Become a Creator today!Start creating today - Share your story with the world!
Start for free
00:00:00
00:00:01
The Future of B2B Supply Chains | Rahul Garg, Moglix
179 Plays4 years ago
How did ex-Google leader Rahul Garg build Moglix into a category-defining force in India’s B2B procurement and industrial supply chain? In this Founder Thesis episode, we unpack the playbook, from procurement SaaS to working-capital rails via Credlix, that powers factories across India and beyond.
From IIT Kanpur to Google to founder, Rahul traces the insight that the world would shift from discovery to transaction platforms, and how that led to Moglix’s build in 2015. We dive into why the company registered in Singapore to execute a global ambition, how enterprise procurement differs from B2C, and why payment terms (30–60 days) and supplier credit shape the economics of B2B. We also discuss the buyer-side software that locks in large accounts, the Credlix finance flywheel, and Rahul’s candid view on timing for public markets once scale thresholds are met. Timely for operators navigating India’s China+1 manufacturing moment, funding winter discipline, and the rise of embedded finance in supply chains.
– How Rahul built Moglix for manufacturers, not consumers, plus what “India’s largest & fastest-growing B2B commerce company” really means in practice.
– Why transaction platforms beat discovery in B2B, and how that shaped product, pricing, and ops.
– Enterprise payment terms (30/60 days), supplier credit, and the working-capital flywheel behind Credlix.
– Building a procurement OS: software + catalog + logistics for long-tail MRO.
– Going global from Singapore: why the hub matters for cross-border B2B.
– When to go public: scale thresholds and IPO readiness in industrial B2B.
Subscribe to the Founder Thesis Podcast
Follow Akshay Datt on LinkedIn for exclusive content
Visit founderthesis.com for more founder stories
00:00 – Rahul Garg’s founder journey
02:10 – From discovery to transactions (B2B)
14:40 – Quitting Google; choosing Singapore hub
25:00 – Building the procurement OS (MRO SaaS)
33:30 – Enterprise payment terms & credit cycles
48:45 – Offline-to-online procurement playbook
56:00 – Credlix and working-capital finance
1:04:00 – Scale first, then public markets
Tags: Rahul Garg, Moglix, Mogli Labs, Credlix, B2B procurement India, industrial supply chain, MRO marketplace, procurement SaaS, embedded finance, working capital India, China+1 manufacturing, funding winter strategies, enterprise payments 30 60 day terms, cross-border B2B, Singapore startup hub, procurement software India, supply chain digitization, Founder Thesis podcast, Akshay Datt, Indian startup ecosystem
Recommended
Transcript
Introduction to the Founder Thesis Podcast
00:00:00
Speaker
Take me on a tour, I'll take you on a tour. 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 Google Mafia and Rahul Garg
00:00:32
Speaker
Many of you would have heard of the so-called PayPal Mafia which includes famous people like Elon Musk, Reid Hoffman and others who were a part of PayPal and went on to build their own blockbuster startups.
00:00:47
Speaker
Lesser known is the Google Mafia, which includes people like Sheryl Sandberg of Facebook, Kevin Systrom of Instagram, and our guest today, Rahul Garg, the founder of Mooglyks.
Founding Moglix: From Google to Entrepreneurship
00:00:59
Speaker
Moglix was born out of a deep insight that Rahul got while working at Google that the world will shift from discovery platforms like Google to transaction platforms like Amazon. And he took a bet on this idea, quit Google and build a B2B transaction platform Moglix that is today among the top platforms used by manufacturing businesses for their procurements.
00:01:23
Speaker
Listen to this insightful conversation between Akshay Tath and Rahul Garg on building and scaling a B2B platform sustainably. What was your ambition when you were in IIT? Like did you want to follow the typical route of IIT and then going abroad or like IIT, IIM or you know like what was the plan? So I think it is interesting because pretty much my plan
00:01:52
Speaker
I had not thought of a plan, what do I do next? I mean, I was like, I want to be an engineer and I want to be the best engineer. And now I am at IT and I got to sort of learn what I can learn, but and go about it and see how it comes. So like if someone was to ask me a question, what will you do 10 years, 20 years out?
00:02:17
Speaker
I would be like, yeah, I'm becoming an engineer. I'll build some products and technology. That's what I knew. And yes, I think somewhat growing up, I think there was also the strong feeling that I want to do it from India. So I think
00:02:36
Speaker
that we can build some of the best technology from India and want to create that brand out of India. So I think that's how my IIT entire four years was about learning, sort of fooling around a little bit, but it was pretty exciting four years that we spent there.
00:02:58
Speaker
And you eventually joined Ithium.
Career Journey and Early Ambitions
00:03:03
Speaker
And I think so you had like about eight years, 10 total. Most of it was in this only like in wireless technology. Like after that you joined FreeScale and then Connexant.
00:03:16
Speaker
Yes, so most of it was wireless and wireless technology. So I worked on 4G cell phone chipsets. Freescale was kind of the Motorola. In fact, again, many of the technologies are still coming into the market, what I worked on. Connexant was into the DSL, so all the broadband routers you see at home. I mean,
00:03:40
Speaker
I think back in the days, 70% of the broadband DSL routers were powered by connection chipsets. So imagine in your house whether it is the DSL line bringing the broadband to your home or whether you are watching a satellite receiver or whether you are looking at wireless LAN. All of those technologies I had an opportunity to dabble with and really know
00:04:10
Speaker
Sometimes what we take or assume as pervasive, there's so much of engineering which goes behind making some of these products successful and the impact it has on consumer and businesses.
Achievements in Wireless Technology
00:04:28
Speaker
So I think there was, so at 30, I was like having filed 16 patents, many of them sort of were still in process. Most of them got approved in the last few years, had worked on pretty much all forms of wireless communication that touch daily lives in phenomenal companies. Because, and
00:04:56
Speaker
And I felt that I had reached a reasonable amount of, I would say, heights in terms of what one could achieve in India as a designer in the wireless communication. And multiple opportunities in between of relocating to US and companies sort of coming to me both US and Japan and
00:05:22
Speaker
that sort of love of engineering. And I would say somewhere that very strong connect to the country that I want to do it from India remained with me, which continued to make me stay in India.
From Defense Tech Startup to MBA
00:05:39
Speaker
Okay. So why did you decide to like take a year off and do an MBA? So it was interesting. So in the eight years of my journey, I had one failed attempt at doing a startup and I think
00:05:51
Speaker
If you look back, I think 2006, 2007, I mean, very early days of startup ecosystem, right? So not, I don't think there were a term like angel investors or mentors or so on, so forth. And probably today it has become a,
00:06:08
Speaker
There are a lot of them available and many of them actually being decent who are able to guide you if you are a 25-26 year old trying to do a startup. And I think one of the reasons I felt it we could not. What was the startup about that you tried? It was still in the area of wireless communication only.
00:06:32
Speaker
very early days of looking at how we can apply some of those into defense technology and we felt there were, where the consumer world had gone to versus where defense was, I think we felt there were a lot of applications that we could be working on.
00:06:52
Speaker
And I think one of the reasons I felt we couldn't sort of get to do it properly when obviously ecosystem was where it was. But second thing, I think we didn't understand this black box of what does the sales and marketing mean. And for me, I felt I understood the innovation side, building products. But I said, like, I want to figure out what is this, so to say, of sales and marketing, because it seems like that is like super difficult and
00:07:21
Speaker
And if I have to become an entrepreneur, this is something I will have to learn now. And it seems like MBA is a way to learn this. OK.
Moglix: Vision and Platform Development
00:07:33
Speaker
So you had a pretty long stint of five years at Google. So when you were reaching the end of the stint, did you start thinking of Moglik's idea and working on it? Or did you decide that I want to be an entrepreneur?
00:07:51
Speaker
Could Google and then think of the idea? So, interestingly, I mean, since, I mean, again, the entrepreneurship does not go away. If you want to be an entrepreneur, and if that's what you sort of aspire towards, I think you'll do that attempts at it. In fact, one of my attempts was also at ISB to try and become an entrepreneur.
00:08:11
Speaker
I mean that time I was pretty passionate about analytics. I was trying to do something in marketing analytics because marketing is something that I was trying to learn and analytics and data was something I really sort of enjoyed dabbling with.
00:08:29
Speaker
So multiple, I think, attempts, but I think in my fifth year at Google, I decided that... So these attempts did not work out because they were on the side? Do you think that's the reason? Yes, they were not full-time because I'd not quit. I mean, at ISB, technically, they're not on the side, but for whatever reasons, they did not sort of pan out into a full-time gig and then playing it out. So I think...
00:08:56
Speaker
When I decided in the Google journey that I'm going to go and do this, I said, I'm going to quit first. So I actually quit and put in my papers that I'm going to go back to Delhi and I'm going to start a venture. I mean, there were three, four things that I was excited about as a space. I typically look at space. I don't look at a specific idea because I think ideas you can sort of
00:09:25
Speaker
sometimes they become irrelevant and sometimes you have to pivot out and things like that. So you have to be really committing to a space and then find the best opportunity within the space. I think for me to be
00:09:40
Speaker
among the top three that I selected at that point in time over the next two to three months, it became the space that I want to go for. Why did you finalize that? Like what were the indicators which made you bullish on it? So I think there were a few factors which kind of see when you're committing to a space, you're looking at 10 year horizons. I mean, for me, at least that was how I was thinking about it.
00:10:09
Speaker
And you're like, you can't be opportunistic about it. And you can't be sort of playing to the wave, that it's something that is the flavor of the season. And therefore, I'm a play to it and kind of things. I think I was always looking at it a little bit far ahead. I think I also come from a school of thought that basically, I'm more inspired or excited about large problems which are difficult to solve.
00:10:38
Speaker
because I don't think of the world as too many large problems which are easy to solve or probably there are too many people who can do it. I think large problems which are slightly more difficult to solve is something that excites me because I think
00:10:56
Speaker
And that's what I was, that's what I've been trained to do. I mean, like the first eight years of my career I was solving and in many of those instances, I mean, we worked around to create the best algorithms, creating our own patents and sort of making sure that we are able to create world-class systems to the 99.9% accuracy levels, right? So, so I felt it was important to pick a space which is large. I had brief exposures to Alibaba working
00:11:25
Speaker
on the China strategy. At Google, we made some attempts also of trying to beat Alibaba. And I think one of the failed experiments, probably a smaller failed experiment, got Google. I think there are many large failed attempts at Google. One of that was Google, launched Google for Business in 2013, I guess.
00:11:52
Speaker
So this was like a marketplace where businesses could list? Yes. It was a marketplace where in the Google DNA, it wasn't a fulfillment platform. It was like the search and classified platform where people could go and search instead of going to Alibaba. Like India Mart. I would say India Mart is more content. I would say India Mart creates unique content for itself, does it.
00:12:20
Speaker
Google in its own platform approach was trying to do it far more light touch than what India Mart would look like or than what Alibaba would look like. And from one of those sort of half-hearted attempts. So I think the space was pretty large. I think I felt that
00:12:41
Speaker
My own view of the world was that everything in the world will move away from discovery to transaction platforms. And that is bound to happen for B2B, what has happened for B2C. And I think that macro sort of very, very strong belief that I want to sort of champion, figure it out, do it. And it's not an easy problem.
00:13:07
Speaker
I think that made me gravitate. I mean, some amount of sort of the love for manufacturing helped in that sense because, yeah, you kind of love to walk into manufacturing plants and talk to people and things like that. And if those are the industries you are impacting, that's something you really like to work upon.
Overcoming Challenges in B2B Transactions
00:13:34
Speaker
Because the other thing which is important for me, I think creating an enterprise is about creating the size of impact. And I think I felt, given it's the largest sector in the country, I mean, even a 10% impact on the sector can be phenomenal for the country. And those are things that excite me. And I think that sort of, yeah. And things then happen.
00:14:02
Speaker
We started in a manufacturing plant, I mean like a very, very small manufacturing plant. We started in a manufacturing plant. So like in 2015, beginning of 2015, you quit Google and you came back to India. Like, did you immediately finalize on it or like, you know, and did the funding happen before you actually started implementing or did you first implement and then
00:14:27
Speaker
go out and look for funding. Tell me from the timeline how it progressed once you quit. So it's very interesting. So I think, for whatever reason, I think God has been kind, and some of the people that I work with have been extremely generous. So I actually put in my papers in July of 2014. And my boss told me, there is only one rule for me accepting your resignation. One, you cannot join any other company.
00:14:56
Speaker
Your only option why you are being allowed to arrive and move out is that you are going to start on your own. And the second condition was I don't care about the time because anyways I will take a year to hire a replacement which actually took a year to hire my replacement. He said like you know all the tricks, you know how to get things done, you keep working at it and whenever you want to sort of
00:15:26
Speaker
I call it the day, I think that's fine. So he give you a free hand that you start working on your idea, but don't quit until you're like, this is something that I'm keeping and you just like figure out and we'll figure out when you want to sort of leave.
00:15:48
Speaker
Yeah, I made all the, I think the six months. Actually, technically I quit on December 31st, 2014. So I think I had that luxury of a six month period where I could spend like my Saturdays and Sundays and some amount of evenings kind of figuring out, building on, which is the space I want to select and shortlist. And you were in Singapore at that time? I was in between Singapore and India. I moved to India in October.
00:16:19
Speaker
So is that why Mowgliks is registered in Singapore? Yes, that is one of the reasons. I think not the only reason. I mean, the get-go, the ambition has been to build a global company. And I felt Singapore was a fantastic hub to kind of create the whole goal to build a global company. So yeah, the company was registered in January of 2015.
00:16:44
Speaker
And since I was working on this idea, I mean, I knew a few people within the venture because if you spent 15 years probably and working pretty much at the heart of technology and innovation, every startup in that space would be my partner, for example.
00:17:04
Speaker
And when I quit, I mean, it was a very obvious thing that, are you pursuing anything in advertising tech, martech, whatever the alphabets look like? And if yes, please take potentially money from us because the level of knowledge inside that you may have about the industry or where it is going. Anyway, some of us are coming to you for advice which company I should write a check.
00:17:33
Speaker
But in that pursuit, anyways, for me, the decision of what do you pursue is not based on the past, because it's based on what you think for the future, what makes sense. So I ended up pursuing this. I think, again, somewhat lucky, I think I did found early investors. And by March 15, March, I think we found investors who were willing to take
00:18:01
Speaker
on the space and what that I was pursuing it. So we were able to raise the first kind of check, but I also found.
00:18:10
Speaker
that pretty much every single sort of leader that I have worked with or worked for, I think, was so generous and supportive of the fact that I'm pursuing. So my Google boss, I mean, like many of those guys ended up putting check as well. But we ran the first round as an institutional round with a few of the angels. We never went through the classical, pure, individual family kind of thing.
00:18:40
Speaker
Okay. So March, when you got the funding, what was the, I mean, by that time, what was the implementation like of the idea of Moglix? I mean, it was three people and we had a PPT. I mean,
00:19:00
Speaker
that was pretty much it. And there is the 15 years of working hard and building stuff behind us. So who were the other two? So early leadership team I built out. So I started to hire, I think probably from March
00:19:23
Speaker
buildings, some of the early team members. So 2015, I ended up bringing six more people as part of the leadership team combined, sort of business leadership, technology, so on, so forth.
00:19:41
Speaker
So how did you go about prioritizing that what to build and you know like did you for example say okay let's get supply in first or let's build a good online marketplace first or you know like tell me about that product evolution. See when you are so early in the market and
00:20:07
Speaker
figuring out what is the right way to build I think there is no templates of building it out and I think for me that works well when there are no templates because
00:20:19
Speaker
because we have to think on first principles. And if you are creating marketplaces of products to sell, I think you do need to create basic supply before you can go out to the buyers and start to sell. So I think you have to build some of these things in tandem, but
00:20:38
Speaker
which means we were building software, we were building some of our supply catalog, many of these elements. And as we continue to build that out, we launched our first alpha in like July of 15, which was like literally maybe
00:21:00
Speaker
3,000 SKUs and just like a bare minimum website which could actually take some orders. And how did you get these SKUs? Was it an inventory-led model or a marketplace model? No, it was marketplace at that point. So we were sort of not taking inventory. We had built
00:21:25
Speaker
supply ecosystem of industrials and we just started to sort of understand how the suppliers are looking at selling their products. We have started to talk to the buyers and customers understanding
00:21:45
Speaker
How do they buy? What do they look for in that process of buying? Understanding what will make sense for many of them to come online or what will be some of the hurdles for those guys would face while they start to look at the products being bought online or how have they done over the last 30, 40 years, so on and so forth.
00:22:16
Speaker
And what categories did you choose? I mean, there were, I mean, there was no sort of like a real answer for it. So we just went out and building 10 categories. So more broad based looking at various electricals and tools and we built up fasteners, things like that.
00:22:40
Speaker
And I would say we knew how to analyze many of the search data and other tricks of the online. So we were doing that continuous research of understanding what are the consumers looking for and what are the businesses looking for and continuing to build products into the catalog based on some of those, I would say, imperfect signs that we could build out.
00:23:09
Speaker
And like, were you also handling transport? Like when you launched as a marketplace? We took the responsibility of the entire delivery, right? So I mean, we were partnering. I mean, we, we didn't have a large fleet per se, at that point in time, early on, but we said like, it is our responsibility to deliver the end product. So, so we have to stitch the entire thing together.
00:23:36
Speaker
as a customer delivery experience. And many of the products that we were selling, probably nobody had ever bought them online before. So it was like unique experiences that these products could be possibly available online. Because there were no precedents, I remember us shipping like a 50 kg machine to somebody in Chamu and Kashmir and it was like
00:24:06
Speaker
Why the hell this guy bought online this product? We were just experimenting and cataloging this product, not even sure whether somebody will actually buy it and the guy bought it. There was like a latent demand for it, which you were able to tap.
00:24:26
Speaker
Yeah, absolutely. I mean, see, India Mart was there. So I think there were definitely some people searching for these products online and trying to connect to the suppliers. We just didn't know how many of them will actually start transacting because that demand of these products was always there. Right. The question was how much of it is offline to online and whatever the online demand is there. Is that really about discovery of suppliers or are they ready to start transacting on the platform?
00:24:55
Speaker
So what was the first year like? Like, you know, first April 2015 till 31st, March 2016, like what kind of top line did you do in that year? And what were the things that worked for you? I think we were very, very small because technically, I mean, like there are software products still so early. So I don't.
00:25:17
Speaker
think we really looked at the revenue number and it was like probably couple of crores we did in that year.
00:25:27
Speaker
Our next product launch was like March, April of 16. I mean, we continue to learn, experiment, build some of the early customers. And how did you build trust? Like, you know, transaction needs trust. So, you know, how did you like build that trust and get customers to actually give you money upfront? I assume it would be upfront, right? I mean, we offered all kinds of means of like,
00:25:56
Speaker
the prepaid and cash on delivery and some of those things. So we had to do that because I think people would not absolutely give you entire money prepaid.
00:26:09
Speaker
And that's the problem still in India, right? Because India is a little bit trust deficit economy. And I would also think there are obviously certain percentage of customers who are also experimenting still. So you don't even know whether that's a true demand or are they just experimenting?
00:26:34
Speaker
And that's a problem broadly because it's been created by the B2C ecosystem of the return behavior and various things. That is still, I think, going to take another three to five years for India to mature as a country, that people move away from experimenting to actually taking online as the most credible platform for buying products.
00:27:02
Speaker
But in that early period, how did you get customers? Was it like Google AdWords and if someone searches for fasteners and Mooglyx comes there, was that the approach? Or were you like, had like an offline sales team approach? We, early on, we were doing a lot of the online hacks as well.
00:27:30
Speaker
because we wanted to understand the customer behavior online. As we started to talk to the large manufacturing houses, we realized that we would need some kind of enterprise sales organization. So we started to build in 2016 our enterprise sales organization, which was like pretty much one guy and me. That was our enterprise sales organization. And we would go and start to talk to the manufacturing companies and understand how they will transform their buying to go from
00:27:58
Speaker
kind of whatever offline approach of SMS, WhatsApp, email phone that they're doing towards online best behavior. And I think 2016 that way was a very interesting year because we realized that we will have to go with a combination of capturing some of the demand that happens online using an online platform.
00:28:22
Speaker
which you see today also on moghlax.com. But we will have to go out and build a sales force which will work with large companies because they're really looking for people who can understand their requirements a little bit better and kind of teach and educate them so that they can move or transition from offline to online journey. So I think we realize that and I think
00:28:49
Speaker
Over a period of 2016, 2017, this became a dominant channel because large companies did their own processes of SAP and other systems. I mean, they would struggle with how do they start to buy online directly. So we would work with them very closely and make sure we are able to make the transition easier for them.
00:29:12
Speaker
you would integrate into their ERPs so that the procurement is like single click procurement for them. Yeah, we would do multiple things. I mean, all people, India is one of those heterogeneous market that there is people have different processes, different systems, different behaviors, different configurations of their own manufacturing plants, different configurations of how their procurement organization is.
00:29:39
Speaker
So, we would we would have created 5 to 10 different unique ways of how organization will get transformed into the next generation kind of procurement and technology led procurement organization.
00:29:54
Speaker
And I think this is still a work in progress. I mean, all of us combined together are less than one percent, I think, of the overall market. So I think it's only next five years or 10 years is when India will probably in five years India should get there of really a technology first country.
00:30:16
Speaker
because we see India has a very unique behavior that there are very few early adopters typically in a country and once you cross that early adopter curve everyone just wants to use it.
00:30:30
Speaker
and then the power of population and all of those kind of kicks in because the first, I mean in consumer company probably first million customers are difficult but then suddenly you have 100 million and that's going to be as well that you
00:30:47
Speaker
you have to really sort of work with the first 100 customers, tell them why this makes sense, how they should think about it, how they should go about it, and then the next 10,000 people just want to sort of come on it and are okay to learn from you versus sort of have too much of their own age-old biases. Okay.
00:31:16
Speaker
So you said in 16 you launched your second product. What was that? So we call it as enterprise. So we call it large enterprise buyer's turn also.
00:31:29
Speaker
It's a SaaS platform which enables the large enterprises who want to work with more clicks to go about deeply sort of working and enabling them on both their business process as well as the commerce engine that support as a company.
00:31:50
Speaker
Okay. Okay.
Impact of GST on Moglix
00:31:52
Speaker
And, uh, how did, uh, GST, uh, affect your business plans, your business model and, you know, like what was the impact of that? Uh, GST was, I think very interesting because, um, firstly, pre GST, I think, uh, uh,
00:32:14
Speaker
Dealing with large enterprises, we had to do excise VAT and all of that was happening by state and it was just a nightmare to kind of do it in that manner because for every state you have to kind of go and knock on the state doors and each one of them will have different policies of what needs to be done and things like that.
00:32:41
Speaker
I think it was like a shit show of what was pre GST. And I think GST completely transformed both, I think our ability to build national B2B supply chain second, our ability to kind of scale rapidly. So I think we took our first, our first 100 CR run rate, we took almost like
00:33:05
Speaker
for two years plus to get there. And the next one happened in six months. So you could suddenly feel that the amount of game change that was being introduced by GST was phenomenal. And I think it was one of those sort of inflection points for a value that you are building. But then there are sort of this unlock that has to happen for you to be able to scale as an organization.
00:33:35
Speaker
Okay. So, uh, tell me about getting funded by Rathan Tata. How did that come about? I think, uh, it's a very interesting thing because when I started and I think, uh, I didn't speak about this much, but when I, I mean all my previous failed attempts at startup were with co-founders.
00:33:56
Speaker
And one of those reasons that I attributed mentally was many of them got cold feet. And when we were supposed to exit together, they didn't sort of do that. So when I started Mughalix, I was very clear that I want to just do it based on what I want to pursue. And I want to go on my path of pursuit rather than dependent on others. And I think
00:34:20
Speaker
hoping and believing that if I do good work, then other people will come out and support. And I think that's how our journey has been that we have found sort of help support from directions. Pretty much everyone I have known my entire professional and
00:34:39
Speaker
careers and people I've known, everyone has been out there supporting us in whatever forms of the connection. So we got fortunately connected and got an opportunity to present to him for 45 minutes and I just latched onto it.
00:35:00
Speaker
We presented for 45 minutes. I think that is one of those best experiences. This happened late of 2015. What do you remember about that experience? What was he like?
00:35:14
Speaker
So I think the key thing that I remember is that obviously in my sort of professional life, I mean, the people that I've always looked up to kind of fall under two, three buckets. I mean, firstly, I mean, early days of my life, I think I pretty much look up to all innovators in the world. I mean, that is always like whether it is what Bill Gates has done, Steve Jobs has done. Anybody who's loved for
00:35:43
Speaker
science, technology, and has done phenomenal. I think those are the people I would admire the most. Edison for building stuff. And so that kind of thing. But then I think over a period of time, I built a growing appreciation for people who have made a large impact. And R&T was like one of those figures for me. R&T continues to remain those figures for me of people who have gone and done it. And I think meeting it was like a
00:36:14
Speaker
Very interesting because you are getting the goosebumps, but you also meet a person who is extremely humble and listening to you. He's not the typical savvy Google CXOs who will have alpha energy of interrupting you or overpowering the conversation, any of that stuff. He's patiently listening to what you're trying to do.
00:36:42
Speaker
kind of trying to nudge and in his own curiosity while you're doing this or how you are thinking about this element versus the others and and he's as curious as you are I mean like as an entrepreneur in early days you are curious about learning about the stuff and he's curious about learning that from you so I think
00:37:07
Speaker
creates a very interesting and you never feel or at least he makes all of his attempts or probably the way he is as a person that he will not make you uncomfortable in any shape or form or
00:37:21
Speaker
And I think that was a very, very interesting experience. And I was like, literally, we were dying, that will he invest? And we said, it doesn't matter if he invests, but does he really believe in what we are doing? And I think
00:37:42
Speaker
Yeah, I mean, I think we got the confirmation in maybe a day or two that he's willing to sort of support a small check. And I think that is like we were on top of the world. I mean, my picture with him continues to sort of remain one of those fantastic memories. I mean, we met him twice after that. But yeah, that first one is always leaves an impression.
00:38:11
Speaker
So why do you think he invested? Like, was it he was bullish about the sector or did you impress him as a person or, you know, what do you think? I see at his stage and he's a man of few words, I think. So so you'll never know for many of these figures. I mean, you can't really sort of you can create hypothetical
00:38:34
Speaker
beliefs of what they are thinking, but I think it's unfair to say that what exactly made him invest. I think the only two things that his love for technology, his love for manufacturing
00:38:49
Speaker
and were definitely something that I feel. So we felt like, I mean, we were ticking all the box anyways, that if there is one startup, he should invest. It should be us, because we were having the two things he loved the most. There were not that many people who had both technology and manufacturing in the single sentence. And even now, I think, with the way we go about and doing stuff.
00:39:18
Speaker
So yeah.
Positioning in B2B E-commerce
00:39:20
Speaker
So can you help our listeners to understand the landscape of B2B e-commerce startups? You know, so like there's India Mart and there is Uran. And at one point of time, there were these companies like industry. I don't know if they're still prominent players or not. So like where is Mooglyx in this broad landscape? And, you know, can you just like paint a picture of that?
00:39:49
Speaker
See, I think there are two dimensions to the B2B e-commerce landscape. I mean, one dimension is, are you a discovery platform or are you a transaction platform? And I think India Mart clearly falls under the bucket of discovery platforms, which is like Google is a discovery platform. India Mart is a discovery platform. Alibaba is a discovery platform. So I think that's the first thing. I've always believed that I want to build a transaction platform. So I think firstly, I'm in that bucket. Second, I think
00:40:18
Speaker
When you start to build transaction platforms for B2B, there are multiple verticals. I mean, you could be doing manufacturing, like what we do, we do manufacturing infrastructure and become one-stop solution for those. You could be doing for FMCG, you could be doing for electronics, so on and so forth. And that's where the multiple companies emerge, or one of the companies which I know
00:40:45
Speaker
the founder is a good friend. He does it for sort of fruits and vegetables. So I would say that it is pretty much about what is a customer and a supply segment you want to go after in a transaction oriented system. And that's where
00:41:07
Speaker
We have focused very closely on manufacturing and infrastructure and many of the PR set has focused on other verticals. And then there are a few which has focused, I mean, the names like industry buying and others that you mentioned, they have kind of positioned themselves to work in similar sectors for us, but far smaller in size and comparison. And anyways, all of us are still kind of changing the behavior from offline to online.
00:41:38
Speaker
the real competition still lies there, not with any of these PR sets in our mind. Okay. So just to like, you know, give an idea of how the unit economics or, you know, what is the business model of B2B e-commerce like, you know, like, what is the kind of margin that you make? What, what is like,
00:42:04
Speaker
you know, compared to B2C, like what is the returns that happen and stuff like that. Like, you know, could you like illustrate that a bit? So, I mean, some of those data points are pretty confidential, but I think what I'm able to speak to broad industry level, if you want to share or, you know, just just so that people understand how is it different from B2C e-commerce and or even how is it different from offline people who do this offline?
00:42:34
Speaker
So I think when obviously if you're a transaction oriented platforms, you will be primarily monetizing based on transaction fees, whatever that looks like. I would say there are a couple of differences in B2B versus B2C when it is typically not a impulse buy. So it is, it can be still single decision maker, multi decision maker. So there is a process method to madness.
00:43:02
Speaker
there are elements under which a business can buy versus what a consumer buys and is accountable towards. And therefore, I would also think that it is not a market where you can drive more demand based on pricing alone as a river. I mean, I'm not going to buy for my factory more fasteners because they are cheaper.
00:43:25
Speaker
Right. I could buy maybe more clothes because they are cheaper. Right. So maybe more shoes if they are cheaper. Right. So discounting doesn't win your customers basically. It doesn't win the consumption.
00:43:42
Speaker
It can win the customer, but it doesn't win the consumption. So if, yeah, I mean, discounting, see everywhere free, free food is good. So if you go and say that I'm going to give everything cheaper, probably more customers for the same requirement they had might shift from offline to buying from your platform. So that behavior, you can never sort of because that that just makes logical sense. But whether that will drive consumption,
00:44:12
Speaker
The answer is no. And I've actually always wondered, I mean, for many of the consumer startups, I think maybe somewhat it's an ecosystem disservice by VCs to make them fight on trying to drive the demand consumption at a pace higher than what a market can support.
00:44:38
Speaker
And I always use this example that I am never used to going to a restaurant and asking for discount. Or even if I am, let's say, some club member or some card gives me 5% discount. I never walk into a restaurant and ask for discount. So why should an online behavior really be about trying to artificially sort of induce that change that you set at home and
00:45:06
Speaker
Instead of cooking, I want you to get cheaper food, which is not something the restaurant is able to offer, but I'm going to sort of artificially induce that demand. I mean, yeah, it shortens your life cycle of building a company.
00:45:24
Speaker
But are you building a company for three years or are you building the company for 20 years? I think it just completely changes the dynamics of how you think about company building. And those are things you can't take away. Once you are on that kind of a race, then you can't get away from it. That's like a race to the bottom. Yeah, it's a race to the bottom. It's clear. I mean, it's OK. Let me put it. It's a race to a monopoly.
00:45:48
Speaker
So many of the Western models work on this principle of race to monopoly by discounting and market share and then basically jack up the prices. Amazon basically drove many of its competitors out including diapers.com and two other companies by discounting and creating a monopoly and then jacking up prices.
00:46:10
Speaker
India, I think, fundamentally, we hate monopolies. US is more capitalist than democracy, probably. India is more democracy than capitalist. I mean, we hate, typically, people who are pure capitalist. So I think we will struggle as a market if it was a one player game, as a consumer.
00:46:34
Speaker
And we have so much entrepreneur blood in the country that if there was one player left, then there will be somebody second who will come. So I think in that spirit, I would say that this race to the bottom and when you have quite a lot of capital as it is available today for the entrepreneurship in the country, there's going to be a long haul. And I think
00:47:03
Speaker
that typical venture models of discounting, building, getting the market ahead of itself. I mean, we have to get the GDP per capita up in the country. That will automatically mean there will be more demand. It will take us five years to get there, to build a pipeline economy, when this consumption patterns will become very different, when
00:47:28
Speaker
We can build independently profitable companies like what China is able to do or US is able to do. Now you can earn all your money in two years and then sort of still wonder whether the company is going to sustain itself or just make sure that you have a more sustained, I'm not saying that you don't have to burn capital, but you're more sustained way of building a company over a five year horizon.
00:47:54
Speaker
because of just where we are as GDP per capita and our ability to afford and various other things. So, but like, you know, in B2B e-commerce, do you see the same kind of return ratio? And do you also offer credit on your own? Like, how are those things different?
00:48:18
Speaker
So first, I mean the return rates are typically smaller because as I said, it's a bit more serious kind of thought process on buying and things like that. I mean, and we put more processes and check also because our supply ecosystem will also not be geared up for high returns.
00:48:36
Speaker
And we have to remember that the offline world, both in B2C and in B2B is not used to returns. Even offline, I mean, you go to many of the malls still, I mean, they struggle with doing returns in offline world. So I think
00:48:52
Speaker
You have to emulate far closer to what a offline world looks like and the principles still bringing customer convenience. So yeah, so there's much better in terms of some of those elements and you have to build a processes and systems around it. Otherwise you can't succeed as a company. Sorry, go ahead. Like what about the pricing in terms of like financing, like payment options?
00:49:18
Speaker
Yeah, so we have to sort of respect the fact that many of the online customers are being trained to offer all the payment gateways and wallets and cash on delivery kind of ecosystem. But many of the large enterprises are more used to payment terms, which can be 30 day credit or 60 day credit kind of payment. So depending on the customer segment and the channel that you're addressing, you will evolve your payment mechanisms in that manner.
00:49:47
Speaker
So you are a marketplace, right? So if a customer is paying after 30 days, then you have like a similar arrangement with the supplier for it or like, how does that work? Yeah, the supplier ecosystem is also trained to work as per the ecosystem, right? So yeah.
00:50:05
Speaker
So you would need to make sure that your commercials are also set up in that direction. And it's possible, I mean, it's trained behavior after a period of time because when you're early as a marketplace, people's perception of you as a brand to offer credit is very different versus as you become a stronger brand and things like that.
00:50:30
Speaker
So I would say it's like offline behavior and offline credit worthiness that you are trying to bring through a technology into the online world. Like you would do some sort of KYC when you're on board a customer. Absolutely. You decide. Yeah. Okay. Okay. Okay. You have to have those needs because yeah, the judicial system in the country is fairly broken. So, so it's pretty much you are on your own if you give credit to anyone.
00:51:00
Speaker
Right. Right. Okay.
Digital Transformation for SMEs
00:51:03
Speaker
So like typically, do you in price are comparable to offline or are you cheaper or are you costlier? Because offline might have better cost structure, you know, because they would not be so focused on the customer experience and offline logistics is like a very old industry. So are you like
00:51:30
Speaker
Price wise comparable do people buy from oglix for a better experience of a better price. So we are able to offer price match and with better experience. I mean that's our going in proposition and then we are able to create.
00:51:43
Speaker
total cost optimization, which is what we look at it as the way for the end customer when he's starting to look at the time he takes to discover a product, buy a product, getting the consistency of payment term, looking at ability to sort of optimize for his inventory levels and plant operation, things like that.
00:52:10
Speaker
Just help me understand this better. Like what do you mean by helping them in the optimization? Like in terms of the timing of the delivery, like they can have predictable deliveries or like, what does this mean? No, so we are able to, I mean, like the large enterprises today, we work with companies which are 10,000 CR turnover, so on and so forth. Many of them struggle with how do they plan inventory?
00:52:36
Speaker
How do they order process? How do they discover alternates for a product? Things like that. So they're able to go very, very deep into many of these organizations and work with them on optimization at a very different level. And I think that's the beauty for us, that we are truly, in that sense, a partner for a manufacturing organization, which is very much powering
00:53:07
Speaker
the entire procurement and supply chain becoming efficient both on the total cost optimization basis as well as in terms of the customer experience we can deliver to them.
00:53:19
Speaker
So you're like a procurement agency partner for them in a way, helping them find lower cost alternatives. And making sure you deliver end to end experience because you're not just then again delegating the experience delivery to someone else. You are sort of opening the entire end to end experience being delivered to them.
00:53:38
Speaker
And invoicing would also be simpler. For multiple products, they have this one entity who sends them an invoice and the integration with their ERP. So this is for large enterprises. What about smaller companies? Are they an active segment for you? And how do you add value to them?
00:54:00
Speaker
See, our value proposition fits across all customer segments. And I think many of them come online and buy from us using moblix.com. And we deliver to them. And we continue to sort of bring many of these SMEs online. It's a difficult problem to solve the transformation for SMEs
00:54:27
Speaker
I think many consulting companies have struggled with that as well because the effort it takes to transform the large organization might be the same as transforming a small organization. The ROI of the effort cannot be justified. So we are doing various scalable things now because we think
00:54:46
Speaker
And we are trying to touch as many MSMEs in the country. I think we need more and more scalable ways in which we can transform and get the benefits of working with MOGLEX out to every single MSME in the country. What are some of the things you're doing to help MSMEs go digital? I mean, some of the things we are doing on our end is definitely we are spending time and energy
00:55:14
Speaker
on education because education is a starting point. So, we have now started to do
00:55:23
Speaker
I would say a lot more outreach even using the mainstream media. So we just launched our first kind of a video explanatory and how people can start to buy from us and use us to get their industrial products and things like that. So I think education I believe is one of the starting points because you have to create, we have to make them aware that they have better alternatives.
00:55:52
Speaker
And then we are able to enable them on coming online and creating an entire digital experience of buying and being able to manage.
00:56:04
Speaker
all of their supplies, even if they don't have ERP systems and things like that. So there are initiatives in that direction. Having said that, I think there is much more that can be done. And we have been speaking to some of the government partners of what we can do more. Unfortunately, where India is, there are a lot of MSMEs. But firstly, their own appetite to go digital
00:56:34
Speaker
is low and therefore it takes more time and effort to educate them. And second, I think there are no structural means in which you can do outreach to all of them and kind of drive a faster movement towards digital. Okay. And typically what is like the margin that you have, like a broad range, like, you know, is it like 10 to 20% or like, you know, what does that look like?
00:57:05
Speaker
So we don't have a public number for it, unfortunately. And I think it's still so much work in progress because we are pretty small piece of work where the industry is that we don't necessarily focus on it as much yet. I think the first objective is to kind of move the behavior
00:57:32
Speaker
towards getting a digital procurement systems and that buying behavior change. Okay. In terms of a geographical presence, what are the markets that you're strong in? Like, you know, like say Faridabad is an industrial hub and there would be a lot of such regional hubs. And so, you know, where do you have like concentration of customers?
00:57:58
Speaker
We are present now actually across Pan India. We are present across North, South, East, West. We are present in more than 25 locations across the country. So we are starting to be the index of where is the manufacturing in the country. So I don't think there is any limitation per se from us now in terms of our geo-reach or strength per se.
00:58:25
Speaker
in terms of where we would be stronger or weaker or any of that dimension.
COVID-19: Challenges and Opportunities
00:58:32
Speaker
So how was the COVID and the lockdown experience for MOGLEX? Like it would have shut down manufacturing to a large extent and I imagine that would have hit you also quite a bit.
00:58:47
Speaker
So I think COVID was an interesting sort of, obviously unprecedented experience for all of us. And given we are a commerce company, we had our supply chain warehouses running all through the COVID. We were doing PP supplies, we were supplying to God and we were supplying to many of the industries, so on and so forth. So I think it was a sort of the first quarter, I would say it was pretty,
00:59:15
Speaker
chaotic because manufacturing plants were shut down or some of them were partially operating because our FMCG pharma customers were operating and some of the process plants were operating but then others were shut down and you have this entire chaos between I think April to June which was like learning by the day and also while you're learning for the customers but then your supply ecosystem your own team members so I think
00:59:44
Speaker
We're all kind of learning about it. But I think what has happened post-COVID, I think, and technically we are not post-COVID, but I think post the peak of COVID.
00:59:56
Speaker
is that there is a strong moment from offline to online. We think it has probably gained one year short circuit of shift in behavior for people. And I think that's fantastic for us as a organization. Is that because people don't want to go out and meet vendors so they prefer to order from home? I mean, that is one effect, but I think also it has also enabled them to challenge some of the stereotypes that
01:00:26
Speaker
Did I really need to go out? Because many of those were habits. So it was not necessarily the requirement. It was more like a habit. So I think people have challenged themselves. And I think that has enabled them to start thinking that I don't need to actually go out, particularly if I'm working with an organized player. And I know many of the things are being taken care of.
01:00:50
Speaker
Probably they would still hesitate to work with an organized player if they have not met in person, but if they are working with a company like ours, it's far more easier to work with us versus the smaller players in the ecosystem. I think that's definitely one of the shift. It has happened probably across the entire gamut of e-commerce companies, not just for us.
01:01:17
Speaker
Have you bounced back? There must have been a dip in your monthly run rate during the first quarter. Yeah, so we bounced back quickly because I think for some reason, I think India, pretty much by September, October, most of the manufacturing started to come at the 100% of their level. So we were able to bounce back pretty quickly as an organization.
01:01:48
Speaker
since then we have been on growth spree, so we've been growing rapidly as an organization. So what's going to be your focus for the next couple of years?
Global Expansion and Future Plans
01:02:00
Speaker
Like what do you want to invest heavily in to build either a capability or a technology or whatever? So we believe we are on a journey of building the de facto
01:02:14
Speaker
supply chain for B2B commerce industry in India and also enabling cross-border transactions from India to the world. And I think that is where we are continuing to pursue it. And we recently launched our Middle East Center, so we are pretty bullish on expanding now across the world because we think the value proposition that we have built, the technology capabilities that we have built is applicable in multiple parts of the world.
01:02:41
Speaker
So we will go pretty aggressive internationally also. So this would be like the focus would be to help Indian suppliers to sell abroad or to help Indian companies to buy from abroad. I mean, it's never a one way street. I would say it's a combination of both because if there are products which are not being available in India and you need to
01:03:11
Speaker
buy from other countries and bring it to India, we would do that. But then, yes, we are definitely continuing to expand our horizon of selling Indian products in other parts of the world as well.
01:03:31
Speaker
Does China have significant players in the transaction side? Like Alibaba is again discovery only, right? Alibaba is discovery. There are a couple of players who have become fairly large now in China as well. So there are two, some of them started with us at the similar point in time, but given manufacturing is fairly large in China, they're now pretty large. So JD has a product, ZKH has products.
01:03:58
Speaker
both of them are bill and dollar plus companies now in China. Okay. And what is your plan to fund the growth? Are you eventually looking at an IPO or like, you know, what do you see as that journey? So we think there is
01:04:20
Speaker
private capital and there is public markets. I think today is still where we are. Probably for next couple of years we would be best funded by private capital.
01:04:33
Speaker
And I think in the next three to four years is when it would make sense to kind of move towards public markets. Also, I think given we are building global company, I think you need to be above a certain size and scale before you can become a public company in many of the large stock exchanges.
01:04:55
Speaker
So that was Rahul telling us the secret sauce behind the success of MoClix and if you'd like to know more about MoClix then check out moclix.com
01:05:07
Speaker
If you like the Founder Thesis Podcast, then do check out our other shows on subjects like Marketing, Technology, Career Advice, Books and Drama. Visit the Bodham.in that is T-H-E-P-O-D-I-U-N dot I-N for a complete list of all our shows.