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Designing ‘91 Squarefeet’ of startup success with Amit Bansal
186 Plays1 year ago
From humble beginnings as a college contractor to navigating the startup world, Amit Bansal's story speaks of resilience and reinvention. In this episode, learn how he found his niche and established India’s foremost asset-light interior fit-out company, 91Squarefeet. He talks about how this innovative company is changing the way workspaces are designed by using independent contractors. Explore the nuances of finding product-market fit, achieving unit economic profitability, mastering the art of B2B sales, and implementing best practices for product development.
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Read more about 91Squarefeet:-
1.91Squarefeet to transform the future of work with 500 high-tech, sustainable offices
3.This start-up uses tech to help brands build their brick-and-mortar network
4.Using AI, this retail store development startup is helping offline brands accelerate expansion
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Transcript
Introduction and Career Journey
00:00:00
Speaker
Hi everybody, I am Amit Bansal from 91 Square Feed. Thank you Akshay for having me here.
00:00:18
Speaker
Have you heard the famous saying about life coming a full circle? Amit Bansal's amazing journey is proof of this. He started working as a contractor fulfilling small construction projects while he was still in college, realised that it did not scale and then went on to build a number of different start-ups before finally ending up where he began, by building 91 square feet as India's foremost asset-light interior fit-outs company.
00:00:44
Speaker
Let me break this down. Interior Sitouts is the business of building the interiors, especially of offices and retail spaces. It means to take a bare shell within a building and convert it into a ready-to-use shopper office. 91 Square Feet takes up such projects from companies and executes them with the help of a network of independent contractors.
Founder's Journey: Experiments and Lessons
00:01:03
Speaker
This episode of the Founder Thesis podcast is a first-hand account of a founder's journey of finding creators through a number of failed experiments.
00:01:20
Speaker
Akshay, I come from a place called Devsar in Haryana. It's a small village. Spent almost the first 12 years of my life early upbringing there, then moved to city, that's a Bhivani district in Haryana. Spent almost five years there in Bhivani. Then moved to an IT group, Shitra. Did graduation in civil engineering, passed out in 2012.
00:01:47
Speaker
Then for a year I worked with a company called WSP India. It's a global structural engineering consultancy which has a back office in India. So I worked on a couple of high rise projects there doing some part of the overall structural analysis like the slab load analysis, the core role analysis, these kind of things I done.
00:02:09
Speaker
I was always interested in entrepreneurship and in that stint at WSP as well, I started a small company, basically a structural consultancy firm, basically pooling in capacities with my seniors there. We took up some assignment of designing a warehouse near NCR region, it was in Faridabad.
00:02:39
Speaker
the entire experience while it was fulfilling experience because it was the first time we were venturing into our own space. But the learning was consultancy around civil structures does not have a big market in India because the guy who was paying the guy was paying us almost 70,000 bucks for designing his warehouse and he expected us to make four visits to the place while it is getting constructed along with
00:03:06
Speaker
the much of the work that we will do in our office to kind of create those designs. When we actually calculated the entire expense, the cost of traveling and lodging was superseding the total money he was paying us. So we realized it was a hard realization that it's very difficult to build engineering consultancy sort of a business. I was a guy like I was very serious.
00:03:32
Speaker
With the power of hindsight, does it fit into some sort of a model like that the time is too small or you were going after the wrong segment in the market? You should have gone after some other segment or the way to deliver was wrong.
00:03:47
Speaker
Yeah, actually more than the learning, it was a heartbreak actually. So the situation there is like I was a guy who was very motivated, very ambitious, took the engineering very seriously. I knew a lot of things around designing structures and the load analysis on buildings. And I thought that I will create a large business out of engineering designs.
00:04:14
Speaker
Right. But when I went into the market, I realized that all these guys, they do not want to pay engineers. They would just work with an architect and architect will advise them that you can put, you know, this kind of support, this kind of investment and they are building will, you know, building will stay erected.
00:04:32
Speaker
and all the approvals which are required to be taken, these approvals can be acquired in hackish ways. People can pay some money and get some signatures and they can get through with those approvals. Basically, builders and developers
00:04:49
Speaker
were saving money that they would ideally be spending on engineers. And that's where I felt that dream that I have seen of building a large civil engineering consultancy. This is not happening. There's no market. And we were very little exposed as well. We could have explored deeper. But in that moment, I immediately thought
00:05:17
Speaker
I will not be able to make something very, I will not be able to make a large outcome out of this place. I need to get out of this place. And I started, I became very serious about writing CAT and changing my line of work.
Entrepreneurial Ventures and Challenges
00:05:31
Speaker
And then I appeared in CAT, then I got into, got an admission into NITI Mumbai, which is now I am Mumbai, and studied operations and supply chain management there.
00:05:41
Speaker
And during that time as well, when we were studying, I was studying at NITI, basically the journey was like, again, I tried a couple of things along with the course, because I got placed, I was the first guy, probably the first or one of the first few guys who got placed in the batch, I got a PP from Aditya Bilagdu.
00:06:04
Speaker
So, I had the whole second year with me at my disposal and I'm always slightly lenient in those areas. So, back in those days. So, I used that time for trying multiple, you can say entrepreneurial ventures. First thing was I got enrolled in an MLM scheme.
00:06:28
Speaker
a multi-level marketing scheme. There's a company called QNet. How I got enrolled is one of my college senior was working in that company. He came to me, he said that I'm doing this business, this giving good profits. I used to be and I'm still am the guy who would have deep respect for the alumni's somewhere it was kind of
00:06:56
Speaker
uh, embedded in our DNA back in the graduation bragging days. So, uh, the way he pitched, I totally, you know, totally trusted him, whatever savings or the loan that I've taken for my education. I have put all that money into that, uh, into that business. And, um, in fact, in the first seven, 10 days, I have gotten my girlfriend's money and one of my close friends money also in that business. So I was like, uh, invested, uh, four or five lakhs.
00:07:25
Speaker
into a new venture, which I did not understand. And after seven, eight days, they started having sessions. So in those sessions, they would talk about hardcore sales, right? They would talk about, uh, you know, things like very naked and honest things about sales that you need to bring a prospect on the table. You need to reel that guy in, in so-and-so ways, right?
00:07:51
Speaker
It was a good learning, but eventually the part wherein you need to fool your friends is where I got completely dejected. So then I took a break, I came to home, attended to my mom's health for a couple of months.
00:08:08
Speaker
But when I got back to campus, I decided that I'm not leaving this campus in net negative, come what may, right? I basically approached these coaching, Cat Coaching Institute, Career Launcher, IMS. And I had this knack of explaining things. So they enrolled me as a faculty and I started teaching quantitative aptitude in those campuses. And I used to teach like in
00:08:32
Speaker
In my good days, I would teach like eight hours a day, six days straight, won't go to any class and would make good money. And so I recovered all my losses. I had a fun time, bought a bike, taken membership of five-star hotels and hampered myself. So the later half of the second year was a good fun experience.
00:08:56
Speaker
I really had a good quality time there and I was feeling good within myself as well because I was not leaving the campus in net negative. After March 2015, what happened is I came back to my hometown
00:09:12
Speaker
My joining at Aditya Villa was somewhere around June or July. So I had three months. And I did not know what I would do with these three months. So there was a friend of mine. His name is Ankit Galoth. He called me. He said that he knew the founders of Bevcoof. Bevcoof.com.
00:09:31
Speaker
And I should come to Mumbai, and I should try a stint at Vevco. It's a startup I learn a lot. And because he knew that I always wanted to do startup. So if I like that place, I can continue there. And if I don't like that place, I can go back to Arithya Bilal, whatever place I want to go to.
00:09:48
Speaker
So that happened. I went to Mumbai with no absolute plans. I met Prabh. He said, he put me in a plant operations. So I am back in my hostel with nobody else around.
00:10:17
Speaker
I think this is a great filter because at that moment, people who were staying back in the hostel, they were all irrational in some ways. So I was in that company, then I realized that two of my friends from campus, I'm with Mishra and Baba, they were working on a startup.
00:10:34
Speaker
the name of the startup workers, they always, almost everybody in the campus knew that I am inclined on building a startup. So they asked me, you want to join? And I'm like, there's no, no point of saying no. So let's do that.
Quifters: Growth and Obstacles
00:10:48
Speaker
So every day, I used to go to Bivandi to the Wavecoaf warehouse and factory.
00:10:56
Speaker
In the evening, we would drive back, we would start building, we would work on our startup. So those were good happy days in the beginning. We had a lot of fun. This was the LinkedIn startup?
00:11:10
Speaker
No, no. So it wasn't the LinkedIn. So the name of that startup was Quifters. So the idea was we would simply build an Uber for mini trucks, right? So it was almost like an X for Y days. We were, we were in the zone, like, you know, what selling what, what investors are buying. We should be doing that because anyway, we don't have money or the experience. So, so let's not be over smart and whatever that is catching the wind. Let's roll with the wind.
00:11:39
Speaker
Uber for X was like a one year phase where everyone was doing Uber for X.
00:11:45
Speaker
So at one moment in that year, Raksha, there was only 47 companies which were doing Uber for many trucks. Like that is one segment of Uber for many other segments of Uber. All of them funded, all of them raised a seat to Siri's airport. That was one of the, I think, one of the first mover and they had the largest round of $5 million. Right. So that was the state of affair. We were also building quifors.
00:12:15
Speaker
Then we quit our jobs, all three of us we quit our jobs, whatever earning we had from the jobs, we put that earning in the business. It was just a small contribution, but it was okay for us to take the business because we anyway, which were not motivated by drawing salaries, all the money which was required, it was required to pay to the developers and get the website and the busy things up and running.
00:12:40
Speaker
So, and then we raised a small round, we raised a 2 crore investment from Indian Angel Network and couple of other guys. And we started building that business. In the first year, I believe that we were good teams when it comes to growing. We quickly grew our order book to almost like 300 trips a day. When you raised funds, were you revenue positive?
00:13:09
Speaker
Like, was it pre-revenue or revenue had started when you raised funds? So it was slightly gray at that moment, Akshay. So how it was it, like, we had a website. We used to run certain ads. Somebody would say that, OK, I want to send my household goods from place A to place B. If one of us co-founders would go to that guy, we would do the loading and loading operations. We'll work with the driver.
00:13:37
Speaker
Very, very high-touch, one or two trips in a day, sometimes no trips. So things were very slow. You can say there were revenues, but revenues were very, very hard. You would go stand in the naka, and you can get that kind of revenue. Revenue were not in the form that, OK, this business has started churning out money and started getting this flow. So that's where it was a little gray, actually.
00:14:03
Speaker
So, so that fund round fundraise happened after that fund. And that fundraise was like, you know, were there a lot of no's before you got that? Any, any learnings around that fundraise?
00:14:19
Speaker
Yeah, absolutely. A lot of learning. So, uh, in fact, it's a little hazy for me. It's like almost eight, nine years ago. Uh, definitely we reached out to a lot of people. Definitely our idea did not make any sense. So these two things we absolutely realized in hindsight, but the momentum of those days were like, you know,
00:14:41
Speaker
Anybody who has some capital was interested in putting money in startups. So we went to some of these group meetings. I think, I don't know. It was like Mumbai angel or some, some angel group network. We went to that conference room or somebody organized that pitch for us. We were pitching. It was a 10 minute pitch.
00:15:01
Speaker
Five minutes into our pitch, somebody called in for samosas and then samosas came and then people are eating samosas. So those kind of days, like, you know, anybody is willing to part with five, 10 legs and that was enough for us. And I think India and the funders environment is still the same. It's very, it's typically very easy if you like be disciplined about it and pitch consistently.
00:15:31
Speaker
It's easy to pick two, three crores. If you are very, very serious about doing something, Mark, I still believe market is almost the same even now. Okay. Okay. Interesting. Then first thing which went wrong was the round we signed up for. We signed up for taking million branches.
00:15:51
Speaker
I think that's the worst thing an investor can do to himself or herself, like agreeing to give money to a seed stage company in tranches. Like if you are giving money in trances to a scaled up company, that makes sense because you are almost talking about an AOP and the execution, then how well the execution has been carried out on those plans. But in the seed stage,
00:16:15
Speaker
Basically most of the companies are pre PMF, right? They don't, they don't have a pre product market fit and then needs to do a lot of pivot around, right? And then they need to pivot around. And if you're giving them money in branches, right? So these things don't go very well with each other. So.
00:16:33
Speaker
We started scaling our business. The first three, four months we got the stealing that, okay, this is not happening. Even at scale, we don't see the unit economics happening. Like it is driving a mini truck is different from driving a cab. You can't make 14, 15, 16 trips a day. Only three, four trips can be made. There's a lot of union issues. There are a lot of
00:16:52
Speaker
But union issues and all these things probably will be handled at scale, but there's a lot of unloading, loading and loading time, right? The buyer is MSME. He would not pay premium just for the heck of paying the premium, right? So even if you kind of win over this market, the amount of money that you need to put in will be massive.
00:17:08
Speaker
Right, because you are basically talking about Jintari, all the unions which are there, all the catchment supply which is there in the, available to the, in the proximity for this MSME, you will fight everybody out, you will, you know, and you will... Basically, there's already a strong middle band here. It's hard to displace that middle band.
00:17:29
Speaker
Yeah, so in this kind of business actually the gestation time and I think the money that is required to put in is very very high and the time was not big enough for to kind of make sense to put that money while it is so much clear in hindsight but in that moment we had this feeling.
00:17:45
Speaker
But we were all choosing the bigger checks from VCs and investors.
Pivoting Strategies and Profitability
00:17:53
Speaker
I guess your way of looking at time also must have been India's logistics market is X billion dollars. So it's a large time. That would have been the way to see it.
00:18:10
Speaker
That's only the way when you start a business, but as you kind of grow into a particular line of work, your focus gets sharper and the definition of them gets sharper. I think that's a trajectory for most businesses. And what was your market? Was it intercity, heavy commercial or light commercial?
00:18:34
Speaker
So that was the problem actually. Our market was intra-city light commercial vehicles, right? Because that's where you have the maximum competition in and the ticket size is very low and it's a very fierce service play, right? While already there's a lot of option B and C's are available for the end customer. And I guess Porter is the only survivor in this intra-city light commercial.
00:18:59
Speaker
Yes, Porter has done a lot of things right. I think I would give a lot of credit to that team, beat the positioning of their service. They get enrolled with Mahindra Logistics very early in the play, realizing that standalone, they cannot survive. So basically, they pulled in capacity, get some anchor business from Mahindra, and then on the back of it, they kept surviving. And then they evolved as well over time, like the parcel delivery reason.
00:19:27
Speaker
Like Mahindra was a supplier of vehicles to them or Mahindra was giving them business, interest city logistics business. So Mahindra logistics, I guess, so I don't have an absolute clarity, but my guess is Mahindra logistics, basically a supplier of vehicles to Mahindra group of company and some other customers.
00:19:47
Speaker
Right. So if you want to transport, let's say the auto parts and basically the finished products from one place to another, Mahindra Logistic will supply those vehicles, right, amongst some other things. And Porter was a very good addition because it was almost a new vertical. They were trying to go deeper into the back-end supply chain working on agility. So they thought that if we have our own captive supply of vehicles, it will make a lot of sense.
00:20:10
Speaker
So that means captive business for Porter and with that captive business you come to certain level of P&L, the overall burn seems containable as a percent of revenue and then you get a chance to take a deeper shot in other categories. So I think that's the way it went, but it could be, but not absolutely sure there.
00:20:26
Speaker
Okay, I understood. Interesting. So you said their positioning was right. What was the difference in their positioning and your positioning? The difference was they focused a little more on consumer side.
00:20:42
Speaker
Like if I want to move my furniture and I need instead of MSMEs. Yes, they focus more on consumer side, the ticket size and the margins are better there. Although the volumes are very spread out and basically they had the kind of money they had almost like 35 crores versus 2 crores that we had. So they had some kind of room as well to play in multiple categories. While we were absolutely focused on revenue, like we would not waste time on
00:21:07
Speaker
marketing to the people wherein we are not absolutely sure what the ROI would be because even this 2 crore coming in 65 lakhs tranches. So that made matters even worse. Yeah, that you mentioned as one of the mistakes that happened in that fundraise of accepting tranches. That would have constrained your ability to truly find PMF. To find PMF you need to
00:21:34
Speaker
Yes, we need to navigate a lot. We need to navigate a lot. I think we had the sense that we can make a unit economics, we are not sure of the scale at that moment, but we were sure of the fact that we can make a unit economics profitable venture if we kind of go into intercity logistics.
00:21:57
Speaker
Because the ticket size of individual trip is more than the overall revenue you'll earn on an LCV by giving 30 days of service. You will make 30-35,000 bucks by supplying an LCV to a customer for 30 days straight without any break. You can make higher revenue and higher margin on a single trip. So although there was a fistfight on the sales conversion, but the unit economics was viable.
00:22:23
Speaker
So, but we didn't have that romance. Like say a black buck. Yes. We go black buck. Yes. So there are also a lot of things. So a lot of their nuances in industry like you will not make a lot of money if you are going only route A to route B on the onward journey, the majority of the money is made when you kind of utilize the return journey.
00:22:49
Speaker
So a lot of technology play and a lot of theories were going around. And Rivego was playing on the fast and the speed of delivery. Blackbook was focusing more on the price point and the availability of supply. I always felt that category had something interesting. But yeah, we were constrained by our own limitations.
00:23:18
Speaker
So that happened. We kind of made sure that we do just enough to get the next ranch. So we spent first ranch, we got the next ranch, then we spent next ranch, we got the last ranch. Almost next year, almost June, July 2016, we had almost left with 10, 15 lakhs, all the money spent out. And one really good friend and investor, Harish Bell, we talked to him and he advised us, he broke.
00:23:45
Speaker
If you are thinking about you will get money on your order book is not happening. Market has changed.
00:23:52
Speaker
By the time, the winter funding, tiny house. Tiny house, all these people were getting burst. Tights have changed. It's not the old world that you'll do massive PR and you will get money. So we kind of tasted that flavor, what people are tasting now. So you can say a little experience in that sense.
00:24:17
Speaker
So there we, one of the co-founder had problems in the family. So he pursued his own path. Two of us, we felt me and Amit Mishra, we felt, you know, we will dig deeper into the, you know, deeper into the segment. We'll see what comes. It was very evident that we need to make a pivot. This business never gonna make money, right? But what pivot we can do with limited amount of money was the question, right? We didn't have enough money. So that time we decided that, you know,
00:24:47
Speaker
We will pivot our software into becoming a logistic SaaS for enterprises, right? Because we almost have an application wherein we can accept orders, we can directly turn a certain route, we can track its movement, we can push things in and out, the documentation, the proof of delivery is in and out of the app. So it was not refined, but almost like 80% catering to multiple use cases around last mile deliveries, the middleman transport and all these kinds of things.
00:25:15
Speaker
So we thought, you know, the product can be turned around in those ways with little effort, wherein we can bring in a SaaS revenue.
Retail and Signage Opportunities
00:25:23
Speaker
And that was hot actually. That was hot juicy market at that one time because a lot of things, Logitech's out to fake, all these things were happening. Locusts, Farai, right? These companies were doing well. The software adoptions was going right. Right?
00:25:40
Speaker
All these things were going around. We decided that we'll make that pivot happen. But even to make that pivot happen, we didn't have enough money because software will take some time to get built and then even longer time to start giving such stable income. So to get the money,
00:25:56
Speaker
In that meantime, we decided that we will start selling the ad space inventory on our commercial trucks to the customer outside, right? Because we have aggregated a lot of truck. We'll just go to the customer that you can put your ads on the sides of this trucks. Unfortunately for us, we started from Mumbai and Mumbai.
00:26:16
Speaker
is one of the, I think, very few cities in India wherein all the container bodies of LCV has are closed container and you have a very proper clean plain surface on the sides of the truck. This is not the case in Delhi NCR, not the case in many other cities but Mumbai is very peculiar in that way.
00:26:35
Speaker
So that was a very, you can say, local technical opportunity we found to make money in the short run. We started putting those ads. Fortunately, we cracked the first deal from McDonald's wherein they were launching a basically retail outlet and they wanted to divert traffic from a city station to their outlet. And we said that on this route, we'll kind of keep it on the run.
00:27:03
Speaker
It's almost like a residual budget these people have around activation of additives. So they use that to give us order for two, three vehicles. And with that brand name, we went to Castrol, Gulf Oil, and these companies saw deeper synergies. And there we made good amount of money. We posted net profits in the year 2016, 17, 18, three years straight. We are a net profit making enterprise.
00:27:27
Speaker
There in with a small team. We were making money from these retail campaigns and on the sides We are using a portion of this money to build a software for logistics, but then it is all you were saying learning your Intracity B to the service of it. No, no, we we decided to shut it like from on the day that We realized that you know, we are not going to get extra funding on that okay, okay and
00:27:57
Speaker
So these tracks over displaying the idea would have some sort of a revenue shares arrangement with them. Yeah, precisely that. So basically, there are three components. One is the permission, add permissions. One is then the cost of logistics, then the printing, and all this kind of thing, and then the revenue. So total income minus the direct expenses job, we used to share with the truck owner and the company.
00:28:25
Speaker
And what kind of revenues were you doing in this ad? We were doing campaigns like we were doing campaigns worth 1 crore, 50 lakhs, 1.5 crores with margins across like 40 percent, 45 percent. How much would have been the peak?
00:28:47
Speaker
So in these three years, the peak of annual revenue would have been somewhere around four, four and a half crore, but it used to hold around two and a half, two, two and a half, three, four, like something in that range. And we also realized, yeah.
00:29:01
Speaker
We also realized, you know, we are not getting a lot of repeat business on these campaigns because company did not have any major to any way to kind of measure the success. So we kind of drifted into many BTL activities. We did mall activations. We did road shows. We did, you know, product sampling in small villages. We painted the goal for cement companies. So, you know, anything you give us anything, uh,
00:29:26
Speaker
for which you don't have a proper professional supplier built up, and we would do it for you. We almost built a loyalty program, kind of an application, an Android application for one of the lubricant sector customers. So many, many things, almost like digging a new hole every day to feed ourselves.
00:29:46
Speaker
Interesting. The Adorbo has a similar story, right? They also started with ads on taxis, then they pivoted it to ads on the society, like putting TV screens on societies and offices for hyper-local. Did you also try that, the TV screen market? So actually,
00:30:07
Speaker
So Akshay, that thing that you're doing, I never came to entrepreneurship for doing those things. I would anyway would have been making more money in the corporates. Our primary bet was to make the software successful.
00:30:27
Speaker
We were working on logistics, a route planning algorithm, and we wanted to make that algorithm successful. In fact, from the product side, I think we were able to make a decent product. We were just not able to market it right or distribute it right. And that is also because the focus was very diverse, the capital was limited, two founders running different things. On one hand, there's a fight to put food on the table.
00:30:50
Speaker
You can say that we could have done a lot of things better in that moment. But in the hindsight, I kind of feel that it's better that it went like that because it was like very deep, rich learning of where and how you could go wrong.
00:31:10
Speaker
Yeah. So yes. So to answer the question, we thought about these things, but we were never serious about pursuing that direction deeper. We were just thinking about where the next 10 legs are coming from, where the next 10 legs are coming from. We were not at all interested about making some assets and making recurring spend out of this because our primary bet on that side was the logistic software. If you were to scrap that logistic software and do everything, we had these discussions when things were not happening within a scope onto that.
00:31:37
Speaker
Should we scrap the logistics software business because any which way the competition has taken a lot of lead, we don't have the ground, our cap table does not look good enough that somebody would fund us, our numbers are not right, things are very messy. So everything is like so much messed up state. So there's no point of pursuing it. Let's focus on if you're getting the venues from ads. So let's shut everything off and we put all the investment back into the ad business and that way we can grow this one.
00:32:05
Speaker
So those kinds of conversation happened in between, but nothing materialized. It went on for a couple of months, but by the end of 2018 or something like that.
00:32:16
Speaker
I got extremely fed up of doing a new thing every day.
91 Square Feet's Strategic Direction
00:32:22
Speaker
We also realized that on the logistics software side, the state of things are the kind of product we have built. We do not have a distinct advantage over competition. We had a distinct advantage, but it was very small and undefensible.
00:32:39
Speaker
So, there we decided that we will trim the spend on the software side and rather focus on building something scalable on the operations and the tech-led operational efficiency side wherein we saw this opportunity wherein we were doing a lot of BTL and signage and we realized that the entire market of signage is very fragmented.
00:33:01
Speaker
So, if an enterprise wants to get their signage for the retail shops or you know, a lot of trade promotion requires these signages to be put up, Philips and Coca-Cola, these kind of companies put up a lot of signages. So, the entire, you can see the procurement, the delivery, the reporting, tracking, maintenance, everything is very hazy and unstructured there.
00:33:23
Speaker
So we thought this is not very large, but definitely a problem area. And we can largely solve this problem area by doing some integration, some technical integration with certain section of supplier. And the supply side is also very attractive, because in one area in Mumbai, there's a place called Ramanthi Road. So you'll find almost hundreds of small signage shops crammed in one area. That small place is getting to a couple of states. And this similar kind of market in Pahad, Ganjan, Delhi.
00:33:51
Speaker
It was a viable plan in our head. So we started working on that. You wanted to offer it as a managed service where tech was in the background. For a customer, you are just like any other vendor, but you're using tech to make it more efficient, give more transparency, so on.
00:34:10
Speaker
Yeah, we would tell customer that we'll take over your trade promotion spend, especially the on-ground brand identity creation or retail transformation, which is required to be done at your touch point. So we'll just take over that entire thing.
00:34:25
Speaker
So, okay. And it's like those, those large signage are also like, they, like, you know, at, at the Kirana stores also, they put up some promotional material and all of, were you also doing that or only on signage?
00:34:41
Speaker
So almost every business has a, you know, attractiveness of category. So the last signage is a little more complex, high quality, high precision required. Customer is a little more serious. So higher margins, higher ticket size, the smaller size, the customer is not like, no, the things are going the way they are going. And India being India in many ways, relationship driven in many ways. So we were predominantly focused on last signage, but we are doing a good amount of the smaller ones as well.
00:35:14
Speaker
This you did as a separate business or within quiffers only? This is also, I think, one of the learning you can say. We never did too much on shaking around the legal structure of the companies.
00:35:34
Speaker
We always believe that whatever you want to do, do it under the same entity. If this goes successful, then you can figure out how you want to create the org structure and the shareholding and the patterns around it. Your shareholding was messed up, right? Your shareholding was messed up. Your index co-founder would have also had share, right, who's no longer working now.
00:36:04
Speaker
Yes. So actually, so it's a chicken and egg now. So if we would go on fixing the shareholding, right? Almost the entire equation breaks apart and we end up being the bad guys for investors who are lost their money. And now they are starting on something good, which will possibly make money. And now they don't want to make us party to it. Right. And on the other side, if you, yeah.
00:36:29
Speaker
And on the other side, if you don't fix it up, you will not get the adequate opportunity to build it, because you'll not get the adequate funding. But again, I would say irrationality helped. We believed, let's do what is morally right. It's not penny pinch, because any which way there's no business on the plate. If there's no pie on the plate, then what we are fighting for? We are just fighting for each other's ego. So let's bring a pie on the plate, and then we'll settle affairs amongst ourselves.
00:36:58
Speaker
So that's how we built everything in the same entity. We created a small software, we distised some of the backend operations around these factories building the signage. We cater to a couple of these bands, Bridgestone and some of the other FedEx and DHL, these kinds of customers and started doing the signage work.
00:37:19
Speaker
Right. So what we realized and towards the, I think the March or February or March of 2020, we are doing close to 30, 40, I think we touched 50 lakhs a month and we were close to making 20% gross margins. We are operating at 10 lakhs gross margin. And of course was also around that range 10, 12 lakhs at that moment. So things were kind of looking up.
00:37:43
Speaker
There was some inherent battle wherein we realized that when the customer account is growing to be, you know, to when we have penetrated deeply or when we felt like, okay, now we have tested, we have passed the initial test of relationship with the customer, we have delivered them good value. And now we'll start to make money.
00:38:02
Speaker
That's when a B2B buyer hits you back saying, you know, uh, you know, doing, uh, things like, you know, this, they started, you can say circumventing us or disintermediating us that night because they realized after the point that they are doing the signage and for doing my signage, they are like this four or five, six guys in the backend. What if I directly talk to these guys and customer wanted to talk directly to these guys because technology was essentially not creating any value in the play.
00:38:32
Speaker
If technology that you are talking about has been creating any value, these guys would not have wanted to disintegrate us. But the only, the small reporting on the dashboard with not a lot of, you can say, direct tangible advantages. These customers, these procurement guys are always driven by KPS when they want to cut costs after a certain point when they have
00:38:54
Speaker
I was going to chill. Then they will circumvent you and go to the next layer. And that's how typically B2B purchase works. Right. Amazing.
00:39:06
Speaker
Then COVID hit, our revenue on the rolling banner side, like wherein we were doing the signages, that revenue went to zero. On the quiffer side, there was some lifeline support. We were getting 10 lakhs, 12 lakhs recurring revenue, which kind of kept on coming.
00:39:25
Speaker
Those customers have been very kind to us in those days. And on the back of it, the add-on truck and all that we kind of curtailed. We had a software, so it was some of the customer paying the recurring money. So that money was coming in.
00:39:47
Speaker
And that SaaS software was like for a, let's say, a Hindustani reliever, which has a lot of logistics operations to go with products around. Someone like that would be the customer. Yes. A lot of FMCG players like Dabur, Mariko, Vijay, Sales, like retail and FMCG players were using that software. Okay. So when the COVID struck, we were in a zone wherein
00:40:13
Speaker
We had basically a team which was doing branding, but the world is going back to Adam's days. So they were not sure, at least from the outside perspective, not sure what will come out of this side. There was almost like 15-18 people on that side of the team. And there are a couple of software developers and small team, 2-3 folks, 5 folks, I think.
00:40:37
Speaker
software developers majorly and one or two sales folks who were on the sales side on the software, the sales and development side on the developers. So these two things were running. We had this theory. So the choice was very straight, like this business, which was supposedly picking up.
00:40:59
Speaker
All of a sudden has now shut it to zero revenues, right? And the business, which wherein we have invested a lot, but was definitely, we were sure that it will not take off from this moment in was our lifeline. Right now, where do we focus back again?
00:41:15
Speaker
So this was the question. And to make things even more complicated, we had almost like a couple of crores, three crores, kind of a loans for which we have signed up personal guarantees because in the process of building this new venture, we had to take loans. And because our business was posting net profits, we have, we were able to get loans from banks, but they, but they got us to sign personal guarantees on those loans. So you needed loan for working capital because your vendors would have wanted payment up front and the clients would have paid you after 60 days or something.
00:41:45
Speaker
Loan for both working capital, even for these were corporate loans, not precisely one capital, we would loan even cook a salaries as well. In that moment, Akshay, we decided, you know, again, a little bit of irrationality that I would, I would state, you know, because there's no logical argument.
00:42:05
Speaker
possible on why we did what we did, right? In the back of our head, right? I was feeling, I had this confidence that this COVID wave will go away, right? And when this dust will settle, there will be an opportunity to take a lead on this side of the things wherein we are doing signage. But the problem was customers are disintegrating.
00:42:30
Speaker
The behavior of the customer will not change. They will still just intimidated. So how will we create a large outcome out of this business? So we decided that what if, if we start doing the whole retail shop, not just the signage, the furniture, the dialing, you know, the painting, the plumbing.
00:42:48
Speaker
everything that goes inside the retail shop, if we do the whole deal, then the procurement guys are basically transferring their headache away, right? This is the area that they themselves don't want to mention. So there's no incentive for them to circumvent us or disintegrate us, right? And that will get a more captive business.
00:43:06
Speaker
And the business will be, and the tech that will create our own project management will have certain value. Because if you are able to pull this off across multiple locations, then there has to be something that is binding all these operations together. That kind of tech did not exist. So that was the theory we acted upon. We kind of directed the whole team. In those days when we were sitting idle, we profiled all the furniture guys, civil work guys.
00:43:36
Speaker
took on board with them, created those internal documentation that how we'll run projects, created sales decks. So around December or January 2021, when the COVID was subsiding, immediately we were emailing the customers all these, you can say decks and all these kinds of things, wherein you tell them that we'll build the whole retail source. And we started getting orders from some of these brand C attires, I think was one of the
00:44:00
Speaker
first few customers which trusted us and we built some of the stores there for them, then for Yokohama, and then from there we built for Yokohama for the plant. So there we saw that you know now there's an opportunity to build something meaningful, something scalable because
00:44:17
Speaker
Although scale was not happening, there were a lot of operational issues in doing what we were doing. But one thing was very clear that every day we are making progress in a manner wherein we are becoming more efficient at delivering stores. At some point, we will become far more efficient and it's a big entry barrier in itself because these businesses cannot be built on a single day. There's a very complex equation between the talent and the technology there.
00:44:43
Speaker
that has to come together. And we also decided to sell quifers. We exited quifers. There was a buyer which kind of taken the maturity stake and it was a whole cash deal. We paid up all our loans and we had some breathing space for ourselves.
Focused Growth and Strategic Investments
00:44:59
Speaker
And in this middle to survive, because you can imagine quifers got acquired somewhere around June 2021.
00:45:08
Speaker
That was really like an intellectual property acquisition. They wanted the software. Software and the customer's account, which were along with that. And who was the buyer? There's a company called Setix Logistics, a Kerala based logistics MNC. They wanted for in-house use or they wanted to start a SaaS business?
00:45:29
Speaker
So they wanted to do both actually. So they were also not very clear. They just wanted to bring in technology in foray. They saw a good team develop products with some developers working. So it was a good addition to the oral portfolio they had. Okay. And how much did you sell it for? We sold it for a million dollars. Okay. So like a good enough exit for the investors.
00:45:54
Speaker
Yes, good enough exit for investors there. They got also, I think almost like 80% of the money that they primarily invested in. But then we overcompensated by giving them almost 1.4x of the worth of stake in 91 square feet, which we bought back as well. So net-net outcome investor got almost 2.2 to 2.4x out of us.
00:46:20
Speaker
So, that's the part of the settlement. Interesting thing was, because Kufos was not moving forward, it was a stagnant and we sold it to a logistics MNC.
00:46:36
Speaker
91 square feet. We were just pivoting around, figuring out. There was no revenue. We were just building things out. We did not lay off anybody. We just kind of dug into the future. We thought to ourselves, okay, we were under a couple of crores of loans. Another 50, 80 lakhs won't hurt us. We'll see. Let's retain the team and keep digging what comes out. But to survive in those days, you have to execute Beirut. We started another company, Yoda App.
00:47:04
Speaker
where in we built an infographics, a casual learning kind of a platform. So we were running three companies in one moment between, uh, two, 2020 to, uh, July, 2021. Right. And it was, it was a big mess, like.
00:47:21
Speaker
We did not have a clue, you know, how the next day is going to start, what conversation we're going to have with whom, what ideas we are working on. It was a big mess, right? There were other co-founders involved on the Yoda side and eventually towards the end of 20, towards the mid of 2021, June, 2021, we decided that it's too much of a mess. We are riding multiple boats. And in the beginning, these things were acting in our favor, right?
00:47:50
Speaker
because our risks were getting hedged. We were running multiple horses. Someone horse will win and all this kind of things. But what we realized is there was sheer lack of accountability in everybody who is involved with us.
00:48:04
Speaker
Even the older folks who are working on 91 square feet, they are also feeling, founders have multiple diverse interests and this is a very early stage company. So why the heck we are so motivated, right? So it is a complete, you can say a lack of accountability, lack of ownership. Nothing is moving, complete stalemate situation on all the front. So it was almost like a rotting thing. Everything is rotting around that kind of a feeling you kind of end up with.
00:48:33
Speaker
Right. So there we took a hardcore. We said that, okay, we had this $1 million taken for your dad. You raised funds for your dad. Yes. A million dollars from.
00:48:46
Speaker
from GSF and an angel group and couple of other key angels, Kunal Shah. Anybody who's paying money or who's working on futuristic ideas, we've got their base. Amazing. But there I think one good thing, somebody gave us this GAN and it worked right. We decided that we'll return the whole one million back to investors. You still had the money?
00:49:18
Speaker
From the 1 million dollars, we have a total of 6.5-7 crore we have raised and out of that we have used up almost 1.75 crore we have used up. So remaining money went as it is 1.75 crore that has been used up. We reached out to all the investors that we have this money that we have used up.
00:49:38
Speaker
Either we can give you stocks in our new venture and stocks also 3x the value of whatever you have invested in the new venture. This is what we are doing. We can give you a proper pitch. And if you insist for money, we'll give you the money because we have some residual income from the exit of the first.
00:49:54
Speaker
Out of this 1.75 lakhs, we had to pay 75 lakhs from our pocket, which me and my co-founders contributed for one remaining one crore, like kind founders like Onalsha and a couple of other folks. They said, guys, what do I do with this money? So you can keep the money, just roll it on to the stocks in the next company. So that's how the affairs went by. And we got a very clean, happy,
00:50:18
Speaker
where you can exit from that venture without creating a lot of venom around us and the investment community. Amazing. I want to ask a question here. At that point of time, you could have chosen either 91 square feet or Yoda.
00:50:39
Speaker
because there was an equal probability of success for either. Both are very early stage, but Yoda had the benefit of already having raised a billion dollars. Why did you give up Yoda? I got blessed with a son on 21st May. I was there in my hometown, my wife's hometown actually.
00:51:02
Speaker
people were dying around it was second wave of COVID, right? And I had this perception of life that life is very fickle.
00:51:10
Speaker
I have, I have always been a very motivated about putting things at stake to aim very, very high, but I have never been on the driving seat on the Yoda app. There was another CEO. One of our friends was co-founder on the side, my co-founder who's still with us, he was the CEO. So I felt like, you know, I've never been on the driving seat. I don't want to go down like that.
00:51:35
Speaker
Right. I want to try myself. What kind of, you know, if I, if I am taking shorts, how will I, I will call short. So the idea and the money did not matter to me in that moment. I just felt, you know, this 91 square feet, I have been harboring this idea. I will carve it out and I will take the hundred percent risk. Even my proposal to my founders, the rest of the co-founding team was like, whatever equity and the interest I have in other companies, you can take all of it, right? Whatever you take out of me, I need that back in 91 square feet.
00:52:04
Speaker
by the equal proportion back in 91 square feet. So, it was a complete back on myself and I think in all those years I have grown that kind of, you can say, confidence or for the lack of better word keep, I wanted to take that one down myself.
00:52:24
Speaker
Basically, 91 square feet was your brainchild, your baby, so you had more conviction. Essentially, you would lead that and you wanted to do something which you would lead rather than following what someone else was doing. But the CEO, co-founder of Yoda, he was also okay with winding it down. He was also running another company on the side, Rainman, which was facing a hard time in Covid.
00:52:51
Speaker
We should leave the photo adani at a really good exit. Amazing, amazing. So it was very, very complex. Those were like crazy funding days where despite so many red flags you still managed to raise a billion dollars. That's amazing.
00:53:11
Speaker
I think the first million is still not that tricky. I still think the market is still the same for first million dollars. Just, you know, just need to hit the right areas. That's all. If you are very, very, if you're dead serious about raising a million dollar, I still believe you can raise a million dollar on a plain deck.
Current Business Model and Future Plans
00:53:28
Speaker
You don't need anything more than that.
00:53:30
Speaker
We will talk about this, like your advice on raising the first million. That's an interesting topic. So we started journey, uh, 91 square feet, uh, focus was very clear. So after long six years.
00:53:45
Speaker
for the first time, we have been focused on doing just the one thing and doing that thing right. So it was a new energy, vibrant place. We were clear on what we wanted to build. So there's a different freshness and excitement in that whole thing in that moment.
00:54:10
Speaker
So when we started on focusing on building 91 square feet, in the early days, first objective was to secure some capital to get going because there was a second wave of COVID.
00:54:25
Speaker
There was no money in our accounts. We were trying to do business, but we did not have anything, any money to pay to our suppliers. So we need at least, you know, 50 lakhs, one crore, some amount to kind of keep surviving. So that was the first objective.
00:54:42
Speaker
So there I turned to my close friends, people who knew me from some time and I knew about for some time. So to my pleasant surprise, almost everybody stood up for me in that moment. That was a very, you can say, emotional and proud moment for us. I got the initial 60, 70 lakh secured from my initial, my very close network and that money came with a lot of responsibility as well.
00:55:11
Speaker
Now, this is the money which is not coming from stranger, I cannot lose that money. So, there was extra motivation to dig harder.
00:55:24
Speaker
We started building 91 square feet with that initial 60, 70 lakhs we were able to secure from our initial bunch of friends and families. So from that area initial time was there were people, I was majorly
00:55:45
Speaker
involved in setting up the macro structures and the things in place because they're very hardcore operations in intensive business. We wanted to build it very fast. So I told myself that if I can bring in the right kind of capital and the right kind of team in place, that's the only way it will happen.
00:56:10
Speaker
So we hired some executive to run the operations. I was majorly focusing on getting the money or raising the funds. My co-founders Amit Mishra was focusing majorly on making sure that the financial affairs are kind of held tight because this is a very, you can say financial operations are very, very intensive in the business we are in.
00:56:38
Speaker
And another co-founder, Puneet Bansal, he was majorly looking at the setting of the technology and the product so that we can scale this in the long term. So that's how we divided responsibility. I was majorly looking at sales and fund raise. We hired an external executive to run the operations. And two co-founders, one was running tech and product, and one was running finances.
00:57:06
Speaker
So your sales at that time would have been delivered manually, like someone on a spreadsheet would be managing things or a basic product. Yes. So the product was not in place. In fact, not at all in place. We just started building the software on which we will scale our operations. But to get through initial days, what we did is we took up some open source CRM.
00:57:35
Speaker
We kind of reject that CRM to suit to our operational processing and we get the macro stage movement of the projects, the financial cash flow control around those projects fixed on that contraction of the software that we have put together and on that we were basically managing our operations in that time.
00:57:59
Speaker
initial guys who gave us this 70 lakhs, these have been the most, by far the most helpful investor one could ever wish for. These guys helped me crack YC, Y Combinator. So these guys helped me. So two of these folks who invested initial capital, they were XYZ founders. So they helped me put my application right. They helped me prepare for interview. They wrote recommendation for me to the YC partners.
00:58:26
Speaker
We were I think one of an outlier kind of a company which got interviewed and selected by YC and it is only because I got so much support around all my friends and colleagues who were also the initial investors in my company.
00:58:41
Speaker
So, and when I got into YC, what was the pitch at YC? The pitch at YC was that India is going to build a lot of retail infrastructure we are lagging behind. And when India is going to build that retail infrastructure, there's going to be somebody who will support a large portion of these new customers, right? All this D2C customers are also transitioning into building, setting up the retail shop. So there's a lot of new demand is also coming. So it's a right moment.
00:59:09
Speaker
to build this kind of a company in this space. So that was majorly the pitch. And to our pleasant surprises, when Michael Sable, who was also the CEO of IC at that time, he interviewed us. He also became our group partner later when we got selected. So he was able to see through what we have been doing.
00:59:31
Speaker
So he asked this question, the kind of job that you're doing is almost like a shit job. Everybody kind of runs away from this kind of a shit and you are telling me that you want this shit. Why you want this shit? And we told him that shit is where the opportunity is.
00:59:53
Speaker
Amazing. I know you don't like the X for Y comparison, but what you pitched at YC was like a live space for retail. Yes, we kind of tried to pitch that, but the YC partner corrected us. It seems more like a viewer for retail. So we did not understand what he meant.
01:00:18
Speaker
In that moment, I think we still hazily understand that, but it's majorly because we pivoted from that side. But yes, when we were evolving on that side, yes, it came to a point that the logical evolution for the business that we are building was to take it to the WeWork sort of a model.
01:00:43
Speaker
So as in you would have pre-built retail spaces and then Brandru just come and set up.
01:00:49
Speaker
Yes, so basically YCE partners majorly have an experience of the US market when the retail is very mature and the real estate, you know, so there, I think the environment is probably set in such a manner that, you know, you acquire a large space, you build a specialty complexes, retail complexes, almost like a strip malls on the suburb of the city. And there you get into a very large real estate play.
01:01:16
Speaker
because you are owning the land and you are appreciating the value of the land by building a market around it. And that's where you make the large portion of the value that is eventually created in this business because so that was the viewpoint. And it made a lot of sense. Like the food court in a mall, typically mall food court is like pre-built and brands come on a revenue share. Yes. Kind of an arrangement. Yeah. Okay.
01:01:39
Speaker
In fact, you'd be surprised to know that his prediction is actually right because the way India retail is evolving in this moment is you would see a lot of highway side retail complexes coming up. There'll be one central food court sort of a thing with some dhaba or this kind of thing and then multiple other shops stacked around it.
01:02:01
Speaker
So this has becoming a prominent theme around most of the tier one, tier two cities around India. So that prediction was almost like spot on. But you are not the ones who would.
01:02:16
Speaker
I mean, eventually if you raise enough capital, then you would be the ones who would actually operate that. But as of now, you are just building it. Yeah. So YC also does not give a lot of money. They only give $125,000, which they changed to $500,000 in our batch. Our batch was the first batch.
01:02:33
Speaker
So I almost recall that year 2020. This was like a remote thing where you would attend some lectures online and then get back to work and then some mentor would keep asking you for progress or something like that.
01:02:50
Speaker
and you would learn from the other people in the cohort. That's the value add of YC. Yes, that's the value add. I think the kind of advice they share, there's a real value in that advice. One advice that we religiously follow is YC almost tells that, do things in an unstructured and unscalable way. That's a very counterproductive thought, counterintuitive thought.
01:03:13
Speaker
Compared to the traditional business running this company, right? So, but the YC mindset is when you are in the initial pre PMF stage, you do not want to get stuck in processes and how the scale will happen. You should only be focusing on what your customer want.
01:03:28
Speaker
have a very sharp customer obsession and do many unstructured, unscalable things around it. When something starts happening, something start gaining momentum, then you bring in processes and you can say scale into the equation. Don't start with the mindset.
01:03:44
Speaker
Airbnb Mattra is also there certainly. In fact, Airbnb founder. Do things that don't scale. Airbnb founders came, they gave a talk, try founders, Brex, so a lot of big companies have a very open, so why see, so almost like an environment wherein very scaled up company founders have a very candid chat, which they otherwise would not have in an open forum. And that's where the magic is because that learning is unparalleled.
01:04:12
Speaker
And the support structure that YC provide, you can almost, they have a large directory that they give you an access to. You can reach out to anybody and if you mention your batch and the partner name, most of the founders across the world are happy to give you time. So YC is almost like a big, big journey in changing our mindset around how we run business.
01:04:36
Speaker
And it was required for us, like for the last six years, we have been, I have been chasing deals to make money. And this is for the first time, you know, I'm thinking about how to make something which is absolutely required, have a very, very practical and unfiltered and biased way of looking at things. Right.
01:04:59
Speaker
These guys have invested in 3000 plus companies. So I think they are able to see through any business, any founder mentality in the first five minutes of conversation. So they, why she has almost created this magic, uh, somehow hard to explain how they have done it, but, uh, they have done it.
01:05:18
Speaker
So that was a very key addition to our overall exposure. Then around the demo day, we started raising a small round. Fortunately for us, the round kind of swelled. There was a lot of investor, you can say, interest in the business that we have been building. We got subscribed. We were raising $3 million.
01:05:44
Speaker
Then it got quickly filled up. Then we increased the valuation. We asked for slightly higher money and it went on for two or three or five iterations. And then eventually we had an overall subscription or offers was 23 million out of which we picked up almost $10 million. So, and we started calling it a series around.
01:06:07
Speaker
Because there's no magic. Amazing. Yes. So those were the days that was the market. I think that was the peak of madness. And after that, the sanity started.
01:06:19
Speaker
Okay. Okay. Good timing. Yes. So post YC post raising this round, we started scaling this business. There was money. So we, and there was pressure that now we want to grow three X, five X in one year. We were providing, we were doing hardcore service operations. And after a point, we again started realizing that when we are building retail jobs,
01:06:45
Speaker
It is not making a unit economic sense, right? If I'm building a 20 lakh retail shops, 20 lakh rupees worth of retail shop, I'm making let's say 20% margins, right? Net net I'm making four lakh rupees on our retail shop.
01:06:59
Speaker
My project manager has to spend a significant bandwidth of his time. Then there are other teams, sales, procurement, operations, other cross-functional design, other cross-functional teams are involved. My overall cost of delivering a particular project was almost equivalent or a little higher compared to the revenue, the net revenue or gross margins I'm getting out of a single project. That's where
01:07:25
Speaker
We started questioning, are we on a right track? Right. So after raising 10 millions, uh, initial days, we thought, you know, uh, this is not happening because our operations and the delivery quality is not right. We put a very dead sharp focus on fixing those things on ground, did a lot of changes in organizing structure. Right. Uh, and, uh, so in fact, the whole journey was immediately after raising the round, I was telling everybody that I will be able to make a marketplace out of it.
01:07:53
Speaker
I will build the technology so clean that I will take up a retail build out assignment. I'll break it into subcontract into smaller, smaller orders. Everybody, every supplier will operate or execute their job like a clockwork and everything will be managed centrally. All the decisions will be taken centrally by this technology think tank that we are creating. So that was the dream I was selling to investors and that was the dream I believed in. And immediately after raising the capital,
01:08:24
Speaker
I kind of pursued it heavily within the company that we need to build a marketplace out of it. If we want to scale in the long run, we need to make our engagement light touch. So that's basically actually, that's the wishful thinking, right? That's, that's one of the very big and core mistake we made because our business was hardcore service operations and we wanted because investor wanted and we wanted to scale and we, we wanted to make it light touch. So we tried to enforce.
01:08:53
Speaker
own our customer what we want rather than addressing what they wanted. So even after four, six months of YC hard training, we still made that mistake. So some learnings, you know, they take time to kind of seep in and totally descend on you.
01:09:10
Speaker
So we made that mistake. Our NPS almost took a nosedive. There was escalation all around. We believe that things are not happening. We are not scaling because our delivery operations are not right. So we turned the entire org model around
01:09:30
Speaker
creating a hardcore service delivery operations wherein we decentralized the P&L to the local regional heads and gave them a lot of autonomy to act and cater to the customer with flexibility. And our NPS improved drastically and we started building technology around
01:09:47
Speaker
enabling that in a better manner. And from the initial thesis of we will remove the project manager out of the site and the technology will take over, we came to the theory that we are in a business of super powering the project manager.
01:10:01
Speaker
we will make him 10x more productive, because he will have a 360-degree control and visibility on what all that is happening around, and he will be able to take decision faster, and he can run multiple projects in parallel. So the technology, the product mindset shifted. We, in fact, made a massive detour on our product, scrapped a lot of modules, and started redoing all these things on the product and the software that we're building, made a massive changes in our structure. And we were able to fix our delivery experience.
01:10:30
Speaker
But even after fixing the delivery experience, we realized that the unit economics is not going right. The amount of money we are making on a small, let's say typical retail shop, which is 800 square feet is 20 lakhs and the net 20% margins we'll make is 4 lakh. We are spending almost equal amount of money in terms of the human capital, which is being deployed and get into that.
01:10:55
Speaker
Wouldn't a counter view be like this, that you are making your project manager super human, like you're making him five times more productive, so eventually the cost will work out?
01:11:08
Speaker
So that is the problem. But eventually, one project manager will manage five such projects that today he's managing one project. So definitely that was the theory, Akshay. Eventually, these guys will be more productive and will be managing multiple sites. But for that to happen, you need to have a density in a particular location. Because this project manager needs to have multiple projects running in a small territory. And this makes sense only at a certain scale.
01:11:35
Speaker
To get to that scale, again, you need to put in a lot of capital. And the way business turned around from May 2021 till now, you see that all this business who were catering, who were delivering services to enterprises like Fasinga or multiple other, operating in a similar fashion, all this business took a massive hit and backlash.
01:11:57
Speaker
because they were burning money on an individual transaction order and the market view has become that investor has stopped taking interest in models which will make money in the longer run. They want a fundamentally sound business the way it is in the current moment.
01:12:15
Speaker
Right. So, uh, so when Mark, then when the external factors change, you have to react to it. So we, we, if, if you want to live in that zone where in things will make, make sense at scale, but what will come out of it if you are never, never, never able to see that scale, right? So that's where, you know, the things started the, the road started diverging apart and we had to take a call. Right. And there's another thing, uh,
01:12:41
Speaker
In our business, the way our business is stacked, there's another way to make this retail fit out business unit positive that you have a pre-fitted modularized component that you are almost assembling at a particular shop. Right. That means your touch is very light and you have things figured out on the backend when customers taking choices, right? So.
01:13:03
Speaker
Around that as well, we thought traditionally because we come from civil engineering and this kind of background, we were almost doing a hardcore, very detailed project management operation on a small scale project size. So that's how our business and DNA was stacked. So we also thought about should we pivot our operation to modularize the store, but then even to modularize what we realized that retail is almost like delivering the exotic experience.
01:13:30
Speaker
Every brand wants this store to be looking very unique. That's the main deliverable of building a brand through the offline touch. So majority of large established brand won't buy into this. They would want to do things their own way. Commodity, maybe these Kirana and general stores and maybe the new companies would probably buy into this hypothesis. But then what we realized is that even the D2C brands do not have money.
01:13:58
Speaker
So that was another reality check we got. We thought that these D2C brands would definitely want quirky stores. I mean, that's part of it. You can still make it quirky actually. See, making things work is not a problem. You can have an assortment of furniture, you can do signage in different ways. So small things, colors can be played around and you can make things quirky.
01:14:21
Speaker
You know, the big brand, it's very difficult to convince them to take this kind of bet and that a massive skill. You can still convince a D2C brand to take this kind of bets. Given these companies have that kind of deep pockets that you would see none of the D2C brand open more than 100 stores.
01:14:38
Speaker
Right. The last, which was the projection where in a hundred is a hundred is a big number. Everybody targeted other than maybe a Nike or, you know, those kinds might have, but nobody, I don't think any of the PR D to C brands out there, nobody even touched like most of the 90, 95 percentile, didn't even touch 10 stores. Like, and all of them had a target, you know, they had the projection of opening under. So the next six months when we talked to them, initially, almost every single guy, okay, I would want to open a hundred sources, give me good pricing on the.
01:15:12
Speaker
You can say almost like a joke in the company that we would ask a sales guy, how many stores he would want to open? He would say, yeah, 100. Everybody wants to do 100 stores.
01:15:30
Speaker
With these two realizations, we were very clear in our head that with large formats, large established brands, difficult to make money, small brands wherein you can make money and do things your own way, they don't have money themselves. How do we make money?
01:15:47
Speaker
And then we looked at many things. We looked at the original idea, which Michael has pitched to us, that you can create strip malls, you can acquire pieces of land, you can develop them. And basically, the land parcel and the whole market will become a product asset. And this product asset will churn long-term revenues, and you can build hundreds and thousands around India. India has the appetite of doing that.
01:16:14
Speaker
So that was one viable idea. We thought about it, but that's a massive pivot, right? Almost and requires a lot of capital can be pursued. I think it's still a viable idea should be pursued. Somebody should be doing it. But for us, when we looked at things, we looked at what will capabilities we have, we have very fine-grained project management capabilities wherein we don't drop the ball on execution. What if we just increase the ticket size of the project?
01:16:39
Speaker
We'll start making money in the short run. And with this money and the better numbers, we can get to the maybe a couple of more rounds, and we can take bigger and deeper bets in the sector. So the natural direction for us was to pivot into becoming a hardcore construction company, which will manage large, complex hype decisional assignments. And we'll take a massive, and we'll create a brand around it. And it makes a lot of macro sense as well.
01:17:07
Speaker
There's L&T is majorly interested in doing projects which are more than $100 million in value, right? Because they are heavy-handed, their overheads and the structures are built such a way that they can't operate on many multiples, smalls, multiple sizes. So practically, there's no brand
01:17:25
Speaker
which kind of operates, which is a go-to brand in building smaller assets, maybe retail shops, warehouses, offices, hospitals, schools, data centers, universities, these kind of things, which are slightly smaller in ticket size, right.
01:17:40
Speaker
Because that requires a lot of agility, that requires a lot of, you know, the complexity in the, you can say the client management and a lot of, a lot of project management fundamentals are almost the same, which are there in a thousand crore projects, right? But you need to kind of figure out a way to do it with agility at a large, large volume.
01:18:01
Speaker
And that's where we felt we have the on-ground teams. We have the technology wherein we are able to manage things with the agility with a very, very light touch. So let's just focus on increasing the ticket size and becoming profitable. From that moment on, we'll see what is the next place to go. One question. Retail store is small ticket size. Give me an example of large ticket size. Office. OK. Like a corporate office.
01:18:31
Speaker
So a typical corporate office, retail store is typically 300 square feet to 2,000 square feet. A corporate office is 2,000 square feet to 1,00,000 square feet. So definitely bigger. Smallest of the retail office would be more than 50 lakh in value. And we draw a line that if the project value is more than 50 lakhs, we become unit economics profitable. So these are the kind of projects we'll focus on.
01:19:01
Speaker
and we decided it somewhere around I think October 2023 after giving almost good one and a half year to retail and retail operations. So in all this time we matured our technology, we matured our ground operation, the project team, we acquired some technical depth around procurement and fine aspects of managing the fit outs.
01:19:26
Speaker
of a particular space. So, with all these capabilities, it was a very natural extension. We looked at all the PS and the competition. So, a typical contractor or traditional contractor who we compete with is generally operating across all these categories. He is not segregating between these things. So, basically the bottom line capability set is almost 90-95% similar.
01:19:47
Speaker
So it was a very, very natural extension. So we did not have to make a lot of changes. We just need to make a changes in our outward position, the website and the customers that we've talked to. Right. And in the, in October, 2023, we decided to make this pivot from this, that moment till now in the last six months, we have grown our business almost threefold, uh, 2.5 to 3x. We became a bit of profit. What's your error? Uh, currently we are doing close to 120, 130 growth.
01:20:19
Speaker
Yeah. Okay. Amazing. And we became a bit of profitable on the service side of things. I had sold lots and lots of, you can say, confidence we have gotten. And now we believe that we have latched on to a category where it is just about building a brand in the long run so that the repeat business and the customers keep on coming back to us. And we will build a cash cow out of this category of office without.
01:20:41
Speaker
Right. Amazing. That 10 million you raised, how much of that is left? I'm assuming since you're a bit positive, you would still have enough money in the bank. Presently, we raised almost near to 9 million. Out of 9 million, we have used up almost, I think, 4.5 million. So remaining 4.5 million is left with us. Amazing. You're in an amazing position right now to really go for hyper growth. Yeah.
01:21:11
Speaker
I'll tell you the real position I am right now, Akshay. When we decided, so we started getting a sense in the early 2020, early 2023, somewhere around April, May 2023, that we are doing a lot of things right on the retail deliveries, but we are not making money and we need to make a pivot, right? Then we decided that we need to make a pivot.
01:21:40
Speaker
We did, we just did not do one thing. One thing was we, we decided we were thinking that we should be doing offices. We haggled on this for a couple of months, but eventually around October we started. But in April, the same year, we also started one more thing. What we did is we thought, you know, what if we package our software?
01:22:00
Speaker
right, the technology we have built, right, and give it to other construction company and design build companies like us, right, and even the end customer because they also need some experience and reporting on their project, right, to manage their operations, right. We can have a much wider view on who is building what, right. Plus, we will be able to train a set of suppliers who almost operate on a congruent process and we will be able to consume their services when you want to scale, when you want to get a hyperscale.
01:22:29
Speaker
Right. So typically company will have this spend, you know, if you look in their company's panel, they will have this spend wherein they would just supply, development, training, this and that. Like this is a typical cost head for companies which are deep in operations.
01:22:46
Speaker
So, instead of setting up a team which will do all these things, we set up a revenue team. We said that if you are able to sell this software to a contractor at a high price, the contractor himself will work his ass off to get the system adopted deep into his day-to-day process. And if he gets this done, then he is very, very consumable to us.
01:23:06
Speaker
Along the way, we showed this product to a couple of contractors. They immediately liked the software. They started buying it. Then we took it to some of the end customers as well because they also need things to manage. We started getting a lot of end customers as well as contractors on a software platform and they are paying for it as well.
01:23:28
Speaker
So while we have a 130 crore annualized business, a bit top positive business on service operations, we also have a pool of 200 enterprises who are using our platform on a day to day basis out of these 200 enterprises, 100 enterprises are almost paying for it.
01:23:47
Speaker
Right. So what's the difference between those who pay and those who don't? So basically, let's say like some of the key customers who are using our software is ICICI bank, AU bank, SimplyWorks, SmartWorks, lot of managed office companies, lot of design architects and these kind of people.
01:24:06
Speaker
So when ICIC bank bought the software, he would have his supplier report progress on the software as well. So customer will bring a couple of more people around, right? And, and to these guys will go and then we'll sell up, sell key. You should also take premium so that you can build your own project. So if you are tagged to a premium license, then you can only report on progress, but your own premium license, you can build your own project as well.
01:24:31
Speaker
So basically, it is almost like spreading from, you can say from one point to multiple direction, then we are kind of going after those guys and amazing. So
01:24:41
Speaker
Then how much revenue does that give you? Analyze revenue for SAS. So in terms of invoicing, we are selling almost 30, 40 lakhs worth of software every month now. In terms of ARR, ARR is somewhere around 15, 16 lakhs. On one hand, we have a deeply integrated supply chain of operations on office without category.
01:25:01
Speaker
Then we have a software which is almost is becoming the necessity for anybody to, you know, anybody who is concerned with fit-out business to kind of manage their operations, almost becoming necessary for people to manage their operations, right? For people who are engaged in fit-out business. So now,
01:25:24
Speaker
I am almost poised for Hyperscale. So Hyperscale, how the Hyperscale will come, right? So we started calling this business in such a way that 91 square feet, our first mandate is to go deeper into office without and build a deeper brand, right? Then expand to some categories, which are even higher tickets and the new age category
Building Expertise and Expansion Strategies
01:25:46
Speaker
business. There's not a lot of competition, like data centers.
01:25:50
Speaker
As new age category starts from hundreds of crores, right? Nobody has an expertise. If you can build deep MVP expertise, you can build data centers as well. Right? So category expansion and the nuances of building that categories are built into the software and then distributed to the wider market. Therein you are training a supplier base around it, right? And you kind of consume that supplier base to kind of stabilize and deeply stabilize that category. And then you move on to the next category.
01:26:17
Speaker
Right. So it is, it is becoming almost like a, it is an early shapes, right? It is almost like a mechanism wherein you, you get your door into a category. Then you start building your supply and you can build your supply faster because you already have inroads into very deep supply network. And then you can scale in that category.
01:26:39
Speaker
That's basically the plan for the next couple of years. We'll go category by category by category and we'll go deeply, deeply penetrate. We'll start going deeply penetrating this good categories. Categories will have a category head who will look after, you can say the positioning, the branding, the finer refinement, which are required to be done on those categories. And the idea is to build a new age construction company, which is faster, cheaper, more efficient in delivering projects, right?
01:27:08
Speaker
And in the long run, we can add a lot of value for these guys as well. Now, because see as a contractor, very difficult guy to give money to, right? You will not lend your money to a contractor because you don't know his affairs with our technology. We know his affairs precisely. We know that this guy is doing a one crore project. If he does it 50%, he'll get money from the customer. He has already done it 30%. So I can give him 20 lakhs.
01:27:34
Speaker
So there's, there's a lot of scope to push value added services like financing, the procurement to these guys, be a part of, uh, you know, their growth trajectory. And then from the other side, you are giving them demand, right? So the whole ecosystem will come together. There are almost like pieces in place. We have like fingers in multiple places. Now it's moment that we need to consolidate everything as a one unified force and punch hardest.
01:28:02
Speaker
Amazing, essentially you're on your way to become a unicorn like in terms of the multiple markets that you are building in and that software play which is pure gross margin because you're a new building software for your internal use case. So whatever revenue you get from SaaS is like pure gross margin for you. Yeah, we are not at all looking at the so see we are pricing the software almost equivalent to
01:28:29
Speaker
the other software which provide which also almost maybe 30% of the use case. There are software which will only do project management. There are software which will do procurement. There are software which will make sure your internal cost centers and approvals are set up. This is all in one, right? We are still pricing it at that level. We are not caring too much about the revenues. We are only caring about the adoption rate. The kind of metric we measure around the software penetration is
01:28:55
Speaker
the values of BOQs, the total scope that is being managed on R dash in a month. Now this is touching in some, what is BOQ? Bill of quantity, like the total value of project. Okay. So in certain months, it is touching like 40, 45 crores now on our desk, the amount of scope that is being managed by all the ecosystem and this like this is growing exponentially. So if, if you are managing a huge scope on our desk, that means you can do a lot of value added services around that.
01:29:21
Speaker
So these are the transaction volume, the number of orders which are released through R dash, through other suppliers. So these are basically the North Star metric on the software front. It's almost like investment into the future, which will, in our theory, will breed long term success for the company.
01:29:41
Speaker
Amazing. So I want to kind of go a little deeper into some questions I had while you were narrating your journey. Let's start with this.
01:29:56
Speaker
mentioned very good brands that you worked with throughout your journey.
Sales Lessons and Enterprise Strategies
01:30:01
Speaker
I want to understand a bit in terms of how you do your client acquisition. Like you must have gone through your own learning of how to acquire clients. Like, you know, be it the ad business where you had McDonald's as your first client or like for every business you did, you had good quality businesses as your customers. So how do you do B2B marketing or B2B sales?
01:30:22
Speaker
So Akshay, I believe that I'm a salesman by nature. So that's my core skill. And more to say, the initial stint at that MLM company
01:30:38
Speaker
I think that's where I acquired majority of my learning. Those two months of absolute misery has been the most helpful and rewarding experience in my life and has been a biggest contributor in whatever we have been doing so far.
01:30:56
Speaker
But because the majority of business in the beginning is almost like a sales fist fight, right? You don't have a lot of differentiation to show, but you are still getting the deal because you are good at sales, right? That's how it looks like in the beginning until you start making a brand and get starting to pitch. And so a lot of you can small, small hacks and tactics that we have learned from that, like I can go on.
01:31:19
Speaker
Keep on sharing what we do, but just to name a few, we believe that enterprise sales is a process wherein you are selling to a group.
01:31:34
Speaker
So when you are selling to a group, you, you give a demo, somebody's excited. That doesn't mean that your sales has landed, right? You know that you need to understand that this person need to take approval from multiple places. You need to understand how this guy's place in terms of decision-making hierarchy and how you need to influence multiple people. And then there are multiple people from the other side. You also need to involve multiple people from your side because one guy probably will not be able to sell, you know, convince everybody.
01:32:01
Speaker
We basically try to gamify it like the scene in the same account. If an executive has made an inroad with a procurement guy and the chief operating officers in the world. So somebody seeing it from our sales will kind of tackle that person. So it's like a man to man marking, understand what
01:32:23
Speaker
We do a lot of edification like even if I'm going in a sales meeting and I'm introducing my colleague, I'll introduce my colleague in such a manner like he's some God or angel on some kind, like he's come from a different planet. So that kind of it's almost like giving the positioning
01:32:41
Speaker
right position to speak to the person that you are introducing. And these small things matter a lot, right? And then it's almost like the basic fundamentals. Whenever the person you are selling to, you cannot be selling features and all these kind of things. You need to be selling things like what difference
01:33:05
Speaker
your product or service will make in his personal life. Before selling the product or service, we would generally want to talk about who all in your family, what are typically the workers. We would sensitize the person. His life is very hard. We'll nudge him in that direction.
01:33:26
Speaker
When he is in that direction, when he believes that his life is becoming difficult and he need to change something, that's when we reveal what product is and how it will make difference in his life. It registers more deeply. Even if people still say, I don't need that product, at least that guy need that product because now it is affecting him personally as well beyond the workplace.
01:33:49
Speaker
So there are a lot of things that we learned like on those two months, on those tables, looking at those guys, talking absolute with absolute quality, how the sales will be done. Like these, this environment is not, not an environment will get in a professional world. These guys are talking about cheating and floating their friends, right? So these guys have, you know, the kind of brutality.
01:34:13
Speaker
they have around closing a deal. This is unparalleled. So you can say that I have lived amongst that tribe for some time, picked up some hacks and kind of applied those hacks and learned some of our hacks along the way. These things kind of contributed. Amazing. I think probably everyone should go through a stint of multi-level marketing just to get sales straight.
01:34:36
Speaker
That's absolute misery. I would say that's not a happy place to be. Okay. The other thing which we briefly discussed, you said that raising your first million is not hard.
Fundraising and Product Development
01:34:53
Speaker
I want to zoom in on that. Like what's your advice on how to raise your first million?
01:34:59
Speaker
So I, you know, what I believe, Akshay, so in the beginning, typically what happens with founders is they're wearing, founders are always wearing multiple hats, but in the beginning, there are not many people around to delegate their operation day to day tasking. So they would be doing very, very small things which are critical for business, right? They are doing it themselves in the beginning because they wanted to learn and then later because they do not have money to
01:35:25
Speaker
hire enough people around it and then later because they are unmindful around doing those things, right? They're just doing those things for the heck of doing it while there are people around who these things can be delegated to, right? So I think the
01:35:40
Speaker
key fundamental of whenever if you are trying to raise fund, you need to detach yourself out of the business and get into the story zone. If you are getting 10 escalations since morning, you are being worried by your team around salaries and there are a lot of
01:35:58
Speaker
You can see a lot of hardship that goes around in the beginning. You are dealing with all these hardships and then you are sitting in front of investors and you want to show him a dream word, right? This doesn't happen. So my thing would be if you are raising funds.
01:36:15
Speaker
be absolutely clear amongst your co-founders and amongst your key team that I'm going to be largely unavailable for these 15, 20, 30 days, right? So business, this is where the business says you are on your own.
01:36:31
Speaker
And when you are taking that time out, you are also understanding that within yourself, your business is going to take a hit. Your numbers will not grow the way it should grow because you want to show that to investors as well. So you would want to start with a slightly lower trajectory of numbers, like because you understand that you get so that overall, because typically founders, what they will say that what the current numbers are, they would say 30% higher or 20% higher.
01:36:54
Speaker
I would say, if you're raising funds, just start with the absolute numbers. One, it gives you absolute authenticity. Even if it doesn't grow too much, you're still on a solid spot. You are not scared about failing in due diligence. You are mentally in a happy place. And that allows you a lot of time to cram all your meetings, everybody under the sun that you can speak with. Speak with everybody in a very short 10, 15, 20 days of time.
01:37:23
Speaker
Joby, whosoever is giving you small checks, 10 lags, 20 lags, just keep on reeling those checks in, start build initial momentum, keep on updating the rest of the guys, how your round is moving, create, you know, and capitalize on that momentum. If you, if you go slow there, it will drag on for forever. Like that's, that's has been my learning for the last, uh, the two funders that three funders, in fact, that I did in the early sizes.
01:37:50
Speaker
What is the kind of investors to reach out for raising your first million? Should you go to angel? Should you go to micro VCs, early stage VCs? Early stage VCs, I think VCs take a lot of time and they largely move with thesis and they largely
01:38:09
Speaker
come on board, and they need to have a certain amount of time or some excessive amount of formula. So if you are raising your first million, I would say that you cram a lot of angel sort of discussion the first three or five days, because your pitch will get refined. You will get iterated on your pitch. And keep on iterating your pitch with every single discussion that you have. It will sharpen you around the edges.
01:38:38
Speaker
With that you go to microvices, microvices and big vices all at once because if you are able to get some momentum with angels, you can use that momentum to kind of generate interest with microvices and the large vices. And if some microvices interested and a large vices also interested at the same time, you can use microvices and trust to get the money from the large VC.
01:39:00
Speaker
Right. So that's basically, you have to create for like, yes, you have to do it full time. Like if typically I see the mistake that people do is they try to do it, you know, in chunks, like I spoke with somebody, then I spoke with somebody, then I spoke with somebody. It doesn't, it doesn't work like that.
01:39:21
Speaker
Okay. That's good insight. Very good insight. Okay. Um, yeah, I want to ask you about, uh, best practices around building a product because you have built multiple products. Uh, you know, so what, what advice do you want to give around building a product?
01:39:37
Speaker
I think my co-founder has done majority of heavy lifting around building a product and I believe that he has absolutely magical skills when it comes to thinking through the nuances. But my sense Akshay is
01:39:56
Speaker
In the very early stages, when you want to raise funds and you want to show investors that this is what I'm building, this is looking exciting, you can cut a lot of corners. You want a functional product on which you can give demo. Basically, it's just to illustrate your vision and the story.
01:40:14
Speaker
But when you are actually on the job, when you are building a product for your business, you can't take these hackish approaches. You can take hackish approaches around operations, around sales processes and these kinds of things, the growth hacks and all this kind of thing.
01:40:30
Speaker
But when you are building a product, I think you need to be very, very cautious on what you're building. And it's absolutely important to build it right in the first group, because if you don't build it right in the first group, what happens is you, you are thinking that you are shipping out an MVP, right? You ship out an MVP, right?
01:40:47
Speaker
Uh, then because this, if, if fortunately that MVP starts working, the customer comes on your requirement, it goes into more feature set. Then you start building more features set around it. Now, some core experience that you initially built is already sucking, right? The whole consumer experience is already sucking. Then you are iterating between your upgrading the first version, and then you're working on certain features, the whole focus. So my sense would be.
01:41:12
Speaker
When you are building product which is catering to core business need, you need to be absolutely clear what you want to do. It's better to have multiple iterations on the story along with the tech team to refine it around the edges, to refine the workflow, refine every pixel in the UI and UX of the whole product.
01:41:33
Speaker
And then you give it to the tech team that this is what we want and you build it. But that advice also applies to companies which already have a stable tech team. For absolutely early stage founders, my simple advice would be you need to be very serious about what you want to ship out next. You just can't be shipping out substandard things in whims and fantasies. You need to give
01:42:00
Speaker
take less number of bets on product, but take those bets deeply. Don't stay in that MVP zone. I think MVP zone is counterproductive most of the times. Okay, interesting. How do you decide between conflicting priorities? Because when you're building a product, you might say, let's first have a good basic structure in place or whatever. So how do you prioritize?
01:42:29
Speaker
So for us, so I know about our business. Our business is anything that has to do with cash flow control and leakages is an absolute priority because it has a direct business impact. And if it is affecting our business, definitely all the other customers who are buying this product, they also kind of will be seriously interested in it. So absolute priority is,
01:42:54
Speaker
fixing the, the performance of the code. So what, what we do typically in the product is we have device, something called as the core experience, the core journey, the core feature set. So you don't want to go wrong in this, in this direction, right? And then there's something called as, uh, growth and the, uh, growth feature set, right? Something that will allow you to take this product to the larger market. So for us, the priorities always fixing the core experience because core experience results into NPS and NPS results into more.
01:43:24
Speaker
post a word of mouth and good customer, right? So it's almost, almost like a, you can say a growth leader itself. It just acts a little slow, right? But, uh, if you do the other way around, if you focus a lot on growth features and the whole experience is not, you are always, there's a running.
Quality Management and Team Culture
01:43:41
Speaker
always running a risk that somebody can screw you from behind. Like some competition will come in. He will see that this product has value. This use case has value, but this company has not done it right. So let me do only this subset of this whole problem, right? And they will take out a lot of your market share. So I think it's important to stick to the fundamental. What is your core experience? Deliver it with absolute perfection. And then you kind of cut to the, get to the growth features.
01:44:09
Speaker
Interesting. How frequently do you measure NPS? Do you have a formal way of measuring NPS? NPS stands for Net Promoter Score. At this moment, because our construction business is basically stacked around Elvis running 30, 40 projects, and we almost deeply understand and know these customers. So for me, measuring NPS is going to the site.
01:44:35
Speaker
go to the site, understand what's going on there, talk to the customer and the pseudo indicators is how much of rebate business you are getting from that account. If you're saying the NPS is right, but you don't. We tried other methods of measuring NPS, but these were all hacked by the team which was working with the customer.
01:44:52
Speaker
Right. So, uh, as of this, uh, this moment, we don't have a very formal way of measuring and piece, but now, uh, because now the scale is amassing. So what we have devices that we would want to start creating the quality score on our, on our work, like.
01:45:08
Speaker
We'll go the side with the initial quality briefing meeting and towards a closer, we'll give a quality score that quality score. So basically there's an unbiased party within the company and whatever he's scoring you is the NPS on the delivery side. Then another component of the customer is that how you are managed at relationship, which is anyway be tracked through the repeat business. So these two things in combination are the indicators for us for of NPS as of this moment.
01:45:39
Speaker
But yeah, I think the formal exercises which are being preached around measuring NPS, these come into play when you have almost, I think, minimum 1,000 customers that you're dealing with. Otherwise, there's no point of running a survey, right? If you have 30 people to talk to, you better talk to five or 10 of them, you will get a good sense.
01:45:59
Speaker
Right. Okay. Interesting. I found that interesting in terms of having an unbiased party within the organization to do quality control, like an auditor within the organization who's not motivated to tweak the score. That is important to do. That's quite an interesting insight. Okay.
01:46:20
Speaker
How do, you know, you've had like CEO role and then also not a CEO role. How do these things get decided? Like two friends starting a business together. How do you decide who will be the CEO?
01:46:34
Speaker
I think there's no formal way. I think I've seen a lot of teams struggling around. I think there was a data Y Combinator showed. They shared almost like typically startup fields that they are going out of business because they ran out of money.
01:46:52
Speaker
Really running out of money is less than 5% or 10% of the cases when the business went first. Almost 35%, 40% of the time when the team was not aligned, founders were not aligned. That was the highest cause of startup death. So that's a big, big problem. I think for us, it was almost like patients. We have given each other good time and space, carved out responsibilities,
01:47:21
Speaker
being very open and candid with each other and sharing feedback. So this is how we decided, but I think the key skill a CEO should have because the CEO job apart from raising money and the growth and the things it would be to
01:47:45
Speaker
drive a sense of culture and coherence within the team, to drive a sense of ownership within the team. And the sense of ownership comes when you give people their autonomy and new credit, when you give them recognition, not just within the organization, but the outward recognition. So you need to let loose of certain things. If you can't let loose of things like the external PR, the credibility, and you are always seeking credit, then definitely the person is not.
01:48:14
Speaker
fit to be being the CEO. I think it's more towards giving your people adequate space and adequate recognition. And because these things can be sensed in the early, if two friends are starting up,
01:48:34
Speaker
Any unbiased third person can recognize very easily out of these two who should be the CEO, but you will often find that within these two people, they are taking a wrong choice. The typical thing that investor notice whenever they meet an early stage team, right? So, but you can't do anything about it. How do you build a great team? How do you hire the right people?
01:48:54
Speaker
So in fact, I have a video. We had a session in the internal team on hiring. I have built a very strong view that you need to index way more on personality than you index on the experience, typically in the startup. Because in the startup, you are looking at value creators, people who will venture into new horizons and will create value.
01:49:19
Speaker
You are not looking at value protector kind of people who has already been there, done that, and you are asking him to do the similar kind of thing at your place. Why would he descend down to your place if he just had to do the same thing? And even if it does that, it will not make an ROI sense of the investment you are making on that person. So majority of the times startups are hiring value creator. You need to spot a value creator. It's almost like taking a bet on the person almost every time. And to do that efficiently,
01:49:48
Speaker
A person, a recruiter or somebody who's driving the interview need to be far more interested in seeing the life of the person from his own lens. So our typical question, when we are conducting an interview, we typically ask the person how has been his early childhood, family problem that has shaped his personality, right? What has been highs and lows of graduation, right?
01:50:13
Speaker
how your experience with your managers, there would your managers will rate you on a scale of one to 10, what strength he will tell about you, what strength do you believe you have. So it's more like 70, 80 percent of the discussion is majorly towards understanding the person who he is, what are his struggles, what are his motivations, what drives him, what sets him off. So if you can understand these things about a person,
01:50:41
Speaker
and you do ask these same set of assessment repeatedly with multiple set of people, then you start getting a sense on what kind of people you will vibe good with and will be able to work long term with. What signals are you looking for when you're asking about personal life?
01:51:04
Speaker
So in personal life, first of all, need is very clear. When you ask about early childhood, it's only the time when your perception shapes up how the world is and what's your place in the world. So from early science, so from early childhood, typically, candidates will give you insight on what drives them, what motivates them. So you get to know about their drive.
01:51:31
Speaker
in these kind of questions, you also get to know about people typically have some unique strengths, which they are continuously good at, but they are not able to articulate it well. When you start looking at their life from their lens, you get a very good sense on, okay, this is the pattern wherein the person is naturally being drawn to these kinds of things because he's naturally being good at things, and these are the kinds of things which he is letting unaddressed.
01:51:57
Speaker
Because it's very easy to see that through from the external lens when somebody else is talking. So, you will get a sense of his drive. We also look at the resourcefulness in people, like people who can make, you can say, sense out of the environment things around them.
01:52:17
Speaker
and get through with it. There are people who would spend a lot of time in setting up the geometry box and the people who will just grab a pen from the side and will write the examination. We are definitely looking for the second kind. So resourcefulness, the drive, and then
01:52:39
Speaker
Basically, teamwork is what we deeply assess. Business is very collaborative. We have a deep sense that teamwork is not about collaborating and delegating the job between multiple people. Teamwork is always about sacrificing for the other guy.
01:52:54
Speaker
When we ask about teamwork, we are always looking for signal. There are people who would come, especially in the first round, who will talk about, I've led this initiative when I come delegate Kia and that's teamwork. We tell them that. Tell us more, tell us more. We'll ask for three, four, five examples in the same instance. If the person has not been able to share a single instance wherein he has done
01:53:14
Speaker
you know, some sacrifice for the other guys slowed himself down to kind of bring the other guy up to speed and that other guy then did wonders for the overall job. So if, if you can spot that kind of signal, then you know that you are absolutely speaking with a groomable leader, right? You that you can lift and you know, then you can work on for developing some course.
01:53:39
Speaker
And that brings us to the end of this conversation. 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 adatthepodium.in. That's adatthepodium.in.