we are not the first one to do this. But we take inspiration from all the big changes. And this all is being done from a very fundamental perspective of learning bias. We don't really get consultants or people who have done it already, kind of hire them. I will not go and hire somebody from Toyota. What we do is we want to learn ourselves because this is another proof. If you don't learn it, the moment that manager leaves your factory, you can go back and check.
01:00:59
Speaker
So we all go through that hard path. In fact, today, if you would notice that I'm sitting in a factory where I don't have a roof, which means I'm sitting in a factory. I have to go personally, invest, learn machines, learn the technology, learn, sit and talk to the people who have come from Italy. And there are some of them who have come from Taiwan.
01:01:19
Speaker
So I'm sitting with them, you know, having beer with them in the evening, kind of trying to learn, you know, what is this machine about? How it will work more efficient? How will I do no maintenance and all that? You know, they share a lot of stuff with you. So we go very, very soon. Being a CEO of this company, I'm not indented to sit in a factory and learn much. But I think this is not about being a CEO sitting out there. I think it's about building that culture of
01:01:42
Speaker
Being connected to what really matters to a customer. What matters to a customer is giving a really great product at a very affordable price. That's what we have learned. We move every inch in our company, just doing that. You do logistics yourself or you work with third party? No, we have built our own logistics.
01:02:01
Speaker
Okay. Why is that? Like to get for cost, like cost cuttings. Yeah. So, so people, we, earlier we used to use third party laws and we used to pay about 500 rupees. No, we used to pay about 1800 rupees per matter for delivery. And we figured out, you know, this is, this is a huge amount of money to pay. Anyone believe today, they have 120 rupees per day.
01:02:27
Speaker
Now, this all is because we are pegboard integrated. We figured out where are the gaps. We imagine the journey of getting the tools like this. If you were to notice in furniture, people generally pay close to 2,000 rupees for delivery and installation of the furniture. We get away at 450 bucks.
01:02:46
Speaker
that all happens because we are all fundamentally thinking on how to give more to our customers, how to give more, because we, again, believe in the same thing that some new startup will come and they will disrupt us because they'll be more efficient than us. Otherwise, they can disrupt. So it's again a fear that kind of drives us that nobody should look for disruptors. We keep disrupting our role ourselves every month, every quarter, every year, and we find innovative ways of
01:03:12
Speaker
you know, saving some bugs in person or the person, either in the form of discount or in the form of wallet. So these are like your odd payroll people, the people who do installation, the people who are driving the truck, the people doing logistics. Well, this is all, how big is your headcount? No, it's quite big. I think the year of, you know, 1500 people, out of which 500 people are, or maybe 700 people are those who work out of office.
01:03:39
Speaker
some 4,000 people who are part of that team. It's a place to nothing.
01:03:46
Speaker
So we realized that even carpenters in India do not have that skill set that it should actually have to assemble furniture, to assemble nothing. And we realized that even if Nisabhar has that skill, it is really not charging you a lot because he's not getting enough jobs to do, right? And then we realized that it's not sustainable that you pay 800 rupees or 700 rupees for a person to go and install furniture at the customer house. So what we did is we created Gurukul.
01:04:15
Speaker
in our factory. Now we have trained 250 carpenters to generate in that group. And they go through a crash course of four weeks where first we could have just spent second training, third testing, fourth is approval. And either they get, if they fail, they can go through the regulated process.
01:04:32
Speaker
So they learn about, you know, maintaining hygiene, how to talk to a customer, how to assemble. If there is something wrong at assembly, how do you talk to the backend team? There are a lot of basic ways to refuse them. And we're very proud that we created 250 carpenters in the last 12 months with us. They're all working with us.
01:04:49
Speaker
And why we did it? Because we wanted to increase the customer experience of using the product. We didn't want to send some random guy in the market and go and assemble the product. We wanted our own people so that they can maintain that big philosophy while accepting the product at the customer house. At the same time, we were able to reduce the cost of that $700 to $150.
01:05:09
Speaker
So we did those efficiencies, we trained them, you know, how to fix a screw faster than a traditional screw, at what angles to fit, what all machines you require. I don't know where I left, but you know, but the, yeah, we created almost 250 carpeters, all the speakers, which are required. And we are very proud that, you know, we have been able to do that.
01:05:27
Speaker
So with it, our costs have reduced very significantly, a bit what we would market, but at the same time, experience is even better also. So for example, one of the best things that we did it, if you happen to buy a furniture, let's say from an online company or a traditional offline company, they'll publicly deliver your furniture first and then there will be a carpenter who will come with the next 48 hours to come and assemble. So we took the thought that we are not going to do this.
01:05:50
Speaker
we are going to deliver and assemble at the same time. Because we don't want the customers to wait and call somebody and then wait for the time and all. Because it doesn't make sense. Then why are we even delivering the product if we are not able to assemble at the same time? So we created process which again added a lot of efficiency. At the same time, it's all customer problems that they don't have to wait for the assembly of furniture. At the same time, we reduced the cost because we were able to do it very efficiently when we did it at the same time.
01:06:15
Speaker
That cost of travelling is not there. You picked it so well. I think the petrol cost itself comes about $500. And then the carpenter is wasting a lot of energy. He does a little bit of job inside the auto also while he's going to customer route.
01:06:34
Speaker
We picked this up from Big Basket. I think I'm a great fan of Big Basket. I read Book of... I think it all talks about those operational efficient where you'll have to go first principle, you'll have to go very smoothly in your approach, very, very driven in terms of customer operation. But at the end of the day, if you have to
01:06:56
Speaker
imagine what big basket is. It's seven o'clock bang out time, the customer, the guy comes with everything fresh, nothing damaged and stuff like that. He delivers 99% on time, the right product, right? So if we can't build something like that, I think, as I said, there'll be someone else who will build it and disappear. So I think it's in the inside, it's a fear which drives us a lot more and that fear is coming from here. Is there something we're doing stupidly? That's a bottle I
01:07:25
Speaker
So is there anything that you outsource or is everything you are doing in-house? Because from driver to installation, the trucks and all are also like you purchase or you rent those trucks? Those trucks and all are entered. Yes, they are not buying those trucks. In terms of outsourcing, we do outsourcing of whatever is not available in-house in terms of marketing, branding, and technology.
01:07:51
Speaker
So for example, if somebody knows better ways to build a brand, somebody knows better ways to build a website, we take learning from them and kind of take them on all and they help us do all of that, whatever you have. I think these are the stuff we feel very, very weak. I will not call it very weak, but if there are better people available in the market, we try to learn from them, mostly around technology and mostly around brand building.
01:08:18
Speaker
because I believe that's a very different game altogether compared to what I know. So what is the sales channel for you? You started with 100% Amazon.
How Does Wakefit Maintain Efficiency?
01:08:30
Speaker
How has that evolved over the year and what is it today? So we started with them. Then we launched our own website in 10 years from the time that I beat 2017.
01:08:43
Speaker
And then the ratio was almost 90% of them have the 10% we screwed. But then over the period time, we started building a lot of stuff on our website. We started building traffic on the road, trying to do a lot of heavy parking. And then the ratio has shifted to almost 70% on our own web at 30%. And
01:09:02
Speaker
And then now we're working on almost four or five large platforms like that, ATM, Amazon, Flipkart, and we have our own web. So we've finished the program and now, in recent past, we're exploring a path to go offline or fail. We are in the process of opening a couple of experience-centered projects that most likely in the next three months we'll be able to do. The people who go to visit the campus, they will make much more work together. So these would be like in malls, like high-footfall areas. High-footfall areas, malls, you are like that, right?
01:09:31
Speaker
Something like what Urban Ladder had done, like they had at airports, they had some display units or something. No, I think we are very focused, very focused on
01:09:42
Speaker
putting up a store where already people go for furniture shopping, not for window shopping. So, if already there is an area which is called a furniture market, then we will... Yeah, there is always an area. But then, I think we are placing a shop there instead of the airport. But if there happen to be a lot of furniture in the airport, we will end up putting up there as well. Okay. So, yeah, you don't want to waste money on just brand building. You want to target people with intent. So, which is why you would put it in their furniture area.
01:10:09
Speaker
That is also true and of course it is coming from that again same-based logic that we don't want to become an inefficient organization in the name of building some I-5 brand like we have a showroom in the airport somewhere, I don't want to do that. That's why we want a very high quality product, a very affordable place. But if the airport doesn't fit in, we don't launch in that direction.
01:10:30
Speaker
Okay, so these would just be like display centers, the ordering would still be online, like pretty much what Lenskart does, like you can go to a Lenskart store, see the frames, test it out and then place the order and the delivery goes to your home. It's almost like that. Okay, okay, okay.
01:10:50
Speaker
And 70% of your business currently is through your own in-house website, which again reduces your cost because I think your margin to Amazon would be getting safer. I think the true measure of measuring how we were able to reduce the marketing cost was really creating a world of mouth channel for us. You'll be surprised to know that more than 50% of our sales come through.
01:11:14
Speaker
which means all of those fundamentals are actually really playing off. Every year we grow because our customer base grows. Like we get automatically grows. We really are not investing a lot of money in, let's say, spending on marketing or branding. Till date, I think, as I said, almost 5% of people spend on marketing. So everything works on those first principles of right product, right by the right way of reaching, lifting to customers, any problem that they're involved with. Those fundamentals have always kept us involved with it.
01:11:45
Speaker
That call after purchase, the feedback, all those still happen. So, in fact, I was talking to one competition of mine and he applied to delegate during the really large, so they're also close to 890 close up of this. And I asked them, how much strength do you have in customer care? And he was definitely saying, yeah, 70 people. And
01:12:08
Speaker
And he asked me like, how many people you have? And we are doing all of 650. I said, we have 500 people. There was a surprise like, what are you guys doing here? I said, yeah, we are very idiot shit. I can't. The two of us didn't know that we are talking to customers. We are talking to them. We are trying to learn from what they are trying to pass on to us. We have a very strong feedback group, which we try to kind of listen to almost every customer.
01:12:36
Speaker
We do it proactively and try to improve our product and services every month, every day. That's how we have been. How does that feedback reach you? With 500 agents who are talking, how do you make that feedback loop work so that you hear? Again, we have a tech team. They have built up a channel. There's a platform. They go and they click the problems. Then it goes into a data structure format. All the factory managers on the click know what are the problems that they created.
01:13:05
Speaker
when the product reaches the customer home. So the factory manager is daily looking at those problems. So he is creating, following those problems. The lawyers say, we have to know because of the inventory issue, what happened. So every problem, every problem that has been created by a customer should be heard by the person who actually created it. So we have mapped almost all
01:13:35
Speaker
90% of the problem, which can be directly related to a person who's on the floor. So for example, a guy, a shift in charge exactly knows that yesterday, what all problems came at customer house when a carpenter went for the delivery of the product. And then he's already working on that carper, which is the active and preventive action. And then he deploys and gives us an action plan in the next one week. It should not repeat it. So it's all so backward connected. They didn't have everybody, like, just like,
01:14:06
Speaker
So, like, because you are tracking the inventory of the manufacturer, therefore, that information goes back. We, in fact, have recorded a timestamp. So, when we scan, we record a timestamp and we know exactly. So, for example, a product A is getting delivered at, let's say, some customers, and let's say that product had a problem. So, the guy who's sitting in a factory looks at the
01:14:30
Speaker
barcode, also looks at the SKU, whatever has gone, the batch number, then from that batch number, he looks at what time it was scanned at packaging. And then we add that time opens up the video camera, which is around the factory to look at what problems were created. And then he finds the guy.
01:14:50
Speaker
So now even people on the ground will exactly know that customer is watching you. Amazing. So what else is your tech team doing? This is fascinating what you have built to make the feedback loop heard by everybody. Amazing. What else is your tech team doing? What other ways are you using technology to build efficiencies?
Tech & Automation in Wakefit
01:15:13
Speaker
So technology team also helps us reduce the amount of person dump, again from this very basic fundamental there, you know.
01:15:19
Speaker
For example, other than usual product management of increasing the funnel, improving the funnel, getting the right intent customers, giving feedback due to the marketing team that the other type of customers should not take to the platform because they're just not coming, they're just fishing. They give right feedback to the market to get better. Other than those simple product issues and all that, I think they also eradicate and depend on the person. So the basic motto that is given to the
01:15:46
Speaker
tech team or the product team here that builds this company on processes instead of people. What I'm trying to say is that a process can always sustain the stay for years and years and get better. But the people, irrespective of the people, we know that people will search jobs, they'll go to better places that they'll find in their life. So they eventually are building this whole company like a robot.
01:16:08
Speaker
The mandate is to remove manpower dependency as much as possible so that all the goodness can be passed for the customer and all the negativeness what can be restricted at the factory or the operations. So majorly, the goal is this. And that's why they end up picking a lot of problems or building stuff for us like people like to think that I did. They have broken NPS, Net Promoter Score dashboard into five level problems like an engineer.
01:16:34
Speaker
So there's a design team, there's an engineering team, they designed a product, let's say, they designed a pet, and that has been given to production team. Now that engineer who created a product, got launched to the market,
01:16:45
Speaker
as a way to access every goodness or negativeness a customer is going through what product he is doing. He is so connected to the customer that again kind of inspires the guy that he has created so many happy faces, all sad faces. He knows exactly the impact of the work, which is again getting connected to the real world and all, not really looking at people in the dark. He goes access and goes correct for him to even sometimes talk to the customer and say, thank you for the appreciation because he believes this is something which Aaron made.
01:17:15
Speaker
tag team is all building that culture of, you know, proactive in nature and solving customer's problem. At the same time, it is driving systems driven, process driven systems instead of manpower. I think that's a broad argument. Then, of course, standard problems of building a website, doing SEO, doing SEM, making speed faster, better UI, better UI. I think these are the details about that. Okay, so what kind of
01:17:43
Speaker
Hiding?
Wakefit's Culture & Team Structure
01:17:45
Speaker
What is your people's strategy? What kind of people do you keep? I'm assuming the people who design furniture would be like NID graduates or something. So all the people who have designed that are either the NIDs or Dizzle.
01:17:59
Speaker
So we take people from the good colleges. Our engineering team is all coming from automotive, almost all of them are automotive technology because they understand nuts and bolts, what side of nuts and bolts there's bolts and efficiency is open in general. So for example, if you have to make a bag,
01:18:17
Speaker
a designer can make it look like this is how the battery should look like. He'll do a sketch and say, boss, here's a year, right? Now, engineer is the one who is building the connectors between two components. Like there are, for example, headboard, sideboard, platform, footboard, area. How will you connect them to each other so that you're not investing a lot of money in connecting them? Because at the same time, you can offer five years and then use the warranty with people often.
01:18:39
Speaker
They are the ones who use stress testing of beds. They are the ones who will put up what are the best efficient ways of manufacturing their product. Because the product, whatever they have designed, has to be production-friendly also. So they are the bridge between production and design.
01:18:54
Speaker
that they do a lot of that work. So we hire engineers from all over the background. We understand that these guys have gone through a stress test of one kg extra in a car and the CEO will fire you, right? Because you've just made it more inefficient, right? So we get those kind of bad numbers. All of the senior management in my company is point in time minimum period on the process. I think this is something really amazing. I think we've got 11 senior leaders in our company.
01:19:20
Speaker
almost 11, 10 out of 11 are one time at least failed on them. Which means they appreciate the work that is being done. They appreciate the money that people are spending. They have a
01:19:34
Speaker
crazy focus on the things that we want to build. They're equally passionate. They talk like me. I think that is something we do. I think one of the best things that we have done on hiring is hiring people from references. I think they're very, very strong on that. So one of the funny things that I can mention here is that whenever there's somebody who joins my company at a little decent senior, I'll pick up a phone call or let's say a video call. And the first thing I'll say, congratulations. Thank you for joining us.
01:20:02
Speaker
But from the organization that you're from, you think you can recommend to good people from that day, right? So he will then get into thinking more and then he will start thinking more, you know, what are those amazing guys in my company? Then he will put forward, then I'll talk to them and figure out. So we've built a culture of, you know, there's a saying, right? You know, good people attract good people, better people attract better. So if you happen to build a chain of, let's say, good people, you'll always get good and better people.
01:20:29
Speaker
So I think this is what good is. Other than that fundamental thing I told you, we hire people who are freshers from good colleges and we make them go through the journey of understanding customer, understanding background, getting the gene of really frugal about that customer. This is how we build those people in general.
01:20:49
Speaker
So these 700 people in the corporate south, what is their split line? Like how many in your tech team, how many in design engineering? So tech team would be close to 50, design engineering close to 30, marketing team is close to 30, finance is close to 30, category management is close to 30, and customer care is close to 5. What does category do? Category management, those are the ideas I told you, they are the ones who
01:21:17
Speaker
and work with me in factory in those states.
01:21:21
Speaker
So they are the ones who understand the customer for the category. For example, one guy is selling coffee dip. Now this guy understands the customer's IQ of buying a coffee dip. Why do they buy? What price they buy? From where they buy? What does that attract? He understands the customer and goes back to the factory and decides first up, along with the designer's genius. And then he goes to the law system to tell him that, you know, what's actually delivered? So he's the guy who's actually
01:21:48
Speaker
So he's your replica. Basically, we don't call them category managers, we call them Eiaps. They're entrepreneurs. The basic idea was to actually replicate many people. So they didn't bring product and operation. That's right.
01:22:06
Speaker
And tell me about your funding journey.
Funding and Manufacturing Insights
01:22:08
Speaker
So you said you've been profitable, but you've also raised funds then. So he raised 65 crores about three years from now. Then we did a second round. Which was for what did you raise that for? We raised that capital for building some factories. We wanted to build some nitrous. Do you want to build some? For backward integration, basically.
01:22:31
Speaker
We did the second round after an year, or a year and a half actually, from Bali Invest. Bali Invest came and laid that round. That round was almost 180 crores. This was again to build a furniture pantry. Most of the money went into the furniture pantry. And then we have done a decent round. Bali Invest and SIG, we figured to come up and invest it which would be close enough. And this is purely a group where we are going to invest in the building awareness of the company.
01:22:58
Speaker
We have a lot more talent in the terms of business market. A lot of talent building. We're trying to build something that is possible every two summers. We can pass on the next year. But they can actually achieve. And what valuation was this most recent round? This was at $1,800. Okay, which is about $380 million, I think.
01:23:25
Speaker
So I guess by the time you launch home interiors, you would hit like that 1 million valuation mark, right? Yeah, I hope so. I really hope so. But I think I don't think we take, I mean, it could be a very stereotypical state. I don't think we take it by building a unicorn. What really matters to us is, these are the two core values that are compared. I think you take down and we take pride in empowering a low
01:23:54
Speaker
in-commanding guy, for example, a carpenter that we created. I think we're very proud that we created 1,000 people. We are very proud that we created 3,500 people to work in the bank. I think what we want to do is give power back. I think in furniture or home industry, you would think that there are a lot of artisans, there are a lot of individuals, there are a lot of people who do a lot of good stuff, but they don't know where to fill out. I think we're trying to, if at all,
01:24:23
Speaker
It is possible that we could try to bring them and make them an entrepreneur, enable them to sell it to larger populations. That's the dream that we're chasing. I think that's what we are after. I'm sure the late dollar valuation should fall in between that part. I don't know where and when it's going ahead, but the ambition is to actually empower people.
01:24:47
Speaker
So, your manufacturing is all in Bangalore area, do you? Or do you have like regional? You get food, we got Bangalore also.
01:24:55
Speaker
I think greater not have we tried but the rentals have gone so crazy again we realized that you know the amount of money that we will spend by just such taking the debt doesn't make sense but we ended up opening a little far from that but we saved some money on that. And these are like what mattress or like what are you manufacturing? So far manufacturing on nature manufacturing and mattress manufacturing.
Conclusion & Podcasting Journey
01:25:21
Speaker
If you like the Founded Season's podcast, then do check out our other shows on subjects like Marketing, Technology, Career Advice, Books and Drama. Visit the podium.in for a complete list of all our shows.
01:25:41
Speaker
Before we end the episode, I want to share a bit about my journey as a podcaster. I started podcasting in 2020 and in the last two years, I've had the opportunity to interview more than 250 founders who are shaping India's future across sectors.
01:25:57
Speaker
If you also want to speak to the best minds in your field and build an enviable network, then you must consider becoming a podcaster. And the first step to becoming a podcaster starts with Zencaster, which takes care of all the nuts and bolts of podcasting, from remote recording to editing to distribution and finally monetization.
01:26:18
Speaker
If you are planning to check out the platform, then please show your support for the founder thesis podcast by using this link zen.ai founder thesis. That's zen.ai founder thesis.