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Rahul Singh is building a billion-dollar global sustainable D2C brand | EcoSoul Home Inc
245 Plays8 months ago
Discover the amazing success story of EcoSoul Home Inc, a homegrown company that started small but quickly emerged as a global leader. By building eco-friendly products and strategizing effective global distribution, they've penetrated markets in over 70 countries, achieving a staggering $30 million in revenue with a mere $10 million in initial funding. Rahul Singh is a hands- on leader and in this episode he talks about his journey of building this D2C brand. He delves deeply into EcoSoul's supply chain development, a critical factor in its rapid growth.
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Read more about EcoSoul:-
2.‘We Sold Our Home For Our Dream’: Sustainable Kitchenware Biz Clocks $50 Million in Revenues
3. EcoSoul: Making a Difference
4. From waste to wealth: EcoSoul Home’s battle cry against plastic toxicity
5. Ecosoul develops everyday products using sustainable materials
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Transcript
Introduction and Background of Rahul Singh
00:00:00
Speaker
Hi everyone, it's Rahul Singh here. I'm the founder of EcoSoul. We are a Boston, headquartered sustainable products company.
00:00:20
Speaker
Ecosoul is an incredible business. It's been just two years since they launched their products and they're already a global D2C brand with an ARR of $30 million. And they achieved this with just $10 million in funding. Rahul Singh, the founder of Ecosoul, uses the term Chappal Hisna in the conversation, which loosely translates to getting your hands dirty. And that really is the soul of Ecosoul.
00:00:43
Speaker
Rahul Singh is an incredibly hands-on leader and he went deep into building the supply chain of Eco Soul, which is really what enabled its meteoric rise. Stay tuned for this masterclass on global hyperscaling with a focus on the bottom line on the founder thesis podcast.
Rahul's Career Transition and Meeting with Wayfair CEO
00:01:08
Speaker
Rahul, I'd love to hear your original story and understand what led to you becoming a founder. I grew up in a typical middle class family. My dad used to work for the authority of India Limited. I went to a government school.
00:01:22
Speaker
And that not only shaped up how I think, how I always got connected with ground level, but also that shaped up my ambitions a little bit. Because every small town boy wants to make it big. He wants to make it big in probably a bigger city or probably big in the world. So again, worked very hard, grew up in the small town,
00:01:49
Speaker
cracked engineering, right, you know, so I went to NIT for my engineering. And then again, only 1000 life work hard, play smart, right. So essentially, went to XLRI for my MBA. So I had a typical three years career path, by the way. So essentially, I did my engineering, my MBA, and then went to New York to work in the bank, right.
00:02:13
Speaker
Most of my career has been from their banking and consulting, grew up really fast in banking, became executive director at JP Morgan, became managing director at Citigroup. Which part of banking were you in? Retail banking or investment banking? What?
00:02:35
Speaker
Oh, I have been in almost every part of banking, right? So I started with the M&A, which was on the investment banking side. Then I became CEO of one of the business units. So essentially, I was purely on the finance side. Then within the bank, I joined marketing and business development. And then from there, I went to JP Morgan, where I was head of new accounts acquisition.
00:03:05
Speaker
And then as managing director of Citigroup, I was head of global strategy for Citibank reporting to the CEO of Citibank. And then I became CEO of commercial banking at KeyBank. So essentially I've seen most of the parts of banking, right from the investments to commercial side, to consumer side, to card side. But after all of that banking, I really thought that
00:03:31
Speaker
My learning curve has sort of started, like, you know, plateauing a little bit, right? So I thought, like, you know, I have done enough of banking. I've seen it all, done it all. And then, like, you know, I joined Wayfair, okay, which is a global e-commerce company, as head of their global supply chain, you know? And I was very shocked, right? You know, when Wayfair asked me... How did you, like, from banking to supply chain, like, how did that happen?
00:03:59
Speaker
That's a very interesting transition. So I met the CEO of a fair like in one of the small business conferences. And essentially, we really hit it off where I was talking about how banking sector is vital to the to do a thriving small business economy.
00:04:17
Speaker
And he really liked my point of view, we connected and we really like, you know, sort of professionally, like, you know, respect started respecting each other, being in touch. And when I decided to move from banking, I reached out to my network. I also reached out to Neeraj and said, Hey, I really want to like, you know, think beyond banking, right? What do you think I should do? And
00:04:41
Speaker
He said, you know, come work for me and manage my global supply chain. Okay. And I was shocked. I was like, I have no idea. I have no idea about last mile delivery, freight networks, shipping lines, consolidation centers.
00:04:57
Speaker
Oh my God, not even knew the terminologies of that. And he said, don't worry, you're smart enough, you'll come figure it out. And my only criteria was if this guy's crazy enough to hire me, let me be crazy enough to join him. Essentially, it almost was like a good personal relationship that translated into a very good professional relationship.
Founding of EcoSoul and Sustainability Focus
00:05:20
Speaker
For people who don't know, what is Wayfair?
00:05:24
Speaker
So, Wayfair is a global e-commerce company in the furniture and home decor category. So, think of an online idea. So, Wayfair is world's largest in their category, in the online furniture space. So, I think it's, again, Boston headquarters. Would it be like, say, Pepper Fry in India?
00:05:47
Speaker
That would be, yeah, that would be like Pepper Fry's Wayfair of India, right? Because Wayfair was formed earlier, right? So essentially, that's how it is.
00:06:00
Speaker
And it was cornered fate, cornered destiny. That's in way fair. I also met my co-founder Arvind. We became really good friends, became beer buddies, and started catching up over the weekend. And that personal friendship translated into, hey, we started EcoSoul together.
00:06:25
Speaker
What led to the birth of EcoSoul? You know, you must have been in a comfortable, well-paid job. What would you want to leave that and become a founder? At that too, now you're in India, so was it all related?
00:06:40
Speaker
Uh, not really. So essentially what happened is like, you know, both Arvind and I, like, you know, we were always thinking about sustainability, right? Uh, we had home composters, yada, yada, yada. And like, we always heard about, Hey, everyone hates plastic and still everyone consumes plastics, right? You know why this is happening. So we were debating about that for quite some time.
00:07:04
Speaker
But also a project came up in Wayfair where we were started thinking about, hey, how do we create a sustainable category for Wayfair, right? What we very quickly realized, maybe furniture and home decor is not the right space for sustainability as of now because of the lack of supply chain, qualified manufacturers, lack of sort of global certification standards, things like that. But there is a very large category that is up for disruption.
00:07:31
Speaker
which was Home Essentials. So it is the second largest consumer product category after food and beverage, and it is filled with single-use plastics, right? There are $5 billion, $10 billion revenue companies that were built on the back of plastics and which is owned by the giants of the world, the Unilevers and the P&Gs and the SE chances of the world. Well, what is Home Essentials
Challenges and Strategy in Eco-Friendly Product Market
00:07:56
Speaker
category? What does it include?
00:07:58
Speaker
So think about everything that you consume in your home on a day-to-day basis. It's consumable category. So think about all the disposable plates, glasses, cutlery. Sof comes into personal care. No, like the dishwasher soap and the... Yeah, laundry detergents, dishwasher liquid. Think about toilet papers, kitchen tower rolls, facial tissues, napkins, everything that is home essential.
00:08:23
Speaker
That category is filled with plastic and tree-based products. So think about it, a single carton of napkins requires you to cut one and a half tree. And a typical American household consumes more than a carton of napkins every month. And now multiply that with global demand. And then we wonder why deforestation is happening.
00:08:52
Speaker
And this is a product you can't live without, right? So essentially, toilet paper, kitchen towel, rose, napkins, something very home essential. You need it on a daily basis, monthly basis. Now the question came is, all of this industry was very stable for the last 50 years. These are not new products. Okay.
00:09:12
Speaker
And there is McKinsey study, there is Nielsen study, everything tells you that consumers want eco-friendly options in this category. Nobody's raising their hands and saying, I love plastic, I want to consume more plastic, give me more single-use plastic, or please cut some more trees so that I can consume napkins. Nobody wants that story. But there was no brand which was truly tackling the consumer problem.
00:09:40
Speaker
And I'll take a pause there. Like, you know, why do I feel there was no brand that was truly tackling the consumer problem was because of three things. You know, what we call is awareness, affordability, and availability. So number one, there were brands which were not certified. They were green washing. People were not very sure whether this is truly eco-friendly, not eco-friendly. Is OXO biodegradable eco-friendly or not eco-friendly? Like, you know, things like that.
00:10:06
Speaker
Oxo-biodegradable, by the way, is plastic studs into microplastics. It's not environment-friendly. But it says biodegradable, so consumers think, oh my God, this looks like eco-friendly. So there is one thing that brands did not do well, which is truly understanding what are the global standards that are required to call yourself eco-friendly.
00:10:28
Speaker
The second is affordability. Look Akshay, we all have our household budgets and the products we are talking about, they're consumed in the households on a monthly basis, right? So let's be sympathetic to the customer saying that, hey, we all want to do the right thing, but we all are constrained by our household budget. We will not go eco-friendly by paying two times the price, three times the price, four times the price.
00:10:54
Speaker
Today, if all of us want to buy an electric car, an electric vehicle, and the only option available in the market is electric Mercedes-Benz, then very few of us can actually practically make the switch happen. That was one of the biggest constraints that we saw.
00:11:16
Speaker
These consumers want to go eco-friendly, but they cannot go eco-friendly with the current product selection available in the market. And the last thing that we had was availability. So I'm a consumer who's very aware, want to make the right choice for us and for the planet.
00:11:31
Speaker
Okay, there might be some option available which comes within my affordability range. But when you walk into a US store or a Western store, right, you know, a European store, a UK store, you simply don't have any of those products available, right? Of course, there are products available in Amazon.
00:11:48
Speaker
But 87% of the Western world, they shop for their home essentials in their local store. Think Walmart, think Target, think Costco, think Sprouts, think Stop & Shop, right? And if the products are not truly available on the shelves, then again, consumer is not going to find you. You have to be where the consumer is, right?
00:12:09
Speaker
So these were the three problems that brands were not solving effectively. And we said, someone has to pick up the mantle. Someone has to do it the right way. And we said, are we going to do it? So there's another way also, you know,
00:12:26
Speaker
I guess you could call it the shark tank way. I've been watching a lot of shark tanks, so I started thinking like them. But this is a category with a very high repeat purchase behaviors. Therefore, if you're able to establish customer love and customer trust, then it means that you acquire a customer and you have him for life. Every month he will purchase something for you. So from that perspective, as a business, it sounds like a sound business to pursue.
00:12:54
Speaker
Absolutely, Akshay. And here is how I'll prove it, right? Tell me something. Have you ever bought a Home Essentials disposable cutlery plate? Anything in your life, right? You know, for your party? Yeah, of course. Okay. Which brand did you buy? No, I don't think it had a brand printed on it. Even if there was a brand printed on it, it didn't register. Amen.
00:13:20
Speaker
What we very quickly figured out, right, you know, this is somehow a very unique category, right, where like before even developing customer love, before even thinking about like, you know, hey, customer recall, there is no alternative brand that customers are able to recall.
00:13:38
Speaker
Okay. So we thought that, Hey, can we become that first brand that customers actually know and recall and want to, uh, like, you know, go and buy and become the first challenger brand of the market. And here is a good example of that. We never thought of launching ecosystem napkins in phase two, right? You know, we've launched our table where in phase one, but we were seeing 6,000 organic searches a month where people were simply looking for ecosystem napkins.
00:14:07
Speaker
And then he said, Oh my God, we had customers want us to be right. And this is what the power of branding looks like in a category which is primarily unbranded across the world.
00:14:22
Speaker
So the tableware category, which is like disposable spoons and plates and so on, which you typically buy for a party, is not like that high repeat purchase category, right? You might buy once in a quarter or once in six months. Why did you choose that category to enter first instead of a high repeat purchase category like napkins?
00:14:52
Speaker
I always tell my people remove all the names and just look at the data and make your decision. When we actually started looking at the data, our use case is only 50% parties. So now think about the young millennial, single working age people. They are actually using disposable products on a day-to-day basis.
00:15:08
Speaker
So essentially, we are a very data-driven company.
00:15:19
Speaker
I mean, it's guilt free convenience. Like you have to, you can avoid washing, saves you on time. You know, there are a lot of utilities or just using a disposable plate, eat your meal and just get done with it. Right. You don't want to put up a dishwasher for two plates. For example, you know, it's neither eco-friendly to put up a dishwasher for two plates. Right. So I think we have surprisingly. You're talking of a Western consumer behavior. That's one of my listeners. Yeah.
00:15:49
Speaker
By the way, I'll give you an example of the Indian consumer behavior. So earlier, we have household help, for example. But there are so many times when we don't want to pile up the dishes. Because at the end of the day, she's a person. And you have to think about her. You can't ask her to help you with 35 dishes, 40 dishes.
00:16:16
Speaker
So now every weekend, every other day, whenever we have friends coming over, family coming over, kids friends coming over, we just take out a disposable plate because we know that that wouldn't pile up the dishes, right? So I think even from an Indian consumer perspective, especially in the tier one cities and the tier two cities, that shift is already happening where people are thinking about their maze, thinking about their domestic health and thinking about, hey, is this something that I really have to do?
00:16:46
Speaker
or I can just be disposable and just and consume it. Yeah. Tell me the data signals which led to this decision of getting into disposables first. What signals did you see? So there are two, three things, right? You know, so number one, we had a really good AC Nielsen survey.
00:17:06
Speaker
which actually said in the home essential category, 80% of the consumers want to go eco-friendly, they simply do not have the right products in the market. That was study number one. Then there was a McKinsey study, which literally said, consumers want eco-friendly and they are ready to back it up with their waters.
00:17:26
Speaker
In that there is a really nice bubble chart, whereas propensity to buy product based on how eco-friendly they are. Okay. And there is a subtle number 24 that I still remember, which says,
00:17:39
Speaker
daily use home essentials products, right? So we said, like, consumers want it, surveys say it. And then we did our own consumer surveys. We started talking to people and said, hey, do you like plastic? Do you think single-use plastic is detrimental to this planet? And everybody said yes. Nobody's taking the other side of it. And then we asked them, what is your constraint? Why are you not switching to different? And they said, oh, I just don't have it available in my grocery store. And I really want it there.
00:18:09
Speaker
But this doesn't answer why disposables are not napkins. Both napkins disposables are in the same category.
Financial Challenges and Supply Chain Operations
00:18:17
Speaker
Like why launch with disposables? So there are three stage gates that we have, right, you know, that we actually think about, right, you know, before launching a new product.
00:18:29
Speaker
So the biggest factor in our category is not finding the right product because there is eco-friendly alternative to almost everything that you see around you. The only question is prioritization. Okay. So the first thing that we said we're going to prioritize is, is this something that we can truly manufacture at scale?
00:18:51
Speaker
That's number one criteria and while manufacturing at scale, how much control can we have over our source raw material? The second criteria was, is this something that I can truly come to the market with a disruptive value proposition? Like for example, can I really launch a plate which comes within 10% of a plastic plate?
00:19:17
Speaker
The third criteria was while doing all of that, can I remain profitable? And I know a lot of startups when they start, they don't have this profitability lens over the whole business, but we had it. We had it from day zero. So we started then prioritizing literally stack ranking every single product that we're going to launch. And then you see table where is the right category because number one, it's the large volume category. It's like more than $30 billion a year consumption.
00:19:46
Speaker
I was in India, so India has an inherent strength with the raw material. We have abundance of agro-based raw material available. We can have skilled manufacturing at a relatively lower cost. So when we looked at all of that, we started prioritizing tableware as a category. And God, it was the right decision. Right. In the hindsight. Did you strike the right decision?
00:20:12
Speaker
Did you launch first or did you raise funds first? Tell me the journey. So you quit WAFL and then you did these studies and you said, okay, let's do Table L. What next? From this to actually your first sale happening through an Amazon or through whatever channel you decided, what was that journey like?
00:20:35
Speaker
Yeah, yeah, yeah. So Akshay, I'll tell you, for your audience and for all budding entrepreneurs, whatever business plan you will make for launching your business, it will go into a dustbin within six months. It doesn't matter what plan you have. It just does not matter. Whatever that plan is, you throw it into a dustbin in the first six months. So Arvind and I, we got very convinced that number one, this is a great category. Number two, we exactly know what we want to do in this category.
00:21:02
Speaker
And number three, we also wanted a category where we can think about our legacy. Because we said, hey, if this is something that we can truly create and scale, you know, that will be our legacy, you know, after we are gone. This is for our kids. This is for our planet, right?
00:21:20
Speaker
So further, when we launched, right, you know, we had like, you know, a bunch of savings, right, you know, and we said, Hey, this should be enough to launch a new business. And we were very confident. We draw all our plans. This money is enough. We ran out of that money in four months. That we thought will last a year, by the way, right? You know, we ran out of it. We will bootstrap the company. We'll do it the right way. And this was literally, we launched the business and COVID wave first wave.
00:21:48
Speaker
So anything that can go wrong did go wrong, right? You know, essentially we thought like, oh my God, we just quit our jobs. We launched the business and all of a sudden the world is to an end. You had the US as your first market where you were? Yes, that's where we started. That's where you incorporated the company. That's where we started. And you were clear that India will be your sourcing hub?
00:22:10
Speaker
At that time, we were clear that Asia is going to be our sourcing hub, right? And in the initial phase, we had to choose between India and China, and we were looking at scaled options. So initially, we started with a 50-cryptic split. But today, more than 85% of our supply chain sits in India.
00:22:27
Speaker
Okay. Amazing. But going back to the story of fundraising, right? So we ran out of money in the first four or five months, and because it was COVID, it was very hard raising the funds. And honestly speaking, sustainability looks like a big buzzword today. Back in 2019, 2020, it was not at the top of the wine for the VCs, right? Yeah, it was at tech. It was at tech, fintech, any tech, but not sustainability, right?
00:22:53
Speaker
For the first 14 months of our journey, we were completely bootstrapped. So Arvind ended up selling all of his stocks and stock options that he earned in his previous jobs. I ended up selling my house in New York. And I'll tell you, Akshay, what a great job you are. And I'm going to tell you something.
00:23:18
Speaker
Amazing. True, true, true. Absolutely. The best way to learn the business is not to have a plan B. Oh wow. Yeah. And so essentially we ended up running through our savings. We ended up selling our house, our assets, our everything, right? And that's how we build a business for the first one and a half year. Okay. You needed money for your, uh,
00:23:42
Speaker
There is a minimum order quantity when you go to a vendor to procure products. So you needed to pay them for that minimum order quantity to get the product before you can sell it. That's what the capital was needed for. You need money for... I'll tell you, when we launched the business, a typical container price from Asia to US was $4,000.
00:24:06
Speaker
Six months into our launch, it went up to $14,000. There was a container crisis across the world, right? Yeah. So I tell you, show me assumptions Leah Thena. Everything went into dust rain in the first six months. And this year you're burning your own money and your savings and like, you know, your family is suffering. So all of that happened. So let me tell you that story, right? You know, so in the first six months we figured out,
00:24:32
Speaker
The only way to truly disrupt the mark is to have an on the ground operations team in Asia. Okay, because nobody was doing that. Everyone in this category has single model. Okay, they are headquartered somewhere nice like New York, California, London.
00:24:48
Speaker
They all have their sourcing operations in China. There are factories in China that run that city scale. You can go over there. You can exactly specify the product you want. They will develop the product for you. You can print your label on top of it and you're done. Okay. So every brand thinks that it's a front-end game. Like, you know, I'll have a beautiful Instagram channel and I'll have TikTok videos. I have influencers. I'll do a lot of marketing and that's how you build a sustainable brand. We went exactly the other way around.
00:25:19
Speaker
Okay, we said no. We are going to produce one of the most cost effective eco-friendly products in the world. Today, my cost structure is the most efficient cost structure in the world period. I sell my products, undercutting my competition by 35 to 50% in prices. Wow. We never followed the China white labeling model.
00:25:45
Speaker
But in order to build that model, someone had to come to Asia. This is not a model that you can build over Zoom calls. So first wave ended. There was a very small window of opportunity between first wave and second wave to come to India.
00:26:01
Speaker
I brought my entire family to India and trust me, I am a US citizen. My wife is a US citizen. My kids were born in the US. It was very hard for everyone to leave your life for 15 years behind. Come to an entry where you're born and brought up, but you have never worked in this country. We have never worked in India. Okay. India is a very important country.
00:26:28
Speaker
So, we came over here. We came over here. Of course, it was a cultural shock. Most importantly, I used to go to different, like, you know, manufacturers and say, I am an eco-soci, I am a founder. Also, maybe we were like just four people, me, my wife, and one more person.
00:26:48
Speaker
And I used to go to these places and they used to say, who are you people? You've never heard about this, right? There were many constraints. I literally met 20-30 manufacturers in India. And I used to literally beg to them, you know, what are you doing here?
00:27:21
Speaker
I used to literally beg to the company.
00:27:32
Speaker
Out of 30, 2-3 decided to work with us. Like out of 30, the strike rate was less than 10%. 2 or 3 manufacturers say, you look like a decent guy. You look like a decent guy. You look like a decent guy. You look like a decent guy. You look like a decent guy. You look like a decent guy. You look like a decent guy. You look like a decent guy. You look like a decent guy. You look like a decent guy. You look like a decent guy. You look like a decent guy. You look like a decent guy. You look like a decent guy.
00:27:53
Speaker
My first believer was my vendor, truly. They really started saying, and this is where, by the way, we don't give enough credit to our culture. But our culture is very helpful. We always think it's very difficult working in India. It's very difficult dealing with people in India. Whatever the ecosystem is, it's because of the generosity of the people of India.
00:28:19
Speaker
Okay, there are certain people who are just generous enough to work with us. There were certain people who were just kind enough to give us a chance. That's it.
00:28:29
Speaker
period. Amazing. Amazing.
00:28:52
Speaker
And, honestly speaking, that's why I'm saying I'm here because of the generosity of people. Okay. There is enough people, right, and now I have started feeling like I should help people and I'm helping a lot of ecosystem, new entrepreneurs.
00:29:15
Speaker
But India is one of the best countries to work in. I remember, if you go to an American vendor, first of all, they will ask you, where is your legal team? Where is the contract? I'm a single entrepreneur. I don't have a legal team.
00:29:45
Speaker
So I cannot give enough credit to the culture on how we build the business. Okay. And hopefully, you know, that makes
00:29:56
Speaker
I think that's what will make India a very powerful country in terms of how the future of the businesses will shape up, where people do things beyond contracts. So this is how we started the journey. When did you ship products to the US when you were essentially ready for your launch? My first product was sold in US in February 2021.
00:30:24
Speaker
So by Jan, you would have got your products. So August, September, August, September, what are the SKUs we're going to launch? Just send me these decisions, like how many SKUs, which on Amazon, which on website? So basically, we had around 130 products to choose from.
00:30:53
Speaker
We ended up launching 8 out of 130. We still have that list of 130. By the way, we are launching products one by one. Today we have 43 products. Okay. So we launched with 8, like primarily in the tableware category. And then we launched with 40 SKUs. Okay. For Amazon. And 11 SKUs for our website is where we started. Okay. Okay.
00:31:16
Speaker
So today we have 43 products, 11 markets, 11 countries where we sell 1800 SKUs, 24 port consolidation centers and operation center. We have a workforce of more than 400. Okay. So today it's a very different company as we scaled, but when we started, there were like four of us.
00:31:38
Speaker
literally the four of us, me, Arve, my wife and like one person who's not with the company anymore. And literally like, you know, we launched like, you know, the four of us who used to do everything. And you spent on like Amazon ads and all to generate the initial sales.
00:32:01
Speaker
Initially, a lot of money went into procurement. Really, we wanted to have a product which had a different value proposition. I'll give you an example. A typical bagasse plate in the market is 13.5g. What is the bagasse plate? Oh, the paper crate. Made out of sugarcane material, right? 13.5g. We were the company, we said, 13.5g. It's a little wobbly. We're going to make 50g.
00:32:31
Speaker
Okay, which basically is rocks on it, right? So I think we did a lot of product modifications and all of that, right? So, what was the time like? Like around August, September. And after September, like, you know, when the window opened up, came to India, like, you know, started begging people. I remember I ran my first warehouse myself. Okay.
00:32:55
Speaker
And not only I ran my warehouse not till February, but till July 2021, I was running my own warehouse. Though no AC Kangara, no Pankhana thing. I used to sit in my warehouse with all the labors and think about a guy who had 15 years of American career behind.
00:33:13
Speaker
I'm managing the CUT Graph as CEO and a large bank in the US. And all of a sudden, I'm going to go to the warehouse, and I'm going to go back to the SA levels, and I'm going to go to America. Okay, I'm going to go there. On at that point, the second wave hit. March 2021, the second wave hit.
00:33:40
Speaker
I had to go to the administration saying that, because they were very strict lockdowns, right? So they said, the lockdown restriction was helpful, but they said, you know, we cannot give an exception to the lockdown, but we can give you permission to create a bio bubble.
00:34:04
Speaker
Okay. This was an administration proposal. And as an entrepreneur, you have to take anything that you get.
00:34:31
Speaker
When outside temperature is as high as 45 degrees Celsius, there's no pakka, there's nothing. I lived in that warehouse with my labour. But from 1st of February 2021 till today, we do not stop out.
00:35:02
Speaker
Okay, we make sure that the truck leaves on time every single day. So life messes both like you know first one and a half year was like no VC believes in you. You are running out of all of your money. You are eating and sleeping in your warehouse.
00:35:25
Speaker
you don't know what your future will look like. And there are so many times when literally I came back to my home and said, what happened? You know, so essentially,
00:35:41
Speaker
Yeah. So a founder's journey looks very exciting when you actually like, you know, when you're scaled up and you have office or you start winning some awards and you start saying, we are the biggest company in our category. But a founder's journey may like, uh, one of my friends used a very nice words in order to credit to her, but she says as a founder, you have to be ready to go broke and go broke.
00:36:08
Speaker
Your financiers will go to hell for sure, but physically you'll be broken, mentally you'll be broken and you have no idea whether you'll succeed or not.
00:36:21
Speaker
Yeah. No idea. In fact, if you're a good mathematician, you'll never be a founder. Yeah. Yeah. Yeah. Thanks is not on your side. Yeah. So yeah, I mean, this is what the journey looked like. You know, we kept on sending out the, what were the sales looking like? So Feb you lost, what kind of monthly revenue run rate was, were you seeing Feb onwards? I'll tell you first month sales, $4,000.
00:36:49
Speaker
Okay. First one. Second one says, uh, $62,000. And this was because you didn't have money left to advertise. Yeah. No advertising. It's a brand new brand on the market. There are no reviews. There are no ratings. There's no organic traffic. There's nothing. Okay. So yeah. So 3,000 62,000 third month we cross a hundred thousand.
00:37:15
Speaker
Okay. And which is pretty good. I mean, a hundred thousand and third month without ads is like phenomenal, which also shows the untapped demand in this category. There is massive, massive, massive untapped demand. Again, I'll repeat myself. Nobody loves plastics. Single use plastic. Everybody hates. You just have to give them the right products to consume as an alternative at the right price point.
00:37:40
Speaker
So, third month, yeah, we crossed $100,000 in sales, right? Today, we do more than $100,000 every day, right, you know? So, essentially, okay. So, the thing is,
00:37:55
Speaker
Akshay takes a lot of patience and a lot of faith. Just saying that. Of course, after we crossed $100,000, we reached out to the VCs, we reached out to the Angel Networks. By then, you had proof of concept.
00:38:14
Speaker
Then we had the proof of concept, right? And I'll tell you, like, you know, our first seed investor, like, you know, Manpreet Singh Capital Partners, he had never done Singh Capital Partners, Washington, US. He had never done a seed round before us. Okay. And we went to Manpreet with a $100,000 run rate and a plan which says we're going to change the world.
00:38:52
Speaker
And then, of course, he laughed at us. He said, I'll put money in your company. Because you guys look like decent guys. You guys look like you're passionate, you have taken the risk, you have done on-the-ground operations.
00:39:04
Speaker
Imagine a company with $100,000 and optimistic founders, you're saying, right? We have figured it out.
00:39:14
Speaker
He actually invested in us because he had enough money this year. You have gone through this part of the journey and you have not given up? Good enough for me. I don't know how this business will shape up. I don't know whether you'll be able to challenge big brands. I don't know whether you'll be in Walmart or Target. I don't know anything. As a founder, the struggle that you have been through, that's good enough for me. If you don't have enough money, you won't.
00:39:43
Speaker
Yeah. And how would you do this in that job?
00:39:46
Speaker
just two million dollars, two and a half with angels and everyone, you know? So yeah, so we raised our first check of two and a half million dollars in the seed row, right? But Greet was generous enough to write us two million dollars out of that two and a half million dollars, right? Amazing. And that's when we started advertising, that's when we started creating our Instagram account, that's when we started doing some of the front-end stuff, and that's when we started also scaling up our backend manufacturing.
00:40:14
Speaker
Because now with some of the earlier players that we actually started working with, we said, now we have to put our dedicated production lines in terms of contract manufacturing. Let's put our dedicated production line with our dies and molds so that the look and feel of the product never changes. We started as standardizing. We started doing more QC process. We hired our first few employees.
Retail Distribution and Global Expansion
00:40:43
Speaker
We scaled from about $100,000 a month to about a million dollars a month. Right. Well, by November. Okay. November 22.
00:40:55
Speaker
November 2022 is when we actually raised our seed. In November 2022, we raised our first round and this time most of the major players came in, so Axel led the round.
00:41:14
Speaker
Big thanks to Prashant Sar, one of the founders of Axl in India. He believed in the sustainability story. He believed that it's a massive mark. And he believed that we are the right founders to get it done. Then Axl came in. Then Singh Capital Partners came back in that round. And then Founder Bank Capital, BoardCap, Wayfund. Then there are a lot of funds that backed us in Series A. Series A around $12, $12.5 million.
00:41:43
Speaker
And good news that as a company, we focused on profitability from day zero. Okay. So yeah, we haven't done our series yet. We are still running through that money. Wow. Amazing. So yeah. Tell me about, you know, was it
00:42:03
Speaker
still largely led by a focus on supply chain or did the marketing initiatives also equally contribute towards sales growing? What was contributing towards the revenue growth?
00:42:19
Speaker
So again, Akshay, the most important thing, okay, before you start doing a lot of advertising, and I think a lot of founders fall into this trap of like, you know, I'll go very big on marketing and advertising and announce to the world, get your distribution right first.
00:42:35
Speaker
Okay. If you are available in 100 stores, and this is what I'm talking about end of 2021, we were almost in like 100 stores only. Okay. If you're available in 100 stores and you're doing a national campaign, it doesn't matter. First one and a half years took us to 100 stores. Next one and a half year took us to 4,500 stores.
00:43:00
Speaker
Once you are available, once you got your distribution right, once the product is on the shelf, then do very surgical targeted marketing. So, as a company, we had the e-cost of never going after campaigns, which gives you 1.25x ROAS. We never went after hard marketing. We never went after, in the first three years, never went after celebrities.
00:43:23
Speaker
Because we knew even in the age of D2C where the VC money was free flow, right? You know, we never went after easy revenue. Okay. We got our distribution right. Okay. And very happy to say we'll be the first sustainable product company in the world, which will hit 15,000 stores worldwide. And we're talking about large stores. We're talking about the, the Waitrose and the Tesco's and the Targets and the Waitrose and the Sprouts. So we are now present across 23 banners. Get your distribution right first.
00:43:57
Speaker
There is only so much you can do with T2C. If you are actually having an omni-channel strategy, get your distribution right. Why did you choose to expand offline? You could have just decided to continue focusing on Amazon as a channel.
00:44:13
Speaker
Because of the initial thing that I told you, awareness, affordability, availability. 87% of the America shops for their home essentials in their local stores. As a founder or as an entrepreneur, never try to change customer's habit.
00:44:35
Speaker
especially there are certain habits that you are just used to. If you like a coffee shop where you like to have your morning coffee, you will go to that coffee shop for having your morning coffee. You can wake up in the morning every day and say,
00:44:50
Speaker
doesn't work like that. There are certain things which are on autopilot. So the way it works in a category is when you go and do your groceries, then you pick your napkin, you pick your toilet paper, you pick your disposables, you pick your cups, you pick anything from a home essential perspective, it happens in a grocery store.
00:45:09
Speaker
And I know 2122, when we actually built this business, there was a huge focus on D2C. Everybody was like, I'll be D2C only, I'll be D2C first, I'll be D2C. And I was like, have you really looked at the data where your consumers are shopping? And very quickly figured out, even in India in our category, 90% plus actually shop for disposables in a store.
00:45:33
Speaker
I was like, just look at the data guys, let's not get emotional about it. If the customer shops in a store, let's get in the store. And I'll tell you, it was equally difficult to find a store which is willing to take a bet on us, as it was difficult to find a vendor which is willing to take a bet on us. I still remember my friend Arvind, because we divided and conquered. He used to have all of our product sample in his cartoon.
00:46:04
Speaker
If you just get a call from a buyer of any of the stores, you just drive to that buyer, like in a movement's notice. Retailers in the US are very conservative. If you want to get on a shelf, you have to display someone from the shelf.
00:46:27
Speaker
That's the rule. Okay. No shelf is lying around empty, right? So as a young brand, right, you know, who have, who is only Amazon, have never sold in the store, not even set up with a distributor in the US, don't have a WMS system. What is the warehouse management system? You know, warehouse management systems, you know, where you can connect your warehousing to their warehouse. You don't have all of that set up. Which retailer will take a better?
00:46:55
Speaker
Okay, it's just that generosity of one retailer, right? They said, okay, I'll give you... Who was the first one? Lowe's MDI, right? You know, and they said, like, you know, we'll give you 100 stores. We have 4,000 stores. Let's see how you do in 100 stores. They just gave us 100 stores near where Arvind lived. And then, and it was just literally pestering him for six months. Give us a chance, give us a chance, give us a chance, give us a chance.
00:47:23
Speaker
In six months, he just got tired and he said, okay, I'll give you a chance in other stores. So as a founder, you just have to be shameless in asking for help. So I think that's how we launched. But once you have the sell-through data, once you can actually show this product sale,
00:47:43
Speaker
Then going from 100 stores to 250 stores becomes a little bit easier. 250 to 750 stores becomes a little bit more easier. And today as we are basically going after almost every single major retail chain of the world, we now convert almost 9 out of 10 pitches. Because you have strong sell-through data.
00:48:05
Speaker
We have very strong sell-through data. What does the sell-through data look like? What does it include? How many units you put on a shelf versus how many you are bought within X number of days? So before that, I'll just tell you how retailers think about it. Retailers at the end of the day are real estate players.
00:48:30
Speaker
True. Their shelf is a real estate. Their shelf is a prime real estate. And what they want to maximize is revenue of that real estate. A profit in that real estate, in fact. Not even revenue. The net margin of the real estate.
00:48:46
Speaker
Okay, the formula is, you know, your margin, the retailer's margin multiplied by number of units sold per week, okay, multiplied by the MRP. That's it. Okay. So, you say MRP is 100 bucks multiplied by 30% margin multiplied by the, like, you know, how many you are staying per week, per month, however you want to look at. That's your simple formula.
00:49:14
Speaker
We were able to show retailers, not only we increase revenue on your four feet shelf. If you look at a four feet shelf, we increase revenue on your shelf. We increase margin on your shelf. So if a typical CPG players, old school, hepti, Gladshina, Duke, paper plates based name for the last 50 years, they give you 25% margin, will give you 35% margin. Our product is 10 to 15% more expensive, and it will still sell as well as these guys.
00:49:44
Speaker
We are selling five units. We will also sell five units. Here's the data that proves that. But since our MRPs are and we are giving you better margin, you will increase your profit per shelf. That's right. And that data, by the way, is publicly available in the US. It's IRI data of cell through. It is very publicly available. So you cannot bluff your way into that data. That data is real.
00:50:08
Speaker
Okay. How is it public? Is it like a Nielsen or some market research agency which publishes this? Yeah, IRI. IRI is the name of the agent. IRI. Okay. IRI. And it basically has the POS sale data by barcode. So you can literally put it by barcode on how much cell 3 is happening for that barcode versus the other barcode.
00:50:29
Speaker
So the retail chains share this data with IRI. Okay. Understood. Okay. In fact, almost most of the America works on IRI data. So when you actually, when they reorder something, right, they also look at the IRI data to know what is selling off their shelves in order to reorder a replenishment strategy. Most of the buyers look at the IRI data.
00:50:52
Speaker
So good news is everyone looks at the same data, and once you have the data on your side, then it becomes very easy to convince people that, okay, yes, this thing flies off the shelf.
00:51:02
Speaker
Okay. And it increases the margin. One big thing that we also looked at is was the aura effect. Okay. The customers that we bring to your stores, like who are these eco-friendly customers? Okay. They are more progressive. Their water size is bigger. Right. Once they are hooked onto a certain brand, they have massive repeat purchase behavior. Right. So all of that, right. You know, data that we were able to share. So we had a whole retail stack.
00:51:29
Speaker
And then last thing we said is we are the most affordable eco-friendly brand available in the market period.
00:51:37
Speaker
Here are 10 more eco-friendly brands. You can get RFP from all 10 of them. If you don't beat their price by 35%, don't take us in. In fact, you beat Target's private table brand by 25% in prices and we beat Walmart's private table brand by 18% in the pricing. And this is what we're talking about, private level where they're supposed to be extremely price competitive. So that is the power of manufacturing in India, by the way.
00:52:01
Speaker
Right. So essentially this is how we want the retail. Okay. Today we have the right data. And today, like there is no retailer, which doesn't want people. So what percentage of your sales comes from offline retail? 60%. Okay. And what percentage of that is from US?
00:52:21
Speaker
Yeah, but eventually in the long term, this would be like 85%. It reflects consumer buying barriers. That is true. And also because it took us one and a half years to crack our first 100 retailers, right? So we started as primarily an e-commerce company, right? Which diversify into retail. And retail is a, retail is something that, offline retail is something that you cannot crack overnight. No, you can launch new products on Amazon at will, right? Yes.
00:52:50
Speaker
Retailers are extremely conservative. You get one shot at retailer once in a year. So they have their reset periods where you actually go and pitch during the line reset. And that's the only shot you get in a full year. Oh, wow. Okay. It's not like you can go anytime and go pitch your product. It doesn't work like that. It's a very conservative industry. Good news is once you're on the shelf, you're on the shelf.
00:53:17
Speaker
Then again, it's equally hard to displace you. So I think that's where we thought that patience of building our offline presence helps. Yes, we will be 75% retail by the end of 2024. And I think that's the right direction to be in, because that's where the customers are. Yeah, I think that's how we... How much of your revenue is from the US?
00:53:41
Speaker
Today, around 80%. And again, the reason why 80% of revenue comes from the US is because for the first two years of existence, we were 100% US. So in late 2023, around six to eight months back, we launched Canada, we launched UK, we launched Germany, we launched all the GCC countries, we launched India.
00:54:01
Speaker
So we launched a lot of countries, Mexico, right? You know, so we launched a lot of countries in the last nine months after we released our series A, right? That certainly had the capital to go for geographical expansion. And we believe that like, you know, by early 2025, US will contribute around 65% of the revenue and 35% less to the world.
00:54:23
Speaker
U.S. Canada is such a massive market. Why go outside to all these other countries which will never be as big and you'll have to do a lot more? I mean, your bandwidth gets split up over all these countries. Why not just continue U.S. Canada? That itself is a massive opportunity.
00:54:45
Speaker
Actually, it's a couple of reasons, right? So number one, right, we graduated from a place, right, where we were pitching our products to the retailers. Now we are in a stage where retailers are coming to us and say, can you actually give us eco sold products?
00:55:02
Speaker
Okay. For example, we are the top performing brand in the Ahol deli chain, right? So Ahol group is the largest retailer in the world. It's bigger than Walmart, by the way. And where is it?
00:55:16
Speaker
Europe, right? Okay. So, Ahold is about an 18 billion dollar retailer in US, but a 160 billion dollar retailer in Europe. So, Stop and Shop, Giant, Giant Food. Okay. Food line. All of these are Ahold stores. Okay. So, now, all of a sudden, you are a top-performing brand in Ahold in the US. Now, Ahold is saying, hey guys, really love you guys. Okay, come and sell these products in Europe.
00:55:42
Speaker
I cannot go and tell Ahol, no, no, I'm not going to do, you're a boob. That's not going to happen, right? A lot of friends, that's one. Same happened with HEB. HEB, we really performed well in HEB in the US. They said, hey, we have HEB in Mexico, go do it. Costco, Canada, same thing. So a lot of friends, we got the invite. The second thing was, if we go back and look at our playbook,
00:56:08
Speaker
Right? We said we're gonna have affordability, availability and awareness period. Right? We had the first mover advantage in every single market that we are entering. So we had the first mover advantage in the US market. We now are getting first mover advantage in the European market.
00:56:25
Speaker
at this stage of the company, okay, let's get on the shelves before anyone else get on the shelf, because I just told you how difficult it is to get on the shelves. Yes, yes, it's true. So the major markets of the world, right? US, Canada, UK, Germany,
00:56:43
Speaker
and UAE, right? Saudi Arabia, right? You know, we literally mapped out the top 10 markets of the world. And these are the markets that we want to pay in and make sure we are on the first on the shelves. Because that drives consumer recall, that drives brand loyalty, that drives first move at advantage, that gives us better unit cost economics. There are so many advantages to doing that. And most importantly, I cannot tell my retailers to go and work with my competitors. We are with you and we will service you anywhere you want us to service you.
00:57:13
Speaker
Will your supply chain be able to keep up? It has kept up for some time, right? You know, so we grew 15X over the last one and a half year, right? As a company, right? In revenue. And 1500% growth is difficult to manage. Okay. And here's the beauty of it. If you look at my 2022, okay, we were 50% China, 50% in. We were around
00:57:42
Speaker
35% contract manufacturing and 65% procurement. That is, we are procuring directly from different factories. That was our modern 2022.
00:57:53
Speaker
2023, I'm 75% India, 25% China. I'm 30% captive manufacturing. These are the factory's own buying vessel. Another 50% which is contract manufacturing. These are the factories where we own dedicated production lines or we buy out the entire factory production. And only 10 to 15% is actually procurement.
00:58:18
Speaker
And we do procurement today only for new product launches. So this is a product where we are really testing the product market. More importantly, now we are 75% India-based supply chain and 25% outside of India, right? So that also shows how much confidence we have in the strength of Indian manufacturing and how much more competitive we are versus Chinese manufacturing.
00:58:45
Speaker
So, if you set up your own plant where you say capital manufacturing? Yes, yes, yes. So, we have a factory. We have in Shimoga and Karnataka. So, we have in the hinterlands of India. How did you set up factories so fast? Setting up a factory is typically a time consuming process, right?
00:59:07
Speaker
No, we started setting it up after we raised our Series A, because there's a definite way of, there are three things that we set to our investors. One is we need a stable source of supply chain for certain products. And secondly, there are certain manufacturer level certifications we wanted. So there are certain retailers who only work with manufacturers and not contract manufacturers. So we had to set up that. But in November 2022, once we raised the fund, it took us a year to build the factory.
00:59:35
Speaker
Okay. But by August, September, 2023, we had the factory up and running. And why these locations in the hinterland, like Muzaffar Nagar? I mean, I would have understood if you told me Chhatnagar from there by Muzaffar Nagar. So this is where Chappal Gisnehwala concept comes back into play. I'll tell you how unique this is, right?
01:00:01
Speaker
So the entire India, okay, buys pulp and converts that into disposable tableware, napkins, whatever you want to convert it into. And India made there is pulp monopoly. Okay, there are only two, three players that supply the entire pulp of India. Okay. And I was very frustrated with that because I was like this pulp price is way too high. Okay, with that pulp price, I will never be able to compete with China.
01:00:31
Speaker
Okay. And I really wanted to do that. So I figured out, how do I decrease the cost of bulk? So I said, like, where is the bagasse? Right. Comes from a sugar, sugar mill. Okay. Now you have to then take the waste product. After they extract the juices, what is left behind is the bagasse.
01:00:56
Speaker
That is true. Give me two examples, by the way. One, Bagas says that he's family. We have another factory. So Bagas me, you need sugar waste, right? You know, sugarcane waste. So you have to go and buy it from a sugar mill. Okay. Which by the way, 95% of this bagas actually get burnt in point. Okay. Which is a massive waste of a national wealth. Okay. And obviously like environmentally ridiculous.
01:01:20
Speaker
So I went to the sugar mills and again started begging. Sir, there is no other way to do business. Begging works actually. And you just have to call them 100 times. Then the problem is, bagas cannot be converted into pulp by myself. So you have to take all of that bagas, take it to a paper mill.
01:01:46
Speaker
Because they have the digester and there's a 100 crore project. I didn't have the money. So I go to a paper mill and say, I give you the pakas. Please convert that into pulp and give me the pulp. The bagging started. And then like, you know, in Muzaffar Nagar, there are four large sugar because the heart of the sugarcane and there are more than 20 paper mills.
01:02:12
Speaker
So I went to all the four sugar mills. I went to all the 20 paper mills and finally one or two people agreed. They actually started. So I had to put up my planting to keep the cost basis very, very low. Now I have my bagasse hose there. I got my pulp source there, my factory there. And the result of that is the entire India buys 12.64 rupees per kg. My landed price is 42 rupees per kg. Wow. Amazing.
01:02:40
Speaker
The Chinese landed price is 10 rupees per kg. So I'm now beating China, I'm beating the entire India. After undercutting our entire competition by 35 to 50% prices, we maintain 77% gross margin on a portfolio basis. That is one of the highest gross margins that you will find in the CPG industry.
01:03:10
Speaker
And that's why I'm actually, I'm not cutting my entire competition. I'm not even matching their price. 50%, 35% maintaining that gross mark. But for that, okay, Chappal Gizna is the only option. Okay. So a lot of you are going to tell me about Palm Leaf also, the second. Yeah, the Palm Leaf date. So when we started the Palm Leaf date, right, you know,
01:03:33
Speaker
It was a beautiful product, really got my eye. We looked at the data, good market in the Western world. And the palm leaf plate is what typically in South India, they put a palm leaf and food on top of that palm leaf. That's what you're talking about. What is a palm leaf plate? Yeah, yeah, yeah. So basically, you know Supari, like betel nut? Yeah, yeah, yeah. So this is Arika palm, which is the betel nut palm. So the main product is actually the betel nut.
01:04:06
Speaker
So you take that leaf, almost 80% of that is also burnt in India, right? You know, which is really, really horrible. We burn our rice husk, we burn our rice straw, we burn our wheat straw, we burn our palm leaves, we burn our kakas. And China does more than 15 billion dollars of exports out of these products. Like, you know, and we are sitting on that well.
01:04:31
Speaker
and nobody is doing the value at. But anyways, so palm leaf, this is a foliage, right? And you can make, like, you know, plates out of that. Like, it really looks like wood. It is as sturdy as a wood plate. Like, you know, it's like really, really sturdy. Like you compress multiple leaves together, dry and compress them or something like that. No, no, no. Single leaf. Single leaf. You put it in a die cutting machine and it comes out like a wood plate. I wish I had one of those right here with me, but right, you know. Okay.
01:05:02
Speaker
So, palm nucleate, right.
01:05:05
Speaker
So again, when I went to really start procuring around the palm leaf plate, I very quickly discovered it's entirely a cottage industry. Okay. So they were Chota Chota Chota Chota farmers who are actually having one or two machines each in their plantation itself. And the whole day they used to work in their plantation. In the nighttime, they used to come home and they used to take all these leaves and they used to convert them into creation bowls. And mostly it is using for local temples.
01:05:35
Speaker
You know, we get all these donas. So I think that's what it is called very cottage industry and really loved the product, really saw the product potential and said like, you know, we have to export this. Okay. In fact, by before even exporting, we have to get it USDA certified and whatnot. Right. You know, there was no certification process. We actually created that entire process. Right.
01:05:59
Speaker
Then we actually started procuring. What we very quickly realized, there were three... You need USDA for even tableware? Any food contact material. Okay. FDA and USDA is... Okay. Yeah. On toilet papers you don't, but for any food contact material, you need the USDA and FDA.
01:06:20
Speaker
Okay. Interesting. So, what happened is essentially we went to all these farmers. Initially, I created a small warehouse in Tukkur, which is around 170 kilometers from Bangalore, the hinterlands of Karnataka. And I said, I used to run a Tata Ace, which used to connect all these
01:06:45
Speaker
Then this oral is not scalable, man. Margins, gross margins are as high as 88%. Imagine the gross margin product. Product sells very, very fast, right? Massive demand. Everything else is good with the back end.
01:07:00
Speaker
is not where we want it to be. So we ended up building the first factory, the first organized factory of this product in Karnataka. Fairly large factory, around 25 machines. And essentially we started running that factory by directly now procuring leaves from the flowers, instead of procuring plants.
01:07:20
Speaker
Okay. And I really wanted to scale it. Okay. But I also knew that I cannot, like, you know, while building a global business, running multi-product supply chain, I cannot keep on running a factory. Okay. That's when, like, you know, we got in touch with Krishi Kalpa. Okay. Which is a farmer's FBO organization in Karaka. And we said, Hey, we really want to scale this project. Okay.
01:07:50
Speaker
And they said, yeah, yeah, how do we scale this? And I said, okay, okay. It's my five lakh rupees per month profit. And then they were like, I have only two conditions.
01:08:11
Speaker
Okay. That you will gather all these farmers. Okay. In your FBO, you will make them entrepreneurs. You will triple the size of this factory. You will put two more factories like this. And in 20 districts of Karnataka, I will get the first try to buy the lease. Okay. Amazing. Okay.
01:08:33
Speaker
So we really created farmer entrepreneurship, not just employment, farmer entrepreneurship. And my Shimoga factory is run by 95% women. Where is Shimoga? Shimoga is in northern Karnataka. So essentially 95% women employee, so farmers wives, right?
01:08:58
Speaker
We created employment, not only employment, we created ownership and entrepreneurship. We get massive amount of raw material now organized. We get very stable supply source. We get standardized products. All of our products are USDA certified. Everything goes into UV cleaning and all of the best practices that you follow. And we organize an industry that was completely unorganized. The reason is, again, I'm the most cost competitive player in the world in this market.
01:09:26
Speaker
And today we are the world's largest player in this category. This is how we really have to think innovatively about our AgriTech supply chain. You have to be really close to your source raw material. You have to really empower people that you are working with. You have to really go and see. I could have taken a very easy way of just buying pull from the market. It's available.
01:09:50
Speaker
Okay. I just don't understand why nobody in India did that. Why? No, why everybody just buys books and create products. Nobody thought of, Hey, let's go to a sugar mill, buy it, but that now build a pub and get the price of the pub lower. So I think that's where we really, uh, created something different from a backend supply chain perspective. Amazing. I always tell people sustainability is not just good for business. Sustainability is good business.
01:10:27
Speaker
You have to be like everyone. Everyone. Everyone. So I think that's what you have to do initially. But once you have a proof of concept, by the way, even in the manufacturing side, today, I'm happy to say there is another sugar mill, which actually realize that they can do the pulping themselves. They are actually putting off 50 crore pulper for us.
01:10:40
Speaker
Yeah, yeah, yeah. Absolutely. Your proof of that.
01:11:18
Speaker
So the thing is, in India, there are two types of people.
01:11:25
Speaker
who will just be generous and who will be swayed by your begging and will work with you. And the second is where you actually show the proof of concept. And then there is capital and businessmen and everything follows after that. They say, okay, you know, this works. Okay. We are happy to put this. Amazing. What percentage of your revenue is from table wish? Today, 50%.
01:11:51
Speaker
What are the other categories you're into? Just tell me about how you expanded your portfolio of products. So you started with tableware, then you saw customers are searching for napkins. So that was the second category. You got it.
01:12:02
Speaker
Yeah, so basically, so there's an entire tableware category, then there's an entire partyware category. So think about cold cups, hot cups, straws, like, you know, all the other stuff, right, you know, that is not daily consumable party. And these are made from bagasse? These are made of bagasse, they are made of cornstarch, they are made of bamboo, like, you know, there are four base raw materials that we use, bagasse, cornstarch, bamboo and palm leaf. Okay.
01:12:27
Speaker
After that, like, you know, we launched our baby care category. So think about baby vibes, you know, flushable vibes, baby diapers, you know, so we have a whole new baby care category, then we have a personal care category. These would be bamboo products. These are bamboo based diapers, right?
01:12:45
Speaker
Then we have a paper product, then we have a home care category. Okay, then we have a paper category, which is basically out of bamboo. We make out of bamboo and bagasse bulk. We make napkins, facial tissues, toilet paper, kitchen towel, rose, right? You know, so now we have six different categories and 43 products in these six categories.
01:13:08
Speaker
Okay. From an assortment perspective, we are the only company in the world that provides the entire Home Essentials assortment. The only company. But you're not doing this, that kind of stuff here. Like dishwasher soap.
01:13:28
Speaker
fabric detergents and all. Coming soon. Very soon. Coming very, very soon in fact. That is a big category. I think there's this company called method that space. There's method, there is seventh generation, right? You know, there are two big ones. Again,
01:13:46
Speaker
Like with all due respect, the prices are not where it should be. Okay. For them, the USP is chemical free, right? Like no harmful chemicals, but you would probably also replace the plastic container because they still cover a plastic container. Like you buy a method, it'll still cover a plastic dispenser, but I'm guessing you would replace that with a plastic dispenser.
01:14:07
Speaker
Absolutely, yes. So we are actually right now experimenting with a couple of materials. What we can do is either replace plastic entirely or have one-time plastic container and then refills that are packed into aluminium. So there can be a refill box after that. Let me be very clear about something. Plastic is not bad.
01:14:31
Speaker
Single use plastics is bad. If you want to buy a bucket, please go and buy a plastic bucket. It's a good choice. It's actually environment friendly choice. Something that lasts for five years, great. It's when you have a use and throw products, that's when you should actually avoid plastics. So yes, what the big detergent company should do is they should have one plastic container and then also available with the refill packs because that plastic container will last for years and years.
01:15:01
Speaker
It is sturdy, right? So I think that's where we have to make a distinction. Let's not completely demonise plastic, per se. It's light, it's sturdy, it lasts. The problem is when you throw out a plastic straw, it will last for 500 years. That's the problem. What do you do about shrink wrap? I've seen most such products come with a plastic shrink wrap on top of the product, which you tear and then you...
01:15:30
Speaker
We do PLA, right? So we use PLA products, right? Both for shrink.
01:15:36
Speaker
A polylactic acid made out of coarse starch, 100% plant paste. And it looks and feels like the plastic shin, basically? It exactly looks and feels like plastic. Ah, okay. Equally sturdy, equally everything, little bit more expensive, right, you know. But from a packing perspective, it doesn't increase the overall cost of the stew that much, so we are fine with that, but we use PLA in our packaging, okay.
01:16:02
Speaker
Do we have more space to be more eco-friendly in terms of packaging? Yes. For example, we still use cartons and everything that is made out of corrugated boxes. But again, we are picking and choosing our battles per se. We still have to ship our stuff in a diesel waste truck. We still have to put it in a ship.
01:16:26
Speaker
There are so many areas of supply chain where I wish I had more control. Unfortunately, it's a little bit out of control, right? So yes, there are opportunities where we can further do it.
01:16:38
Speaker
Tell me your playbook for new product launch. How do you, because you said you believe in data. So I'd love to learn what data do you look when deciding which product to launch. How is that? There must be some sort of validation process where you would do some early testing and then decide, okay, let's launch it or let's modify. How do you decide how to price it with channel to launch it or how to scale it?
01:17:06
Speaker
It's a it's a very it's a multi-stage process right you know so it comes from it starts with product identification
01:17:14
Speaker
Okay, then once we have identified here, here are the possible products, and I'll give you the data that we looked at in each phase, the product identification. Then we have certain stage grids that we apply, that is we call like, you know, from identification to product prioritization, we actually rack the products in terms of priority of launch, which also does market sizing and everything. Then basically we start figuring out the backend. Okay, we now know it's a great product with a great market, how we will actually build the backend for this, right?
01:17:42
Speaker
Where is the raw material? Where is the source? Are there ready manufacturers that can do contract manufacturing for us? Is this something where we have to put our own factory? And then finally, we get into the launch strategy. We have a go-to-market strategy. So product identification. That's when we actually start with the overall consumer sentiment. So we look at, hey, here are the categories in which consumers are looking for eco-friendly products. And there are multiple indicators of that. There's AC needs and reports that you can get.
01:18:11
Speaker
Then we look at the market sizing of that. So for example, consumer do want jute bags. It's not a very large market though. It's like a $34 million market. Our minimum market size that we go after is a billion dollars worldwide. If you are launching something, for example, cold cups. So we have a cold cup, which is a plastic alternative. Just one company solo does $2.5 billion revenues on plastic.
01:18:43
Speaker
And I'm talking about one product in one company. So that's the kind of product that we go after when we say, okay, we know we can be the challenger brand. It's a massive market. There's nothing on the shelf that competes with us. Let's go for it. So there's a full market sizing that happens, consumer sentiment analysis that happens. Once we have identified the product, then we actually apply a certain stage case. Number one has to be more than a billion dollars, which I already talked about. Number two,
01:19:09
Speaker
Will I be able undercut my entire competition by at least 30-40% in price? Or get within 10% of plastic? 2 different material. And number 3, while doing all of that, can I maintain a 75% plus cross margin?
01:19:29
Speaker
This is basically like a supply chain viability test, you're saying that. Is it viable for me to have a supply chain which allows me to price it at this level? That is correct. Okay. Absolutely. Okay. Once we have figured all of that out, we again do a step ranking. Okay. Like, okay. We started with 35 products, but like these five lined up on the top. Once you have done that, then you start figuring out the back.
01:19:54
Speaker
Who are the suppliers? Who are the manufacturers that we want to work with? We have already done the market survey. These are the five manufacturers. These are their pricing. This is what their capabilities are. Okay. Then we actually look at like, you know, where we'll be on consolidation center where the consolidation is going to happen. What will the packaging look like? Then we actually do the go-to-market strategy. Our go-to-market playbook is very clear. Every new product and every new geography always gets launched on Amazon first.
01:20:23
Speaker
Okay, even if a retailer is asking for it, we'll still launch it on Amazon. And the reason for that is we make all our mistakes on Amazon. Okay, in the first six months, good part with Amazon, Amazon doesn't share any customer data with you, but you get direct feedback from customers. You see the ratings, you see the sell-through. So if you have launched five variations of a SKU, like pack of 20, pack of 50, pack of 100, which SKU is moving the fastest?
01:20:52
Speaker
Okay. Then in the six months, you also do price demand elasticity, right? If I decrease the price by a couple of dollars, what happens? If I increase the price by a couple of dollars, what happens? So you can do a lot of testing on terms of your pricing. So once you have your, all your reviews clear, once you have your ratings clear, and there are many times where we have discontinued the products, you know, that we launched the products, we discontinued the products, like dock to bats we launched.
01:21:15
Speaker
We were not getting to a place where we felt comfortable that we truly have a path-breaking value proposition. We discontinued the product. So we got the reviews, we got the ratings, we got the pricing strategy, we got the demand and velocity, we got the SKU optimization. After that first six months, we start planning this product for the retail launch. So we'll choose the hero SKU and we'll start planning to the retail launch. We start pitching it to the retailers and then finally make the retail launch happen from where we start scaling. Okay.
Profitability and Strategic Market Approaches
01:21:46
Speaker
What is the result of that? The result of that, Akshay, is that 23 retail banners we sell into across 11 countries, for last two and a half years, every retail banner has the right to RTV, right, to return to vendor. Okay, return to vendor. So if the product doesn't sell, the retailer has the right to return your product to you.
01:22:11
Speaker
Twenty three granars, eleven countries, two and a half years, not even a single RTV. Wow. Zero. Absolutely. Everything has sold through basically. Everything sells through. Everything has repeat order rate.
01:22:28
Speaker
And the reason why we are able to do it is because we have our GTM very, very clear. Do you already made your mistakes before going to the retailers? Do not make your mistake in retail. It's very expensive. Wow. That's amazing. You know, so we have figured out the front-end, we have figured out the back-end, we have figured out the value proposition, then we have a very clear go-to-market playbook, right? And there are cases in which once we started scaling on the retail, we have scaled down on Amazon.
01:22:58
Speaker
Why is that? Amazon Vile is a great platform to interact with your customers. In a lot of cases, it's very hard to achieve profitability on Amazon. Especially in pack sizes, which are smaller. If it's a pack size of 500, you can probably get profitability, but if you're selling packs of 20s and 30s,
01:23:24
Speaker
And your entire value proposition as a brand is to be one of the most affordable players in the market. Achieving profitability becomes a challenge. So we continue only the SKUs and the product categories where we truly see locked the profitability on Amazon as a channel. We start scaling it up on our website. We start scaling it up on retail, but scale it down on Amazon.
01:23:47
Speaker
Okay. Because in Amazon, the shipping logistics cost commission, all of those like only make sense if the average order value is high enough. That is correct. Right. And it's again, a very hard choice for an entrepreneur, right? Because everyone is judging you on your ARRs, on your revenue growth, yada yada, I'll just give one suggestion to people. Guys,
01:24:13
Speaker
Don't do that. Judge yourself. If you truly have the ambition to be bought out by a public company, or you want to become a public company, start behaving like a public company. Have a discipline of profitability. Have a discipline of net margin. Have a discipline of profitability. And I'm very happy to say that my entire global retail business is profitable as of today.
01:24:38
Speaker
Well, our entire e-commerce business where the SKU has been in the market for more than a year is profitable as of today.
01:24:46
Speaker
Okay. So a lot of startups, they think that they will scale. Then there will be a lot of soul searching and there will be a lot of like, you know, once I scale, I'll probably figure out these five things and probably I'll get profitable. It doesn't work. Once you're in a large enough ship, it is very hard to steer it back because the momentum takes you there, right? So make sure before you build a momentum, you have a very good strategy.
01:25:14
Speaker
Right? To be profitable. And I'm now happy, by the way, with all the funding window that is happening, a lot of VCs are now starting to ask difficult questions.
01:25:25
Speaker
I really wish this question should have started about a year and a half back than now. At the beginning of 2023 was the right time to start these questions. I think a lot of these questions are getting asked at the end of the 2023, right? So, so good, right? You know, I really like a real dhanda makes profit. Okay, you can go on yourself startup, right? And I understand there is an investment phase. We don't make money on most of our school launches in the first year. And that's fine.
01:25:54
Speaker
But if you don't make money in the second year, that's not acceptable. What is your era today? This year, anything you can share?
01:26:06
Speaker
And this year is a very ambitious number, okay, but we are currently averaging around $30 million a year. Wow, amazing. Phenomenal with a fairly lean capital structure. I mean, you've raised about $12 million and to reach.
01:26:24
Speaker
Total 40 between CD and CDJ. Yeah, yeah, yeah. And just on the back of our existing order book, okay, we'll get to around 40-45 million dollar ARR. Like on existing order. If we just decide to chill for the rest of the year, that's where we get it.
01:26:43
Speaker
Yeah, so 1500% growth in the last two years will grow around 300-400% this year. But just the sheer demand that we saw from the customers, the sheer intent to move away from plastic is amazing. And by the way, we always think that the Western customer is more aware and Western customer is ahead of the curve. We saw surprising results in India when we did our India launch.
01:27:12
Speaker
Okay. And I'll tell you the Indian North story. I never wanted to launch in India. Okay. And, uh,
01:27:20
Speaker
Now, some of my employees are also learning from me, the begging style, right? So, one of our managers, he came to me, he's like, you know, India. I was like, what's your name? Right. We have so much going on in the US and we're launching 3000 stores in the next quarter. It's just way too much going on. I'll not do India. He said, but the inventory is already here.
01:27:45
Speaker
let's do it. And I said, I don't want to do it. And he literally went after my life for three months straight. Finally gave up. I said, okay, in the spirit of being a startup, let's do it. I gave him an inventory and said, okay. And he said, I will work over the weekend as side project to launch India. He was so passionate about India. And I was like, okay, I gave up finally, the way my vendors give up. And I picked that right. So
01:28:16
Speaker
So he worked over the weekends. Online or offline? What did he start with? He started with Amazon. Of course, that's our playbook. We own it with Amazon. We don't try to disrupt our playbook. It's a very well-defined playbook that we have developed over the last four years. So I gave him an inventory and told him, okay, yeh, one month, we sell kar kar kar. Try selling it in one month, and probably I'll think about it. We got stopped out in five days. Wow.
01:28:46
Speaker
Okay. And I said, Pigna Slag, Total Flu, whatever. So gave him replenishment inventory much more than the previous batch and said like, try selling this. We got stocked out another week. Wow. And this happened in June 2020. Which category was this? Tableware. Tableware. Tableware. Tableware. It was all here already. And there are two, three things that I told you. Number one, okay, I'm not going to do any B-grade, C-grade category in it.
01:29:16
Speaker
The products that I export to America, the products that I export to Europe is exactly the product that gets sold in India. So we'll not compromise on that. Now go and sell. So after that happened, after a couple of stock-outs,
01:29:32
Speaker
We completely went back to the drawing board. We said, oh my god, so much underestimated India. Our fault. Thank you, Shabhar. And like, you know, we went back to drawing board in India. We had a tie-up with Yashra's film. We called Kumi Pandika as our brand ambassador. She's already a climate warrior. She had a lot of passion for the brand. She used her products in London. She knew us, right?
01:29:58
Speaker
So we got her as a brand ambassador. Did India online, offline launch? Today, offline business is larger than the online business in India, by the way. Again, tremendous, tremendous potential. In six months of launch, less than six months of launch, we are already costing $200,000 a monthly run rate in India.
01:30:21
Speaker
Wow. Amazing. I was like, which I never believed, right? You know, I'll tell you, it took us six months to get to $200,000 monthly run rate in US as well. Hmm. Yeah. Yeah. Yeah. Remember that story, 3000 to 60,000. We got to, we got to around 200,000 run rate in six months in the US and we got to $200,000 monthly run rate in six months in India.
01:30:45
Speaker
Amazing. Right. And we started with online OG and we expanded to just Delhi NCR region. Okay. Then we expanded to 19 cities. And this month we are in March one, we are launching 24 more cities in India. Wow. Okay. And what is the split online versus offline of your revenue in India?
01:31:10
Speaker
So today is around 55% offline and 45% online. But this one also... It will also be like 75% plus offline. Yes. Detail. Okay. Offline retail, again, I put a massive challenge in front of the team. I said I would not give even a single PASSA credit in the bar. No, India offline doesn't work like that. Yeah, exactly. And especially modern trade, like organized retail.
01:31:38
Speaker
They have like 60 to 90 days payment terms, typically, right? Okay, so now we are in more than 200 modern retail stores in India, and more than 1700 GT stores in India. I don't give even a single pass of credit in the past. Wow, amazing. Amazing. Okay, no, no credit.
01:32:02
Speaker
Is this the same in the US also? No credit? So US is different, right? So every retailer has this term. It's typically 2 net 10 30. That means if you give them 2% discount on the pricing, you will get your payment in 10 days. Otherwise you'll get in 30 days.
01:32:19
Speaker
The good news in the US is that you can get all of your POs financed at 0.85% per month, right? So once we deliver, we get all our money back. So we are a very capital efficient business from that perspective. In fact, on running this entire business, my overall working capital is like $2 million. And my receivables is less than $400,000 at any point in time. I mean, 2 million working capital for a 30-35 million ARR is phenomenal.
01:32:49
Speaker
I'll tell you a funny story, right? So when I was launching the business, I came to India, right? So I met my dad, was CEO of a large company, right? I met my dad and he said, he was to an extent disappointed. Like, why do you want to live that life and all of that? Like, you know, uh,
01:33:12
Speaker
I told my friend, we will do eco-friendly products and he asked me like, you know, I just show me the product that you're going to sell. So I showed him that palm leaf plates and bowls and everything, right? You know, cutlery. So my dad said, right, you know, you don't want to sell it. I said, I said, you don't want to sell it. I'd ask you a really good question, right? You said, you don't want to sell it. You don't want to sell it.
01:33:46
Speaker
That's a difficult dad question. You have 15 years of successful career behind you, you still ask your dad question. A lot of love to my dad. I entered a category which the entire India thought is Kachara.
01:34:08
Speaker
Okay. India made, this is an 8,800 crore category. Sane art, Hazar crore category. That does not have any brand. That does not have any national player. Can you imagine? There is no national player in India in the entire disposable category. Amazing. And it's such a large category.
01:34:34
Speaker
So we said, if we just try to be a non-Kachara player in a Kachara category, that's enough. That's more than enough. If you become the first branded player in an unbranded category, that's more than enough. And I met a few distributors in India and they shared the Bisleri story with me. So Bisleri as a brand, when they first came to the market with bottled water,
01:35:13
Speaker
So, they shoot off Bisleri a lot of times. I talked to the distribution of Bisleri. But now we know what Bisleri is. Right? Yeah. It is synonymous to bottled water where people say, yeah, Bisleri Vena. Yeah, yeah, yeah. You are entering a category where this is the Bisleri moment of the category, where there is no brand, there is no organized player, there is works like Kachara. Nobody can recall anything. And if you just become a brand that people are able to recall, you're done.
01:35:20
Speaker
and they went to the distributors, they said,
01:35:51
Speaker
That's what I saw in India because you asked a really good question. Why India? When you have all these Western markets, fairly large markets, why India? Because first the sell-through really showed me. We are a very data-driven company, so data doesn't lie.
01:36:07
Speaker
And the second thing is, once I launched the products and did our own research, truly understood the dynamics of the India market and it's more exciting than anywhere. And it's also a good test for the brand, right? India is a price sensitive market. If you can win India, trust me, every other market is a child's play after India, right? India is one of the toughest market to crack.
01:36:33
Speaker
From a distribution perspective, from a retail relationships perspective, from logistics perspective, from price sensitivity perspective, from every perspective, India is one of the toughest markets in the world. So this was also a good test for the company. It can be actually do India. Okay. What worse can happen here? We'll fail. That's okay. You should be ready to fail as a startup. It's okay. It's one market that didn't work out.
01:36:58
Speaker
But it's working out super great. By the way, our entire India business is profitable as of today. Six months of launch. You said you have a team of 400 people, right?
Decentralized Hiring and Organizational Model
01:37:14
Speaker
That is correct. So around 85 people are headquartered, which is basically data analytics, operations, supply chain, marketing, product development, finance, analytics, design, merchandising. So around 80-85 employees are headquartered employees. The rest of the employees are across warehouse centers, port consolidation centers, factories, all of those places.
01:37:39
Speaker
So how do you, how do you do your hiring? What are some best practices in terms of building a team? Number one, never hire a recruiter or recruiting company. So till eight, we have paid zero paisa in a recruiter commission. And again, it all disciplined comes out from the fact that we were poached up for the first 14 months. So we never developed bad habits. Okay. Because once you do develop bad habits, it's very hard to go back. Okay.
01:38:09
Speaker
Every hiring decision is taken by the hiring manager. Okay. And we give them full liberty on who they want to hire within a certain, of course, compensation band. But then once you know, like, you know, this is the guy that you will have to live with.
01:38:26
Speaker
for a long, long time. That's when people do make good hiring decisions. So we do trust our hiring leaders to hire the right people. I hire my own people, my direct reports, who hire their direct reports. The other thing that we actually look for during the hiring process is essentially their entrepreneurial mindset. This is a really, really hard category.
01:38:52
Speaker
I'll tell you people in my company who are college dropouts. I have people who are from ITIMs. I have people who have PhDs. I have people who have the background where they ran their own Kirana stores from the age of 17.
01:39:11
Speaker
Okay. Then went on to do their engineering MBA. Now we're working in a company. So we also look at their backstory. We also look at their intent to work hard. We also look at like, you know, a lot of things. Degrees is a plus. It's not a hiring criteria though.
01:39:34
Speaker
Most companies at this scale will need to be more centralized and this current decentralized approach you hire, whom you want to hire, may not scale? No, actually not true. So when we were in Wayfair, right?
01:39:49
Speaker
The one thing we learned as a culture in Wayfair, they had a concept of single-threaded organization, STOs. So there is no department in Wayfair. Other than one or two departments, for example, you need to have an accounting as a department, an HR as a department. Other than that, every function works like an STO, where there is an STO leader. What does that mean? Single-threaded organization. That means you are not organized around a business problem.
01:40:20
Speaker
For example, Shubha Madri is our India business head. India operations problem says this, India sales problem says this, India's product development problem says this, India's pricing problem says this, India's relationship problem says this, India's finance problem says this. For example, even we have to raise some level of debt in order to fund his business, he goes around talking to the man. So now you become a mini CEO.
01:40:46
Speaker
Okay. Think new product development. Okay. So now every product that comes with new product development, right? You know, talking to the vendors, figuring out the logistics, you know, so you are organized around a business problem rather than a function. Okay. So at the beginning of the year, we actually define there are 14 or 15 business problems that we want to organize ourselves. International launch could be one business problem. Okay. Supply chain efficiency could be second business problem. So you cannot be an operations head.
01:41:17
Speaker
You have to be in supply chain efficiency here because in operations here, think about how do I get my current logistics to be more efficient? How do I get my stock higher? But when out of stock also becomes your metric, you start thinking about supply chain in a very different way.
01:41:33
Speaker
Interesting. Only profitability becomes a metric for you and the business head. It also becomes a very scalable approach, right? Where you actually start making everyone a part of a P&L owner and you start organizing it around the prop. And you start figuring out what kind of people I need to solve this problem. And this is like a well understood model, single-threaded organization.
01:42:00
Speaker
Oh, yeah. Amazon has it. Wayfair has it. A lot of well-developed companies has it, the single-threaded organization. And it also reduces, like, you know, what I will say, interdepartmental bureaucracy.
01:42:15
Speaker
So, of course, it's an acquired taste. See, it was very much an acquired taste for me from where I came from banking, which is very departmentalised. Yes, absolutely. All the way, we were getting into a way where everything is me. So, all of a sudden, I have to figure out every part of the problem. And that also develops a little bit of empathy for every part of the problem. Typically sales guys are like, you know, you know, I don't know what to do.
01:42:46
Speaker
Operations guys are like, I need three weeks of notification before I can dispatch this product to you. And then there is a clash. But when operations is also yours and sales is also yours, then you understand both parts of the problem. So I think that has worked out very well for us because now everyone thinks about every problem from a P&L mentality.
01:43:16
Speaker
It is very scalable. It's very non-departmental and people get very rich experience, right? Because working in a company, you become either become a finance guy or an operations guy or a marketing guy or a sales guy. In my company, everyone gets a CEO level exposure. Jaya, they're basically meeting entrepreneurs looking after their business problem. Amen. And that's why
01:43:40
Speaker
working at Eco Soul, you will either love it every day or hate it every day. There's no way around. But here is how I judge the results. We have attrition rate of less than 5%. Wow. Amazing. So hopefully we are doing something right. Okay. People are really thinking through like, you know, what kind of work experience they are getting. Is that rich enough for that?
01:44:10
Speaker
Do you think you'll need to raise more funds? We'll do a series B, right? You know, probably this year. Okay. Okay. And that's what we're thinking about, right? For investing in new product development.
01:44:26
Speaker
We have to strengthen our manufacturing capacity, right? You know, so we went into 25% captive, so we want to get to 50% captive because now we are doing a lot of product innovations.
Innovation and Sustainability in Product Development
01:44:36
Speaker
So one of the good things, Akshay, that EcoSoul decided very beginning in the very beginning is we are not going to win R&D Cup.
01:44:43
Speaker
Two reasons for that. It requires hundreds of millions of dollars to do original R&D. And secondly, there is a lot of good R&D happening across the world in sustainability. There's good R&D happening in US, in Netherlands, in Japan, in China, in India, everywhere. So it's not necessary that once you do your R&D, you'll be better off than anywhere else in the world.
01:45:05
Speaker
But what EcoSem can do very effectively is become a great commercialization partner for the R&D companies. So you own the patents, you have developed a new product, now you need a network of 15,000 stores, a global supply chain, a manufacturing capacity, that's where EcoSoul comes in. So we want to wrap up our manufacturing in order to become a great commercialization partner for the R&D company. We are already doing it for four or five companies where we are the commercialization partner. So we want to wrap up that capability. What is some of these technologies which you are commercializing?
01:45:35
Speaker
Like, for example, PLA extrusion technology. So, for example, like, you know, there is a company called Coromat in the US which developed a technology where you can extend the PLA fibers through an extrusion process and blowing air in between. What it does is, in simple languages, this makes the product equally sturdy but 30% lighter.
01:45:57
Speaker
Okay, when the product becomes 30% lighter and equally sturdy, it becomes 30% cheaper. So you, our entire goal is to one day achieve parity to plastic. Because we know the day that happens,
01:46:13
Speaker
achieving parity to plastic. Daynet happened, the world changes. Yeah, nobody loves. Nobody loves plastic. It's just the price paradigm where we have to crack it. So there are a lot of companies like that who are sitting on the patents for two years, their universities are sitting on the patents for two years, three years, there's nothing happening because they don't have the right commercialization part.
01:46:32
Speaker
We would really take the risk, make the product, get into the supply chain and get it all. But our space toilet papers and napkins, nobody was doing it. We are the first company we started doing it and we built a superior product. If you look at our toilet paper versus the simple toilet paper is much better. And now we're launching it in more than 1800 stores in America and UK.
01:46:52
Speaker
So we are able to do all this innovation because we have our manufacturing. So we have to wrap up that capability. We are obviously expanding in three or four choreographies. There are France and Spain, where we are wrapping up, Australia and New Zealand, where we have to wrap up. And obviously, so you have to put money into marketing and detail launches and listing fees and all of that. But more importantly, we really want to continue to strengthen our supply chain and talent base. So already applying a lot of generative AI in the company, we are already building
01:47:22
Speaker
deep deep analytics model right today right from IRI data to the container planning for us is completely automated. So we want to really invest in those capabilities. I think that's where we really need the fun.
01:47:37
Speaker
The end goal is to get parity to plastic by being more efficient, by being a manufacturer, by being a technology developer. Yeah. Okay. You know, North India has this like one month of extremely heavy pollution because of the stubble burning. Is there a product that can be made out of that stubble? Do you see some way out of that problem?
01:48:00
Speaker
A man already doing it. So 30%. So what we started doing like, you know, in early 2024 is essentially we started mixing 30% of rice, rice straw and wheat straw into a bagasse baseball. Okay. So you can actually do 70 30 mixing. That also why my product cost is lower. 42 rupees per kg. Right.
01:48:20
Speaker
But not just this, okay, bamboo pulp, eucalyptus pulp, right? There are so many types of pulp, right? So you remember in the lumbar process, all the wood jaff comes out, right? You know, the waste, what do you do with that waste? You burn it.
01:48:36
Speaker
That's a typical process in India. Whatever you can't figure out, burn it. Right? All of that can be converted into value added products. Right? So we are already in 30% mix. And I was recently like, you know, one of the keynote speaker on sustainability in the Bangalore tech summit, where I presented the data, how between 85 to 95% of agro waste is burnt.
01:49:00
Speaker
And how much China is exporting out of these exact same macro waste, which they don't even have, by the way. So they import bagas from Brazil, from India, from Thai. They are importing a lot of bulk, creating valuable product and exporting it to the world. And we are sitting on that gold mine. And we are burning it. You are literally making gold out of kachra. Amazing.
01:49:25
Speaker
That's what we call it, right? You know, so essentially literally it's aggregate waste that we are literally mining it. Okay. And why you should do it? Because you can build a business that is 77% gross margin out of this. Trust me, sustainability is not good for business. It is good business.
01:49:47
Speaker
These raw materials are cheaper. One last question I want to understand
Market Approaches in India and Entrepreneurial Advice
01:49:53
Speaker
from you. What is the difference between organized retail in India and organized retail in the US? I mean, in the US, it's all organized retail. I don't think they have the kirana stores they access. And you've dealt with both of these players. What do you see as a difference, like selling to retail in India versus selling to retail in the US?
01:50:13
Speaker
Okay, so let me first go to the retailer in the US, right? It's a very structured process, okay? So you get once in a year opportunity when the line reviews happen. You present your product, okay? You present your value proposition. It's a directly relationship between the brand and the retailer, okay? And then you get like a, let's just say a long-term contract.
01:50:43
Speaker
bigger commitments. And it's a very time-taking, lengthy process. Sometimes it takes more than a year to get on the shelves. So that's how organized retail looks like in the US. You have to present a lot of data. It's almost like pitching to a VC, where you have to show them the data, pricing data, our competitor data, market analysis. So almost like you have to go in a full-fledged consulting firm. You have to do product displays, merchant banking strategy. They want to look at everything. How would your product look like in a shell?
01:51:13
Speaker
Right? So all of that happens. This is a very lengthy and very organized process in the US. In India, whether you go to GD or MT, General Trade or Modern Trade, it's a very relationship-driven, distributor-driven process, by the way. Okay. So it's a very fragmented process. For example, if I want to go to and sell in Noida, where our headquarters is in India, okay, there are multiple pockets of Noida where only one distributor serves.
01:51:44
Speaker
You need to work with multiple distributors then. Multiple distributors are very relationship driven. They are all sole proprietorship. So you have to go and convince the owner one by one. Okay. So it's a very relationship driven process and it's all based on faith. They don't want to see any PowerPoint. You have to work over there. You have to convince. If the uncle is convinced, the distribution, if not convinced, doesn't matter what data you have.
01:52:13
Speaker
If it's like, Chai Pithanda is the philosophy in India. Chai Pithanda, literally. They have to like you first. Then they will think about liking your product. So I think it's a very personal relationship driven business in India. It's very fast by the way. So if it doesn't take years, if you go over there, you meet them, you like each other, you could be pretty much in the business very next week.
01:52:42
Speaker
So I think that's where the biggest difference comes between organized retail in the US versus retail in India. But I guess you need more working capital if you're working with organized retail in India, right? Typically their payment periods are longer, bill discounting rates would be higher if you were to like in the US you pay like less than a percent here, it'll probably be four, 5% I guess.
01:53:09
Speaker
So what we have done is essentially we don't give any credit in the market, right? And if you want bill discounting, we have actually have a tie-up in the e-pale. So we directly tie up the retailer and the e-pale later and say we will guarantee the credit, you pay them the money and essentially we manage it through that but we don't take any risk on our own balance sheet. Good news is even in India, not even a single RTV. So product sells. So that's a good news.
01:53:37
Speaker
One difference that we did in India, by the way, when cracking the general, okay, now you have sale data coming out of all the credit card companies as well. So you can reach out to Visa, Mastercard, all of these guys, and you can start getting the sales level data by pin code. Okay. How would Visa know? Because when the card is swiped, Visa doesn't see what was the card, Visa just sees the value was swiped.
01:54:05
Speaker
No, a lot of these companies like eBay later and all of these guys, they get the actual bills, right? They actually get the inventory data, they get all of that, right? What we started looking at is, while India looks huge, right? More than 36,000 pin codes, right? India looks huge on the outside. We started looking at the data. So 30 cities in India account for almost 80% of the disposable consumption in India.
01:54:32
Speaker
Only 30 series. Then we started looking at the 30 series. For example, if you look at Ghaziabad, within Ghaziabad, Indira Puram consumes 80% of Ghaziabad's disposable. Within Indira Puram, there are three pin codes which are residential pin codes that consume more than 75% of Indira Puram's disposable. So what we actually started nailing it down from an India perspective is India has not a 36,000 pin code story.
01:55:01
Speaker
India has only 190 pin codes history. If you are able to conquer 190, 190 pin codes in India, 192 to be exact. Okay. Okay. You have almost captured 60 to 75% of the market of India.
01:55:17
Speaker
You have to be very surgical when you go in India. You cannot be spread across the board. A lot of people think I'm in 2 lakh stores in India or 5 lakh stores in India. It doesn't matter. Very quickly, out of the 2 lakh stores, 1 lakh and 80,000 stores are not generating anything. And your 20,000 stores are generating everything. So I don't have to be spread very thin in India. I have to just go after 192 pin codes. I think we are pretty covered.
01:55:49
Speaker
Amazing. Any last words of advice for young expiring founders who are listening to this? Couple of things, right? Number one, don't build your business that runs on VC fund. VC funding is absolutely great to amplify your growth.
01:56:14
Speaker
Okay, but if it survives on VC funding, that's not a great business model to be in, right? That's first advice. And the second advice is that, like, you know, you will get a lot of chances, right? You know, in your entrepreneurial journey, when it will feel like you have made a wrong decision, you would want to give up, you will be ridiculed by your family and friends, right? And it will be a very difficult part.
01:56:44
Speaker
All you have to do is just stay alive. There is a saying in India, and I don't know the source of this saying. Like in India, there is a very profound saying. It doesn't feel like a profound saying, but in India, there is a business saying.
01:57:10
Speaker
Remember that just stay alive. Okay. VC funding cycles will, will go up and go down. Okay. But if your business has strength, you don't have to worry about it. Amazing. Thank you so much for your time.
01:57:26
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.