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Building The Used 2 Wheeler Stack | Sasidhar Nandigam @ CredR
171 Plays3 years ago
‘Karna hai, toh karna hai!’ – This is one mantra that our guest today lives by!
In this edition of Founder Thesis, Akshay Datt speaks with Sasidhar Nandigam, Co-founder and CEO, CredR, an omnichannel platform for buying and selling used two-wheelers.
With more than a decade of experience with various venture capitalist funds, his eureka moment came when he had an unpleasant experience in buying a second-hand bike. He, along with his co-founder, Nikhil Jain, started CredR in 2015, with a mission to make personal mobility reasonable and cost-effective, which today is the country’s most trusted marketplace for used two-wheelers with a presence across seven cities in India.
Tune in to this episode to hear Sasidhar speak about how CredR is formalising the fragmented used two-wheeler market and changing the way customers buy, sell and trade used two-wheelers.
What you must not miss!
- Nothing replaces hard work and commitment
- Consumer insights are the foundation of any business
- How does owning the entire value chain improve customer experience?
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Transcript
Introduction: Building Unicorns
00:00:01
Speaker
Take me and I'll take you on a date with you. Hello. This could be a great intro. Hi, I'm Akshay. Hi, this is Aurob. And you are listening to the founder thesis podcast. We meet some of the most celebrated sort of founders in the country. And we want to learn how to build a unicorn.
The Origin Story of Kredar
00:00:27
Speaker
Hey, hi. This is Seshidhar, co-founder and CEO of Kedar. Kedar is India's largest used two-wheeler consumer brand. I still remember when I purchased my very first vehicle. It was a second-hand Bajat Chetak. I was in second year of college, frustrated of the whole experience of going to college using DTC buses. And the only thing I could afford was a second-hand two-wheeler.
00:00:52
Speaker
And the experience of buying a second-hand two-wheeler was so intimidating for a 19-year-old kid. You pretty much had to just pray that the vehicle you are buying is a good one because there was no assurance, there was no guarantee. You just went to a bunch of dealers and picked pretty much based on appearances a vehicle.
00:01:17
Speaker
This was pretty much the scenario even back in 2015 and is what led to the formation of Kredar. Kredar is a startup that makes the buying of a second-hand two-wheeler a lot more pleasant and in fact it makes it into a great experience. Kredar acquires used bikes, it makes them go through a rigorous testing process, they have their own workshop where
00:01:44
Speaker
any maintenance and repairs needed are done to the vehicles and they provide vehicles with guarantee in a nicely done up showroom with the professional staff and the whole experience is like a 360 degree turn compared to the old way of buying a used vehicle. Today I'm interviewing the founder of Gridar, Sasidhar, who's had an amazing journey himself and is the epitome of grit and resilience.
Personal Journey: From Medicine to Management
00:02:12
Speaker
Here, Sasidhar talking about starting his career after his B-School.
00:02:43
Speaker
So, Sachithar, where are you from? Like, which part of the country? I'm basically from a small town known as Shikopulam, which is close to the coastal city of Vishakhapatam in Andhra Pradesh. Okay. And what were your parents doing? Like, what kind of a family do you come from? My dad is a banker. He was a banker with a public sector unit. He was an Indian bank.
00:03:08
Speaker
Though I hail from Chicago, I hardly studied a couple of years there. Being a banker, the best advantage is that you roam all across the country. And my dad was like a nomad. Every three years you get transferred to a different part of the country. And the advantage of being is that you make a lot of friends. But the downside of it is, you know, never make any good friends.
00:03:30
Speaker
No friend will last more than two, three years. And my mom is a homemaker and I have a younger sibling. So what was your aspiration as a kid? Like, you know, we all have dreams of becoming an astronaut or becoming a Tata and a Birla. So what were your dreams like? Brutally honest, I wanted to become a doctor just because my parents pushed me to become a doctor.
00:03:55
Speaker
So right from childhood my parents kept on telling me that, I started believing that I want to be a doctor. Which is surprising considering your dad is a banker. So I think if you are from South India and if you are particularly from Andhra Pradesh, there are only two career options. Either you are a doctor or an engineer. So you don't have anything.
00:04:17
Speaker
Primarily my dad wanted me to a doctor because he always thought that profession as a very noble and aspirational profession, something to save lives. By the time you were completing your schooling, tell me about that transition, what career option did you narrow down on? So schooling was pretty good, very academic.
00:04:41
Speaker
Uh, when I got into plus two, which is 11th and 12th, then my kid choices became more medical. Uh, unfortunately I couldn't get a medical seat by just one mark. And, uh, I missed out, but in the hindsight, I feel very good because I still remember when I lost my medical seat by one mark, I didn't shave for close to six months and I will not meet my relatives.
00:05:06
Speaker
and i feel so bad and all those kind of stuff and at the end of the day what what it used to look at as if i've lost the entire life for close to one year i was in some kind of a
00:05:18
Speaker
huge pain. But then when I realized that life is much beyond that, then I started developing more passion for things outside medical. Then I joined in Graham's college, which is, which is Hyderabad's number one college in biotech and genetics there. Okay. That's how my career started moving in a different direction. So
00:05:43
Speaker
So after my graduation in genetics from Nizamath College, I got enrolled in MSc programs at Central Institute of Hyderabad, which is one of the very prestigious universities in the country. And during that time, I was selected for PhD program in University College of London. Wow. Okay. One of the very few Asians to have make to that college on merit. So I also got a scholarship.
00:06:09
Speaker
from fundamental research for the university college london course no no not for that between second year of my mse
00:06:20
Speaker
I got something known as scholarship program, which is in the entire country, there is only one student they pick up for a program. And I was a selected guy to be able to do that. And what happened during the program is I was working on a cancer drug. And it
Venture Capital Adventures
00:06:38
Speaker
so happened that that some of the students who are working there on the cancer drug were interviewed by a pharmaceutical company management team.
00:06:50
Speaker
And they were interviewing them as if they know more than the college students. That exactly irritated me a lot. I said, these guys spend night and day to produce a new molecule, which is drug. And you being a management graduate, and you are coming from a pharmaceutical company, you have no clue what goes into making such a great product.
00:07:12
Speaker
You are trying to quiz him, you are trying to criticize him. So that point after my decided, I think being in science and not appreciating science is two different things. So if you are going to be in a pharmaceutical company and trying to appreciate what people are scientists are doing in the laboratories, then you should also have a vent of science. I think it was pretty stupid on that on that day for me to think that way.
00:07:36
Speaker
because pharmaceutical companies have built billions and billions of dollars and they are not as stupid as I thought. Instead of pursuing my career in science and research, I'd rather go ahead and do a management degree and use my graduate and postgraduate skills in science
00:07:57
Speaker
and couple up with my management skills of my MBA graduation, I'll be a much better pharmaceutical executive is what my thought process was. And during the same time, one of the other reasons why I stayed back in India and not went to London is the fact that my mom was affected with cancer. And I'm very attached to my mother and my father both, extremely emotional, hypersensitive.
00:08:24
Speaker
So I decided to give up the career of going to London and pursuing that because at some point of time I thought my mom may not live as much as I wanted her to live. I stayed back, stayed with mom, stayed in India, picked up a management degree and that's how the education proceeded.
00:08:46
Speaker
So where did you get placed from campus? Like how did your careers start? During my college days in Pumbaa, that is during my management days, if you recollect, there is something known as campus placement program. Okay. Where in between first year and second year, seniors and juniors go to different companies and tell them that we are ready to be placed, please absorb us. So when I joined the first year of my management program, I went along with my seniors,
00:09:15
Speaker
to a company asking for jobs. And that guy really, really, really tore us apart in terms of the moment we met him in his office. He said, what do you want? You want money or you want job? I said, till now, no one has asked this question. Everyone who used to ask jobs, who's the job? If you don't have jobs, who's the job?
00:09:38
Speaker
It's very interesting. I said, why would you give money to us? He said, we are a venture capitalist company. We are a venture capital fund. So we invest in startups. My senior who was accompanying me has absolutely no clue what that guy was talking. And that guy gave us 10-15 questions and I hardly could answer five-six questions.
00:10:00
Speaker
and I was really thrilled to see the kind of intelligence that is required to be a part of the venture capital market or industry. I came back to the room I said
00:10:12
Speaker
If at all I do a job, I will definitely do in a venture capital fund. That looks so sexy. That guy was tearing it apart. The guy was asking questions which were so motivating, so intellectually stimulating. Why would I not do that? So, but the rest of my college, rest of my students, rest of my batch were saying that, yeah, who works in such a small office, there are only eight people in the entire fund.
00:10:35
Speaker
I said, you're losers. You don't even know what these guys are up to. These guys are epitome of intelligence. That's because we don't know about them. Doesn't mean that they're worthless. So what I've done, I researched a lot. I researched a lot thinking that what does it take to enter that industry? So the guy whom we spoke, right, during the summer, I called him up. I said, do you mind if I work as a someone intern at your fund? And he came back to me and said,
00:11:02
Speaker
You know what is the minimum criteria to even apply for an internship program? He said, you should be IMM, you would have started a company, failed, and you should be really great, gold medalist. Then we will even consider your CV for an application. I said, I don't know how to do it.
00:11:26
Speaker
Then I researched a lot. Then I thought all these guys working in funds come from high pedigree. Pedigree like IMM Dabat, Harvard, Stanford and all those likes. So what I've done, you'll be surprised shamelessly because there is a period between first year and second year in MBA during which you get to get an internship program done. Yeah. So I have written to all the people, all the fund in the country. Those times there are around eight, nine funds.
00:12:01
Speaker
So not even a single person reverted back.
00:12:09
Speaker
Not even single person. I have to go. There is no second thought. If door doesn't open, I break the door. I made a very stupid, which I think is a very right way to look at it. I went to ICS Adventures. ICS Adventures is the India's largest priority fund, if you know by that name. And it is the largest fund that time. So I went to their office directly.
00:12:36
Speaker
And I told the PA, Mr. Aldi Srinivas have asked me to meet. I was shameless, I want to meet, I want to tell him I'm interested. Then she's a lady, called up the managing director, someone by name, Seshidhar, called a student, he came in some Thai suit and all this and said that he wants to meet you. Every day I kept on coming to ISIS Adventures, saying that, I'm not going to do this, I'm not going to do this, I'm not going to do this, I'm not going to do this.
00:13:02
Speaker
One day it was a security problem. I thought I was acting a bit maniac. Then one finder that PA. I met her outside in a bus stop. I was waiting for her to come to the office. I really don't know. I know it's very awkward. But all I want to do is work in that office. I don't have a degree. I'm not from Aymanabad. I'm not from Harvard.
00:13:27
Speaker
But I'm very, very passionate. Some more things worked. So she felt like she felt she was really good. And she felt that this guy required a chance. And she spoke to the managing partner said this guy is coming nonstop for last one week 10 days. And he just wants to talk to you for five minutes. And after five minutes, you judge whether you want to take me or not.
00:13:57
Speaker
Then that gentleman has been very kind. He said, I can't do anything. I'll put you across my HR. And HR fundamentally is currently conducting interviews for summer internship at our fund. And you can sit along there. So I met the HR person. I don't take it the other way. She thought he was here.
00:14:23
Speaker
Then she showed me four TVs, all IMM and Dabha candidates, all gold medalists, IIT Kharagpur, computer science, chemical graduates. I'm very happy sitting next to them. And I didn't have any mentor. I'll be honest with you. I didn't have any mentor.
00:14:43
Speaker
Don't talk to me. At least these days, there are a lot of mentorship programs. You can reach out to seniors and all this kind of stuff. First day of interview, you'll be surprised. I'm well like a buffoon with a very oversized coat with a tie, which is very badly done.
00:15:00
Speaker
And all those stuff, I went there, I sat next to four really, really sharp eye mandoas guys, who are looking very sharp in their dress. They're looking like they have arrived in life. So I'm not ashamed. I'm not ashamed. I introduced myself to all the folks. I said, I know you guys will be selected, but I want to go to the interview process. Blah, blah, blah. I kept on chatting with them.
00:15:25
Speaker
And there are few rounds of interviews. And luckily, I passed each one of the levels of interviews. And finally, the day came where they had to make a choice. So as per the ranking, as per the marks, I and the one more guy both got shortlisted, but they had to only make one choice.
00:15:46
Speaker
So obviously, I am... You are very good, but we had to make one choice.
00:16:07
Speaker
I was like a small kid, curious, enthusiastic, ambitious. I know I don't belong to this league. This is not some amusement park that you will come and sit and watch. You have to work hard. I said, give me a chance. So then they made an exception. She went to the
00:16:28
Speaker
the boss, the big boss. And she said, this guy is like a chewing gum. So I think I non-stop trusted her. And the PA who was connecting me, she told me, she came back and she said that we'll pay you 4,000 rupees per month. And I said,
00:16:57
Speaker
thank you so much 4000 is a very big amount. I'm okay. So initially, the project was only for two months. They loved my work so much that they extended my work for eight months. And instead of giving me 4000, finally, they gave me 18,000 rupees. And I was very happy. I said, when I was finally leaving the last year at my fund, I said, I don't even desire to enter this, this fund, because I don't have that
00:17:23
Speaker
credentials, right? But I'm very, it's your generosity that that you you gave me an opportunity to be here.
Values and Risk in Entrepreneurship
00:17:30
Speaker
I think this this sums up pretty much all all about myself. All my life I struggled to get what I am. But I have never given up. I'm shameless, very hardworking. I'm very committed. And I don't give up. I don't mind taking themselves.
00:17:48
Speaker
I keep taking himself even now. Different people give different kinds of insults to me, but I don't lose the sight of the big picture. I always remember one thing. The big picture wins. Everyone else becomes their footnotes to you. If you start bothering yourself with footnotes, then you'll never have the energy and vision and the patience and commitment
00:18:13
Speaker
to stay long. And if you get bothered by someone, if you start taking all those things very personal, you'll never be able to build a great business for yourself.
00:18:30
Speaker
I think that lived with me for a very long time. And a lot of that credit goes to my father and mother who always taught me that hard work and commitment is the only way that you can go up the ladder. Because we come from a very middle class family background. I don't have anything. Beyond my job, I don't have anything. I don't have any. So I had no safety in it.
00:18:57
Speaker
And all the decisions that I have taken in my life till now are extremely risky. If I would want to advise anyone to do that risk, I would never do that. Okay. Did you miss your classes then? Because if you were working there for eight months... Never go. No, no. I will never go to college. After school, I stopped getting formally educated. I never went to college after my schooling. I'll tell you why. Because the amount of learning I had on my own was phenomenal. I started to do startups while I was in college.
00:19:27
Speaker
I hated being taught in a classroom. And I always wanted to learn things outside, learn more how to build things, how to run things and all those types of stuff. Even in education, schooling also used to do everything by own. So I love to be learned on my own, not because anyone can't teach me, because the pace at which they teach along with other students is not to my liking. Right. Essentially, you didn't fit into the assembly line of education, basically. Exactly. Exactly.
00:19:55
Speaker
And I'm very grateful to all my teachers who thought that I will fail in my life. So let him go his way.
00:20:03
Speaker
Because if they were very hard and fast on me, I would have stopped. So where did you get placed then? So luckily that year, one venture capital firm came back to us saying that, do you have any students who have a slightest of working experience and working in a fund? And they put up the salary.
00:20:34
Speaker
I said, I love the job. I love the job. I really don't care. And I also know the fact that venture capital firms pay really very high.
00:20:58
Speaker
And that's why we have to find out more about this country.
00:21:02
Speaker
But this firm was paying low because they thought that we come from a government college or we come from a non-IMP college. So maybe they had a different salary structure for us. So how cool, 14,000 doesn't matter, I joined. Just after joining within a month, my salary was doubled. Okay. So you joined the Gujarat Venture Finance Laboratory. This is like a government body? It's not a government, but it's funded by government. Okay.
00:21:31
Speaker
And what kind of startups were they funding? All first-generation entrepreneurs. So they would fund everything. What was their thesis? What was their investment thesis? Okay, that's a very good sentence you used. Investment thesis is you come from an investment background. No, I don't. I just read a lot. So their investment thesis is to back risky ventures started by first-generation entrepreneurs. Okay.
00:22:05
Speaker
the founder should not come from a family of founders. He should be a first generation entrepreneur and it should be technology driven risky ventures. That means they are ready to fail. They are okay to take the risk of failure, but they are not okay to take the risk of commoditization. That means they are ready to back.
00:22:25
Speaker
So, it can be so necessarily
00:22:32
Speaker
And Guraj Vanchas is the India's largest and the oldest venture capital company. It's the oldest if not the largest. It is the first VC fund to be started in India in 1990. And I mean, it sounds like there was a certain
00:22:48
Speaker
Social objective also, which they had in terms of encouraging entrepreneurship. That's the reason for international entrepreneurship. And what did you do there?
From Dubai to Kredar: Strategic Decisions
00:22:59
Speaker
I spent close to three years there. I've done a bunch of investments. I've done close to six to seven investments.
00:23:06
Speaker
I loved it and I was very lucky to have a very good boss. I used to tell my boss, I want to work alongside the founders. I can't just write checks and sit in my office. I want to go ahead and work with founders, learn what they do, how they do, how can I contribute meaningfully.
00:23:29
Speaker
beginning a career with learning from Gujarat entrepreneurs is next level. But Ahmedabad has played a very big role in me trying to understand business at a ground level. Okay. Then from like GVFL, where did you go next? After GVFL, I got spent close to three years then I was getting stagnated there. And then I got a very good opportunity working for Evolvents. Evolvents is there.
00:23:57
Speaker
Dubai based fund, which invested in India. Okay. So they wanted someone to head their India team to be an important part of the member of India team. So I joined them. Initially, they were supposed to set up an office in Mumbai, but it got delayed. But I was working out of Dubai office. Okay. It's a typical productive fund. We invested in a lot of companies, five to $15 million. And
00:24:24
Speaker
So this would be like series A, series B. It is more series B. Yeah, back those days, 15 million matlab series BIR. I'm talking about 10 years back. Yeah, right. But honestly, I really didn't enjoy working there as much because typical predictive fun cases of check photo or bad job. And since I was working in Dubai, I didn't get much opportunity to come back to India and work for founders. So learning from the founders was always there on my
00:24:54
Speaker
And secondly, also, at that point of time, my mom was not keeping well, if you recollect, I told you earlier, yeah, she had a cancer remission. Okay. And, and I clearly told my boss saying that was if you are not able to set up in the office, I would want to know when it will be done. And, and a couple of years later, maybe a year and a half later, I think I quit.
00:25:16
Speaker
And I started briefly working as a part of Angel Network. And that's when I met Kei Ganesh. Kei Ganesh is a serial entrepreneur based out of Bangalore. So Kei Ganesh and Mina Ganesh started a company known as Growstory, which exactly, if you see Big Boss, Portia, House Drive, Freshmen, these are all
00:25:38
Speaker
his venture. So what he does fundamentally is he feeds an idea, he set up the company, we run the company, then we find the founders, then we raise the money. So enter operational intensity, initially for the first one, two years, is born by the K Ganesh and myself. So I think that was really learning experience. That's when credit happened to me. To begin with, I was the investor in credit.
00:26:01
Speaker
Kedar was somebody's idea that was pitched to K. Ganesh and K. Ganesh invested in it or? It was someone else's idea. We invested in him.
00:26:11
Speaker
as in when. And when we invested in him, I was the guy who was from the investor side. After that, I joined credit as a founder, co founder. Now I'm currently CEO of the company. Okay, okay, okay. So what was the thesis of credit, like problem statement? So very simple. So it was time paid 2015. My other co founder, Nikhil wanted to buy a second second hand bike in Mumbai.
00:26:34
Speaker
He's from IIT. And after bike those days, there are no WhatsApp, if you know it very well. There are just an SMS those times.
00:26:43
Speaker
And there are sites like Quicker and Olex. Yeah. Yeah. So you'll get host of hosts of spam, texts, calls, mails, all sorts of things. So we were really confused. So finally we ended up buying a bike in a suburb in Mumbai. We received a receipt from a dealer. And the team didn't know.
00:27:10
Speaker
broke down. And when we went back to the dealer and he said that, boss, I can't do much. I don't even know what you have done to the bike. And I don't even know you. Then we got really shock of our life. We paid 50,000 rupees for a second and bike. And this guy tells me that he doesn't even know us. And 50,000 rupees is not a small amount. Even though this, that's when we thought, is it just we, we got this kind of a raw deep or is it generally how customers are also getting this kind of experience?
00:27:37
Speaker
So what we did is for a period of last next two to three weeks, we sat in front of all the second-hand dealer shops and started doing a research survey asking customers what works, what doesn't work, why are you buying, why are you not buying. So after that, we realized very surprisingly customers.
00:27:59
Speaker
In Bola, he had a person who earns 25 to 30,000 rupees as a monthly salary. He is buying a bike which is one and a half times his monthly salary. And he is at the mercy of the God to make sure that his bike is good, bad, ugly. How pitiful it can be. So we immediately went back to the drawing board and said, is there anything that we can do for this customer who is being cheated, left, right, center, and quality of the bike, pricing of the bike, documentation of the bike?
00:28:28
Speaker
And that's what the European movement, we said, if we are able to solve the toughest problem for this consumer, who is being cheated by the second hand dealer day in, day out on pricing, quality and documentation, then we can make a huge impact on the lives of the millions of Indian consumers, because by
00:28:47
Speaker
is the most common mode of private transport in India. And most of the people can only afford to buy a bike. So that this really hurt us badly saying that, can you give me experience which is 10 times that what he's getting today?
00:29:06
Speaker
From that problem, personal experience, born the idea of Kredar. Why did you call it Kredar? I mean, Kredar almost sounds like a fintech company, you know. I know where you're coming from. But back those days, Kredar was Kred-plus-R, credibility and reliability. Okay. We were shorting it for credibility and reliability is the reason we named it Kredar. I knew it was Kreda. I knew it was Kreda.
00:29:32
Speaker
We were the original user of the term Kedar. So I think to sum it up, the idea and vision of building Kedar came from the personal experience where we saw ourselves being cheated by the dealer and we wanted to build a product and a business which will help customers
00:29:50
Speaker
buy and sell two-wheelers in a very efficient, transparent and effective manner. How did you execute this thesis you had?
Kredar's Business Model Evolution
00:30:08
Speaker
The buying process can be improved. What was version one of it?
00:30:14
Speaker
See, I'll be very honest with you. We didn't know anything what to do on day one. Because unlike car companies, like car trade, car deco, car valet of the world, most of the executives working in these car deco companies were coming from mind their first choice, more the true value of likes. There was no two wheeler, second and two wheeler business.
00:30:35
Speaker
So we really didn't know what to do. We didn't know what is the business model. All we were knowing only one thing was we need to make a huge impact on the lives of the consumers who are buying this stuff. That was a single agenda motive for us. So we understood that what can be done to make the customer happy. So what we have done is we listed out all the problem statements, A, B, C, D, and started building solution for each one of the products.
00:31:00
Speaker
That's how we started the business. And trust me, actually, we made a lot of mistakes because being first complete to the market, our learning curve was really, really very tough and challenging. There are no playbook available in the market. That means whatever you do is first for the market, which means that you're always making more mistakes than anyone else in the market. But we enjoyed that.
00:31:25
Speaker
So out of 10 things we do, 9 will fail miserably, 1 will succeed, we keep our chin up and we move ahead.
00:31:33
Speaker
And it was an excruciatingly difficult business model to build. Tell me that history of mistakes. It would be interesting to learn from those mistakes. So when we initially started, we thought that we can improve the customer experience from a second-hand dealer side. Because dealers have bikes in their stores, right?
00:31:56
Speaker
So we started onboarding second-hand dealers on our website as an aggregator. So what we've decided is that first we need to understand the pricing of that. So what we said is on the business side, first let's try to educate the second-hand dealers so that they themselves behave properly and the customer will get a great experience. So how do we get the best experience? Then we realized that when a dealer comes to the company, the dealer gets a great experience.
00:32:22
Speaker
That means the entire philosophy of trying to educate the second-hand dealers and making him sophisticated didn't work out. And we thought that instead of trying to make him understand what is the right way to talk to customer, we said, why don't we do it ourselves? So then that's when the idea of franchisee stores branded by Kridar came up. And one of the biggest learning we had in the market was that come whatever,
00:32:49
Speaker
People who are doing business in a certain way for decades together, just because you are giving them a 15 day, 30 day crash course, will not all of a sudden become different. But were you getting customer like, you know, football in terms of people inquiring about bikes on the other side? Yeah, that is something which is easy to be done. That's not a big deal. Because we had website, we know how to generate leads. The demand is a problem.
00:33:17
Speaker
Problem, how the customer feels good when he's buying and selling the two wheelers? That is the biggest problem. And the second-hand dealers would never listen to us. Don't talk to them in a rude manner.
00:33:31
Speaker
Say hi to customer. A lot of things that you learn as a good customer experience practices, they will never do that. They will not give bill. They will always take cash. They never wanted proof of payment. A lot of these customer experience aspects of dealing with franchise with second-hand dealers were very difficult to change their behavior.
00:33:59
Speaker
And you had like a Pan-India presence? We were only working in three cities, Poona, Bangalore and Delhi. Okay. And what was the monetization strategy? Charging the dealer? Yes. At that point of time, charging the dealer was our monetizing strategy. And we would make very small money out of that, like lead business. But what we realized quickly is that this is not what the business you wanted to be in.
00:34:22
Speaker
we want to improve the customer experience. So we very quickly realized in two, three years that this is not going to change the customer experience. So for us to control the entire customer end-to-end, we need to own up the entire value chain from refurbishing the buy to owning the way we talk to the customer and everything else. So we started our own concept of franchisee stores, which are credit or branded, where the bikes will be refurbished our own warehouses.
00:34:49
Speaker
And we'll be put to begin with initially we didn't have our own warehouses So what we have done is we used to give to third party garages to repair and refurbish the bikes and what we realized there is that That those third party garages would cut corners and would never do which is right for the bike and we used to pay very heavily but we could never control the quality of the refurbishment and
00:35:14
Speaker
That's when we came back and said, this is not going to work. Even the refurbishment bit should be taken care of by us.
00:35:23
Speaker
And that's when we went back to the drawing board and said, we'll have our own workshops wherein these bikes will get refurbished for the best quality. And they would be sold to the franchisee showroom where the customers can come and buy those stuff. Okay. It sounds like a very asset-heavy kind of a model. You would have to pay upfront for the bike and would need a lot of funding also to run something like this. And then you have to invest in workshops to manage the refurbishment process.
00:35:50
Speaker
But that's the cost of doing the business actually because at the end of the day we want the customer to be happy so none of the listed companies like colex quicker so the rooms of the world are able to make customers happy because the transactions would never happen because the buyers and sellers are not happy with the entire flow.
00:36:09
Speaker
The buyer would always be cheated saying that the bike that she got out of low-grade quality, the paperwork was not good and the pricing was not just right. So it needed a trusted brand like us who would stand next to a customer and say, don't worry about all those.
00:36:25
Speaker
a problem, we'll take care of it and you can walk back home with peace of mind that you bought something, which has a brand value. And if something goes wrong with this product, you can always come back to us. So our thesis was that if you make a great product, then your marketing costs would always be less. And that actually happened today, even today, our marketing costs as a percentage of our overall revenue is not more than one 2%.
00:36:51
Speaker
Wow. Which is phenomenally low compared to any consumer product company you know and I know of. And where did we invest that? We invested everything into making the product much good, much stronger. That's where the difference come in. Though this may come as a short-sightedness, maybe three, four years back, people laughed at us. But now if we see all those companies that are adopting our own approach, Pini is a full-stack business model just like us. Karsh24 is setting up its own warehouses.
00:37:19
Speaker
So at the end of the day, what matters to us is whatever we have done for the customer, we want to do to the best of our abilities with the best of our resources. We don't want to cut corners anywhere. So how long did this evolution take from selling leads to buying a bike refurbishing and selling it?
00:37:37
Speaker
So it took us close to in the first couple of years, almost three years, we were doing more of a lead gen business, primarily because we also wanted to achieve the pricing bit, which is not available in the market. How did you get pricing intelligence by doing lead gen? Because what dealers listing bikes with pricing?
00:37:58
Speaker
Yes, we were listing bikes with pricing and we know at what price ultimately the dealer was selling it to the consumer. How do you know that? Because we are passing on to the lead with commercials involved. I list the bike on my platform with the price. I say that this bike is available for 55,000. Now the dealer can't sell it more than that. He can sell less than that. That's fine with me. But he can't sell more than that.
00:38:19
Speaker
So the pricing intelligence is one of the major reasons why we chose the lead gen model. Got it. And you would get leads for the dealer by spending on Google ads and marketing ads. Google face social media ads. We always wanted to do a full strike business model, but since we didn't have ingredients ready to make it happen. So initially we started with the lead gen business model to get our pricing benchmarks right.
00:38:42
Speaker
From there, we slowly migrate to a full-stack business model. So the evolution has taken close to three to six years, but it's an extremely difficult business model because, like you rightly said, it involves a lot of operations. But the beauty of our business is that the business is tightly, tightly, tightly intertwined with data. That means our business is all about data.
Leveraging Data and Technology at Kredar
00:39:03
Speaker
So if you ask me what is the crux of our business, it's not operations anymore. It's the data. Our ability to understand the
00:39:10
Speaker
the price at which we are buying at the right location at the right price, the right quality of bike, and selling the same bike to the right customer at the right location at the right price is all about data. Right, right, right, right. And were you also buying like B2C model, like someone can directly go to your website and sell his bike?
00:39:28
Speaker
In the last six months, we had to do that because the trade-ins and walk-ins have almost all disappeared. It has come to a trickle because of Covid, a lot of customers were not going to show them to buy new bikes. So that's when we started offering customers to tell their vehicle directly to us and also offered them to buy new bikes because we partnered with a lot of OEMs.
00:39:49
Speaker
And when you buy a bike, what is that process like? We have a mobile app which captures not only just bare minimum specs of the bike, it also gets into the nuts and bolts of the bike, the quality of the bike. So over a period of last six years, we have refurbished more than five like bikes. So we know the bikes, like the doctor knows his patient, we have built a lot of diagnostic tools inside our mobile apps, which helps us judge the quality of the vehicle.
00:40:13
Speaker
And that has been a learning and that keeps evolving. It's very difficult to judge a bike without touching it. I think that science we have developed over a period of time. And I'm still saying that it's still 80 to 90% perfect. But I think that's the crux of the business. So you're using like machine vision, the camera points to the bike. Yes, it camera points to the bike, it picks up the right signals, noise, a lot of things that goes into picking up the right
00:40:41
Speaker
parameters that help us judge the bike. Okay. Okay. So that data goes back to a server and then the server is able to. That's exactly what I mean. Yes. Okay. Once you buy the bike, then it goes to the workshop where it gets refurbished. And then, then how do you decide where it goes for selling? That's exactly the data, right? That's all about data. So I know the demographic profile, I know the demand supply dynamics of each hyper location I have.
00:41:07
Speaker
I know what sells in Indranagar, what sells in Kormagla, what sells in Pina, what sells in KR Puram. So I think that data is very, very valuable and crucial for us to make that decision of keeping which bike in which showroom. Okay. These franchises pay you upfront or how is the...
00:41:25
Speaker
So how does one become a grader franchisee? What is that process like? How do you control quality at the point of sales? That is the toughest part of our business. What we do is we are very choosy about the kind of people you work. Initially we used to work with everyone. And we realized that franchises are also not all homogeneous.
00:41:48
Speaker
So then we have to let go a lot of franchises because of their reluctance to comply with our standard operating procedures. What is the profile of a typical franchisee who comes to you? Are these people who are already into secondhand bike business or what? No, no. Very surprising. We don't take anyone who has a secondhand business background because they typically bring their own knowledge to the market.
00:42:12
Speaker
So we typically take people from consumer experience background, customer experience background, people who are in different service oriented businesses. For example, someone selling insurance insurance, restaurant business people who have front ended customer are the kind of people we take. Okay.
00:42:29
Speaker
do they pay something as a fixed cost? Yeah, so they pay something known as royalty fee upfront on time. Okay. And that stays for a few years as a part of non-written refundable initial fee. Okay. They're in a soapy around everything, the way you have to build the showroom, the way you have to treat a customer. So there's a huge long list of
00:42:48
Speaker
SOP that we ask the franchisee to comply with. If he doesn't, then we ask them to leave. So we are very clear. If he doesn't follow our SOP, we really don't entertain. What about your geographical presence now? We are across more than 12 cities now. We are in fact 14 as we speak. So we are in Rajasthan. We are in Gujarat.
00:43:09
Speaker
We are in NCR, in Puna, we are in Bangalore. What is the level for this business? Is it more important to build supply or is it more important to build demand? Like, you know, supply of used vehicles or demand of customers who want to buy used vehicles? I'll give you a simple example. There are 350 million two-wheelers on the Indian roads.
00:43:29
Speaker
your ability to pick and choose the right kind of two-wheeler from procurement side at the right price at the right location makes all the difference. If you pick up wrong bike at the wrong location at the right wrong price at the wrong quality, you will never be able to sell it as simple as that. It's a supplier driven market not demand driven market.
00:43:49
Speaker
Demand is very elastic, but you should have a great technology which can help you filter the right quality of bike to procure. How are you scaling supply then? I mean, that is then the key to growth as a business, right? Like the more supply you can scale up, the more you will grow. Yeah. So our supply channels are pretty much standard. Again, I'm telling you, we don't care about the supply channels. We care about our filters.
00:44:15
Speaker
So tomorrow, even Akshay can tell me, you want to buy my bike. So I built my technology so robust, so strong that it's like a filter.
00:44:28
Speaker
So now the supply channels are commoditized. What is critical is my technology. My tech is able to pick the right kind of a bike. And that's what makes the difference. Okay. What is your success rate in picking? Like, you know, out of every hundred bikes you buy, how many are wrong purchases? Out of hundred bikes, I'll tell you what, around 30% bikes auto reject. 30% because people don't maintain documents.
00:45:08
Speaker
But you could still buy, but you could buy and you can't. We can do, but logistic cost is too much. So essentially you're looking at a volume game. So you want to... Absolutely. And currently how many bikes do you source on a monthly basis? We do more than 1000 bikes.
00:45:16
Speaker
India has a problem with this. So India has a problem with this. So India has a problem with this. So India has a problem with this. So India has a problem with this. So India has a problem with this.
00:45:29
Speaker
On average, this being a COVID, once we get out of the complete COVID situation, we can scale very fast. Okay. If you want to make that thousand bikes you acquire a month to, let's say, 20,000 bikes that you want to acquire a month. So what is the path to that? Very simple. Basic, basic marketing awareness. The more and more people know you, the more and more chances that people will fall into your marketing funnel. It's as simple as that.
00:45:55
Speaker
And we believe that is going to drive our next level of growth. And till now, we were growing only by referrals. By referrals, I mean, people know us, they tell their friends and all this kind of stuff. At some point of time, we want to also grow disproportionately faster.
00:46:12
Speaker
Okay. So you would spend on marketing and branding for the purpose of, do you want to sell a bike use credit? Like that would be the pitch. Absolutely. Okay. So what has been your funding journey so far? So we've been very fortunate. We've been very fortunate to have long-term investors backing us. We started with Kganes, then we had
00:46:35
Speaker
We had Amit Agrawal, Amazon India head who invested in us, Snapdeal founders invested in us in the seed round. Then we got Fidelity, which is now known as Eight Roads, to do the investment later.
Investments and Market Challenges
00:46:47
Speaker
Then we had Omidyar, Yamaha, till now we have raised a notch above $17 million in the last six years, cumulatively. Yamaha invested in what, your series A, series B? No, no, Yamaha came very opportunistically. Yamaha wanted to take a slice of
00:47:03
Speaker
use tools abroad and they found no company elsewhere in the world to have the technology like us. So they invested in us more for technology than anything else. They believe that we are the right kind of technology which they can scale in Southeast Asian countries.
00:47:21
Speaker
And African countries. Okay, so what is your plan then in terms of like, you know, when do you plan to go global go to these other countries? I think we are planning to go to Southeast Asian countries like Indonesia and Vietnam of the like in the first
00:47:38
Speaker
a quarter of the next calendar year. In fact, we are already making plans and everything already. I think by first quarter of next year, you should see an advertisement saying, Kedare is in Indonesia. But to be very honest with you, the Indian market itself is so big, so deep that I don't need to go to any other market. It's massive market. People keep asking us, what if bikes 24 come? What if this comes in? I said a three to four million car market has
00:48:06
Speaker
10 companies and all are surviving and doing well for a 30 million two-wheeler market.
00:48:12
Speaker
You need at least 20 cred hours. But the only difference is being that since the ticket price is lower and the operational intensity is higher, not everyone can just build the business just like that. It's very difficult to build a business because you need the used car business. There is a technicality to it. Every new car gives around 7 to 10 years warranty on the engine. So the most expensive part in any automobile is engine.
00:48:42
Speaker
and gearbox. So in Karmitu, the original manufacturer is the original manufacturer. Usually most of the used car companies don't invest as much into the refurbishing capabilities. They are more like listing companies plus plus. Whereas in used by businesses, except one company hero, obviously the model model is the same. Rest of the companies don't give those kind of warranties.
00:49:09
Speaker
which means as a company, I need to refurbish the vehicle. And unlike cars, bikes are all analog, which means every bike is very different. Right. And bikes are more complicated compared to cars. So how did you build your refurbishment capability? And what is the role of tech in that? Very simple thing here. There are 4500 plus SQ's in bikes. This means there are so much of heterogeneity in the bikes.
00:49:37
Speaker
No two models also don't remain. But Activa 2017 and Activa 2018 might be different in terms of technicalities. So there is only one way to do this. You keep doing yourself. So we have a collective experience of more than 5 lakh bikes that we have refurbished. Which gives us a huge opportunity.
00:49:54
Speaker
to be able to understand the bike like no one else. And this is not a one time affair. It's an ongoing process. Any time a new model bike comes, you keep understanding the bike, trying to repair the bike and all this kind of stuff. And how does that information become part of the organization DNA? So if one center is learning it in Bangalore, how does the center in Rajasthan learn that? Absolutely fantastic question.
00:50:24
Speaker
So that's the crux of the business. So what happens is whatever we learn, it gets codified in our product. So I'll be very honest, we don't have that level of sophistication today, that the information dissemination happens across all the location. But we have today localized dissemination very strong that in Bangalore, if a new vehicle comes, and it is gone through a certain wear and tear, the local mechanic will be able to break down the parts and take what went wrong and rest of the people in his warehouse will learn from him.
00:50:51
Speaker
But these are like end of the day, these are like mystery. How do you get a mystery to do documentation? It's like a product of a strong banana, product of a strong banana, that he will be able to easily inputize everything. So for him, everything is an input. That input has to be very beautifully given, so that he doesn't have to break his head over it.
00:51:16
Speaker
Not every time it's a mechanic who does the inputs, right? There are floor managers, there are certain set of folks who are also working alongside. So our strengths are product and tech. So we have made the product tech so simplistic that anyone and everyone can use it much easier. Okay. So like there is a mobile app for repair also where they would enter the diagnosis of the problem, what parts got used. But it's very complicated. What you said is just the beginning of what you're saying.
00:51:45
Speaker
far more complicated than that. Okay. Okay. Like they would take photos also, so that gets recorded in the system. Like what was the damage and what was the, okay. That's what differentiates us, the rest of the crowd.
Sustainable Growth and Future Plans
00:51:57
Speaker
And that since we are doing that in house, the, all the knowledge gets trapped within the system. If you're giving this bike to a third party service provider, a garage, he will never share the knowledge with you.
00:52:07
Speaker
What is your path to becoming as big as, say, you know, like Cars 24, which is headed to an IPO? Because the market opportunity is obviously bigger than the four-wheeler market, you know? And is it just a question of that you raise funds more aggressively, spend it on branding and marketing and reach there? See, we are not going to be mad about spending the money. The reason being, the market is very big.
00:52:35
Speaker
We don't want to cut corners. You'll be surprised we are the only company who make money on every transaction. Some of the names that you mentioned, they buy at 100 rupees and sell at 50 rupees because they want to show numbers. We don't do that. We are very loyal and committed. And the market is so big, there is an opportunity for every player to make his mark.
00:53:03
Speaker
But we want to make it mark in a sustainable and profitable manner. We are not going to sacrifice profit and sustainability.
00:53:10
Speaker
in any way. But I mean, a short term splurge on boosting up your supply would be worth it. If you could get your monthly supply to like 20,000 bikes a month through spending on marketing and other things. I'll tell you what, you need to understand our business. What is the core nature of our business? We are like an OEM. We are just like a new bike company where manufacturing is replaced by refurbishment.
00:53:37
Speaker
You never see hero producing one lakh units one month and 50,000 units one month and five lakh units one more month. Just imagine as like a hero or a Honda or a TVS. It's a balancing act. It's a balancing act. You keep balancing and keep scaling up. Okay. Got it. So by when do you think you will like, you know, reach the unicorn club?
00:53:58
Speaker
I don't know what that unicorn club means, but all I know that I want to impact the customer's life. So unicorn will happen when it has to happen. But we are more focused about the fact that the customer, more and more customers' lives we have to touch. And it looks as much cliche as possible. Maybe people have become a unicorn. This is what we lived all our life. That's because I'm not a unicorn. I'm making this statement. But the answer is no. For every funding round is an added responsibility.
00:54:26
Speaker
to a larger set of customers for which we raise this funding for. Unicorn, by unicorn, 100 unicorns. Right. I guess part of it, is it like geographical expansion also? Like, you know, in terms of your growth path, do you want to open up more locations also, or do you want to go deeper in existing locations? I think, I think, I think mix of both. Some markets, it is very deep, we'll go.
00:54:55
Speaker
In some market, we would end up going a bit wider and longer. So it all depends upon a lot of other factors. There are some markets which don't have the depth. So we don't want to spend more time there. Instead of that, we go horizontal. Would you want to spread red and white? No, Antid is no. So we take a very calibrated approach.
00:55:18
Speaker
How does the entry of e-bikes and you know, so there is a lot of that e-mobility revolution happening in India. One is of course e-bikes and second is even like bike rental. How does that, you know, what's your outlook on that? Like how would that influence the way you do business? I see for us selling a used tool is just a function of the product. It's not a function of fuel.
00:55:45
Speaker
Tomorrow we will sell second hand e-bikes. We may sell second hand air bikes. So we are not, we are agnostic of the fuel. We are just making a product which is used by someone else, refurbish it and sell it to the end consumer. Our core value proposition is that we are giving a trusted product to the consumer. Oh, trust can be in a e-bike, can be petrol bike or a diesel bike. That's irrespective of the bike.
00:56:13
Speaker
I want to understand, you know, do you have some thesis that the e-bike revolution will lead to more people upgrading? Therefore, there will be more supply available to you. As of now, we have not seen such a big year. And see, I'm not sure not many people know this.
00:56:34
Speaker
The automobile revolution started with electric vehicles in 1780 and 1800, 1900. So not many people don't understand this. People think that one decade back Mr. Elon Musk has started e-bikes. The answer is wrong. In fact, the automobile industry started with electric vehicles. Then petrol vehicles came. Then again electric vehicles are making a comeback. See, the reason why petrol vehicles had to make a comeback, there is a strong reason for it.
00:57:04
Speaker
The same way we believe the market is still not matured enough to go in which direction the entire market will swing. But all I can tell you is that there will be an equilibrium. You never see any single technology becoming so dominating that it removes other technology because petrol will have its own usage, their own coverage.
00:57:28
Speaker
There are already a lot of murmurs around the fact that batteries are in short supply. There is a battery, batteries are big short supply. Then there are saying people battery, the way you use batteries and dumb batteries in open field, they cause something known as lithium poisoning. So boss, not everything is so hunky-dory. If that's the case, then things would have been different. The reason the government is giving you freebies subsidies to push the product
00:57:58
Speaker
means that the product doesn't have legs on its own. But having said that, in future things may look very differently, but I definitely feel that we are agnostic about the fuel. What is your headcount today, like organizational? 200 people give and take, 14 odd locations. So 200 to 250 people. How many of these are like at the blue color level, like, you know, the mystery and the shop floor? 60%.
00:58:23
Speaker
Okay. 60% would be blue collar slash logistic slash entry level guys. And the rest would be sales marketing tech. Yeah. And what is your top line currently? Like how much do you expect to close this year? It's difficult to answer, but we would grow almost a double of what our revenue last year was that I can tell you for sure. We already crossed last year revenue. We would nearly cross the previous year revenue also.
00:58:47
Speaker
What was it last year? Last financial year around 9 crores. I think we should easily grow three times of that revenue. And what do you define as revenue? It includes the like the sale price of the bike or just the margin or what? Sale prices. We sell the vehicle. So it's a sale price. Are there other companies in this space who are also selling secondhand bikes?
00:59:10
Speaker
So there are a couple of companies that came up. One is Bikes24 is trying to do something. And there is one small startup which started
00:59:19
Speaker
couple of weeks back. But are they taking a full-stack approach like you? Good question. Answer is no. They are more trying to become a listing player than full-stack. Full-stack will take a long time to build. It's operation intensive. And these companies are used to being a listing model. So CAST would never had a refurbishment center of their own.
00:59:43
Speaker
So, the reason spinny came into the market is because car student food didn't do a good job of giving good quality cars. Right. The reason the spinny came as a full-stack business model is for the same. Got it. Okay.
00:59:58
Speaker
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