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A Masterclass on Building a Global Consumer Hardware Brand | Vivek Goyal (PlayShifu)
337 Plays2 years ago
"My first two attempts were my biggest failures... they were stepping stones."
This is the core of Vivek Goyal's founder thesis. He believes that for a founder, failure isn't the end; it's the most valuable data you can collect. In this episode of Founder thesis hosted by Akshay Datt, he explains how the lessons from his "deadpooled" startup were directly responsible for building PlayShifu's global success on the first try.
Guest Bio
Vivek Goyal is the co-founder of PlayShifu, one of the world's largest and most innovative "phygital" toy companies. An alumnus of IIT Kharagpur and Stanford GSB, Vivek has led PlayShifu's expansion into over 40 countries, raising over $41 million in funding and surpassing ₹100 crore in revenue. In this conversation with host Akshay Datt, Vivek shares the playbook he created to build a globally-loved hardware brand from India.
Key Insights from the Conversation:
- The "Phygital" Thesis: PlayShifu's success is built on the idea that combining physical, tactile play with interactive digital experiences creates a superior learning outcome and solves the parental dilemma of passive screen time.
- A De-risked Global Playbook: The company masterfully sequenced its go-to-market strategy: first validating global demand via Kickstarter, then scaling rapidly using Amazon's Global Selling program, and finally expanding into omni-channel brick-and-mortar retail.
- User-Centric Design for Kids: PlayShifu's product development process relies on rapid prototyping with 3D printers and laser cutters, followed by direct play-testing sessions with children in schools to gather honest, unfiltered feedback.
- The In-House Technology Moat: Instead of licensing, PlayShifu built its core computer vision and AR technology from scratch. This proprietary stack allows for a seamless user experience and technical accessibility on older, lower-spec devices, expanding their market.
- The Power of Platforms: Moving from single products (like flashcards) to scalable platforms (like Plugo and Tacto) with multiple add-on kits has been key to increasing customer lifetime value and building an ecosystem.
YouTube Chapters
(00:00) The "Stepping Stone" Failures That Led to Success
(05:15) The Personal Frustration That Sparked PlayShifu
(12:30) Why "Phygital" is the Future of Play
(19:02) The First Product: Selling AR Flashcards in Tech Parks
(26:45) The Kickstarter Playbook: How to De-risk a Hardware Launch
(35:10) Scaling Globally with Amazon: The Go-to-Market Masterclass
(44:20) Building the Product Platforms: Orboot, Plugo & Tacto (
55:05) The Supply Chain Challenge: Manufacturing in India & China
(01:03:10) The Path to a ₹100 Crore Profitable Hardware Brand
(01:09:45) The Future of Toys: Vivek's Vision for Emotional AI
Hashtags
#FounderThesis #PlayShifu #VivekGoyal #StartupIndia #MakeInIndia #D2C #Hardware #EdTech #AR #VentureCapital #Entrepreneurship #BusinessPodcast #AkshayDatt
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Transcript
Introduction to PlayShifu and its Mission
00:00:00
Speaker
Hi, I'm Vivek. I am the founder and CEO of PlaySheep. We are a company which focuses on early learning and kids in the age group of three too well to create experiences and products for them that can change our future.
00:00:25
Speaker
It is well established that the best way for children to learn is by playing. This is what led to the birth of the gamification movement in edtech.
Interview with Vivek Goyal on Immersive Learning
00:00:34
Speaker
In this episode of the founder thesis podcast, your host Akshay Dutt is talking with Vivek Goyal, the co-founder of Play Shifu. Play Shifu is in the business of creating immersive learning experiences for children through games that merge digital technology with physical objects. This extremely unique approach has helped them create hit games with cell-like hotcakes across the world.
00:00:55
Speaker
In this conversation, Vivek talks about the journey of discovering product-market fit and taking a modular approach to product development by building platforms instead of standalone games. He shares important insights about how they have scaled their sales and marketing at a global level and the path to hit $100 million in revenue. Listen on, and if you like such insightful conversations with destructive startup founders, then do subscribe to the Founder Thesis Podcast on any audio streaming
Vivek's Early Influences and Career Path
00:01:22
Speaker
app.
00:01:22
Speaker
I was pretty attached to logic and logical things is what I felt. I was more attracted to early on, whether it was a mechanical or electrical, whatever I saw when I saw my father fixing things, I was naturally attracted towards going and seeing why he was doing what he was doing and the way he was fixing things. So that was a mindset. And then by the time I kind of graduated,
00:01:43
Speaker
did my schooling, I was clear that I wanted to do something around mechanical or electrical. That's what my initial thought process was. So engineering kind of came in the blood through what my father did around the house and used to visit his
00:01:58
Speaker
substations where he used to work on electricity maintenance and new power lines. So I was exposed to a lot of that early on. Yeah. So that's early night, which led to me kind of trying to crack IIT and getting into KGP with an electrical as a subject.
00:02:13
Speaker
that triggered my more of a formal studies journey from there on. When I got exposed to computer science and coding at KGP, that was my first exposure to computers. And enough the whole digital world that sits inside and the power that it entails. But I had chosen by then electrical. So I pursued my
00:02:32
Speaker
almost minor in computer science and major in electrical engineering. But by the time I came out of KDP, it was clear that digital products or computer science based world is where I foresee doing something. The choice I had to make was among several choices and general project management is what I chose and joined Procter & Gamble at that point of time.
00:02:53
Speaker
to pursue my career and building blocks. At P&G, I was more in supply chain division where P&G was going through massive expansion for their multiple categories, Femcare and Babycare. This is basically Femcare products and Babycare products like Vampus. I was in the operations vertical helping P&G scale operations. It was clear now that I want to go back into the software
00:03:14
Speaker
management product world or creative world where we can create things. And consumer is something that I, after BNG, one thing was clear that love the whole BNG way of looking at consumers and designing for consumers and the need. That's something that I really connected with. So I wanted to do more of that, but more from a computer science world perspective. So I decided to choose Silicon Valley as my next step and what all options are because I decided to go with an MBA with Stanford as the next stepping
Entrepreneurial Ventures at Stanford and eBay
00:03:44
Speaker
stones.
00:03:44
Speaker
I chose to do my own startup there, which was the most enriching experience I could have done, primarily because what I wanted to do was to do something of my own. That thought process was clear. It was a cross-vertical product rental play, which gave you connecting small businesses who were renting out for short-term needs with people who wanted them over a platform. So this could be sports rental or electronics rental or party rental.
00:04:10
Speaker
rentals ranging from six hours to three days of rentals. So what ERB was doing for houses, we wanted to do it for non-houses categories, other categories. So that was a play. I then joined eBay in eBay headquarters in San Jose because one of my seniors from Stanford was running a startup inside eBay called eBay Now. So eBay Now is exactly like Grofer's hyper-local e-commerce play. This was back in 2014, just not fresh, but
00:04:38
Speaker
non-frustratingly. So eBay already was, so Amazon obviously was the e-commerce leader, but eBay was decisively big in terms of e-commerce. And this was one of the ways that they wanted to differentiate things that we can get you something delivered in 45 minutes if you want it. Just that it was too big a platform to experiment. So we created an eBay now as a separate product and aggregated sellers based on their G location and users were allowed to order based on their location. And we created a Vanne system layer, which can route the orders and get the delivery happen.
00:05:08
Speaker
So I was the senior product manager responsible for Intuit experience and ended up creating it, launching it across six cities of the US, scaled it to about a million users, a million transactions on the platform, before which it was absorbed into eBay.com as a core feature and it still lives there.
00:05:24
Speaker
very enriching and especially because we operated as a startup. So after the first startup and which I had to end abruptly, it was heartbreaking, but knew that I have to go back and do that. I just used that experience as a stepping stone to learn something new and work under somebody who I can learn and turn from.
00:05:42
Speaker
But the moment that was decided, it will be absorbed into eBay.com. I knew that I don't want to work in another org. Having worked in PhD, I already learned how large chain systems and orgs are built. I didn't want to do that journey again. So it was the right time for me to kind of jump in again. I wanted to build in India and build for India and probably for the world from here. That was my vision.
Formation of PlayShifu with Dinesh
00:06:05
Speaker
But for that fact, I've been in touch with Dinesh for long now. So Dinesh was my batch mate and I did. We also worked at P&G together. So I've been friends for quite long. So we were in discussions throughout the journey of what he, he post P&G joint delivery, which was, and he was the first guy outside the founding team at delivery. So he actually had an experience of growing startup right from let's say day one, to a half a billion dollar value entry company in four and a half years. He had
00:06:31
Speaker
There was he in operations early? In delivery? Yes. Sales operation business. That's what he did. So he also got phenomenal experience and grew in confidence. So by the time I had done my eBay stint, he completed four and a half years at delivery. So we were just at the right time. And when we saying that I'm thinking of coming back and he's saying that I'm thinking of now doing something, we just, it makes sense for us to show thanks. And the skills were complimentary. I had completely gone deep into tech and product management in the Valley.
00:07:01
Speaker
He was very confident on ops, business scaling, business development. So it was perfectly complimenting in terms of what we have wanted to do and use our skills to scale. So that's how we came together. And like, how did the product idea or the business idea get formulated?
00:07:18
Speaker
Did you go through a couple of ideas before finalizing our place? Yeah, the typical process, right? So we were very sure that we want to work together. That was the clarity we had. Now what is something that we want to traverse together? We went through probably about a period of two to three months going from vertical to vertical landscape.
00:07:35
Speaker
But after a certain time, we were clear that if we just evaluate a vertical from an outside perspective, we will never feel passionately about solving that problem. So it was extremely analytical analysis of putting in a spot to figure out whether this opportunity is right.
00:07:52
Speaker
but never connect from heart about the space. Ultimately, we decided next, put a ground rule saying that if we personally have, that should be at least rule number one. Otherwise, we'll not evaluate an opportunity. And both of us were clear that we wanted to consume. If we have come across, then at least let's evaluate that deeply. Ended up analyzing, but one thing that we ended up landing on was this early education or education per se. We failed
00:08:16
Speaker
the way we went to early schooling, actually still grade six, seven, where we didn't know what we loved. We didn't know that we love maths or science or bio or law. Another thing we connected strongly with, nobody told us opportunities are things that are possible based on the parts, right? So they were, and it's an infamous thing, right? Either you're a doctor or an engineer, but the world is now so open. The world is now so open that
00:08:41
Speaker
at when you are in 8th grade, if somebody comes and tells you that you have a big huge career in front of you, if you have art in your mind or design in your mind, they would have chosen differently. They would have chosen differently. We need 11, 12, we need a design as a vertical versus commerce or a science. We need to separate out science and maths to a certain extent. And we need to design for these. There's law as a choice now, which
00:09:07
Speaker
helps so many startups. They understand that legal framework, IP framework is something that you can create an edge on if you design it early on. This is something that is completely missing. That was another exploration that we did. We wanted to break free from the traditional
00:09:24
Speaker
model, which is heavily competitive exam based and score and heavily driven by ultimate CTC that you get in the final. So if it is computer science, that's what you connect the dot all the way to the grade eight. So we wanted to break free from that. And so two ways we thought of this or very early age where we say that.
00:09:42
Speaker
If you can make an impact and make you realize that you actually love design or you actually love logic, not maths. Maths are one level up. If you go below one level, you ultimately love logic or you love creativity or you love exploration at your heart. If you can make you aware of that and then let you give you opportunities to grow from there,
00:10:02
Speaker
You will ultimately take the right decisions when you are at a different point of decision making. So that's what connected with us because we had a son who was four years old. I just had a son who was just a toddler. So thinking of ways to explode their mind when they can't speak or they can't articulate is what we felt. Let's go with this opportunity as a mind. That's where we doubled down on and started thinking about.
Pivot from AR Books to Immersive Toys
00:10:27
Speaker
How did you merge the two together, the physical and the digital? What was product one? Maybe you can, through the journey of building product one, you can help me understand. Sure. So the first ever product that we designed, which was before the formal launch of the brand, was a hypothesis that we take every NCERT book out there and convert it to an AR book, where we will scan every page. And since we understood the concept, we create a 3D
00:10:55
Speaker
animation of that concept. And when you take a mobile phone and scan that page, we will load a 3D version of that. So that was our first hypothesis. Every single page, since it's boring to read text and understand, we will convert it into a small movie then and there for you, on demand. So that was the hypothesis, the first one. The vision was grand, but we understood that it was extremely difficult for us to create an end-to-end product in this range, given that
00:11:23
Speaker
We would have to convert all the books to be meaningful for the whole ecosystem, and we still have to create an end-to-end product which parents can deny on. Otherwise, we have to be productive. A school will have to buy us or somebody else can have to buy us. For a consumer product, we have to wrap it around as an end-to-end solution to their needs, which is, let's say, science learning or math learning.
00:11:42
Speaker
which is not something that we wanted to gain on because then we will have to do assessments and whether they remembered or not. So we didn't have to go that part. So we then kind of try to apply it to a younger mind and say that, okay, let's do what a four year old do plays with. They don't play with book or learn with books. They rather play with toys. So let's go to the toy world and see what book format existed in the toy and then convert that. So the story books that they had, smaller slash books that they had, we thought of converting them as a product.
00:12:11
Speaker
And then we thought, okay, then we'll have to design our physical product ourselves. So we designed a physical storybook and added the AR component and the digital component via mobile to that. And we started sending it individually in tech parks and societies by putting a stall up and started selling it. And we got, can you describe some of those products? What were they?
00:12:34
Speaker
Yeah. So for example, we created an anatomy book, which was 20 pages of a small book, A3 size, which had all the orgasms as different pages. And we said that, okay, this is a heart. This is what it does. This is how it works. Just how you see it in the books. But then when you downloaded that app and scanned the heart, 3d heart loaded up and the
00:12:55
Speaker
bluish blood entered and the heart was pumping in, the air was coming in from the lungs and it was cleaning the blue blood and the red pure blood was being pumped out of arteries into the rest of the world. So you could see the blood flow and the purification and this all through a semi-cut section of a heart in a 3D format. So that was what we did. So the feedback we got
00:13:17
Speaker
A lot of parents of 7-8 years old took that book and experimented. None of the 3-4 years old took because the content was a little too heavy for them. But what we got a sense from is there is a strong appetite to convert small
00:13:31
Speaker
real world things into a more immersive experience so that the kid can absorb and retain it. Parents were looking for how do I take a real world concept and create something around it so that my kid can retain it. So that's the thing we pick up from there and then created a set of flashcards. You created like a very small batch of this just as a like a test run. This was not like a commercial launch.
00:13:53
Speaker
We created only 100 books of these and we gave it away for 20-30 rupees each just to get feedback and most of them talked to us. We knew this would be doing it in societies that we lived in and one of the tech files that one of our employees earlier had somebody to work there working. So we did this in this.
00:14:10
Speaker
But then when we knew what we wanted to make as a commercialized product, that's when we created a small brand under which we wanted to launch it officially.
Launch of AR Flashcards and Kickstarter Success
00:14:18
Speaker
And the brand was Chief. And the first commercial product that we made was a series of flashcards in teams. So animal flashcards, vehicle flashcards, and jobs flash, or space flashcards. These three series flashcards we made, which you can scan with our app.
00:14:34
Speaker
And a 3D animated concept would come up and you can play with it, learn from it. So this is what a commercialized product, first version looked like, which created an umbrella brand called Shifu. The Shifu animals and Shifu space and Shifu travel is what the name of the products were. And we created these as 60 card sets.
00:14:52
Speaker
and boxes in which we're listing, we priced it at 700 rupees, and we started going to every tech park where they used to do events and fairs, every society where fair was happening, and started selling it there at 700 rupees. Why not list on Amazon and try that way? You wanted to interact with customers and actually get a feel of what people are asking and so on.
00:15:14
Speaker
Absolutely. So when we were selling on Contos, we were actually taking down their mobile number and immediately sending them a high on WhatsApp. Thank you for purchasing. So we were creating a channel for direct communication with every single sale that we were doing because we wanted to understand whether this is scalable or not. And whether we have done the product right or not. So that's why the first, actually 3,000, 5,000 pieces that we sold through all of these, we had those numbers added to on our WhatsApp and not directly reachable to us.
00:15:43
Speaker
Okay. And when was this, when you launched commercially with the C4 brand? We launched the flashcard series end of 2016, somewhere around October 2016. And it is when we did this, and did this for four months or a hour till January, where we had enough conviction that everywhere we went, we sold out whatever we took. We're getting phenomenal feedback from the parents. Whatever feedback critique we got, we were able to iterate the app to take care of the critique.
00:16:10
Speaker
And we knew that we have to list your question on listing on Amazon. We ended up listing on Amazon by February, March, because the product was one is enough to start selling there. Okay. Okay. Got it. How did you find developing the product? Because you would need to hire really talented, probably unity developers, I guess is what you would need to create this or at least like animators who can do this. Yeah. So how did you find that?
00:16:36
Speaker
Absolutely. Yeah. So before, before this, when we had the vision of doing books or the Anatomy, one example that I talked about, that is something that I built personally myself. And we then, based on that, we got a couple of slow devs to come join us on obviously no salary basis, but for the vision part of it, which we then created a more stable X stack that could power the ER experience. So I just built a very hacky version of the consumer experience.
00:17:02
Speaker
And then we went to raise our angel round. So 2016 is when we raised our angel round of about two clones, if I remember correctly, which allowed us to hire a team of 10 people, couple of devs and six content creators on the 3D side, because that was the primary driver of experience. And that was a team of initial 10 that we did. Okay, got it.
00:17:22
Speaker
Okay. Tell me 17 or 16, 17 must have been like friendly, low revenue, right? Because you just launched your first product and maybe you would have touched what can go by the end of that year or something like that. And maybe less. Yeah. Revenue were negligible. I don't even remember the number, but it was negligible because we came on the roadmap from a global perspective in 2017. So when we started thinking about what do we go from here? How do we create a company out of this? Because.
00:17:49
Speaker
series of flashcards is not something that is going to cut the ceiling and be researched beyond India. We believed it couldn't be a hard sale to price it if you could even ask for us to give a business.
00:18:01
Speaker
There were two thought processes after this. One is the tactile part of play in the flashcard is too minimal. It's just flashcards. You just place it. The digital part was overwhelming. It was more stronger in the play. So we want to balance it off. We wanted more tactile and balance off the tactile and the digital play. And second, we wanted to create a product which could have a global appeal.
00:18:22
Speaker
Now, obviously, we didn't have fun enough to spend another six months to do this. So what we did was, let's first come up with a vision of something that achieves these two objectives. So through again the thinner initial code and team that we had, we came up with the concept of an ER globe, which was basically a globe which you can scan any part. And then the same interaction that was happening on flashcard is now laid on a sphere through scanning of different parts of the globe.
00:18:48
Speaker
So the tech stack was scalable. We could use the same tech stack on this and look, we could come up with.
00:18:56
Speaker
so many use cases, which was basically the whole encyclopedia that we have in books. We could convert it into such amazing things because everything is tied to geography. So where is it? How is it? And we could just do it in an amazingly well-turned interaction. So we came up with the concept. We created a small video via prototype, and we thought, how do we validate this, whether this could be a big thing or not? And that's what we got exposed to Kickstart, which is a crowdfunding platform in the US.
00:19:21
Speaker
saying that if we put it on this and we get enough yes responses, we would know that this is something that we want to build. Plus, it will give us some cash to actually build it out. In March of 2017, we ended up putting it on Kickstarter and we got a phenomenal response. We could raise $100,000 through 2,000 backers.
00:19:41
Speaker
But more importantly, 2000 backers across 150, 15 countries targeted. So that was a huge confidence push that we are on the right track. This is what we should be doing. And money was enough for six, seven months to build this out. We doubled down on execution from there. I want to understand Kickstarter better. I've not yet really interviewed any other founder who grew through Kickstarter.
00:20:05
Speaker
I'm guessing that maybe only a single digit percentage of products listed there would really cross that 100,000 mark. What are the secrets to that? How did you manage to do that?
00:20:16
Speaker
Yeah, no, I think it's not a sex science that you can recreate it. In fact, we did one more kickstart of that, which was not as successful as that. And we've seen a bunch of kickstarters in front of us, which we thought the product is late, but did not work out the way. So there's varying levels of success across products. But I think what works is, so first of all, the Kickstarter community is extremely tech-heavy.
00:20:40
Speaker
followed by tech passionate people who loves new tech and new products around tech and have disposable income to actually back these projects irrespective of whether they are going to get back or not. So 70% of backers on Kickstarter do not back for the reason that I'm going to get that product primarily. They back it because
00:20:59
Speaker
They love the concept and they wanted to see the day of the night and as an added benefit, they will get the product, right? So it's the heart of the community is because they want to innovate. They want to allow innovation to foster. So parents in general are less, right? They're only about 20% of the Kickstarter community are parents because generally parents
00:21:17
Speaker
Whatever you say in the middle-class economy, do not have such high disposable income to kind of spend on. Early age or either you ask early in your career or later in your career where you tend to give back to the community a lot more. So if you are making a product for the kids, you are generally not going to hit those numbers of raising a million on Kickstarter. Those are meant for high-tech products where, you know,
00:21:42
Speaker
Techies are buying for themselves. But 100K is a huge success for a Kickstarter. 50K is a decent success for a Kickstarter product. What clicks there is, did you get a pulse on?
00:21:54
Speaker
Whether what you created is an innovation in AI or in front of every parent that you can showcase. So before going to Kickstarter, if you can show it to 20-30 parents and get their response, they say, yeah, this is nice. I would probably have this. Or if you get, wow, when can I get it? If you get more vows, then you know that when somebody sees it for five seconds, there would be, there was a chance of conversion.
00:22:15
Speaker
So you need to get those signals before you land on Kickstarter through your video only that you can't describe too much. You just have to share a video and get that sense. So that is something that we did. Another thing is after landing on Kickstarter, it's not just the end of the deal, right? You have to get it in front of the eyes and you don't typically have money to run ads on because you are doing a Kickstarter to raise funds.
00:22:35
Speaker
So you have to figure out organic ways for this to spread. Passionate communities on Facebook or Reddit, where you post a genuine post and people react to it, spreads the word, gets more people to share. Those are the kinds of things that you have to do. Okay. Got it. Interesting. Okay.
00:22:51
Speaker
And what did you price it at on the Kickstarter? So we priced it at about $35-40, which was 25-30% discount to a retail price that we were thinking. Okay. Got it. Okay. So then what? You got $100,000 from Kickstarter. Tell me like how it evolved after that.
00:23:07
Speaker
Yeah. Yeah. So we started, we, I think hired about five to 10 people more. The amount of content that we had envisioned for going on our boat, which was a product name that the AR globe that we had thought of was humongous, right? So we had, we saved our way somehow through ways, team consulting, interns, everything that we did to create the amount of content and made sure that we launched the product by October. So we ended up doing that. Yeah. Yeah. Give me an example of the content. Like say I scan Nepal. What would I see?
00:23:36
Speaker
Yep. So we chose about 60-70 odd countries in our first go. We did not convert the whole globe, but region-specific, we had enough density. In Asia, for example, we had covered India, China, South Korea, Japan, Thailand in our first go. But we covered about 15 odd countries in every continent to make sure that the continent is spread across.
00:23:59
Speaker
and progressively had plans to release, keep on adding countries as we do app update. In an example, if you scan Japan, you would see five categories of content. You could choose to learn about cuisine, food about that country. So if you choose cuisine, you would see Soshi as one of the items. It would be a 3D Soshi.
00:24:16
Speaker
on top of Japan on the globe. So when you click on it, you would see a 3D sushi and the recipe of how it is made and history behind it, when was it invented, and a quiz, the trivia that what goes in sushi. So things like these that you can play around. So your understanding and learning of sushi would really be deep because it's an attack from multiple places for you to understand what sushi is. That's an example of what gold bank trust.
00:24:41
Speaker
Okay, so you spent a couple of months to get this content ready and you lost it and then you shipped it to the people who had backed it.
00:24:52
Speaker
We spent six months to actually build it out. And yes, we shipped it out to 2000 people who backed it. But we also came about to the end of our runway in terms of what we had raised from Kickstarter. So we had to raise more. And that's when we went out into the market to talk to venture capital from early stage investors and got pretty strong interest in our first two, three weeks of meeting people.
00:25:15
Speaker
And at that point of time, Chirate led our seed round. They came in and we raised a 1.25 million round of seed round of capital to further bring us out. Okay. This would be around 2017 by the time the funds would have come. End of 2017, yes. Okay. Okay. Got it. Okay. Okay. And then what? Did you decide to do more for the west for the global market or what was the strategy after
Entering the Global Market with Orboot
00:25:40
Speaker
that? Was it Chirate funding came in?
00:25:42
Speaker
Yeah, so I think while we were building our book as a product, we 100% kept our focus in terms of content to be global in nature, which meant we will not. The voiceovers that we had inside the app were a mix of American and European, which let's say the kid in India could also understand. The content and the language was in a sense, the sentence formation was correct.
00:26:03
Speaker
We stayed away from knowledge, which was not politically correct from the country's perspective. So we kept a global picture in mind while building the content. And we doubled down on that product method to say that, yes, we will only build global, correct content. And that's what has been powered in the next four years after the launch. Okay. And beyond our book, like where did you go beyond our book? So 2018, when we did the 2017 launch and 2018, when we came to it,
00:26:33
Speaker
Our first focus on how do we figure out market to sell because we had done Kickstarter, we created it, shipped it out. Now it was time to test real waters. Moment of truth came where we start placing it in retail and customers could, when they did not have the video in front of them and no description, just a box, packaging, did it sell automatically. So 2018 went into perfecting art of selling it in retail, both online and offline.
00:27:02
Speaker
Our first year of scale came in 2018, and we did quite well in the first year with a single product, which was only on, but that put us on the roadmap that we can do big numbers with a single product. What if we have a suite of products? So 2018, end of it, we started thinking about
00:27:19
Speaker
How do we now create multiple products? And we had suddenly multiple ideas. We wanted to create something in early maths based on number series and counting and addition, basics of addition. Then we also want to do something in literacy English, right? So how do we teach kids or get kids excited about THE and spelling of ball? That's what I wanted to do. Now these were a variety of ideas. How do we get them in a physical format?
00:27:45
Speaker
and the digital format is something that was extremely tough. So that's where we ended up innovating and creating the platform logo, which was a more versatile platform where you can do any physical format. Just like Nintendo, if you remember 90s Nintendo, there was a console and you put in a Mario cassette and you're playing Mario game, then you remove it and put a contract cassette and you're playing contract as a game. So the variability it provided in digital content, we wanted a variability on the physical content side, which is a way tougher challenge.
00:28:15
Speaker
We ended up creating Flowverse, a platform which has a magnetic clay area, which could take any kind of physical format for magnetic clay area. And ended up creating Count, which is a number space experience, and Dunes, which is a music experience, and Link, which is a logical printing block experience with a...
00:28:35
Speaker
they were still play connected to it. And this time we had to create a new stack because in our boot, the technological innovation we did was use the camera feed, understand what part of the globe are the ticks pointing to and load 3D animated content there.
00:28:51
Speaker
But in PluGo, now we are using front camera because we are putting the device in front of you. So we can't use back camera because there is nothing in the back, right? So we are using front camera now and selfie camera and using that to figure out how kids are playing with physical stuff like numbers and musical keys.
00:29:09
Speaker
and track that consistently in variety of backgrounds. You can be wearing any t-shirt or you can have bright, lit sun behind you. The AR should still evolve. So that was a technological challenge that we had to overcome. And this was the precisely time we beaved off our tech team to be strong enough to kind of pull this off. Okay, before I go a bit deeper on, what was your go-to market for our boot? Did you place it on shelves in India or did you actually get global distribution? We started with India because
00:29:38
Speaker
We could make inroads in our local market way faster. We got into a meeting with Toys R Us India head, after which we got into Hamlets meeting. These meetings were easier for us. And once we demoed or bought, it was a no-brainer. So the product led to conversions itself. We just have to knock the doors and get our foot into the door, beyond which, products start way into the shelves easily.
00:30:01
Speaker
But from Shell, Stoke, and consumer sales was another iteration. We had to iterate on packaging and communication a couple of times before throughput was fast enough that retailers started shelving everywhere. So that's what our learning was. Another learning was we went into modern retail as well as normal retail in Type 2, 3 cities also together.
00:30:22
Speaker
and we burned our hands in Thai two, three cities because the device penetration was not ready there. So the product did not move on the shelf. Whereas in Mumbai, Delhi, Bangalore, it was moving like left, right center. We understood that we have to take it slow. And as the device penetration in kids' life, the device penetration was high among self-users, but kids were not exposed yet. So it was too early for Thai two, three cities.
00:30:48
Speaker
Okay. Okay. And like for the unorganized detail, how did you do that? Did you have distributors tie up and like that traditional channel? We tied up a couple of distributors, couple of distributors too. That's another thing that we learned that while you're building your brand initially, where the messaging around the brand and the brands
00:31:08
Speaker
The emotion that the brand evokes, if you're still iterating on that, you should have touch points to the ad retailers and the consumers they are selling to. You should have the direct communication channel. Going to retail too soon when you are still evolving your brand just makes you blind because you don't know why it is not selling or why it is selling. So you can't accelerate on things on why it is selling and you can't cut down on things which are the reasons of not selling. So,
00:31:34
Speaker
Keeping touch points closer to you so that you yourself as a user or let's say your friends can go to the shop and observe and give you feedback. If you go into a remote city where you have no nobody and distributor has already placed 10 of your products across under retail stores and they have not moved much in two months, you will have no data point of why they're not moving.
00:31:54
Speaker
So that's one thing that we learned is you need to keep initially you need to your end sale points closer to you. Got it. Okay. Interesting. And what did you price or would have in India? In India, we priced it at 99. So it was 2000 rupees. Okay. Which is quite reasonable for something of that nature. Got it.
00:32:15
Speaker
And marketplaces also you launched and that was also India or did you launch globally also? Yeah. So we launched it in India with clip card and Amazon, but Amazon at that time was pushing a new program called global selling program, which they wanted to send us out of India or product creators out of India to sell globally.
00:32:33
Speaker
because they wanted cross-border commerce to increase for them as an Amazon platform. So that team loved our product, and they wanted to make a case study out of us. So they took us to all the Amazons around the world, and we had significant selling throughput on all those Amazons. So it became a huge success story inside Amazon, and that kind of led our growth journey from there on, where every product we launched, we ended up launching all Amazons across the world. And that was a big launchback for us.
00:33:02
Speaker
So how did you scale up manufacturing? Because it's a physical product also that you're shipping here. And while making a small run would have been manageable, but how did you scale it up? Did you build in-house? Did you have contract manufacturing? How did you build that supply chain?
00:33:17
Speaker
Yeah. So I think this is something that since we, from PNG days, both Dinesh and I have been doing it. So this was something we knew how to do it. We just needed to build a small team, couple of people who could do the legwork because heavy legwork is required in this. So initially the first vendor we found out we sat out of.
00:33:34
Speaker
which is outside Mumbai, because we found a vendor, a global manufacturer there. And we sat with him to create the initial iterations of our boot and the right print, spent so many hours there. But we figured out that, yes, we can achieve quality after spending a lot of time, but scale is still a problem. If suddenly we get an order of 10,000 units, it will take months to produce here. So we had to go to China, unfortunately, or whatever you say. But in 2017, there was no other option for you to create that.
00:34:01
Speaker
So we ended up going to China, spending months there to partner with the right people and set up the right quality for our boot and then set up the whole system where then remotely we can just place an order and the batch gets ready. So did that exercise, but it was a one-time effort that we did beyond which the team could sustain a new run on development and designing here in India and then taking it to China to get it manufactured for the world. Okay. Amazing. Okay. And what kind of numbers were you doing for our boot, like monthly sales value or top line or whatever?
00:34:30
Speaker
In 2017, I would say we did a total of about terms of sales. We did somewhere around 15 to 16 CR in total. That was the first year of our boot. So it was phenomenal for us. But it was a little seasonal also. We can't really divide it into month basis because in the West, toys as a category send a lot in November, December when there is Thanksgiving and holiday and Christmas. So a lot of gifting happens. So it was a little seasonal in nature. But yeah, that's our first year of skiing.
00:34:58
Speaker
Okay. Okay. Okay. Tell me about blue guys. There's like a magnetic mat, like a hard mat on which the toys can be placed magnetically. How does it work?
00:35:11
Speaker
Correct. So, it's mat, which is foldable mat. You expand it. It has a device housing area because for Tlugo's interaction, what we wanted was the front camera to be very stable. It should not be moving. It should not be tinted. We want it in a perfect angle. For that, we had to create a perfect housing for the device. So that, based on the devices, it would be a phone or a tablet device for both. It could not work.
00:35:37
Speaker
Many things with the selfie camera works. We ended up creating a whole housing structure where you place the device and it sits perfectly in the right angle we want. Now that's defined. Now the second big criteria was the playing area where kids actually use these.
00:35:52
Speaker
toys that we created, small pieces, that should not be too far away. Otherwise, it's very small in the camera field. So we wanted it at the right distance from the camera. So we had to lock that distance. So we designed a mat which had a certain distance between the playing area and the device and kept the device in a perfectly suited position. And hence, we could create this whole system of gameplay area.
00:36:15
Speaker
Okay. So there's like a non-magnetic zone. Exactly. Naturally. Just for distance purposes. Got it. So there's a magnetic zone where your toys knock in. Does the magnet serve a dual purpose of like recognizing what device is placed on it through sir? I don't know. Or is it the recognition is purely through the video feed?
00:36:37
Speaker
Exactly. So the magnet has no sense other than the physical design format and locking and creating a system of where to place things. But our intelligence completely sat in the computer vision part. So we looked at the camera feed and processed it to understand whether it's our toy piece or it's a shirt having a pattern which is not really our toy.
00:36:58
Speaker
And so tell me how it progressed in terms of your revenue, your go-to market, your product range. So Plugo you lost in 2018, right? 2019, we started designing it. And 2019 summer is when we launched Plugo. And by the time holiday season arrived, which is October, November, December of the year, we had four different products and the Power Boot was an individual product.
00:37:21
Speaker
It was not a platform, so it was an individual product. But Plogo, our vision was always a platform. So we launched it with four unique products. There was a Plogo count on maths. There was a Plogo letters on English. There was a Plogo tunes, which was on music, piano learning, and there was pure Plogo link, which was more of a logical reasoning kit.
00:37:40
Speaker
So we entered 2019 holiday season with five products, all boot and four on Klugo. And big phenomena we did roughly 3x of what we did now the year before. And that paved our pathway into 2020, where our methodology was set, right? Our products, our winners, whenever a parent and a kid plays with it, they absolutely love it. We need to go more in front of the eyes wherever parents are making purchase decision.
00:38:10
Speaker
Or in the other way route, we need to create awareness that if you are not making a purchase decision right now, we have something breakthrough. So try it out and it's very cheap. $50 to $60 is not a big deal for our kids learning the progress. So that's the two parts we doubled down on, one with the marketing team, one with the sales and distribution team. And while the product engine was mature enough to start thinking about, okay, now we have done five products for five different skills.
00:38:36
Speaker
How do we take other skills like memory or moral values or environment science and start thinking about them with different interactions? So blue is a modular platform. The housing and the magnetic board needs to be bought only once and then the things that you put on it, those can be a variety of, and those would probably be, therefore making total cost of ownership also cheaper because you're buying the housing board only once. And each of these units would cost about 50, $60 is what you're saying.
00:39:06
Speaker
Yeah. So first time when you buy with the game fan is $60 for you. But when you want to add the second physical product onto global, it's only $35. Your second purchase decision is relatively easier. Since you're not the system adding is that's amazing. That is very organic upselling also amazing. Okay. Okay.
00:39:25
Speaker
And so tell me about how you doubled down on both of these, like the branding marketing side and the sales and distribution side. And this doubling down, you did pre-COVID or this was post-COVID, like when you thought about that, okay, now's the time to press the pedal on sales and marketing. So I think we did it in two phases. In 2019, we ended up raising our Series A of about 7 million.
00:39:46
Speaker
which was the first big amount of money that we raised, which had some budget-kept society for creating the brand impact. It was still not big enough, but it was a decent amount for us to start forming our hypothesis of how to build. So that was 2019 and we spent, pre-COVID, we spent doing experimentation on some of the channels like Instagram videos and YouTube videos for brand and influencers who are ex-teachers and ex-moms and dads who are
00:40:13
Speaker
passionate about this whole early learning as a concept, playing with our products and posting a video on Instagram as a review. So these were our first foray into creating awareness organically, also on the channels that we were selling really well on, for example, Amazon or Hamlet stores.
00:40:29
Speaker
We started spending small amounts to create brand impact. So brand visibility in banners and creating a shelf, which was a POS in retail. I think like this, we started spending a little bit of money on so that it's not just the product we're just sending. It's also the brand impact that is getting created. So that was our initial steps in 2019.
00:40:49
Speaker
Okay. Okay. And like what happened once COVID hit? Did it impact your supply chain? It actually, it was all phased out, right? So when first COVID hit, the first five months was humongous amount of demand. Kids got locked.
00:41:03
Speaker
toy category saw a huge surge because parents wanted to engage their kids.
Impact of COVID-19 on Demand and Supply Chain
00:41:08
Speaker
Inside toy category, category need to do with learning saw the biggest surge because they wanted to continue the home learning and everybody became homeschooled, forced to be or by chance, whatever you say, it suddenly saw a huge spike and we had built up
00:41:23
Speaker
inventory for the holiday season. We used up that kind of inventory for the uptick in demand from April of 2020 to about July of 2020. But then we started falling short in inventory. So we started creating more, but ultimately that holiday season 2020, we
00:41:40
Speaker
could not meet the whole demand. We left about 30 to 40% on the table because we just could not produce at the fast pace enough. Because then China was like, they were shut down in China. Absolutely. Absolutely. And we still haven't created our strategy of building in India for the global level. So we're not producing in India enough level to supply it. So we basically had to shut production for four months. But the built up inventory is what we supplied with in the moving.
00:42:09
Speaker
production opened up, we reacted and manufactured quickly, but we could not have time to ship via sea, which is the cheapest method of shipping. So we had to use air, which was very expensive just to meet the demand, whatever we could see, but ended up losing on demand also, as well as burning on their shipments. So yeah, that's what happened in 2020 holiday season. But entering into 2021, we were pretty clear that we have to create another supply base, and hence we doubled down on our manufacturing and energy.
00:42:39
Speaker
And thankfully, India was going through a massive ship top build in India, also making India. So we found a lot of good business connects, which were building to import machinery, skin up to create a new category of products, world making, which was typically an extremely painful exercise in India, six months and lots of errors.
00:42:58
Speaker
became a lot more educative and three to four months in exercise.
Manufacturing Transition from China to India
00:43:02
Speaker
So things were very positive and hence we were able to localize all of our products in India in six to seven months by focusing. And now we have every product being made in India and China both and we can supply from India also to the world.
00:43:17
Speaker
Okay. The mold that gets made for your products, is there something that you pay for or you pay per piece and the manufacturer recovers the cost of the mold from? No. So there is something, basically it's subsidized. So we pay for an upfront cost, capital cost for the mold.
00:43:34
Speaker
but it's not the action cost of the mold. So there is a lock-in that you will place, continue to place orders, which was more of a verbal commitment because China is more of an evolved ecosystem. So they don't contractually kind of ask you to place these many orders, but they know that if you place these many orders, the rest of the cost will be recovered. So it's, I would say half an hour. Okay. Okay. Okay. Got it. Got it. Okay. Okay. And why? So.
00:43:58
Speaker
What is the constraint to scaling up manufacturing in India? Do you need more molds or do you need more factory space and workers who are trained to produce? I'm just trying to understand that manufacturing bit of it.
00:44:11
Speaker
So, first of all, you have to create a mold. Mold creation is the machining process which requires you to have one that kind of machine which can create mold and the knowledge of mold baking process is a little different. You have to understand of which mold will suit the right. For example, when you create a complex 3D shape, you have to do the mold design right because if you design a mold and inject it with liquid plastic and when the plastic forms,
00:44:36
Speaker
you will not be able to take it out of the world because of the way you design the mold. So you have to create such that you can take it out of the mold easily. So that kind of designing has to happen, which is typically called cross-section designing for easy takeout. And every single square in China can do that. They know how to do that. Second thing is the machining process requires you to understand the software knowledge of it, how to do the CAD designing for the mold making process to happen. That is something which is inherently because of
00:45:05
Speaker
two decades of making there in China. So that's a learning process which you have to get the team to scale up on. So you have to invest initially in that. Second part is the mold making machines are expensive. So you have to capital investment on that. Then once you create a mold, that becomes a capital asset. So now the machine for using the mold and creating parts out of it is a separate machine that you have to invest on.
00:45:31
Speaker
And ultimately, QC. QC is another big process thing which manufacturers have to understand that the printing is shifting. For us, if the print shifts by one millimeter, the AR goes off because AR is precise between the designing of the print. So for us, that precision is very important. So achieving that in the print on top of a physical product. So it's a complicated end-to-end process.
00:45:56
Speaker
Without any electronics involved, by the way, if you have an electronic component inside your product, that's a different category of manufacturing altogether. So you read like a deep-pocketed vendor to really scale it up in India.
00:46:09
Speaker
Yeah, it's deep-pocketed as well as a vision that if they do this, there is a humongous scope. So right now, India, toy industry is small, right? But the partners that we partnered with taught it from a more of a manufacturing industry perspective that if we partner with these guys and create these products, which are very specific on certain specifications, I would then be able to go to, let's say, interior design industry, or I would hold products, right? Or kitchen products.
00:46:35
Speaker
And I could create innovative products here and there without copying from somewhere else, without asking for bold from some coming from somewhere else. So that vision to be someone, those who have money and the vision is the right partner for you to have to scale manufacturing.
00:46:53
Speaker
When you have a new product, tell me about your new product development process. You must have by now built a playbook on how products are developed. I'd love to hear that whole process.
Product Development and Manufacturing Challenges
00:47:03
Speaker
I think we start with the skill first. Which skill we are trying to create a product on. That's the core of it. Either we can go with advanced mats because we have the basic fundamental mats already created on. Let's go to little advanced concepts, which are, let's say, multiplication and division. If you're creating a product on that,
00:47:20
Speaker
Then, we think of, okay, now, what's the tactile interaction that can enable the best learning? Now, we have two sections. We have not talked about tactile, which is our latest knowledge, but it's a very different interaction. So, we first decide which tactile interaction best shoots this skill, whether it's PloGo or a tactile interaction. If we decide, let's say, it's PloGo interaction, then we say that, okay,
00:47:43
Speaker
which age group are the right fit for this skill learning? Is it five-year-old, six-year-old, three-year-old? If they are three-year-old, we need to keep tactile for the skills, motor skills that they already have. The pieces have to be a little bigger. The print on it has to be a little bigger. But if it is five and six-year-old, they have better motor skills. So we can go finer. We can put together two pieces which are fine in interfection. So that determines our tactile designing around it.
00:48:11
Speaker
Now, another constraint is the AR part of it. We cannot go very small, otherwise, the print on it will not be visible to the camera field. So, the AR determines whether you can go to a piece which is one centimeter big or of three centimeter big. So, accordingly, we basically design and then we create very small prototypes
00:48:30
Speaker
by spending, let's say, $500,000 and test it out with kids. We have a huge batch ambassadors, kids who love to test out products, very early version of it, whether it's laser-cut or 3D-printed. They just love trying up new prototypes out. So they give us the feedback whether I was not able to understand what these products are or how to connect these two things. And we trade about 20 times before we confirm and finalize the design of the product.
00:48:56
Speaker
You have 3D printers in your super development lab or like a laser cutting machine. We have contacts with laser cutting who do the laser cutting part for us, but 3D printers we have in our case. Amazing.
00:49:11
Speaker
Okay. So once you decide, okay, this has got good acceptance from the users, then what? Then comes the content part of it. Commercialized. Yeah. So I think the second part of it is content part of it. First, we make sure that the physical part of it is in line with users' motor skills and interaction paradigm. Second come is digital games. So each product that you buy comes with about seven to eight still games. Each of them have different character stories. So this is the cycle where we put our Disney hat on for
00:49:40
Speaker
We have to come up with stories and charming narratives which have right values that we are passing to the kids. It has the learning embedded in it. So this is where the digital content team, both learning content as well as the visual content comes together and multiple teams. We form about four or five teams to come up with multiple concepts.
00:49:58
Speaker
and create those games. That takes about four or five months while the mold making and manufacturing and iteration of physical products, both of these routes culminate into the point where the stories and the games are ready with the AR and the physical product is ready with the stress testing and testing and safety testing has been done. And we combine them into a beautiful packaging with the marketing team coming together to put together the right
00:50:24
Speaker
marketing message on the product and for the creatives on the social to launch it across one. Typically, your supply chain will start with China first because they are more mature in terms of developing new worlds and probably perfect that there and then later on it starts coming to India.
00:50:44
Speaker
Exactly. You nailed it. I think for us, it just takes about two to three months to perfect the right mold and the right shape, form factor there. And then we recreate it in India is the new cycle. We want to do more in India, but I think we will experiment it slowly. We have already cracked the rest of it in India, but for now we are doing the initial part in China.
00:51:04
Speaker
Okay. What is the cycle from thinking of a product to its launch in the market, like from thinking to shipping? For a physical product on an existing platform, it's about five months, I would say, but we don't do a single product. So our team is versatile enough to think about three to four products in battle.
00:51:23
Speaker
So in an year, we have capability to launch about 10 products. Last year we launched 10 products. But if it's a platform like a new platform like TACTO, that's a complete 9 to 12 month cycle. So start from thinking about the platform itself to launching on the platform. Yeah. So TACTO.
00:51:38
Speaker
So after all, we started thinking in 2020 holiday season when the logo became a big hit and we knew that this platform design is working. Now we wanted to create another platform. So we were super ambitious that single platform is not going to cut it. We need variety. And when we saw the success model of every other toy company in the world,
00:51:57
Speaker
The breadth of portfolio is one big factor, right? You can't really become a big brand if you have 5 or 10 products. You need to have 30-40 products in the portfolio. So, for us to create 40 products on Plogo would again become very constraining. So, we can create, think of 20 products on Plogo, but we need to come up with another physical platform which gives us a very different interaction paradigm for us to create another 20 issues which are very different. So,
00:52:22
Speaker
We started coming up with different designs for a platform which is very different than Plogo. We had already used back camera and front camera in orbital and Plogo. So we didn't want to use a camera-based interaction this time. So we started looking at different sensors that are there inside the devices to come up with the next interaction merging of physical and digital worlds. So we looked at Mike.
00:52:43
Speaker
We looked at speaker, we looked at gyro, we looked at external and created a bunch of prototypes. Some of them are so promising that we might end up using in our next set of platforms. But the touch scene and touch interaction without touching the screen itself became a big hit when we created a prototype. So for us to create that DJ kind of experience where you have a dialer which kind of controls the music, imagine that dialer being a toy piece and each dialer being different. When you put that toy piece,
00:53:12
Speaker
If iPad can recognize which piece has been put, iPad cannot recognize between the two fingers, whether it's an index finger or a second finger. But if you can create a system where it can determine whether it's an index finger versus second finger and create a lightning wave on index finger and create a fire particles or fire system for the second one, that just becomes magical for kids. All right. So that's what we kept ended up innovating. Created small toys pieces, which are figurines like chess pieces.
00:53:42
Speaker
and ability for iPad to recognize what has been placed on it and create a digital experience around it. That's what the TACTO at the core is. It's a board gaming system where the iPad becomes the board of your chess or a ludo or jackals. The iPad is the board. The pieces are like you have in chess and ludo, but these are specially designed pieces by us. They have a touch pattern at the bottom and they conduct static electricity from your hand to the screen. And when you place these pieces on the screen,
00:54:10
Speaker
The touch pattern is created and the iPad knows what has been placed. Our app knows what has been placed and it creates a digital play experience around it. Okay. I want to try and understand this a little more. How does the app know which piece got placed? Whether it was a queen that got placed or it was king or it wasn't?
00:54:29
Speaker
Like how do they differentiate? Your queen and a king on a typical chess set are flat bases. They have a flat base at the bottom and they have the visual design of queen or king. Typically how you play chess is based on your visual sense which is eyes seeing the king shape. You understand this is a king piece. Now the iPad cannot see the shape of the king on the top. So it has to know something else. So what we did was instead of the flat base at the bottom,
00:54:55
Speaker
be created legs for the King figurine. So there is three legs at the bottom of King figurine and there are three legs at the bottom of Queen's figurine. But the triangle being created by the legs on the chest is different than the triangle being created by the Queen's figurine. The angles between the arms are different. Now when you place that, the iPad tells the three fingers have been placed here.
00:55:21
Speaker
And three fingers have been glazed here, but the triangle being formed by the three fingers are different and hence we are able to differentiate. Wow. Amazing. That is such an elegant solution. Amazing. Okay.
00:55:33
Speaker
And what are the use cases for this? Like chess, obviously, I understand, like board where you play with pieces of chess on your iPad, and maybe more animation opportunities are there, maybe tips are there and stuff like that. Okay. What else? So the first two things was that took the traditional board games and converted it. So we have Nudo, Stinks and Ladder, Check and Dead Chess, right? These are the board games that we first converted.
00:55:56
Speaker
Then we came up to our innovation. So we wanted to do new stuff. So one of the series is principle of light. So we have four pieces in that box. One is a laser, laser shooter. Another is a light torch. Another is a mirror and a prism. Only these four pieces come in a sec. Now, when you place the laser figurine on the screen, a laser beam is casted out of this and you can rotate it and you can increase it power using a button.
00:56:22
Speaker
Now you can place a mirror and bend this laser beam in any direction and you can rotate the mirror to change the direction of the laser beam. So imagine a maze where you have to take a laser from one end to another end and you're constantly placing mirrors to take a beam to the end. So this is one of the examples of offset. Hands-on way of understanding physics. Amazing.
00:56:48
Speaker
And what else? Yeah. So we have other sector, for example, tactile dino, in which we have 10 dinos, most popular dinos that kids love. And when you place the dino, the digital 3D dino appears based on which figurine you placed. And you can move it around using this figurine. You can see it. And so games around dinosaurs. Another thing that we did, which is very unique, but meant for higher age group, seven plus, was tactile electronics.
00:57:14
Speaker
So attached to electronics, what we did was we took the usual components of an electronic set, the resistor, the capacitor, the battery, and we created those degrees, and we created a breadboard inside the game. So there's a story running, something is broken, breadboards open up. Now you can place the resistor, capacitor, battery, you have a tool, you draw the pen, and then hit play and see whether the circuit that you've created with basic electronics, whether that solves the puzzle inside the game or not.
00:57:42
Speaker
All of this without destroying any component or an electric shock. All of this with the physical component which look like the actual component. So, one of the examples was this. Amazing. And you don't like add supervised learning products. Like you don't need to help the kids. Amazing.
00:58:00
Speaker
One of the examples I want to take was TACTO DOCTOR, which we just launched and it became an international phenomenon. So we recently won TOTI award. TOTI is the toy of the year category, which is the biggest, it's an Oscar in our industry and TACTO DOCTOR won it. Now TACTO DOCTOR set is a usual doctor set that you typically buy all the same things that you have, BP and you have a thermometer, you have a scissor, all of that is there.
00:58:26
Speaker
But all of them are now working in Tapto. So when you place the BP figurine on the Tapto app inside the doctor, a digital BP meter starts coming in and starts measuring the BP of a patient and that gives you that. Now you remove that, you put a thermometer, reads the temperature of the character. Now you can take a medicine figurine and place the medicine, choose which medicine to give and give a medicine. So be enacted, being a doctor, which you typically do via stories,
00:58:50
Speaker
to the next level because we actually visualized it in the game and used actual figurines which doctors had. So it became a huge... Amazing. Okay. Like what is today your channel? Have you gone to offline detail outside India or outside India still like marketplaces? No, we have gone big time actually. So we are now present in about 35 odd countries or almost...
00:59:11
Speaker
All of them, our presence is retail first, physical retail first. So you take UK or Nordics or your big countries, or you take Japan, South Korea or Middle East like Dubai. First, go with physical retail via the distributor channel where we find the right distribution partner who we go deep understanding of whether they have grown brands there. And then they place us in retail and we directly work with retail to
00:59:34
Speaker
place our products in the right manner so that the shelf brand visibility is great. And that has been our driver in retail growth. So retail has grown really well. Whereas online is something that we scaled pretty quickly between 2019 and 2020. And every year we have been adding products and figuring out ways to scale our online retail presence across the countries.
00:59:54
Speaker
And what are you currently doing in terms of the marketing and branding side? Multiple efforts actually. Now, so the team is quite involved. We have 225 strong team across all verticals. So mature verticals going deeper into how brand marketing is supposed to happen, both organic ways, as well as organic ways. We have partnered with few celebrities last year as an experiment, which worked out really well. So we are formalizing our strategy of formally getting a brand ambassador who can help us spread our word out at a larger scale.
01:00:23
Speaker
US and India are the economies or the countries where we are self-present, we drive our own brand growth. By most of the other countries, we are through a distribution net model. So these are the countries where we are doubling down our brand growth presence on and figuring out both online as well as detailed ways to grow.
01:00:43
Speaker
Moms, essentially, that category. Exactly. So last year, we did experiments with Moms, Reddy, Sanya Mirza, and so some of the ones which we initially experimented with, Cacci and Eagle in the US. So very early experiments with minimal kind of investments, but just to see where the following can create an impact. So we did see an impact and want to formally do it in the right way now with a proper brand. These were more like organic posts on Instagram to see followers and see the fun.
01:01:10
Speaker
Do you have enough dry powder to spend on celebrity marketing? Did you raise more funds? We did raise series B last year and we said enough series B even then. That's not an issue as such but given the market external scenario and what's happening, they're dreading cautiously, making sure that we don't overspend and make sure that we oversee the winter before we double down our strategy.
01:01:31
Speaker
Just spreading cautiously in terms of how to approach and grow accordingly. Okay, I don't want to get a Shahrukh Khan. I wouldn't for now. I'll probably wait out six months and see. But yeah, Shahrukh Khan is already associated by June, so I'll not go with that route, but probably a similar tactic once the market opens up and we figure out the right one. We want to connect with...
01:01:50
Speaker
Somebody who, first of all, has to have a kid under eight, nine years of age. So that's our primary. We don't want to get a brand ambassador who doesn't have a kid in that age group that's first connect. And we want to formally actually, if they are evaluating, you want them to use it for three, four weeks and tell us whether they had an absolute stellar experience with that or not, because that can come out in the way they express themselves. We want that to be authentic.
01:02:14
Speaker
How big is this opportunity that you are chasing? What is the size of the market here for a smart toy kind of a thing? We connect ourselves with the educational toys category. If you were to look at toy space in particular,
01:02:30
Speaker
Toy space is the most mature one. So, toy space and then there is a tech space. These are the two spaces and the third is the gaming space because we touch all three spaces. We don't really connect too well with the gaming space because it's primarily meant for teenage and above. Tech space and the toy space is what we connect with. In tech space, early learning, which is before age of 10,
01:02:51
Speaker
is actually relatively small, right? It's relatively small in the tech space. But in the toy space, educational toys category is the fastest growing category, right? So overall, worldwide toy space is about 100 billion. Educational toys as a category is about 20 to 25 billion dollars. But while toy is growing at 3 to 5% year on year, educational toys are growing at 25 to 20% year on year. So
01:03:16
Speaker
It's a massively expanding space and we believe we are pioneers of a very new interaction in that space, which is still small in the education toy category, but it can overtake in the next five to ten years, half of the education toys might be digital in nature. And if that is happening and we are one of the pioneers, we believe we have an opportunity for a billion dollar revenue in let's say next six to ten years. So that's how we are looking at it.
01:03:43
Speaker
Okay. Amazing. Amazing. And you've been amazingly capital efficient compared to the Giants. You've raised a total of about 30 odd billion dollars and you've already crossed that number in annual sales, which is remarkable in terms of the capital efficiency. Yeah. I think based out of India helped us a lot in the space. Whatever we have built, if you were to build this out of the West, it would have taken us 7x more money just comparing pace.
01:04:06
Speaker
salaries for every level. It's a 7x number. So yes, that is to our advantage and that's to every startup's advantage building out of India. But what's missing is a sense of how to build for the globe, how to build for the user needs, which are global. Understanding the pin of the user needs, the core of the user needs setting out of here in India is what you miss. And that's why you create local products because you can connect with them so efficiently here in India. But if you have to build out for globe, you have to connect with the needs of global users.
01:04:36
Speaker
Okay. Is there an IP opportunity for the content you are creating? Could we see a Netflix series based on Shifu characters? And what is the kind of IP you're creating? Tell me about that. Just give me an example of a fox who's trying to navigate his way and you need to solve Matt's puzzles to help him navigate. But do you have any IP characters?
01:04:56
Speaker
Very good point. So far, the IP that you have created is mostly on the tech stand that covers these interactions and making it work for very old gen devices with low GPU and CPU.
Focus on Technology IP in Educational Content
01:05:07
Speaker
That's the core IP that you have created. In terms of content IP, since this age group is driven by
01:05:14
Speaker
Two methods, one is the Peppa pigs of the world, which is content IP. Other is the variability. Our strategy has been variability, right? So that Fox is one out of the characters that we have. Hence, there is no single character that has to build up its stature. So be unfortunately, so far in not in a space where the character IP is ready, but probably down the line, as we double down on scale and choose one of these characters to go, we might be able to drive that. But for now, no. And that brings us to the end of this conversation.
01:05:42
Speaker
I want to ask you for a favor now. Did you like listening to the show? I'd love to hear your feedback about it. Do you have your own startup ideas? I'd love to hear them. Do you have questions for any of the guests that you heard about in the show? I'd love to get your questions and pass them on to the guests. Write to me at ad at the podium dot in. That's ad at t h e p o d i u m dot in.