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Why Offline Retail (95% of India) is Still Untapped | Anshoo Sharma (Magicpin)
144 Plays5 years ago
"Offline retail, in spite of being 95% of retail, is dark in terms of data."
This core insight drove Anshoo Sharma to leave his successful venture capital career and build Magicpin. He saw a massive, data-poor market ripe for a technology solution that could bring performance marketing, traditionally used online, to the vast world of offline stores.
Anshoo Sharma is the Co-founder and CEO of Magicpin, India's largest discovery and rewards platform for offline retail. Under his leadership, Magicpin sees over $1 billion spent annually by users on the platform, has raised $37 million in funding, and serves millions of users and retailers. An engineer by training with an MBA from IIM Ahmedabad, Anshoo previously evaluated high-growth startups as a Venture Partner at Lightspeed India and advised major corporations as a Consultant at Bain & Co.
Key Insights from the Conversation:
- The Offline Opportunity: Despite its scale (95% of Indian retail), the offline market lacks data, hindering effective marketing and growth for retailers.
- Performance Marketing for Offline: Magicpin applies data-driven marketing principles, allowing offline retailers to see tangible ROI, much like online ad platforms.
- VC Lessons: Anshoo shares insights from his time as a VC, including evaluating strategic value vs. short-term metrics and the importance of backing the right team.
- Innovating for Kiranas: Recognizing the unique challenges of small retailers, Magicpin developed tools tailored to their needs, like simplified ordering systems beyond basic catalogues.
- Pandemic Pivot: Covid-19 accelerated the need for offline businesses to go online, leading Magicpin to build free tools enabling retailers to accept online orders and manage delivery.
- Future of Retail: The rise of D2C brands and the increasing importance of omnichannel presence create new opportunities for platforms that can enable small retailers.
Chapters:
- 0:00:27 - Intro: Anshoo Sharma's Journey & Offline Thesis
- 0:01:27 - Early Career: Building VoIP Technology
- 0:05:05 - Pivot to Business: IIM-A Insights & Bain Consulting
- 0:12:10 - Entering Venture Capital with Lightspeed India
- 0:14:43 - VC Learnings: Investing, Thesis Building & Missed Deals
- 0:34:39 - The Leap to Entrepreneurship: Why Start Magicpin?
- 0:37:20 - The Magicpin Idea: Solving the Offline Data Problem
- 0:41:41 - Zero to One: Early MVPs, WhatsApp Hacks & Iteration
- 0:45:53 - Scaling Magicpin: Funding ($37M) & Growth Strategy
- 0:50:18 - Innovation Spree: Building Online Tools for Offline Retailers
- 1:01:11 - Post-Pandemic Retail: Enabling Kiranas & D2C Opportunity
- 1:07:17 - Closing Thoughts: Building for the Future of Indian Retail
Hashtags:
#Magicpin #AnshooSharma #OfflineRetail #IndianStartups #FounderThesis #VentureCapital #StartupIndia #PerformanceMarketing #RetailTech #KiranaTech #EcommerceIndia #D2CIndia #Entrepreneurship #Podcast #StartupPodcast #IIMAhmedabad #Bain #LightspeedVP #StartupJourney #BuildingInIndia
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Transcript
Introduction to Founder Thesis Podcast
00:00:02
Speaker
HD Smartcast You are listening to an HD Smartcast original
00:00:24
Speaker
Hi, I'm Akshay. Hi, this is Aurob. And you are listening to the Founder Thesis Podcast. We meet some of the most celebrated sort of founders in the country. And we want to learn how to build a unicorn.
Origins of Magic Pin
00:00:40
Speaker
Anshu Sharma was living the dream. He was working at one of the most prestigious museums of the country, where he packed investments in startups like Freshmanin, Line Road, Craftsvilla, among others. But he had a thesis on the untapped potential of the offline retail space and was looking for a strong startup to pack in the space.
00:01:07
Speaker
When he could not find a good enough venture to pack, he decided to start Magic Pin with the aim of building a data-driven performance marketing engine for the offline retail world. And today, Magic Pin serves millions of retailers with a whole host of innovative products.
00:01:28
Speaker
Here's Anshu talking about his journey from being a technique working on deep tech products to creating innovative products that empower women for retailers.
Anshu Sharma's Early Career
00:01:40
Speaker
I joined Hughes in fact in late 2000 itself. I think January 2001 I joined them. So this is pre pasta. So I joined them then because they had this program to say you can do your last semester with us. In fact I remember the project that I was a part of.
00:01:56
Speaker
It was the product team within HUBE. So there's a bunch of things. There's a lot of services business that they do. But they had one team which was building their own proprietary products that would be set. And they were building protocol stacks in the voice over IP area. And that again was a very good experience because
00:02:15
Speaker
moment you get in, there was a lot of work. So they would throw you at the deep end. I did a bunch of things that were in sandbox, but soon enough, they needed people and they could see that, okay, it seems like he's getting hang of it. So they started to give more. I was used for around two and a half years that I was there. And I, I enjoyed that a lot, right? This, this satisfaction of building and seeing how to build
00:02:40
Speaker
at commercial grade because those tasks that you're building, those are getting deployed. I filed my first patent there. And that was also very early. Usually, you'd not get an option to file a patent. I was at the right place at the right time. There were a number of what was defined as the internet engineering task force, ITF. We could submit drafts on that. So I think within that context, I had a great run.
00:03:07
Speaker
what I realized that I felt so saturated because you know two years out of college I had seen that and built that product and at some point owning some of those completely end-to-end by myself but I felt that there is a lot more that I haven't seen that I want to go out and there was no other reason because other than that the run at Hughes was great but I chose to
00:03:32
Speaker
try something different and I found this job at Motorola in Bangalore and I took that. I remember the director as he was saying that was, I don't understand your family is here, your life is here, what don't you like about it for you to go and put yourself into a different city altogether? And I didn't have a very good answer other than that I don't know what I've not seen, I want to go out and see both.
Life and Career Shifts
00:03:57
Speaker
And then I joined Motorola in Bangalore
00:04:00
Speaker
And the first thing I realized when I got to Bangalore, and this is the first time I was living out of my home, that you need to solve for food three times in a day. I'd never thought of it in that way, but now I have to. The other thing which happened while I was at Bangalore was that I somehow realized that technology is a great place to be.
00:04:24
Speaker
But if this continued quest for needing to break out, I just felt that to an extent is still constrained. And this is 2003-2004. So you either go out, and Moosra had a bunch of those opportunities. Moosra had Shamburg office in Chicago where they were doing a lot of work, and a lot of work in India used to happen in collaboration.
00:04:45
Speaker
even while at Hughes right there were enough opportunities we were representing you at a bunch of international forums actually I got to do my first international flight I did my first flight to Paris that was something which is very interesting and you know all of this was a result of working on something which has global demand
00:05:06
Speaker
So to that extent, it was very satisfying and that continued to be true at Moshala as well. But I just felt I'm missing something which would let me break out. And that is a context in which I wrote Cat in 2003. And I got through almost to, I think to all of the I.N.s and that seemed to me like a good thing to go out and do next. That's how I got into M.G.
00:05:35
Speaker
And that was after three years of work experience. So it was not as if I'm going in blind, but I was going in blind to the extent I didn't have any understanding or context of what businesses are. Literally, I would see economic times and I would see crows and I would not understand what a crow was. Then I think the time at Ahmedabad was amazing to the extent that somehow
00:05:55
Speaker
suddenly in matrix, you would start to see the code everywhere. I could start to see P&Ls everywhere. I could see one with all I would have a P&L. I can see his course. I can see his revenue. I can see his marketing. So just like I think when I started to study computer science way back in college, I had a similar kind of awakening studying business. And this time around, other than, of course,
00:06:20
Speaker
academics, right? We could get together a few like-minded people, four or five of us, and we practically made it our business to win almost any event that was happening in any competitive circuit. And we won a bunch of things through the course of those two years in India, in Singapore, and even in my first year when usually people are just focusing internally on academics, we were the first team among the second year students who
00:06:50
Speaker
who could win other business leadership awards. At that point in time, I was very much conscious about what I want to get out of Indabad and we could find a bunch of like-minded people who could together work towards that. And the two years was quite satisfying. At the end of that two years, I was fortunate to get an offer from Bain and Company.
Consulting and Building Aspirations
00:07:13
Speaker
Bain was setting up its shop in India and they want to help build the India office.
00:07:19
Speaker
even though they didn't have an office in India back then. So I joined Bain in Austin. This was in 2006. Also, at the same time, I'd also got married because I'd known my wife Anjali at that point, took five years or so. So she and I had joined Hughes together. And I had been in touch with her throughout, through different places, right? Through Motorola, and I was in Bangalore, then, and I was in India. And she'd been also in different parts of the world.
00:07:46
Speaker
as a software engineer and then telecom. And then we also got married and then we spent the next one year in Boston, a little over a year in Boston. At the end of that one year, Bain was in a moment position in India and there was an opportunity then. What were you doing at Bain in that one year in Boston? So a bunch of interesting things, but I would say my time was kind of half
00:08:12
Speaker
and half divided into one part was pretty, pretty ring fence. So Bain has this advisory team which gives commercial advice or does commercial diligence. If a private equity investor is investing in a company, they would ask Bain to come and give their point of view. So I was part of that team that would give this point of view. So I think I spent around six, eight months in that group and every, you would see a different company.
00:08:41
Speaker
So like company after company, I remember in my time had been I had done I'm 22 diligence. So I'd looked at so many spaces sector. So you kind of get a knack of very quickly to get to here is this company in this market. What are the three things that really matter that let you understand whether it's a good investment or not? Or what do you need to believe in to this investment?
00:09:01
Speaker
So that framework I started to build while I was in Boston. And then I did the first six months. In fact, that I was there, I was working for a pharmaceutical giant. I did that. And in fact, I continue to do private ones. I was back in India also for me. What were some of the industries that you looked at in India? From technology, consumer, retail, industrials.
00:09:29
Speaker
So you would figure out what is a good valuation for this company and give that as advice to your client that A, invest or not and B, invest at what price? The second part we would shy away from doing. We would kind of rephrase that to say, if you were to invest, advise and expect so much return, you need to believe that these three things need to happen. But you stay on commercials or on the business aspects, which you probably have a better handle.
00:09:59
Speaker
And then I also worked with just once the investment side of the market. I did a fair bit of work in the consumer telecom retail space also, which were traditional clients, large companies, public and private who are building businesses and looking for advice around the specific area that
00:10:19
Speaker
like what kind of like reorganization or optimization that kind of work those kind of things also i remember there was one telecom giant which was bidding for 4g pricing so we've set up this massive model and then understanding of how to bid what do you expect as revenues how much should you bid i think all of those kind of things i remember there was a toy company which was a company that was a very strong brand but the penetration in terms of revenue was not as much
00:10:48
Speaker
What do they need to do get to capture the kind of demand the intensity? So I think those were the kind of problems that we would work with these companies. And it would be fairly deep operational kind of work, but also at the same time being specific about it to say these are the items that we should prioritize over the next three to six months to start to see the results coming.
00:11:10
Speaker
So, you know, some of the other founders that I've spoken to who also have a consulting background typically end up feeling frustrated in a consulting role because they don't own the outcome. Did you also feel that way? I would say frustrated would be a strong word, but yeah, you know, I did what I spoke of right up front, right? The thing about building is what I was missing.
00:11:36
Speaker
And it is great at a place like especially being super sharp about how to make the people. And in fact, that was the heart. That was the reason it took a long time for me to also get to the sense that I would explore something. So I would maybe hesitate from saying frustrated, but maybe more.
00:11:54
Speaker
this thing around that is this what I want to do 10 years out 20 years out and that answer is not that no this is it right I kind of long to be able to come closer to ground and building unfortunately that opportunity you you don't get as much off especially I think that's an opportunity you can pursue once
00:12:15
Speaker
You are maybe a senior partner where you're building a practice, right? That building is of a different kind. It's not building a problem. And I think somewhere around that course, I met Dejal who runs the LightFeeda. He had
Venture Capital Insights
00:12:29
Speaker
taken over the office and
00:12:31
Speaker
He was looking for like-minded individuals to come and join him. Interestingly, he had worked at Bain really long back and I think he had some affinity to meet people. I met him and that process took some seven months. I was, you know, venture as an asset class is really nice. This is 2009 that we are doing.
00:12:53
Speaker
So I have a few questions here. In your LinkedIn, it says you're a venture partner at Lightspeed. So does one need to put in one's own capital to become a venture partner in a VC firm? Or I mean, how does it operate? Or are you getting a fixed salary and a percentage of whatever exit gets generated? And tell me about Lightspeed also.
00:13:21
Speaker
Yeah, so I can talk about the venture model in general. So the venture model is basically based on what is referred to as
00:13:29
Speaker
that you get 2% of management fees. So if you deploy $100 million, as a platform, you have $2 million to cover the expenses for the assets you've developed. Plus, you get 20% of the upside you generated. So if you converted that $100 million into $500 million, the $400 million of upside that got generated, you get to keep 20% of that. So that's $80 million. And this $100 million is raised from HNI's and
00:13:57
Speaker
H9, but also institutional funds, right? There would be, let's say pension funds in US and Europe would be keen to get exposure to some of their capital to venture risk or emerging market risk. And thus they would want you to invest that money on their behalf. So those are referred to as limited partners in the industry and the people who are making the investment, they are referred to as general partners.
00:14:22
Speaker
This is like a US-based entity. What's the history of light speed from that?
00:14:27
Speaker
Lightspeed is a much older set up. This was their eighth fund. So every fund you can imagine has, let's say a light cycle of three years. So this was 24 years that the senior partners or the founders had been investing in the space. They had Lightspeed that originally started from US and then they set up in Israel, China, and India was the newest market. Got it.
00:14:54
Speaker
Okay, so tell me about the light speed experience. What were you doing there? What kind of thesis did you form? What kind of investments did you participate in? What were the hits and the misses? So I was there for close to six years. So what we did in that six years is around 10 investments that I was a part of.
00:15:15
Speaker
And the first investment I remember was a company called Indian Energy Exchange, which we started to do the work in 2010 is when the investment actually happened. An example of the kind of investments Lightfeed was to do. Power is a very asset intensive sector. Investments that were happening in power at that point in time, digitization of power that was happening over the last five, six years and ten years.
00:15:39
Speaker
and the investments were largely around creating power assets. But as I see it, we went on to find a company which is an exchange for power. It's an exchange that trades spot power. So someone sitting in Chhattisgarh can sit in, let's say, Gurgaon. They can discover the national grade kind of clear set. Full business, because it's supposed to grow of a country needing more and more power.
00:16:06
Speaker
and needing the right kind of recovery of that power, you're not having to get your capital stuck in both fixed assets, but you're sitting in a very at light way of getting exposure to that same growing market and financial services like our thesis is that we are working on the day ahead market, then we'll work on the futures, the forwards, the derivatives, like the entire stack of what would exist for this come up.
00:16:31
Speaker
that ability to somehow find a solution in all of these days. And some part of that is, you know, also to do with just being focused on the outcome and doing whatever resourcefulness is just one part which makes them able to get to the output, but not not relenting. There are a bunch of really high quality people around us in the Indian, I would say, tech ecosystem now. And all of them show the same traits that
00:16:57
Speaker
They've seen the opportunity, they've gone aggressively after it, and they're just unrelenting. They would not give up. They'll attract more resources towards them.
00:17:04
Speaker
Okay. So, you know, there's this concept, I don't know if you read this book called Loon Shorts, which talks of a P-type and an S-type innovation. P-type being a product innovation through technology. S-type being a innovation in the process or the system, you know, deriving more efficiencies. So which of your investments were backing S-type innovation and which of them were backing the P-type innovation?
00:17:32
Speaker
Yeah, I'm not aware of that framework. But I think Lee whatever we were doing was more more product and in the short term, you know operations or structure could help it. But fundamentally we were believing that at a scale which is much bigger than this product can will just create such a deep mode that others would find it right.
00:17:53
Speaker
For example, if you think of Indian energy exchange, it's not that power trading was not. But when you come to this model and you kickstart the engine somehow and gets to a certain scale from that point onward, it's on its own on its own term. And in fact, really high quality companies in India where we could not find that that you call it a network effect or that effect kick in.
00:18:13
Speaker
We did not make those in largely because like as venture investors, our focus was more to find where do you find that upside, right? Versus, versus saying that this is a really strong execution, but that becomes a lot more like a priority than a, than a venture like office. Okay. And typically what was the kind of investment that you did? Like at what stage was it like seed series and, you know, like where did light speed come in?
00:18:41
Speaker
seed A and B, I would say, but, um, we realized that anytime you go towards B, it is really hard to get the price right. We intentionally created this mix of coming in really early seed and a, like line road that I mentioned to you on a, like all of these companies, right? We were coming in really early and we could come in because we believed in the base and knew the entrepreneur, right? And over a period, once you have seen enough of that pattern, once you formed your thesis, it becomes possible to take that leap of faith.
00:19:10
Speaker
And that's when you kind of get paid in terms of the returns that accumulate. And did all the investments live up to their potential? Like what were some of the misses? Yeah. Yeah. I think misses were on both sides. Things that we did and they didn't result in what we thought they could and things that we that we did not do. And they went on to become pretty big opportunities across the board.
00:19:38
Speaker
I would first talk about the latter that we had, and I think we looked at all the big names that you see around you, right? I remember, especially to call out, Ola was one company that we looked at very closely at different points in time. No matter, we had an opportunity to invest at one point in time. And one thing which we didn't factor as well in is that this is demand and supply equation.
00:20:06
Speaker
where if you get the number of really high quality companies in the country is so low that if you are part of building one, the return on that kind of gets taken care of because there's more capital that wants to come in. The same thing that we were seeing that we were getting priced out on companies that were further around.
00:20:26
Speaker
I think we would, there was an option to see that, right? If you'll, for example, look at Flipkart, like economics, we're not working out for a very long time. The, the concept of e-commerce in India and being the leader in that is valuable by itself, regardless of the cash flow that is generating in the short term. The strategic value is meaningful. Just clarity on that piece and confidence in making such investment, which will be backloaded, um, in their returns and the returns would be based off the strategic value that's getting created.
00:20:53
Speaker
And at scale, you know, I'm not talking about an acquisition getting done, but that realization to an extent dawned later on, uh, after having seen some of that story get laid out. And that's, that's more of a, I think from my perspective, one, one thing. Hmm. Okay. Why did you say no to the matter? Like what was the thesis behind that? In most of these cases, the reward, right? The price that we were seeing it to the current numbers that were available, it required.
00:21:22
Speaker
us to believe that there's a leap that can be taken. At that point in time, I remember the leap was that it would be successful in many international markets to put together.
From Ideas to Magic Pin
00:21:32
Speaker
And they did a pretty good job at it. And they've gone on to build so many things that couldn't have been conceptualized then. We couldn't get to that same conviction and answer. But it seems that there are many more things at play.
00:21:48
Speaker
with disproportionate amount of capital, which sometimes becomes available as a result of scarcity of high quality assets, right? You can build things that were not part of the original vision that you had for the company. And I think that's where value sits, right? And that's where as investors want to invite the company, there is so much more that can be done. If you've got the right team in the right market, the degrees that you can maneuver, right? They just expand meaning.
00:22:12
Speaker
And what are some of the investments which are yet to live up to their potential, like which are still on the way where as compared to what you might have projected? Yeah, no, we didn't have all successes. We had invested in another fashion commerce company called Fashionara alongside Helion and Arun really accomplished high quality
00:22:37
Speaker
Entrepreneur who build reliance trends before this and with that mother if I remember correctly even prior to that So it's a really high quality person who'd seen how to build a business in this area I think when the markets become tough, right? It's just hard and the onslaught continues from a minter and a I think Jabong There's so many people who came in that even if you've got something really high quality Like they will just drown you with the amount of money that can be thrown into things
00:23:05
Speaker
So unfortunately, we ran out of money. OK. So typically, these investments that you did, were they inbound inquiries or outbound? Like did you form a thesis and then go out and find companies or were these people who were like writing into you? It's always amazing. I think inbound, the quality on inbound usually has invested. Everyone would reach out to the separating the noise from signal is the heart. So a lot of investments that you end up doing are really long term.
00:23:36
Speaker
relationships that you've nurtured that in an investment subject. And that was true with all of these. I spoke to you about such a also, right? That was an introduction which was made. And I think having said that, if I think about a referral from a peer who's investing and or someone in the industry who says there's this really high quality person who's building this, I think that kind of inbound is high in quality and really high likely to succeed.
00:24:06
Speaker
To get that inbound, you need to do a lot of outbound. You should have gone and built that network.
00:24:13
Speaker
And it's because you've built that network, you have those conversations going, is that when that person gets to know something in their space, which is of relevance to you, they would kind of reach out to you. Sometimes it's just a question. It's your opinion that they are looking for. That's just basically keeping the network alive by generally trying to be of help to people who you connect with. And some of those things will lead to an investment, which is inbound.
00:24:38
Speaker
At the same time, you know, the more popular assets in the market, those would be, to an extent, chopped around or you might need to be ahead or somehow get to have your leg in before someone else does. And that's equally important as an investor. You can't, like the investor role is an interesting role. While it seems like you're kind of looking at stuff that's coming to you, actually the amount of work that it takes to build that network
00:25:04
Speaker
Um, and, um, and, uh, the hustle with which you need to continue to invest that time in, in the hope that something will come out of it on the other side, right? That's just a very, very different part, like a sales job, even though you're giving money, it is part like a sales job where you're continuously building that network, right? Building those rails through which you will get those opportunities from technology.
00:25:36
Speaker
So you would figure out what is a good valuation for this company and give that as advice to your client that A invest or not and B invest at what price?
00:25:48
Speaker
The second part we would shy away from doing. We would kind of rephrase that to say, if you were to invest, advise and expect so much return, you need to believe that these three things need to happen. But you stay on commercials or on the business aspects, which you probably have a better handle on. And then I also worked with just once the investment side of the market, I did a fair bit of work in the
00:26:15
Speaker
consumer telecom retail space also which were traditional clients large companies public and private who are building businesses and looking for advice around the specific area that
00:26:27
Speaker
like what kind of like reorganization or optimization that kind of work those kind of things also i remember there was one telecom giant which was bidding for 4g pricing so we've set up this massive model and then understanding of how to bid what do you expect as revenues how much should you bid i think all of those kind of things i remember there was a toy company which
00:26:49
Speaker
was a company that was a very strong brand, but the penetration in terms of revenue is not as much. What do they need to get to capture the kind of demand, the intensity? So I think those were the kind of problems that we would work with these companies. And it would be fairly deep operational kind of work, but also at the same time being specific about it to say, these are the items that we should prioritize over the next three to six months to start to see the results coming.
00:27:18
Speaker
So, you know, some of the other founders that I've spoken to who also have a consulting background typically end up feeling frustrated in a consulting role because they don't own the outcome. Did you also feel that way? I would say frustrated would be a strong word, but yeah, you know, I did what I spoke of right up front, right? The thing about building is what I was missing.
00:27:43
Speaker
And it is great at a place like especially being super sharp about how to make the people. And in fact, that was the heart. That was the reason it took a long time for me to also get to the sense that I would explore something. So I would maybe hesitate from saying frustrated, but maybe more this thing around that is this what I want to do 10 years out, 20 years out.
00:28:07
Speaker
And that answer is not that, no, this is it, right? I kind of long to be able to come closer to ground and build. Unfortunately, that opportunity, you don't get as much off, especially I think that's an opportunity you can pursue once.
00:28:23
Speaker
You are maybe a senior partner where you're building a practice. That building is of a different kind. It's not building a problem. And I think somewhere around that course, I met Dejal who runs the LightFeeda. He had taken over the office and
00:28:38
Speaker
He was looking for like-minded individuals to come and join him. Interestingly, he had worked at Bain really long back and I think he had some affinity to meet people. I met him and that process took some seven months. I was, you know, venture as an asset class is really nice. This is 2009 that we are doing.
00:29:01
Speaker
So I have a few questions here. In your LinkedIn, it says you're a venture partner at Lightspeed. So does one need to put in one's own capital to become a venture partner in a VC firm? Or I mean, how does it operate? Or are you getting a fixed salary and a percentage of whatever exit gets generated? And tell me about Lightspeed also.
00:29:29
Speaker
Yeah, so I can talk about the venture model in general. So the venture model is basically based on what is referred to as that you get 2% off management fee. So if you deploy.
00:29:41
Speaker
$100 million. As a platform, you have $2 million to cover the expenses for the assets you've developed. Plus, you get 20% of the upside you generated. So if you converted that $100 million into $500 million, the $400 million of upside that got generated, you get to keep 20% of that. So that's $80 million. And this $100 million is raised from H&Is? H&Is, but also institutional funds, right? There would be, let's say, pension funds in US and Europe would be
00:30:11
Speaker
keen to get exposure to some of their capital to venture risk or emerging market risk and thus they would want you to invest that money on their behalf. So those are referred to as limited partners in the industry and the people who are making the investment, they are referred to as general partners. This is like a US-based entity or like what's the history of Lightspeed from that
00:30:35
Speaker
Lightspeed is, I would say, a much older setup. This was their eighth fund. So every fund you can imagine has, let's say, a life cycle of three years. So this was 24 years that the senior partners or the founders had been investing in the space. They had Lightspeed that originally started from US, and then they set up in Israel, China, and India was the newest market. Got it.
00:31:02
Speaker
So, tell me about the light speed experience, what were you doing there, what kind of thesis did you form, what kind of investments did you participate in, what were the hits and the misses.
00:31:15
Speaker
So I was there for close to six years. So what we did in that six years is around 10 investments that I was a part of. Um, and, uh, uh, the first investment I remember was, uh, a company called, um, Indian energy exchange, which we started to do the world in 2010 is when the investment actually happened. An example of the kind of investment light feed was to do. Power is a very asset intensive sector investments that were happening in power.
00:31:42
Speaker
at that point in time, the utilization of power that was happening right over the last five, six years, or 10 years. And the investments were largely around creating power assets, investing in power gen. But as I see it, we went on to find a company which is an exchange for power. It's an exchange that trades spot power. So someone sitting in Chhattisgarh can sit in, let's say, Gurgaon. They can discover
00:32:07
Speaker
the and the national grade kind of players and full business because the crew of a country needing more and more power and needing the right kind of recovery of that power you're not having to get your capital stuck in both fixed assets but you're sitting in a very at light way of getting exposure to that same growing market and financial services like our thesis is that we are working on the day ahead market then we'll work on the futures the forwards the derivatives like the entire stack of
00:32:36
Speaker
what would exist for this company, that ability to somehow find a solution in all of these. And some part of that is, you know, also to do with just being focused on the outcome and doing whatever resourcefulness is just one part which makes them able to get to the output, but not not relenting. There are a bunch of really high quality people around us in the Indian, I would say, tech ecosystem now. And all of them show the same traits that
00:33:04
Speaker
They've seen the opportunity, they've gone aggressively after it, and they're just unrelenting. They would not give up. They'll attract more resources towards them.
00:33:15
Speaker
Okay. So, you know, you said that in inbound, there is a signal to noise issue and there's a lot of noise there. How does a startup looking to attract funding overcome this? You know, is there a specific instance you recall of someone who overcame that, which was just like an inbound, maybe a cold email or something, or is it generally that it's best to find someone who can introduce you?
00:33:47
Speaker
I think it's best to find someone who can introduce you and it's not hard now given some of the word goes from there cold email having said that like if you're losing time then a cold email I know out of cold inbound and everything is looked at nothing is not so so if I think and the likelihood of success if that investor is actually working in that space if someone's invested in that space they would
00:34:13
Speaker
likely want to know about anything else that is happening. If they have a point of view, someone's looking at, for example, the online music stream at some point in time, they would like to know anything that is moving in. And if you find that I'm reaching out cold to them right now, if someone is investing in the microfinance companies and reaching out to them cold with, let's say, the online streaming music, that will not yield.
00:34:36
Speaker
doing homework, whether it is around building a network through which someone would put in a good word or it is to do the research on the person who would be relevant. Okay. Got it. Very useful advice. Okay. So then tell me about how magic pin came about. Like you were, I'm sure you were enjoying your time at light speed. What made you want to, uh, do something of your own?
00:35:05
Speaker
Yeah. Yeah. I think that, that largely came from, um, um, it was, as I said, right, even before joining Lightspeed, I told you, right, that it had been kind of nurturing these aspirations and such that at Lightspeed, Lightspeed became that, uh, it's, um, just that I, and I spent some time in China. That was actually a trigger point for me. I remember Rajan Anandan from IMI at that point, he took a delegation from India, everyone. This was 2014, late 2004. This is amazing. Almost.
00:35:33
Speaker
mind-blowing the the way in which people were thinking and whatever you can think you can build and we write all of these things that you would imagine they're actually building and looking at that I realized that India is really in its infancy even it's true even but if if I were to thus go on to invest it's a great way to to see what can happen right and to play this so nice and right but the other way would be to go on to
00:36:00
Speaker
build if that's what I would enjoy. And, uh, it was, it was a very interesting window in time, right? Where I had seen an experienced that investing is, uh, is, uh, is a great place to be high quality risk adjusted. It pays pretty well, but I just felt that if I don't go out to build, then I will kind of regret that for the next as many years. And I don't know at some point you call that I felt this was the last opportunity. If I were to get any.
00:36:28
Speaker
And if there was one thing I could do, what would that be? And having been at Lightspeed for six years, I'd seen this recipe of people, markets, and capital kind of play out over and over again. This time around, it was not that I did not know what had to be done. I'd been prospecting this space at Lightspeed for a while, which was the offline relief that there's an option where we would have backed a team if we would have found the right team. I got convinced that I should
00:36:56
Speaker
go out to build and this was the idea that was the top and we had seen it for a very long time and knew what we were doing. And I could get that team, initial team together, fortunately, which basically meant that my ex-colleague at Bain and Cambridge was subsequently at a startup. At that point, Nexus was looking to step out and build something. He'd been there before I was there and he would ask me
00:37:21
Speaker
Uh, investing is, oh, why do you do that? Why don't you get it? Why don't you do it? Fortunately at that point in time, I got to that answer and he was also on the same answer. So we could converge and we could say, yeah, this is the right space. So what was the thesis in 2015 when you started it out? What did you want to build? Retail, right? Discovery for offline retail. Like, let me tell you about Magna. This is the problem. That offline is the, is 95% of the retail.
00:37:48
Speaker
Most of retail gets consumed in the offline leave the last but e-commerce is 5% of it and that has seen so much investment you technology everything is tight you visit an Amazon product the the ad for that page can follow you wherever they've really nailed it down to who should be marketed one but if you think of offline still kind of largely driven by
00:38:11
Speaker
very broad tools like above the line mark. What happened? Is that going in the right place or not? And that's because there's no data on offline retail. So offline retail, in spite of being 95% of retail is dark and if that data was made available.
00:38:24
Speaker
then this market could be transferred. If you could understand who's spending how much, where, et cetera, right? There's so much more that, so that was the abstract of it, that we would build a platform that is can users, retailers, and manufacturers. And we would create proposition that are win-win for all, which is the retailer is happy to spend because he's getting the manufacturer is happy to spend because he's able to reach the right customers, say the message to them that
00:38:50
Speaker
And the users are happy because not only are they discovering all of these interesting things, but they are getting rewarded for.
Magic Pin's Business Model
00:38:56
Speaker
So the way we built the platform we built, we built a rewards program, which is powered by an app where for sending their shopping receipt, our users will earn magic pinpoint. And these points can be then used back at our partner. The interesting thing about the model is that as we keep aggregating users purchase habits,
00:39:19
Speaker
We are able to form this graph on who's spending how much, where, frequency, category, specific issues. And then we can take back and match these preferences with our partners and allow the redemption of the points that we had given to our users for sending out those receipts to be burned out. It's like a two-way match between retailer and user and kind of tries to match both of them to the right one.
00:39:43
Speaker
And to a retailer, it becomes really beautiful because in the past, if the retailer was to spend on Google, Facebook, right? Like in most cases, they would not have a way to spend, but even if they would, right, they would not know where that money went. You spent 10,000 Google just eat it and no one would. But with magic pen, if they spend that and they get to see the return of that. And if we are delivering a forex return on that 10,000 rupees, they will see the 40,000 rupees worth of this and they can track it through the receipts you would have shared or to the points that our users would come and use at that.
00:40:13
Speaker
So this performance marketing for offline, right? Or you think of it as Google ad, but that is the heart of what matters. And that was, that was a newer entrant start with retailers. Then we realized that there is one more entity that's playing a very interesting. And now we are working with the ITC or a PNG. Um, and because they are also in that same ecosystem and they are also spending in a way that they don't get to. So you get points going to that store, but you earn more points if you find this SKU.
00:40:41
Speaker
in your basket and we are reading the receipt side. So we're able to understand that. And users could submit any bill or bill of partners. Like the kickstart of any that we do is that users can submit any bill, wherever they are going, whatever there is. And our way of acquiring supply is on the other side to go and say that to retailers and we don't even go and say we won't stop them.
00:41:07
Speaker
And we would send that link over WhatsApp, which would show pictures of their customers, the spend that those customers are doing at the retailer store, how his average order value differentiates versus other competition in that neighborhood. He's never seen his business and he doesn't even know us, but we immediately built credibility.
00:41:29
Speaker
on the back of data that we have. And then our pitch to him is fairly straightforward. We are not even asking for upfront money. We say that sign up with us and then any business that we drive to you, you can pay us a percentage of. And because of the fact that the moment a partner signs up, he would now be accepting magic pinpoints, we are able to immediately drive demand to that partner. Okay. So where did you pilot this and how did the pilot go? I remember the initial campaigns we did were
00:41:57
Speaker
out of sitting in the light speed of it that you were just trying out. If I run a Facebook campaign to say send me your your read from a cafe coffee day and I'll recharge your phone. I just wanted to see if people are going to do that or not read. Actually, I at that point we were testing selfies or people are going to end selfies. We wanted to build and we don't know where we did that Pizza Hut. We didn't do that for KFC all the more. So this question that will people hesitate to send their pictures to get reward points, right?
00:42:25
Speaker
I am like a no brainer and our model throughout the journey of company have been to say, what are the key risks? Let's identify the key and then let's solve for each of those. Let's kind of keep going after them one by one such that we, in fact, the first version of the application we had, this was largely on Facebook. We didn't even have anything. The second version was also, we didn't have anything. We took a number on WhatsApp and hacked that on the backend with a fresh desk.
00:42:49
Speaker
and said people that if you WhatsApp your picture phone number and we were doing this in Delhi in summer so it was hot and we people walking in the street we said that if you were to WhatsApp your picture and bill today to this number we will recharge your flight again you see saw in the first day some hundred transactions came in I got this hack together back in that broke because we couldn't approve that many then the next version we had was
00:43:13
Speaker
We kind of took an open source chat application and to people who are coming on WhatsApp, he said that on your repeat transaction, you please go to this, like acquisition was still happening on WhatsApp, but he said your next transaction, please do it on this
Overcoming Challenges and Growth
00:43:26
Speaker
app. It's still chat, but at least it's now our chat because WhatsApp will keep blocking us, right? They will realize that these guys are doing things funny here, they'll block us.
00:43:35
Speaker
And we kept coming up with ways to not getting unblocked, but everything will have its life, right? And it was too much. So he said, let's take our repeat users out of it. Let's keep using it as an act. And, uh, and, uh, and that, that worked well. Um, it was just now our chat, so we didn't have any issues, but our backend remained. Then we did one, and this is all happening in the first two, three, we kept iterating.
00:43:57
Speaker
The first app came after the first three months and the first app, which is similar to what we have right now that came after. But we had learned so much in that period. I remember the next thing that we launched is in our chat app. We kind of created a magic wand. And when you press the magic wand, you would get pictures of people from around you back. So not just giving pictures to earn points, but now you could get pictures back. And we saw a lot of people are clicking those like
00:44:22
Speaker
pressing that one button and we saw people who were pressing the one button, they will stay with the plan. They are getting more joy and fun out of it. In fact, our first version of the app ended up happening the feed, which was this interesting pictures from around you as the homepage, because we found that the engagement was as big a lever. I can transact only so many times in a day, but I can open the app to see what's going on. Who's doing what many more times. So I think we, I think that was the philosophy that we kept
00:44:50
Speaker
kind of building layers and layers at this point, uh, at the backend, that's fully automated machine learned wherever we need decision manual intervention, have like our own.
00:45:00
Speaker
implementation or having someone approve those times, that that piece still has, I would say legacy from five year old op ed used kind of customer what we are doing, and then kind of kept building on it. Yeah, that so that that's the story of how we started and most people who are around in the company still right from those times would remember that fondly, I think the things that all of them had to do to get the flywheel spinning, but that taught us a lot it taught us about how to
00:45:28
Speaker
improvise the initial product, how to get any markets. In fact, we never marketed on Facebook because our primary marketing method was on which we kind of finished in our initial. And once a market would have the first initial 100 to 100 people, I mean a locality day, right? When I say markets, really a small people would refer their friends in because it's an interesting proposition. If you say and Bill and you get points for it, yeah, why not? So that's how most of the growth happened. 90% of our acquisitions were happening with that.
00:45:56
Speaker
And that continued to be just a lot of those learnings, right? Just whatever was working, we just imbibed that. There were a bunch of things that didn't work, but whatever was working, we kind of added that to our toolkit. So how much have you raised so far, like in terms of funds? We've raised, put together $37 million. And what was this? How much of this was used to fund the, the points that customers would earn? How much was used for other stuff? Like how did you use these funds?
00:46:27
Speaker
Interestingly, we've never been very far away on our economics. We've always been pretty close to making the economics work. And that discipline was a result of just both Bridget and my background. Like, let's build a business that will stand on its own feet.
00:46:45
Speaker
And so to that extent, most of the investment and a lot of that money is not a lot, but the last round that we raised $7 million, but a lot of the investment into building the product.
00:46:59
Speaker
building the markets that were important and less into the let's say just the burn. The investment in fact I would say has gone into building the system which is now scaling. And how many people use like are you at liberty to tell us stuff like that?
00:47:20
Speaker
Yeah, we even five minutes on the platform. And I would say that the rate of growth I spoke to you will finding the more demand gets more supply, more supply gets even more demand. So it's just once you've gotten it. Yeah, and there is there's a lot more because our core TV is this 18 to be 2830 kind of age group, which is which is looking to experience life is value conscious, which time is to an extent being quoted by most brands want to speak to
00:47:47
Speaker
and that that segment to an extent like tech savvy and a bunch of other things but if you think of the concept we have which is that saving this an even more universal concept like how wise for us even people beyond that 18 to 38 it's very relevant but our mode of engagement on the app was designed for this thing our opportunities are actually a lot more around
00:48:07
Speaker
Okay, how do we lower the bar terms of the usage of the app or an even larger thing such that like the proposition of saving that everyone that's one vector
Expansion and Innovation
00:48:16
Speaker
of growth. There are vectors of growth around more city. We are still focused mostly on the metro even though we are but there are many more sitter available. There are many more categories that are available for example food and fashion.
00:48:28
Speaker
was a very big part of our monetization even though we were seeing transactions but a big part of a monetization option and because that was working so well we didn't build monetization other categories but over the last three months you've actually managed to build monetization on those other categories we are now providing them with
00:48:47
Speaker
online delivery capability to accept an order but also marketing for that it's not sufficient in this environment to just send them footfall because the macro it's important enable them to see where the world is make them capable of accepting online orders and then kind of sending demand to them.
00:49:05
Speaker
on the online order side. Let me just build one more piece on that that we realized that like we were sending orders to them and then give them the full stack from payments to order management to a third-party integration. We will generate the order you will see it you you pack it and keep it ready we'll collect the payment for you and then we'll get someone to pick it up from your store and deliver it to you do this part out but then we realized that
00:49:30
Speaker
In doing that, we are bundling our marketing with the rest of this. So we've now separated that rest of the SAS stack out and kind of given it to retailers at zero marketing. Like in a way of Shopify for retailers, right? Go to store.orderhere.io. We've created those kind of white cable link and any business that comes to the store on that URL, we don't charge any. So, and I do believe, and this too, not just for all retailers, but even for large retailers, right? Omni channel.
00:49:58
Speaker
was in that everyone wanted but everyone was busy servicing there that's changing now that's changing now because consumers are looking to place their orders without coming to them and and that's the need of the art for all retailers right like if they want to be relevant in this world where there's an Amazon there's a geo right there's a big basket they would they would need to be equipped with the right technique and they're keen to be
00:50:20
Speaker
And we are saying that, OK, we are not pushing our marketing to you to use that. You have your own marketing. Here is technology that you can use. So I want to understand this offering a bit better. So this is like a self-service platform where a retailer can list his inventory and share a link with his neighborhood customer base through WhatsApp or whatever and tell them, place your order here.
00:50:48
Speaker
And when they go to that link, then they can also make payment and the payment comes directly to the retailer's bank account. And you have a collaboration with some logistics company which takes care of the logistics and that gets charged to the retailer. Is that what this is?
00:51:06
Speaker
It is it is that build on that you've got there, right? Let me build on that in case and be it is exact because the number of items in the inventory is living knows the store the items and he's trained on that concept with other matter in case of grossing because the grocer and we all know to leave in many he can't do catalog. He doesn't have the time in the day right for him to list. I have all of this and then I know the stock keeping units also on all of this is not going to happen. We've kind of done it differently said that
00:51:33
Speaker
You know, like the dominant for ordering in the pre is to kind of pick up the phone and say like you create a list of 10 items and give it to them. You try to simulate that experience here where you create your list and you've got the universe of SKU, right?
00:51:52
Speaker
but give this list to the retailer after getting it from the consumer and the retailer in the past. We know the prices he's quoted for each of those items. So we pre-populate those prices are if he's never then we kind of suggest a price to us is what we are seeing everywhere else and he can then with the minimum number of clicks say like suggest replacement say I don't have it and then send the itemized bill back to the country and then the consumer can pay and then we'll attach the fill rate issue with alien
00:52:20
Speaker
in case categories like grocery, right? I ordered 10 items, but I got only that gets to an extent solved because I'm not paying for what I, what was not available. Like the payment is not up payment is after the night, very much like how you'll order. So, and I think that's a very important because for this market, right, it will, it is like giving this retailer a catalog for him to populate.
00:52:43
Speaker
will never work. I think if they are trying and there are people attempting that, but that just kind of overlaying an existing paradigm onto a new market where it does. Okay. So how does the bill go back to the customer? Is it an app where they receive a notification or is it email or what? The user is on magic pin app. Of course it goes on the magic pin app. They can see the itemized bill and
00:53:07
Speaker
In case of these white table links that we created where the user might not have an app, in that case, same page from which the user takes the order, the same page shows the status and the response from the merchant. We would send an SMS the moment the item is built in that link. Okay. Okay. This is super interesting. But right now you're making no money from this because you're giving it all free. Or do you take a, like a payment processing fees or anything like that? Like in a way, this is the base offering on a stack.
00:53:37
Speaker
The next offering is marketing. So we are hopeful that if we enable these merchants to do business online, then some point and some of them will need services around marketing, which is what we are there to offer. And you've kind of finished that from that point. And that is sufficient, right? Like to us that that upsell create enough margin opportunity for us. And while we are not making as much money in doing this, but we are creating a future pipeline of a new, but we're not losing money doing and our marginal cost of servicing this merchant is pretty close to zero.
00:54:09
Speaker
So this is like the freemium model, basically. Yeah. You can, you can think of it as that. It does many more things too. And my answer is that the new, so I spoke of this example of an item when you go and order from even a white label link of that ITC or PNG offer is sitting on that store, right? And it's a great for the merchant training for the matching brand and a great thing for the consumer, right? We are just able to bring it at the right place and
00:54:37
Speaker
we are seeing that those orders are also picking up. So we've in a way created that revenue stream that existed. So I'm curious on where this came to, I mean, where this idea originated from. Like, you know, was it like demand driven that people asked you make something like this or did you think of it on your own or, you know, because this is fairly innovative and I'm curious to hear about how this got developed.
00:55:05
Speaker
I think necessity is the mother of noise as we wanted to move in this direction of online for time, but we were busy building our business.
Pandemic Innovations and Future Predictions
00:55:13
Speaker
So we did not, but the moment I think March and then he plotted, we realized that
00:55:19
Speaker
Our ability to serve our partners comes from this ability of enabling the partners to do online. Otherwise, we can't because people are not going out and people will go out in six months, 30 months, six months, whatever. But these businesses need to exist today. We sold the save the local vouchers, which was a campaign to say that
00:55:39
Speaker
get 50% off on your favorite merchant partners when they open you can use these boxes right let them enable them to but you know we can go only so far like there needs to be business case that works out today and that's how this this concept of online enablement came up once we started to do the online enablement we realize that the existing challenge in there are two kinds of challenges in the f and b category
00:56:02
Speaker
The challenge is that the marketing is being bundled by the existing players with the delivery capability, right? So you can't just take the delivery capability. You have to take the full marketing act, right? And that makes them feel that the price is the other side. And thus he said, okay, if we decouple this becomes a great way for us to provide them a service and also penetrate on the other side. What we realized is that and there's massive inbound demand, by the way, because the whole market is trained on online delivery. The moment they see that
00:56:29
Speaker
They now no longer need to pay that high rate for their organic customers. Also, they're really happy to join. We're seeing a very deep inbound on that. But on the other side, we realize that free as a market just needs to be serviced.
00:56:43
Speaker
like a geo thing that we will enable the kirana. It'll be really hard for them to enable kiran. They'll be much better positioned to open their website as they've done, which is geomart integrate that with their own editing and purchase directly on the manifest, right? That's a more cleaner method, better rates, better margins. It works better working and enabling the kirana just requires a different approach. Um, and we had more tools already, right? For example, this, this manufacturing brand integration was already present. We, with our partners,
00:57:12
Speaker
were integrated into their post. So 100% of whatever bills they were printing were coming to our back. They were doing that because we had a relationship with them that if our manufacturing brand partner sells more, then you get a part of that commission. We own something and we share something. We share something with the consumer also, but we share something with you. So the data of SKUs and pricing was already there with you.
00:57:34
Speaker
Yes, exactly. Exactly. Right. And we had a method to collect that data on SKU and at a store. So all the stores that we are powering, we just integrate our our possibility on that. And the moment the store starts, we know what this storytelling and what it not. Our list that I spoke of those are smart list. Those are not the universe.
00:57:53
Speaker
They are actually custom to that merchant and what that much and that the moment we had that clarity, I think the focus from the tech side on the product side, right? It was pretty sharp. A lot of this was done for the last few and we are in the market live kind of building this and the way we are seeing recovery panel that while the traditional category food and fashion will take some more time. Right. So to come back in the meantime, we've got this entirely new engine that's come in for growth and together all of these. Okay.
00:58:21
Speaker
So who are the competitors for you first in your previous like the already existing business of allowing offline merchants to do intelligent marketing and in this new business. Let's start with the previous business. Like I don't think there are similar companies in the U.S. right who do something like this. No, not really. Not really. You like doing marketing for retailers.
00:58:51
Speaker
There isn't, there is the reward program companies, but no one that is in the eats and stuff that pieces in different parts of the world were doing running in some way, but no one's kind of doing this exactly. And, you know, it doesn't matter what means we used to get to an end, right? Because the goal is to Dave marking for retailer. And in the past, there was, for example, um,
00:59:14
Speaker
in China and like, um, to drive business to these offline retailers. But those companies got built in a very different way. They just burnt a lot of capital build that initial base of users and merchants. And then they went on to do more things from there. We kind of.
00:59:29
Speaker
were born in a different era where mobile phone was present. We were able to use this data from to build this piece out. So we kind of approached it differently, but to achieve the same outcome, which is to drive performance marketing for our, um, in terms of competition, I think your original question, right? Um, like there were many attempts at this space, but very few seated earlier on there was, um, um, there was an abdulance first of that, which started this, uh, and, uh, they're subsequently pivoted because this is a,
00:59:58
Speaker
hard to capture market. And that point mobiles didn't exist. It's really hard to do this stuff without mobile, right? There was, I think there was, um, there was group on which subsequently became nearby, which at his, uh, my dollar, which was, so there were multiple attempts, which for me, I think there was ground at all. And, uh, they were, I don't know, finally they went about building the local redemption cycle.
01:00:19
Speaker
piece around being able to get the retailer, see the redemption and making him believe a lot more in what you do. That I realized that that's a, that's a problem, which is, which is as much operations, right? As it is. So I would say there were these, all of these different approaches, uh, which were trying to deliver the same end outcome, but they kind of came at it differently and they had thus different pros and cons.
01:00:43
Speaker
Grofers would be something like this. Grofers also works with Kiranas to fulfill orders. No, not at all. Grofers is actually completely vertically integrated to the point of manufacturing the product for the retail. What kind of transaction value have we seen so far from this new business? We are seeing that this becomes increasingly a large part of the business. I'll just hold back on the numbers there.
01:01:11
Speaker
at the moon, but yeah, we are super excited, the rate at which this is growing, this will be a meaningful part of our business.
01:01:19
Speaker
So, you know, how, so obviously now I have a fairly good understanding of how the COVID and the lockdown situation has impacted Magic Pin. How has this, how has this impacted your thesis as a VC or, you know, are you still an investor in your personal capacity or is Magic Pin your 100% right now?
01:01:45
Speaker
Magic pin is my 100% of what I'm doing. Of course, there is some light speeders, light families. So to that extent, there is that alignment and interest in what is happening within the lightfeed portfolio. And the other is a few friends who I had invested in more as a friend than as an investor that I continue to be close to.
01:02:07
Speaker
But yeah, I think this is where I see most of the action and this is where I exchange most of the ideas. Like this fundamental shift towards world home being a lot more and e-commerce being a lot more of our lives. Right. That will just like change the fabric in more meaningful ways. That doesn't mean existing stuff will happen. Right. But we will find that new opportunities will emerge. Right. Let me give an example of that. Right. For example, think of the manufacturers.
01:02:36
Speaker
So far they had been happy to work with let's say an Amazon or a Flipkart and sell through them on the online channel because online channel is not as big but online channel is getting big they don't want to be then like upset of whatever the retailer is selling because
01:02:54
Speaker
The retailer, they would be looking to substitute with a wide level as the retailer can. So they see that as a risk and as an opportunity for them to build their own direct. So ITC is doing that. P&G is doing that. All of them are building their direct to consumer shops, which was not happening in the past because all of these companies would be working directly with the end with the distributors. Right. But now they're building.
01:03:18
Speaker
D2C. What that does is also it means that if these companies are building D2C, many more companies can build D2C. And D2C would be increasingly like, and there are more brands, even on our platforms, we help new direct to consumer brands launch because we are fairly effective, efficient, and also can segment the right population reach out to them. But we will see a bunch of more as people spend time online.
01:03:41
Speaker
just more direct to consumer brands come up. We've seen some and we probably continue to see more. And then I think the other thing that will happen related to this is that that location will be less important location with the beginning in retail. I would say that online increases, right? Like that, the preference for just that location will be less relevant. Service provided would be far more valuable.
01:04:04
Speaker
That means the rental should go down, which is something that's already starting, which make which is a silver lining for most retail. But it also means that providing a great experience becomes more important and that experiences.
01:04:17
Speaker
important. The small retailer also I want to control my storefront to the extent I can write the online presence or what is it that I can provide as extra services, which is the kind of sass that we would like, whether it's that inside that it's being able to send pictures of products, all of these things become a very important part. That is what we were attempting to do, like build a social layer on top of free. I think those concepts will have
01:04:40
Speaker
a lot more role to play as kind of internet penetrates deeper and deeper. So it's a great thing. So while the shift off purely offline retail will leapfrog a little bit more towards online retail, but a lot of that online retail can come to the same offline retail provider. And I think that's where around enabling these retailers, there are opportunities around enabling demand to discover these retailers. There are opportunities. I think that's, that's an area where there are
01:05:07
Speaker
There would be new things that will happen. And entrepreneurs and companies that are around this area would find that the next layer would be far more efficient because it's technology oriented based on internet versus the previous build of retail, which is very offline and slow moving. So if you were still at light speed, what kind of companies would you have been hunting for right now to invest in? One is obviously D2C brands besides that.
01:05:38
Speaker
And I'm focusing my answer on, uh, on the retail side. Uh, if I kind of remove that lens, I think there would be, there'd be a lot more stuff that I think that will become available. But if I stay on the retail side, I would say that, uh, this enabling the millions of small retail, that is, that's a core theme that should be one. I would make one more point that a lot of these retailers would fairly, um, value considering out.
01:06:06
Speaker
business models is another important step. Just buy a large base of retailers, it will not be sufficient. But if you create that large base of engaged retail, then I think there would be opportunities around providing marketing to them, providing credit to them. If you're in the way of the transact next wave of whether it's I think
01:06:23
Speaker
credit marketing, any of those pieces that can get built. So yeah, I think retailers do a better job of servicing their customers. That's a very here and now. We saw this last time when monetization that all retailers suddenly understood online payment. I think all retailers are likely to understand online commerce in this
01:06:44
Speaker
And that opens up just a big chunk right now around D to C brand to these retailers. One of the examples conversations I've had with future forward version of you're doing, we can tell, let's say, a chemist in a neighborhood that, you know, in your neighborhood, this new medical device selling a lot.
01:07:03
Speaker
Here is the manufacturer for that. We'll provide you a credit line from the manufacturer, stock it at your store, and we'll reach out to your relevant consumer in the catchment days and ask them to come and pick it up from. And so can you some of this D2C, but then use the offline distribution to create new value coming out? I think there would be companies that are working in different flavors of that. It's hard for one company to do everything, even though many would claim. But I think companies which are able to solve point problems each of these
01:07:30
Speaker
So that was Anshu talking about how he built a performance marketing engine for the offline retail world and how the pandemic actually opened up new opportunities for Magic Pin. Do check out the Magic Pin app on Play Store to find great deals and win cashback on your shopping.
01:07:51
Speaker
If you like the Foundry Thesis podcast, then do check out our other shows on subjects like Marketing, Technology, Career Advice, Books and Drama. Visit the podium.in for a complete list of all our shows. This was an HD Smartcast Original.
01:08:23
Speaker
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