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A Masterclass on Disrupting a Traditional Market | Nitin Saluja (Chaayos)
180 Plays4 years ago
"We are a technology company that sells chai."
This single sentence from Nitin Saluja captures the disruptive core of Chaayos. It’s not just about tea; it’s about using technology—from custom-built IoT robots to a proprietary tech stack—to solve the problem of delivering a perfectly consistent, personalized cup of chai at massive scale. In this conversation, Nitin reveals how this engineering-first mindset allowed him to build a premium brand for one of India's most traditional beverages.
In this episode, host Akshay Datt sits down with Nitin Saluja, the founder of Chaayos. An alumnus of IIT Bombay, Nitin left a corporate consulting job in the US to build Chaayos from a single outlet into a dominant, 200+ store chain with revenues of over ₹248 crore. He is a pioneer in using technology to disrupt the food and beverage industry in India.
Key Insights from the Conversation:
- Technology as the Core: Chaayos operates as a technology company first, having built its entire tech stack in-house, including IoT-enabled "Chai Monk" robots to ensure consistency across 80,000+ customization options.
- The Founder's Grind: Nitin spent the entire first year as the manager of the first Chaayos store, providing him with unparalleled ground-level insights into customer needs and operational challenges.
- The Power of Customization: The core brand promise of "Meri Wali Chai" (My Kind of Tea) came from the insight that no two people like their tea the same way, creating a powerful moat against competitors.
- The Profitability Pivot: The company made a deliberate strategic shift from a "growth-at-all-costs" mindset to focus on sustainable unit economics, successfully achieving positive EBITDA.
- Disrupting a Commodity: Chaayos successfully built a premium brand for a low-cost, everyday product by solving the unorganized market's core problems of inconsistent quality, poor hygiene, and lack of a modern experience.
Chapters:
[00:00] - Coming Up
[01:22] - Nitin's Early Life & Upbringing
[02:35] - The IIT Bombay Experience: Realising Everyone is Smarter Than You
[05:26] - First Startup: Building a Robotics Company While in College
[09:43] - Learning 'Problem Structuring' in Corporate Consulting
[15:54] - The "Aha" Moment: Why Isn't There a Starbucks for Chai?
[20:46] - The Leap: Quitting a US Job & Bootstrapping the First Store
[25:06] - The Grind: Launching the First Chaayos Outlet with Friends
[30:42] - The First Year: Working as a Store Manager to Learn the Business
[33:47] - Scaling Pains & Securing Funding from Tiger Global
[38:16] - The Core Insight: Why Chaayos is Built on 'Meri Wali Chai'
[46:44] - Building a Tech Company that Sells Chai
[50:51] - How 'Chai Monks' Deliver a Perfect Customised Chai Every Time
[54:00] - Nitin's Advice for Aspiring Entrepreneurs
Hashtags:
#FounderThesis #NitinSaluja #Chaayos #StartupIndia #Entrepreneurship #BusinessPodcast #D2C #FoodTech #Retail #IIT #StartupStory #AkshayDatt #MakeInIndia #Disruption #Technology
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Transcript
Introduction to Nitin Saluja and Chaios
00:00:19
Speaker
Hey guys, I'm Nitin Saluja. I'm the founder of Chaios.
00:00:30
Speaker
If you're a tea lover like me and can't survive without your afternoon try, then today's guest is literally God's gift to this tea-loving nation. His business was founded on a very simple idea. Why isn't tea sold in a swanky and clean environment the way coffee is? This is the idea that drove Nitin Saluja to quit a well-paying job in the US and start a small tea cafe called Chayos.
00:00:58
Speaker
Over the years, the small tea cafe has become one of the largest tea chains in India with more than 60 outlets and is a pioneer in using technology to solve Chai Pani challenges in India.
Nitin's Early Life and Education
00:01:11
Speaker
Listen to Nitin's insightful conversation with Akshay on scaling up a uniquely Indian retail brand using a Silicon Valley playbook. So till grade 9,
00:01:25
Speaker
My parents were pretty much my best friends. My sisters were pretty much my dear friends. I used to spend time with my dad at his business, my mom in her kitchen.
00:01:38
Speaker
And I was not a kid who would go out to play a lot, let's say, gully cricket or football. I tried everything and I sucked pretty much at all of them. And so I was like, it's better to spend time at my father's business, just sitting there, just observing him or in my mother's kitchen, just talking to her about life.
00:02:04
Speaker
I'm talking to and i'm going to have going to have long drives with my sisters and all that so great nine that's that's what my life was like great ten eleven twelve i got pretty consumed with my studies.
00:02:21
Speaker
And that's when, for the first time, I worked really hard and started to get the right results as well. There was loads of healthy competition going on in the institute that I used to study in. And then I went to IIT Bombay. I actually, for the first time, made good friends there. And so IIT was very special on multiple fronts. In fact, an experience that pretty much
00:02:51
Speaker
Most IITians end up having, so when you make it to IIT and you come from a small town like Lucknow, you tend to think of yourself a bit, you tend to think of yourself to be a bit different from many others. That, okay, I have been able to make it to IIT.
00:03:14
Speaker
And not everybody, let's say, in my neighborhood, in the coaching institute that I studied has been able to make it. So it's a nice feeling, right? And then you land in IIT and you realize, and at least that's what happened to me, that, oh, shit.
00:03:35
Speaker
I have come to a place where everybody around me is so much more smarter than I am. They are not just good at Accads but somebody plays a great guitar, somebody is a rock star at soccer, somebody is a champion at cricket and people speak so well, people write so well and you really feel
00:03:59
Speaker
bad about yourself that, oh, I just maybe spent time studying or doing nothing. And so I had that kind of an experience in the first couple of months at IIT. And that's pretty damn hard hitting. And so I had that experience. I said, OK, fine. Let's not crib about something I cannot change now. So let's get down to study.
00:04:28
Speaker
So I studied really hard in the first semester and I land with a semester performance of 7.97. And I'm like, I studied so damn hard out of 10. And I studied so damn hard and I could not even make it to a full 8. And I was like, OK, fine. Now I'm done with my studies. And next semester onwards, I started to participate in a lot of organizational activities.
00:04:57
Speaker
I first took an experience with ESale, Entrepreneurship Cell. I kind of liked it, but then I liked TechFest, which is the technological festival the next year. I liked that even more. I made great friends there. So did that for second year, for my third year, in my fourth year.
Entrepreneurial Beginnings at IIT
00:05:21
Speaker
And TechFest is actually where I made some of my best friends.
00:05:26
Speaker
And then in my fourth year, I started up a company with a big mate of mine. And it was an educational robotics company.
00:05:39
Speaker
And we used to conduct workshops, we used to develop robotic kits for kids to be able to better grab concepts of robotics. And so that's what consumed my fourth year. And then in my fifth year, I realized
00:05:57
Speaker
that, oh, I'm in my fifth year now and I did not do all the musty and the fun part that people have done over the course of last four years and what I will miss about this place. So I made a lot of new friends at that point, traveled a lot of Bombay,
00:06:20
Speaker
My tech-fest buddies, my non-tech-fest buddies spent a lot of good time in my fifth year and was Institute placement nominee at that point of time. So all that organizational strength, it pretty much continued from second semester till the last year at IIT. And then I graduated in 2007. So my five years, I think my summary would be
00:06:47
Speaker
lots of good friends, very dear friends, lots of organizational stuff that I did. And thanks to a lot of smart batch mates who helped me pass out with my five-year average grade of 7.95.
00:07:09
Speaker
So it was just studying a day before the end sams or the mid sams and then just not worrying about a catch for rest. But if I could go back, I will change a bit of it. I would maybe give a little more emphasis to a catch. And while doing a lot of everything else that I already did,
Corporate Experience in the US
00:07:35
Speaker
So the robotics venture is like a venture which still runs and makes decent revenue. Why did you just do it for a year and not really look at that as an option?
00:07:51
Speaker
You were one of the founders. Yes, I was one of the two co-founders of that business and my co-founder continued to run that business for 10 years and he eventually sold that business in 2017 to a larger educational company. So we were making money right from day one.
00:08:09
Speaker
And that was one of the big powers. You are still a student and your business is making good amount of money. So we could draw salary from the business and all that. So being able to do that while being a student was a luxury at that point. Feeling the rush of entrepreneurship then was a big positive.
00:08:38
Speaker
But what was also very clear to me was that I wanted to get a corporate job experience because it's a totally different world. So even when I was starting up, I was very clear that I will do this for a year, year and a half, and then move on to take up a corporate job. And so that was what our deal was. And that's what we started with.
00:09:07
Speaker
You wanted to see corporate world since your father also had that business exposure. So you understood that side, but grass is greener on the other side. And during my job life also, I was constantly on the lookout for my startup idea.
00:09:28
Speaker
that what is it that I'm going to do. So I was very clear that that's something that I don't want to do for my life, but I want to take whatever it can possibly teach me and then go back to starting up again. Got it. Okay.
00:09:42
Speaker
So you got a pretty good placement, I guess, by, you know, as per those times where you went to the U.S. with Opera Solutions. So, you know, how was that experience like for you? And why did they select you? Like, you know, what did they see in you? So it's an Opera Solutions is a consulting firm.
00:10:08
Speaker
based out of New York. It was much smaller than the McKinsey's and the BCD's of the world. And that was the best part about it.
00:10:17
Speaker
You could, being a small firm, you as an analyst or an associate or a senior associate, you could engage directly with the clients. And they possibly would have thought of me to be a good communicator and confident individual who could have been put in front of clients. And I think that's what they would have just
00:10:46
Speaker
assessed me on and I really wanted to only work for consulting firms because what was very clear to me was I want to start up again and a consulting firm will provide me the sort of broad exposure that would be helpful when I start up once again and I did not want to take up an investment banking job or anything of that sort.
00:11:12
Speaker
So yeah, joined Opera, worked with them for six years, different parts of the US and some other parts of the world. And yeah, so it was good six years that I spent with them, learned a lot.
00:11:34
Speaker
help me sharpen my analytical skills, my communication skills, my overall problem structuring skills, which I think is the biggest takeaway that anybody can ever get from a consulting firm.
00:11:50
Speaker
And so, yeah, it was it was working with a lot of smart people and and help me understand what is problem structuring skills like, you know, what did you learn in terms of how to look at a problem? So it is it's a very meta skill which which I believe a lot of people a lot of people don't realize as a skill.
00:12:20
Speaker
which is when you see a problem that okay, A needs to be let's say B, right? If that's a simple problem statement, how do you ask very simple questions around
00:12:41
Speaker
What is A? What is the context around A? What is the core reason why A is A? And then what are the different steps that will need to be followed for A to become B? And just ask those really simple yet
00:13:02
Speaker
smart questions and I'm saying simple yet smart because it does not require a lot of intelligence to ask those questions, but it requires a lot of clarity to ask those questions. And I believe for a mid-level manager, for a senior level manager or for a leader, one of the biggest skills is to ask the right question.
00:13:32
Speaker
And something unique about consulting is that you are dropped, let's say, at a client site. You may not know anything about that particular industry. So you are learning from the client. You are learning on the fly only by asking all the right questions.
00:13:56
Speaker
So, being able to ask those simple smart questions is something that helps take A to B much more
00:14:13
Speaker
straightforward as compared to somebody who might just think of five solutions right then and there might be really, really fast, but at the same time may not necessarily have been able to think it through well enough. So I think that's what simple problem structuring is. It's a very, let me say, important aspect of
00:14:43
Speaker
every manager or leader's life, yet it is one of the topics that gets less academic interest. I believe, ideally, problem structuring and problem solving should be a part of ACADs when people are graduating now.
00:15:04
Speaker
Right. The simple things are often the toughest to do. Correct. Very true. Very true. And when you interact with leaders from larger companies as well, you realize that it's actually not that common that you see people being able to structure a problem simply yet effectively.
00:15:33
Speaker
either people end up complicating it or people don't end up unfolding it enough. So yeah, that's something that I believe we should all as individuals focus on. So what was the problem you saw to which Taos was the answer?
The Birth of Chaios
00:15:54
Speaker
So I think
00:15:57
Speaker
This was my third business idea that I was working on while still in the US. And the questions I asked myself were really simple. And it all actually happened because of one simple incident. And that incident was me and my wife, we walked out of a breakfast.
00:16:23
Speaker
Saturday, Sunday morning breakfast. And I told Yosha that I feel like having a good cup of chai. And this is when we were in Houston. And she said that, and I'm like, okay, fine, yes, let's go home. And that's what got me thinking that
00:16:48
Speaker
had I been in India, what would have been the answer? The answer would have been... And this is me asking this question in 2010. In 2010, there were more than
00:17:06
Speaker
1,500 coffee cafes in the country. Yeah. Yeah. Yeah. CCD and Barista were like many others. Yeah. Well proliferated. Yeah. Much, much, much, much, much deep presence in the country and and doing a good job at the product and everything else. And that got me thinking that we are a child drinking nation.
00:17:34
Speaker
And like a true consultant, I started to dig for a lot of numbers. I started to structure the entire problem statement for myself. And it took me about two, three months to be able to finally deduce that boss, it's a real problem that if you want to drink chai outside of your home, where do you go? And being a chai drinking nation,
00:18:03
Speaker
not having good options to drink chai outside of home felt like a gap. And then what I spent a lot of time understanding was, am I the smartest guy who has thought of this the first time or have there been people who have already tried it? And I came across a couple of companies that had tried to do it before me.
00:18:28
Speaker
And lo and behold, the answer came in the fact that people have thought of it before, people have done it before, where they possibly did not go right, where they might have gone wrong. And it's all a presumption because I did not end up talking to anybody about what they did or what they thought. My outside perspective was that they did not get the product right and thus the venture did not succeed.
00:18:57
Speaker
By product, what do you mean? The experience of it? At that point of time, I did not really know what real customer experience means. So for me, at that point of time, product was all about the Jai. And people did not get the Jai correct.
00:19:17
Speaker
that was very clear to me. At least that was my deduction for myself. And that is what went into the entire foundation building for JIOS. That how will we structure the product and how will we give the best possible product in the customer's hand. So yeah, so I think I would have cumulatively spent
00:19:41
Speaker
many months it just kept on kept on talking to a lot of people be it the projecting our P&Ls for a store projecting what what what a store should be structured like so the good thing out of all that all that work was when I came back to India I had the blueprint for the entire thing in my hand I had I had already
00:20:10
Speaker
made my P&Ls. I had already zeroed down on the city I want to start from. I had already thought of a lot of products that will need to be done. So a lot of that work was already done. And it was done after talking to a lot of, let's say, friends, friends of friends who could one day be our customers.
00:20:34
Speaker
And I'm just trying to understand their pain points gaps and what they what they would like to be filled up. Why are this offering that we were thinking of and so on and so forth. So you like you spent a year or so thinking about it and then you just like quit your job. Left US. Both of you packed up your bags came to India with with your savings as the bootstrap capital to. Correct. OK. Correct.
Launching the First Chaios Store
00:21:04
Speaker
So why did you choose Delhi? Delhi is where you started, right? So why Delhi? Gurgaon is where we started. And I chose Gurgaon for like two, three very simple reasons. The company I used to work for, Opera, office in Gurgaon. And when I moved back, I did not immediately quit.
00:21:29
Speaker
I went on a part-time mode with them. I said that I will still need money and let this part-time income flow in. And so I came on that new model. They had never done it before with anybody. But they were flexible. What did you tell them? Yes, yes. I'm going to start up. I'm going to run a Chaikidukan and I cannot
00:21:57
Speaker
work full-time? Is there a possibility of us working part-time? And the answer I received was just the right answer I was looking for, that yes, you can work part-time. I did three hours a day kind of a model with them for about eight to nine months. And I was
00:22:20
Speaker
I was clear that it will in Delhi NCR, it will not be Delhi that I will start with. I will either start with Noida or Gurgaon because of much more new businesses because of a lot of service class Janta that lives in these cities.
00:22:42
Speaker
So it was just the answer that I had to zero down on was whether it will be Noida or Gurgaon but it is going to be Delhi and CR that was very clear because of opera.
00:22:55
Speaker
And because I wanted to be closer to my parents, they live in Lucknow. So yeah, I'm not a very strategically thought out decision, but I still had the clarity that was needed at that point. And did you face pushback when you told your family and friends? Oh, massive, massive. My mom was totally supportive.
00:23:22
Speaker
My dad was totally pissed. My in-laws were very supportive. My wife, Yosha, she was supremely supportive. And in fact, as a matter of fact, our first kid was on the way.
00:23:35
Speaker
When I'm saying first kid as if I have many, I just have one kid. So, our kid was on the way and still she supported me wholeheartedly. And my father was like, I don't want to do this. I don't want to do this.
00:24:07
Speaker
So I tried very hard to convince him. Eventually, I decided not to convince him. And while every other member of my family was pretty much supportive of the idea, they were not really supportive of the idea. They were supportive of the fact that, OK, you want to do something, we support you.
00:24:29
Speaker
And they showed their support in many other ways. For example, a lot of products on the Chios menu on the food side, they were recipes of my mother, of my sisters, and so on and so forth. So they were supportive in all different manners. But yeah, my dad was like, sorry boss, I'm not approving this.
00:24:55
Speaker
And so yeah, with the savings that we had from my job life, we got started. So tell me about the first store. And how did you decide Chios as the name? Like easy recall? I wanted a short name. I wanted it to end with S.
00:25:23
Speaker
and because S usually has a nice zing. And I wanted a .com domain to be available. I wanted a different spelling of chai. So yeah, a lot of different reasons put together. I ran polls with my friends.
00:25:46
Speaker
And interestingly, Chios always received the least number of votes. And I went ahead and picked that name. So yeah. And so starting up the first door was, it still feels like a dream that just somehow came true. So I
00:26:08
Speaker
carried a picture of a cafe, a printed picture, A4 print of a cafe that I had seen somewhere. And I was like, Pahila store to SI dikhega. So did not invest any money into designing the store. Called up a friend from IIT who was running his family business in furniture building. So asked him to do furniture for us. I still remember the dimension of each and every table and chair that was put at our first cafe.
00:26:38
Speaker
and just got down to designing menu and 100% of beverages that Chios started with and that Chios actually had for first three years they were all done by me and got a consultant on board and members of family on board to do some food products for us and yeah so
00:27:03
Speaker
What was the trickiest part was to be able to convince DLF to be able to rent out their place to us. It was difficult because DLF is a large corporation and they did not want to really take punt on one of their premium buildings with an unknown brand.
00:27:28
Speaker
And while we now have an extremely deep relationship with DLF, we are present in every property that they run in Delhi and CR. It was certainly not the case when we were starting up. So it took us a lot of time to convince them. And once they were convinced, we fitted out our store. In fact,
00:27:55
Speaker
A distinct memory of starting up the first store that I have is a lot of my friends from IIT, they were there at the store. About 12, 15 of them were there the day before the launch. And while this was a big, large, heavy kiosk that had been built, it was supposed to be pushed about three feet or four feet from where it was.
00:28:24
Speaker
And everybody was just like, okay, fine, we have no intelligent way of doing it. Let us just use our manual labor and one of my friends actually ended up hurting his back.
00:28:42
Speaker
But yeah, that's a very warm memory that I have from that day. A friend of mine flew from New York for the inauguration day just to support me and he landed at like four o'clock in the morning
00:29:00
Speaker
And one of my other friends, he just handed him a mop with turpentine oil. So this guy comes in and is just trying to make sure that the store is open. And the next morning in his accent, he is helping me out.
00:29:29
Speaker
He is helping me out, take orders. And there was this yet another friend of mine who now is a very senior member of our leadership team. He took a two week off just to be able to get things off the ground from his job. So yeah, it was a lot of support from friends, of course, all from IIT, that made that first door going live possible. It's a big deal.
00:29:59
Speaker
It's not easy. How was the reception on day one? It was fabulous. We had distributed three chai coupons. We started distributing them a week before launch. It went really viral on first day. We ended up serving some 8-900 chai. I cannot forget the sight of the first tour.
00:30:28
Speaker
And it was a brilliant response. And we became operationally profitable the very next month. So yeah, it was really nice. So one store, say multiple stores, how soon did that happen? Actually, it did not happen too fast. We opened up our first store for first full year. I was the manager of that store.
00:30:58
Speaker
So I opened up the store at 7.30 AM. I wrapped up the store at 11 o'clock. Took each and every order six days a week. We had a central commissary. So for me, it was very clear. For me, it was very clear that I don't know the business. I need to learn the business on the fly.
00:31:24
Speaker
This was like a one year market survey, consumer behavior research. Everything in one. Everything in one. Managing. Your product testing also. You must have tested a lot of variants. Yes, yes, yes. All of it crushed into one year.
00:31:43
Speaker
And so it's after one year that we opened two more stores. And then we added two more stores after seven months from there. Then we added... Did you need funding for opening stores? Because there is at one time investment. It was angel funded from second store onwards. And it was just the first store that came up with my own investment.
00:32:10
Speaker
And yeah, so, so Intel investment allowed us to go from one store to six stores. Six stores is when Tiger Global came in.
Expansion and Challenges
00:32:21
Speaker
And they helped us go from go from six stores to about 40 odd stores.
00:32:30
Speaker
So how easy was it to get Tiger? I mean, you know, Tiger is like a tier one VC. And so, you know, like, did someone introduce you there? Did the IIT Bombay network help? Or like, you know, certainly, certainly my, my, my dear friend Bhavesh Khurran's Ola connected me to Lee.
00:32:52
Speaker
And had I possibly sought that connect, maybe it would not have interested Lee, but it was the other way around. Lee sought a connect via Bhavish because he got to know about us from somewhere. And he was like, I think Jai can be really big in the country.
00:33:12
Speaker
let's do something. So yeah, we had conversations with him fast as Lee is. He made up his mind really quickly and we ended up shaking hands. Wow. So that took you to 40 stores. So by when did you hit 40 stores? It was
00:33:42
Speaker
late 2017, early 2018. Okay. And were they like growing pains? I mean, you know, bolnimeter is like... Of course, of course, of course. What were those growing pains like? So, multiple levels. For the first time when we got money from Tiger, we tried to grow.
00:34:05
Speaker
And as soon as we started opening stores, we realized that our entire organization is crumbling down because there is a lack of lack of processes, because there is a lack of clear responsibilities. And our business is a tough business to scale up without processes. Many, many businesses have gone under simply because they scaled up too much too fast and without 100% of processes.
00:34:34
Speaker
supporting that scale up. So we had to shut stores. We hired wrong people. We had to let them go. We sometimes got locations wrong. We sometimes started messing up with the product. So everything that you could possibly think of that could go wrong pretty much went wrong.
00:35:02
Speaker
Yeah, and I think it is rarely that somebody, some organization does not face growing pains. I think it's a part and parcel of growth. So it has to, has to, has to happen I think.
00:35:17
Speaker
How did you decide on the vibe of Chayos? It's essentially like a dhaba which has been made cool. So how did that decision of having this as your vibe, as opposed to say, most chains have a more westernized approach
00:35:43
Speaker
you know, more clean and not so colorful and loud. And so, you know, what made that choice happen? So it's a very, frankly speaking, it's a very personal approach to things that's pretty much reflected in how Chayo's overall vibe ended up being.
00:36:10
Speaker
For example, while I used to work in the US, I was always very long on India. That boss, our country is going to make it really big one day, really soon. So my future belongs to India and my future does not belong to any other part of the world.
00:36:36
Speaker
I was one of those extremely proud, as cliched as it might sound, I think I'm a very proud Indian. And so just keeping things Indian, they see, but yet modern was pretty much how I was living my life.
00:37:04
Speaker
how I thought of things around myself, how I associated with something, how I did not associate with something. So you've got to keep it Indian, you've got to keep it modern, you've got to keep it simple, you've got to keep it warm. You come to my home, you'll find my home to be like that. Simple, Indian, modern, clean,
00:37:29
Speaker
Home. And you come to our cafes, we've kept our vibe very similar. Less fuss. Less fuss. Indian at heart. Very technologically enabled. And very warm service. So that was very much a reflection of how I looked at things to be.
00:37:53
Speaker
and what gave me comfort, what did not give me comfort. There was not a lot of research that went into that vibe, but that one full year of standing at child's pretty much told me that that vibe is just the vibe that the country is looking for. And it is nothing else that we want to create.
00:38:16
Speaker
And what about the decision to go more towards customization rather than standard options?
Chaios' Business Strategies
00:38:25
Speaker
Like, you know, there are other chains which have four or five standard options and so their approach is more of consistent standard options no matter where you drink it.
00:38:35
Speaker
But you took a different approach of as much customization as possible, which would have been painful also, I'm sure. So why did you make that call? I think that was one of the most strategic calls that we made early on. And it actually came out from a very simple customer insight. Before moving to India and even after moving to India,
00:39:01
Speaker
I would have overall conducted a survey of more than three, four hundred people. And I asked everybody, can I have a chai? And to my extreme surprise, no two people were kind of drinking same chai at home. And that kind of led me to believe that people A, don't get bored of their chai.
00:39:29
Speaker
B, they are all drinking different kinds of chai. They might hate my chai, but they just thoroughly love their chai and I thoroughly love my chai. So there is no one chai fits all. And once you are able to crack that chai for them, they will just love you because nobody else will be able to replicate it that easily.
00:39:53
Speaker
So the idea was to give power in the customer's hand to be able to let them decide how they want to make their chai. And if you get that chai right, they will love you because they are never going to get bored of it.
00:40:08
Speaker
So right from the first tour onwards, you had this customization? Yes, yes. That was like built into the way you took the ordering process itself would have included that. So our loyalty program, our reliance on technology, our personalization of choice, it's been there from day one now.
00:40:33
Speaker
And so what did you discover about locations, like what locations work best for you? So what locations work best for us are locations which have a high amount of football. Locations that work best for us are those which have multiple reasons for a customer to come in.
00:40:57
Speaker
Unless they are a business park location, we run stores in a lot of business parks and we do very good business there. And as long as you have high football, as long as you have, as we call it, multiple points of convergence, as long as our customer gets multiple points of convergence in a particular catchment, I think those locations will work well for us.
00:41:22
Speaker
And this is also a very evolving thing. What might work for us now would not have worked for us six years ago and what will work for us five years from now may not necessarily work for us today. It's all about the wider appeal of the brand, more awareness about the brand and many other things.
00:41:51
Speaker
So that SDA location opposite IIT Delhi, was it like a strategic call to target IIT Delhi? So it was our first, actually it was our first, first big bet. Let me say it like that. And before that we opened stores that were of much lesser rental.
00:42:15
Speaker
Every time we went to that market, my co-founder Raghav is from IIT Delhi, and he introduced me to that market. He was like, I'm not from Delhi, I've not studied here, I've not lived here. And when I went to SDA market, I was like, you have to be here. And you have to be here. And so that's when we took the call. It was a big risk that we took.
00:42:40
Speaker
But that risk really paid off very well for us. And that is what allowed us to take an even bigger risk the following year in Galleria Market in Grudano. We earlier used to be on the first floor of Galleria Market, and then we moved to the ground floor of Galleria Market. And yeah, we really took those risks, and they paid off really well for us.
00:43:06
Speaker
Okay. So going back to your journey, so you said Tiger Global funding took you till 40
Navigating the Pandemic
00:43:13
Speaker
stores. So tell me after that. So Tiger Global came in and then in 2018, Seth Partners came on board and that further helped us scale. And as we talk, we are a 90 store, 90 cafe company, and we should end the financial year with about a hundred odd stores.
00:43:35
Speaker
Okay. Yes. Okay. But like, tell me about, you know, I'm sure the lockdown would have thrown a spanner in your plans. Like, you know, what was your trajectory like in like JanFeb and then what happened once the lockdown was announced? We were like all for growing to grow and a lot of locations identified, a lot of leases signed. And you also closed the funding round in Feb, right?
00:44:01
Speaker
Yes, we did. Which I think was very good timing. Oh yes, it was a godsend thing for us. So we closed that round and we were just roading to grow is when lockdown hit us and it was certainly a bummer because the org was all set to grow and then all of a sudden it comes to a screeching halt. Nonetheless, what worked really well for us
00:44:32
Speaker
is that we just took about eight to 10 days of planning. And once that planning was done, everybody just got to execution. And when I said that our stores were just shut for one day after Jadak and few, it is all an outcome of the fact that the team was like, that boss, we are ready to serve.
00:44:55
Speaker
And yes, there are risks. We are cognizant of it. We will be prepared for it. And we will try our best to be safe and keep the customer 100% safe. And let's institute 20 different checks that are required. But let's go out there and serve. So the team was ready for it. There were lots of challenges around.
00:45:19
Speaker
just simple something as simple as to be out there on the streets you need now need a pass a covid essential pass and to be able to help our suppliers make supplies we also ran a give back campaign during the first 30 days of covid the entire month of april actually where where we fed
00:45:44
Speaker
over one lakh meals to the migrant labor that had lost their daily wages. And we ran a campaign. A lot of our friends, family, customers, they just pitched in. And we cooked those meals in our kitchen.
00:46:00
Speaker
a 700 gram meal, a hot, nice meal that was packed and dispatched twice daily and distributed along with the government of Gurgaon. We did that. So the machinery was constantly working at our end. And we just needed to be mentally very strong. And yeah.
00:46:29
Speaker
I think we've come out of it pretty well. We started growing again three months ago and we started adding new stores and just continue to add more stores as we look forward.
00:46:42
Speaker
OK, OK, OK. So tell me about your approach to us bringing in technology. And I have been a regular Chios customer. So I've seen in both the software side and the hardware side how you have done innovations. So if you could talk about that. Sure. Sure, Akshay. So the idea was very simple.
00:47:11
Speaker
We pretty much realized in 2015, we did not have any control on our operations without technology. And while we were using a bit of technology here and there, it was a very primitive stack that we were reliant upon. And one day what happened that there were about
00:47:39
Speaker
there were about 30 WallaPows that were about to expire, let's say, midnight at a particular store. And I said that there's got to be a way where you can prevent these WallaPow from going into the dustbin. What if we knew who our top WallaPow consumers for that store are?
00:47:59
Speaker
What if we could send them a very simple notification saying that, hey, your Vapao is available at a very lucrative price. Would you like us to deliver? Would you like us to, would you like to drop by? And just prevent them from going into the dustbin. And that one simple statement led to building out our own technology team. That is what led the foundation for
00:48:28
Speaker
us going really deep into our overall technology stack, be it our point of sale, be it our customer screen, be it our entire supply chain module, be it our ERP module, all those things, they came out of one simple statement, which I just told you.
00:48:51
Speaker
I don't want those wallop hours to go to the bin. I want them to be promoted to the top wallop hour consuming consumers, customers. And we kept on shipping our new releases every week. And it took us about four years to be able to get to the desired state where that original statement was then finally fulfilled.
00:49:17
Speaker
And yeah, that's how it started. And on the hardware piece... I think every order on Sios is tracked to the customer, right? To a particular customer profile. Because I think it's mandatory that you need to... It's not mandatory. It's not mandatory to give us your phone number. At the end of the day, you are there to drink a cup of Chai.
00:49:42
Speaker
Only when you want to enjoy the loyalty benefits that Chios offers, you should enroll. What just happens as a matter of fact that our loyalty program is so simple and so lucrative. So every time you visit a Chios, we know that you've visited if you've given us your phone number. Every sixth visit, we give you one free Chai.
00:50:08
Speaker
We started this simple process at our first store. We just continued to scale up that process across all the stores. And because of that simplicity of the program, because of that lucrative nature of the reward that was available, customers find it really, really worth it to just give us their phone number.
00:50:29
Speaker
Plus you're able to send them the right kind of offers also like deals. Correct, correct, correct. So the intent, the overall intent is to be able to deliver our customers with the best possible experience at the best possible price. And just technology helps us do that like anything else. So this is on the software side. What about on the hardware side? Like I believe now Chai is no longer made manually, right?
00:50:59
Speaker
So tell me about that decision, why you decided to remove manual chai making? So that actually just came out of the big bold promise that we made to the customer, that we want to give you a personalized cup of chai. We realized that personalization was scalable until we were, let's say, a 10, 15, 20 store company. We had to invest a month in training a team member
00:51:29
Speaker
on how to personalize a cup of chai. But all that was scalable till you were about, let's say, 20 odd stores. And when you started to grow beyond that, it was very visible that this is going to just be the reason why our customers will stop coming back to us because we will start to screw their chai up.
00:51:57
Speaker
And at no cost did he want that to happen. And thus in order to be able to deliver a consistent cup of personalized chai at scale. So the problem statement is personalized consistent at scale. So when you say that you want all three of them,
00:52:24
Speaker
It was it was very clear that it will have to be a combination of man plus machine. It cannot just be man only. So now the chai monks that made our cup of chai, they have automated
00:52:39
Speaker
four out of the six parts of steps of making a cup of chai. And our chai is- So what are those six steps and out of which four out of- Measuring milk, measuring water volume, measuring the heat and measuring the boils. So those are the four steps out of six. Pouring is still manual and addition of the spices is still manual.
00:53:07
Speaker
Okay, but you would be working towards getting this whole thing in like a complete automation. Correct. And did you develop this or was it available off the shelf? Oh, not at all. It's 100% developed in-house and it's a patented proprietary technology. And a small team of three hardware engineers has just built it out.
00:53:34
Speaker
This itself would be like a pretty scalable business to sell just this machine. Certainly, in time to come, certainly. Cool.
Advice for Aspiring Entrepreneurs
00:53:48
Speaker
So let me not take more of your time. You have been very generous. Any last words you want to leave for our listeners who are also thinking of taking the plunge, doing their own venture?
00:54:00
Speaker
I think I would just leave everybody with one message. Go on and start up as quickly as you can. Just be sure that you are going after a large market. Don't fall in love with a very niche idea. Niche ideas usually become really hard to scale up.
00:54:31
Speaker
Don't overthink too much. Just spend time ironing out the details and just do it. Don't think too much about should you, should you not. If your heart is saying that you should start up, just go ahead and start up.
00:54:51
Speaker
I am sure this episode would have left you craving for Meriwali Chai. Just search for Chaios on Google Maps or Zomato or Swiggy to satisfy that craving and to appreciate the beauty of what Nitin has built.
00:55:07
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 thebotium.in that is T-H-E-P-O-D-I-U-N dot I-N for a complete list of all our shows.