Ep #11 | WTF Goes into Building a Fashion, Beauty, or Home Brand? Nikhil w/ Kishore, Raj, and Ananth

Nikhil Kamath 0:00 [upbeat music] So I have been looking into consumption, and each one of you, I will explain how, but brings a totally different insight into consumption. [upbeat music] I want people who want to build a brand today, young guys-

Ananth Narayanan 0:20 Sure.

Nikhil Kamath 0:20 Zero to one, to learn everything-

Ananth Narayanan 0:22 Okay

Nikhil Kamath 0:22 ... from all of your experiences. [upbeat music] And I'm going. So I have been looking into consumption. We created a fund to invest into companies around consumption. Uh, there seems to be a double standard in a way, wherein the reported numbers on the top are looking good, but everyone I talk to on the ground is talking about how consumption seems to have dropped in the last two or three months. Uh, this could be in travel, this could be in fashion, this could be e-commerce. Uh, across segments, very unlike a year leading up to an election, consumption seems to be dropping. Uh, as an investor and also talking to people who want to build a brand from zero to one, or to scale a brand in consumption, which I broadly believe is the larger India opportunity. We have too few independent Indian brands in consumption which have scaled. Uh, so I thought this would be opportune.

Ananth Narayanan 1:38 Yeah.

Nikhil Kamath 1:38 The timing is great, and each one of you, I will explain how, but brings a totally different insight into consumption. Don't be fooled by Raj. I think people have seen one facet of Raj, but the other more interesting facet, I think we'll all get to learn today, as I have in my time with Raj. Uh, since you're here for the first time, would you like to tell us a bit about yourself? How did

Nikhil Kamath 2:06 Anant begin? Where did he begin? How did you arrive at Mensa or creating Mensa? Give us, like, a few minutes.

Ananth Narayanan 2:14 I just want to make sure it's not boring.

Nikhil Kamath 2:16 Yeah.

Ananth Narayanan 2:16 Actually, by chance, and a little bit a random path.

Nikhil Kamath 2:20 Mm-hmm.

Ananth Narayanan 2:20 I did fifteen years in consulting.

Nikhil Kamath 2:22 Before that. Start from the very beginning. Born...

Ananth Narayanan 2:25 Born in Chennai, grew up in Chennai.

Nikhil Kamath 2:27 Parents?

Ananth Narayanan 2:28 Did engineering. Parents... My father was a professional, worked in the auto industry. He worked at a-

Nikhil Kamath 2:34 Which?

Ananth Narayanan 2:34 ... company, Hindustan Motors.

Nikhil Kamath 2:35 Mm-hmm.

Ananth Narayanan 2:36 Uh, which actually I think makes, or used to make, among the more iconic cars-

Nikhil Kamath 2:40 Ambassador.

Ananth Narayanan 2:40 So the Ambassador and the Contessa. So he sort of did that. Uh, so I grew up in Chennai, but I spent a bit of time in Calcutta, a bit of time in Indore, all of that. Um, did engineering, which seemed like the logical thing at that time. You know, you did engineering or were a doctor. The startup world actually hadn't really, you know, made it into-

Nikhil Kamath 3:04 What year is this?

Ananth Narayanan 3:04 This was '94-

Nikhil Kamath 3:05 Mm-hmm

Ananth Narayanan 3:05 ... was when I graduated. Um, so '98 is when I graduated from college, and then I went and did engineering again, and I always thought I wanted to be an auto guy. Uh, my dream job, actually, at that point, was to design engines at Cummins. Um, instead, I joined McKinsey, which is a consulting firm. Um, they paid slightly more. I had a loan, [chuckles] so I decided to go to-

Nikhil Kamath 3:26 How much did McKinsey pay back in the day?

Ananth Narayanan 3:28 McKinsey, at that time, for an analyst, would pay fifty thousand dollars.

Nikhil Kamath 3:32 Wow! And this was in the US, I guess?

Ananth Narayanan 3:33 It's in the US. So I joined in the US.

Nikhil Kamath 3:35 And they were hiring engineers?

Ananth Narayanan 3:37 They were hiring engineers. So I was among the first automotive manufacturing analyst-type engineers that they hired. At that time, McKinsey was getting into auto and operations. So since I didn't do automotive in real life, I thought I'll do it through consulting. I always thought I'd do it for two years. I ended up staying for fifteen. So lived in China for about three, four years. Uh, US, six, seven, and then came back and spent about four, five years.

Nikhil Kamath 4:03 China when?

Ananth Narayanan 4:04 2002 to 2005. So anyway, to cut the long story short, did McKinsey for a long time. I came back to India because my wife wanted to come back to her family-run business, diagnostic lab. So we came back to Chennai. I started the McKinsey office there. Uh, did that, got elected senior partner, and then left. Did Myntra,

Ananth Narayanan 4:23 which is my fashion experience, which is quite unusual.

Nikhil Kamath 4:26 How did you go from that to being CEO of Myntra?

Ananth Narayanan 4:28 Um, a bit random again, Nikhil. I think, uh, I met Sachin, Binny, and Mukesh.

Nikhil Kamath 4:33 Mm-hmm.

Ananth Narayanan 4:34 Um, uh-

Nikhil Kamath 4:35 What did you think of them personally?

Ananth Narayanan 4:38 What did I think of them personally? I think each of them brought very, very different things to the table. Uh, Mukesh was all about people and culture. Sachin was all about vision, big picture. Binny was the ops guy, execution, ops, et cetera. So I thought they were a very interesting group of people. They had just bought Myntra when I met them. I actually... This happened because one of my-

Nikhil Kamath 4:57 The good and the bad. They're friends of mine, they won't feel bad. You can say-

Ananth Narayanan 5:00 They're friends of mine as well. Um-

Nikhil Kamath 5:01 What is the bad part? You said he really-

Ananth Narayanan 5:03 Um, no, I think the bad part is, by the way, I think they could have figured out more complementarity amongst each other.

Nikhil Kamath 5:08 They didn't get along?

Ananth Narayanan 5:09 I think at that time they all got along. Now, I think as things evolve and companies evolve, I think they all evolved into very different people, very different goals.

Nikhil Kamath 5:15 Who was right and who was wrong amongst the three of them?

Ananth Narayanan 5:17 I don't think, uh, one was right or one was wrong. I think, by the way, it's, it is still the most successful exit that I think India has produced. So I think they did something right. Much more right than wrong. Uh, since you're their friend, maybe you know a little bit more.

Nikhil Kamath 5:31 [laughing]

Ananth Narayanan 5:32 But, um, uh, but essentially, uh, I... So it happened by chance.

Nikhil Kamath 5:36 Mm.

Ananth Narayanan 5:36 So I do a lot of stuff based on instinct and people, and some macros. So may not be quite like investing, but, you know, for me, people matter, so you make the bet on the person, and I thought they always put the company first, and I bet on them. I think e-commerce was a ten-year trend, so bet on that.

Nikhil Kamath 5:53 What year was this?

Ananth Narayanan 5:54 This was 2015. So '14 end, '15, is when I started with Myntra, and actually, by the way, uh, fashion in e-commerce was a very logical choice. It's the only one with high gross margins.... at that time. I mean, beauty, et cetera, came much later.

Nikhil Kamath 6:08 Mm-hmm.

Ananth Narayanan 6:08 So decided, we'll try it. What's the worst that can happen? Uh, turned out to be great. Really enjoyed the experience. So that's was my first- I mean, at that time, by the way, just to give you perspective, I didn't know the difference between a knit and a woven. I'd never... I mean, I was in automotive-

Nikhil Kamath 6:22 Between a?

Ananth Narayanan 6:22 -a knit garment and a woven garment, or a denim. I mean, I could tell a difference between a casting and a forging, but that wasn't particularly helpful. Um, so did that for four years. Really enjoyed it. Uh, thought there was something interesting about building. Um, Flipkart sold to Walmart. Had, uh, thought I would be more entrepreneurial.

Nikhil Kamath 6:43 How big was Myntra during your time?

Ananth Narayanan 6:45 It sort of went from, call it 200, 250 million, to a little over a billion and a half.

Nikhil Kamath 6:50 Of sales?

Ananth Narayanan 6:51 Of sales. GMV would have been higher.

Nikhil Kamath 6:53 Mm.

Ananth Narayanan 6:53 Right? Um, so it went... I- actually, it was... And the private brand business of Myntra, at the same time, also went from seven, eight percent to, call it, almost thirty percent, which is what drove profitability. So we were among the most profitable pieces of the Flipkart ecosystem. Not amongst, we were the most profitable piece of the Flipkart ecosystem. So I think it was quite valuable. Um, so did that, then, uh, thought I would do something more entrepreneurial. So I

Ananth Narayanan 7:19 invested some money into a company called Medlife, which is an e-pharmacy business. Why e-pharmacy? I think, by the way, here I should have done more homework. Uh, gross margins were lower, so I should've, should've picked that up. But it seemed interesting. It was, uh, Medlife was a company which was completely privately funded. So Prashant was the founder, as part of the Alkem family, and Tushar basically put all of their personal money in. There were no external investors. Uh, it was a small business at that time, forty, fifty crores a month, relative to the Myntra scale, right?

Nikhil Kamath 7:49 Mm.

Ananth Narayanan 7:49 Um, so got in, got in as the CEO. I also put in money. I bought ten percent of the business. Um, there were no external investors, so it was relatively easy to put in money. Um, put some money in, went through a humbling experience trying to raise money.

Nikhil Kamath 8:02 Mm-hmm.

Ananth Narayanan 8:03 Uh, you know, I had done a bunch of raising money through the Flipkart ecosystem, and everything seemed easy. Um, you sort of go out independently and try and raise money, I think it's quite tough. Uh, we were not able to raise money at Medlife. We went through multiple iterations. I think at that time, if you remember, WeWork happened.

Nikhil Kamath 8:21 Yeah.

Ananth Narayanan 8:21 Right? Uh, and then everything went into a freeze, and then right after that, COVID happened. So, you know, you got into this... But we got quite lucky. COVID, which destroyed many other businesses, actually created [chuckles] a huge tailwind for e-pharmacy, right?

Nikhil Kamath 8:35 Mm.

Ananth Narayanan 8:35 Because everybody started shopping online. The government changed, uh, regulations and looked at it more favorably. Consolidation started to happen. Netmeds got bought at that time by Reliance, just before this, and then we were the independent one. 1MG got bought by Tatas.

Nikhil Kamath 8:51 Mm.

Ananth Narayanan 8:51 So we got bought by PharmEasy. Um, turned out to be a very good deal at that point of time.

Nikhil Kamath 8:57 Share swap, not a, not cash, right?

Ananth Narayanan 8:58 Share swap.

Nikhil Kamath 8:58 Yeah.

Ananth Narayanan 8:58 But essentially, they provided lots of liquidity, because after that, they continued to raise and raise and raise, right? So after the, uh, PharmEasy sort of buy, I was trying to figure out what I wanted to do. Um, I could have gone and been an investor or joined a venture capital firm. I... You know, you just did a podcast recently, but I felt like I was an operator.

Ananth Narayanan 9:18 Um, just very interesting thing, I think, is, um, in India, we're mostly still an unbranded market, I think in almost all spaces.

Nikhil Kamath 9:28 Especially in fashion?

Ananth Narayanan 9:29 Especially in fashion. Uh, also true in beauty, also true in home decor, which are the three spaces that we are in. So, large unbranded market. Second is, I think the friction of building brands is becoming less. You know, call it for one forty, one fifty rupees, maybe the ch- rate has changed slightly, but one forty, one fifty rupees, you can get to twenty-three thousand PIN codes or twenty-six thousand.

Nikhil Kamath 9:52 You mean as a delivery fee?

Ananth Narayanan 9:54 As a delivery fee. I mean, you know, if you think about Unilever, you think about Marico, you think about-

Nikhil Kamath 9:58 Is that time dependent? If you want to deliver in one day versus one week, does the price change drastically?

Ananth Narayanan 10:02 Not really. So I think there's break points.

Nikhil Kamath 10:05 Mm.

Ananth Narayanan 10:05 I think there's a within two day, two to two and a half day delivery, and then there is a two and a half to five, six day delivery. And I think-

Nikhil Kamath 10:10 Is that also based on weight?

Ananth Narayanan 10:12 It is based on weight. Um, so most of, actually, volume-value ratios are among the most efficient in fashion and in beauty, right? It's very bad when you do large appliances-

Nikhil Kamath 10:24 Mm-hmm

Ananth Narayanan 10:24 ... because you ship large amounts of air. So, but now, for at least fashion, that category, where it's not very heavy and not very volumetric, for one forty rupees, you can get to, or beauty, you can get to most parts of India. So you don't need a very large distribution network-

Nikhil Kamath 10:38 Mm

Ananth Narayanan 10:38 ... to reach customers, at least in the initial stages. Second, I think brand building, now, influence of brand building happens a lot, actually, online. E-commerce and fashion is maybe ten, eleven percent, roughly. Overall, e-commerce is slightly lower, given grocery will bring it down. But I would say what is influenced online will be fifty percent, right? So brand building can happen very differently. So that was the second thesis. The third is, it's very easy to start in India, very hard to scale in India. I think the scaling is boring. It's about efficiency. You know, we made jokes about time and efficiency. I think efficiency is really what drives a lot of scale. You have to do performance marketing well, you have to do sourcing well, you have to design well. These are all, like, boring things, after you get the product market fit right, to continue to scale. And I felt that was-

Nikhil Kamath 11:26 If you were to say hundred rupees spent on fashion in India-

Ananth Narayanan 11:29 Yeah

Nikhil Kamath 11:30 ... how much is spent where, online versus offline?

Ananth Narayanan 11:33 Online will be ten, eleven rupees.

Nikhil Kamath 11:34 Mm-hmm.

Ananth Narayanan 11:35 Right? The rest will be offline.

Nikhil Kamath 11:36 How much is organized, how much is unorganized?

Ananth Narayanan 11:37 I would say still, I mean, Kishore may also have a point of view on this, by... I would say, by the way, sixty percent is still disorganized, right? I think ready-to-stitch is still a very large segment. Most of ethnic, which is a very large portion of fashion, is still unorganized. You go to your nearby tailor, you go to your nearby store, it's not really a brand, right?

Nikhil Kamath 11:57 Is that close to being disrupted?

Ananth Narayanan 11:59 Uh, I think there is, um, is- I think it's a five-year journey. I don't think it's like it happens overnight, right? I think the first big push has happened already. So-... to give you a sense, Nikhil, I think Myntra used to be, when Myntra started, right? Myntra used to be two, three percent fashion penetration online. It's now eleven percent. I mean, obviously, by the way, growth of Myntra, growth of Ajio, growth of XYZ, have all created-

Nikhil Kamath 12:27 And between 2015 to now?

Ananth Narayanan 12:29 2015 to now.

Nikhil Kamath 12:30 Mm.

Ananth Narayanan 12:31 When the market itself is growing, and this is all branded, right?

Nikhil Kamath 12:33 Mm.

Ananth Narayanan 12:33 So I think there's a real opportunity in my mind. I think it, it'll continue cyclically for the next five, ten years. This penetration will go up. I think, if I remember the numbers correctly, and this is a little outdated, but China is in the mid-twenties in terms of penetration in fashion. The US is seventeen, eighteen.

Nikhil Kamath 12:50 By penetration, you're talking about online sales?

Ananth Narayanan 12:52 Online penetration, too, as a, as a, as a measure.

Nikhil Kamath 12:54 And how quickly is this market growing?

Ananth Narayanan 12:56 The overall market is growing a little bit over GDP.

Nikhil Kamath 12:59 Mm.

Ananth Narayanan 12:59 Branded is growing two, three X faster because unbranded to branded is happening.

Nikhil Kamath 13:04 Mm.

Ananth Narayanan 13:04 And online, by the way, will grow faster. We can talk about the current situation, but if you take a three, four-year view-

Nikhil Kamath 13:10 Mm

Ananth Narayanan 13:10 ... it's growing reasonably fast.

Nikhil Kamath 13:11 And can you also explain what Mensa is and the scale today?

Ananth Narayanan 13:15 Yeah. So,

Ananth Narayanan 13:16 um, I don't want to get into a lot of scale and so on, but I think we have... It's essentially a house of brands. Uh, we have about twenty brands. We have brands in fashion, beauty, and home. Why those three categories? One is because I knew something about it. Second is, it's high gross margin category. Um, also, it's a large TAM.

Nikhil Kamath 13:32 What are the margins, typically?

Ananth Narayanan 13:33 Fifty, sixty percent gross margin.

Nikhil Kamath 13:35 Mm.

Ananth Narayanan 13:35 Right? Uh, in, in beauty, of course, it's higher-

Nikhil Kamath 13:37 Mm

Ananth Narayanan 13:37 ... but in fashion, at least fifty-five, sixty. In beauty, seventy, eighty, right? Uh, depending on what area of beauty that you get to. Perfumes is high, et cetera, et cetera, right? So, um, we are trying to build a house of brands. It's a very simple thesis. Um, we get buildings which are half-finished, but with a good basement and a good foundation, and we build them out into hopefully skyscrapers, right? I mean, the number of thousand crore brands in the country is very, very, very few. Right? We spoke about this a little while ago. I think the goal for me, I think, is over the next five, seven years, could you build five, six thousand crore brands, right? In each of these spaces, and I think it's possible. I think you can build them very differently. You can build them more efficiently. Lots of lessons learned from the previous experiences, so trying to see if you can do it more efficiently and effectively this time. That's what we're trying to do.

Nikhil Kamath 14:26 And Mensa is doing about two hundred million now, sales?

Ananth Narayanan 14:29 Yes.

Nikhil Kamath 14:29 And raised about two hundred million?

Ananth Narayanan 14:31 Yes.

Nikhil Kamath 14:32 And not burning much money anymore?

Ananth Narayanan 14:34 No, we're not burning at the EBITDA level-

Nikhil Kamath 14:36 Mm

Ananth Narayanan 14:36 ... um, money, but I think, you know, there's still working capital investment and so on.

Nikhil Kamath 14:40 Because a lot of people watching this are not just entrepreneurs trying to start a business-

Ananth Narayanan 14:45 Yep

Nikhil Kamath 14:45 ... but also investors.

Ananth Narayanan 14:47 Right.

Nikhil Kamath 14:47 What is a good multiple to pay while you're investing in a fashion, A, and in a b- beauty, B, brand?

Ananth Narayanan 14:56 Yeah. So I mean, look, from an EV to EBITDA multiple, I think, uh, you know, a lot of the FMCG brands trade at forty, fifty EV to EBITDA. And I think fashion, by the way, trades-

Nikhil Kamath 15:07 Can you explain what EV to EBITDA is?

Ananth Narayanan 15:08 Sorry. Uh, enterprise value to the earnings before interest, taxes, depreciation, and amortization.

Nikhil Kamath 15:14 How do you arrive at enterprise value?

Ananth Narayanan 15:15 Enterprise value is the overall value of the business, right?

Nikhil Kamath 15:18 Mm-hmm.

Ananth Narayanan 15:18 Which is, what is the value of the equity of the business? Um, where-

Nikhil Kamath 15:23 What if I were to ask you for a simpler mul- multiple? In terms of sales, what is-

Ananth Narayanan 15:27 So I think a revenue multiple is what I think you're looking for. My-

Nikhil Kamath 15:30 Are you considering sales as revenue?

Ananth Narayanan 15:33 I'm thinking about-

Speaker 15:33 Sales is the same.

Ananth Narayanan 15:34 It's the same in this case, right?

Nikhil Kamath 15:35 GMV?

Ananth Narayanan 15:35 No, I'm not... There is no GMV-

Speaker 15:36 No, no

Ananth Narayanan 15:36 ... when you're running a brand, right?

Nikhil Kamath 15:37 Mm.

Ananth Narayanan 15:38 So when you're running a brand, I think it's accounting revenue, right? I mean, whatever is my... Whatever gets recorded as accounting revenue.

Nikhil Kamath 15:44 Are you also a platform where you sell all the brands? No, you're not.

Ananth Narayanan 15:46 No, we're not. So we do have D2C sites for each of our brands, but we are not a platform. I don't want to compete with my end customers, whether it's a Myntra or an Amazon or a Flipkart, right?

Nikhil Kamath 15:58 Mm.

Ananth Narayanan 15:58 I think there, by the way, the cost of traffic-

Nikhil Kamath 16:00 Mm

Ananth Narayanan 16:01 ... is very high, and you've spent a lot of money building it. Does that make sense?

Nikhil Kamath 16:04 Yeah. Yeah.

Ananth Narayanan 16:05 So, um-

Nikhil Kamath 16:06 Sales to mul- sales to multiple-

Ananth Narayanan 16:07 So sales to multiple, I think varies, Nikhil. My sense is, I think a five X would be interesting.

Nikhil Kamath 16:12 On fashion?

Ananth Narayanan 16:12 Five X on fashion would be interesting.

Nikhil Kamath 16:15 Beauty?

Ananth Narayanan 16:15 Beauty, I think between four and six. No, actually, maybe six, seven. Um, I think food will be probably lower.

Nikhil Kamath 16:23 Mm.

Ananth Narayanan 16:24 Uh, will be three, four.

Nikhil Kamath 16:24 By food, you mean like QSR, fine dining?

Ananth Narayanan 16:26 QSR, yeah, yeah.

Nikhil Kamath 16:28 Rich, fashion.

Ananth Narayanan 16:28 We don't do it. I mean, in Mensa, we don't do it.

Nikhil Kamath 16:30 Uh.

Ananth Narayanan 16:30 But if you actually did-

Nikhil Kamath 16:31 Mm

Ananth Narayanan 16:32 ... like, um, um, a fresh food with d- with a cloud kitchen-type thing, I think the multiples will be low. Yeah.

Nikhil Kamath 16:38 Is backward integration a big, big part of-

Ananth Narayanan 16:41 Yes

Nikhil Kamath 16:41 ... Mensa?

Ananth Narayanan 16:42 Yes. Yes.

Nikhil Kamath 16:42 Yeah?

Ananth Narayanan 16:42 Uh, we would like to.

Nikhil Kamath 16:44 Mm.

Ananth Narayanan 16:44 Um, we're starting to do a little bit of it. I mean, we have one peanut butter brand, uh, which has a captive manufacturing, because there, I mean, literally, you, uh... I mean, the taste is everything.

Speaker 16:54 It's a small machine, yeah. [chuckles]

Ananth Narayanan 16:55 Yeah, yeah, it's a small machine as well. So, um, so we do that. Uh, we would like to backward integrate. We would like to sort of d- um, make, have more control over supply chain. But roughly, uh, Nikhil, going back a little bit to what do we do, just to simplify a little bit, right? I think we want to build global consumer brands out of India.

Nikhil Kamath 17:13 Mm.

Ananth Narayanan 17:13 I think we want to use technology to do it slightly differently and more capital efficiently. I think that's it.

Nikhil Kamath 17:18 Mm.

Ananth Narayanan 17:19 That's a little bit of what we're trying to do.

Nikhil Kamath 17:20 If I had to phrase it in my, my own language-

Ananth Narayanan 17:22 Yeah

Nikhil Kamath 17:23 ... can I say you pick a bunch of medium-sized brands-

Ananth Narayanan 17:27 Yes

Nikhil Kamath 17:28 ... and hope by putting them together, adding backward integration and tech, together they'll be more valuable than they are on their own?

Ananth Narayanan 17:34 Uh, not really. I think, by the way, the synergy part of it is for sure true.

Nikhil Kamath 17:38 Mm-hmm.

Ananth Narayanan 17:39 Um, but I think the reality is you do a lot of work in brand building and growing them and so on, right? So it's not just the synergy across a portfolio.

Nikhil Kamath 17:47 Mm.

Ananth Narayanan 17:48 It is... So we have twenty brands.

Nikhil Kamath 17:49 Mm.

Ananth Narayanan 17:50 There are ten brands that are what we call breakout brands, which are growing much, much faster than the market, profitable, blah, blah, blah. So you really invest in brand building in them. So the way I think about it is, Unilever and P&G built brands a certain way because there was a certain set of constraints. I think we can build brands very differently because the constraints are very different. And so over the next ten-year period, can you build out a fairly large consumer brand business out of India? But I, by the way, think there's a global opportunity, because I think the arbitrage, at some level-... both in distribution and in sourcing is also very high, right? So you can actually build it out for the world, and I think that's the exciting opportunity.

Nikhil Kamath 18:29 So by the end of today, uh, two objectives. One, if somebody is starting a brand, I think a lot of people in India right now want to start a, a restaurant, food brand, fashion brand-

Ananth Narayanan 18:42 Yep

Nikhil Kamath 18:43 ... makeup brand, perfume brand, mixer brand. There's so many different things that people-

Ananth Narayanan 18:48 Yep

Nikhil Kamath 18:48 -are trying to do.

Ananth Narayanan 18:49 Right.

Nikhil Kamath 18:50 I think we need to get them from 0 to 1-

Ananth Narayanan 18:53 Yep

Nikhil Kamath 18:54 ... and walk through all the intricacies of that.

Ananth Narayanan 18:57 Yep.

Nikhil Kamath 18:57 We need to figure out where the black holes are-

Ananth Narayanan 18:59 Yep

Nikhil Kamath 18:59 ... where something needs to be built. And if you're building it, how do you build it?

Ananth Narayanan 19:03 But is there a way I can ask you some questions?

Nikhil Kamath 19:05 Of course.

Ananth Narayanan 19:06 In the course.

Nikhil Kamath 19:06 Yeah.

Ananth Narayanan 19:06 Okay, good. I'm looking forward.

Nikhil Kamath 19:07 What do you want to ask?

Ananth Narayanan 19:09 We'll let it flow.

Nikhil Kamath 19:09 So we both went for breakfast-

Ananth Narayanan 19:11 Yeah [chuckles]

Nikhil Kamath 19:11 ... the day before yesterday.

Ananth Narayanan 19:12 Yeah. [chuckles]

Nikhil Kamath 19:12 Mm. And, uh, he was being so cagey about so many personal details of his life.

Ananth Narayanan 19:17 [chuckles]

Nikhil Kamath 19:18 So Ananth is a very colorful character, okay? Uh, he collects wine. He has 6,000 bottles of wine.

Ananth Narayanan 19:25 3,000, but we're not counting.

Nikhil Kamath 19:26 3,000? 3,000 bottles of wine stored in a vault in-

Ananth Narayanan 19:30 Chicago

Nikhil Kamath 19:30 ... Chicago, and he's obsessed with wine. I know Kishore is also into wine, so you both can-

Raj Shamani 19:35 Not at all. I'm not at all into wine, but anyway.

Nikhil Kamath 19:37 You're not?

Raj Shamani 19:38 No.

Nikhil Kamath 19:39 Okay. I know Raj is not into anything. [chuckles]

Ananth Narayanan 19:41 He doesn't drink.

Nikhil Kamath 19:42 Yeah. [chuckles]

Ananth Narayanan 19:44 Yeah.

Nikhil Kamath 19:44 Yeah, but we'll come

Nikhil Kamath 19:45 back to the personal-

Ananth Narayanan 19:45 Yeah

Nikhil Kamath 19:46 ... side of your story later. Raj needs no introduction. Raj is more popular than, uh, many people I know.

Ananth Narayanan 19:53 Mm-hmm.

Nikhil Kamath 19:54 But the one thing people don't know about Raj is, uh, his insight into consumption is really different.

Ananth Narayanan 20:04 Mm-hmm.

Nikhil Kamath 20:04 He has spent a large part of his life building a detergent brand.

Ananth Narayanan 20:08 Yep.

Nikhil Kamath 20:09 And, uh, if I were to tell you a personal story, he started a new company called House of X, and when he was starting that company, we both were talking about, uh, you know, how we can work together on it. And the very, very impressive thing about Raj is, we were trying to beat him down on the valuation and the price and trying to get 20%, 30% into this company, because evidently, we believed in Raj and all that he can accomplish. But in 24 hours or 48 hours, he went to another venture capital fund, uh, Lightspeed-

Ananth Narayanan 20:45 Yep

Nikhil Kamath 20:46 ... and he raised more money at three times the valuation, and the duration between beginning and end of that conversation was less than 48 hours.

Ananth Narayanan 20:55 Fabulous.

Nikhil Kamath 20:56 And I found that incredibly impressive. And maybe you start there. What, what convinced whoever at Lightspeed to hear your pitch and fire that quickly? Is it just that Indian VCs don't do diligence, or is it [laughing] something else?

Raj Shamani 21:12 [chuckles] I, [clears throat] I genuinely don't know about this, honestly. [chuckles] And I think, uh-

Nikhil Kamath 21:19 What worked?

Raj Shamani 21:20 I think two or three things which

Raj Shamani 21:23 I would like to say, which I believe that it worked. One of them was, before I started pitching to you or anyone, or, like, your friends, the larger group, I got it tested by Ananth, I got it tested by you, I got it tested by Varun and Gazal. I went down, and I actually got my pitched... my pitch crafted by at least 12 or 13 stellar founders in the India who I know.

Nikhil Kamath 21:45 I think that's such an incredible insight.

Ananth Narayanan 21:47 It's a great insight.

Raj Shamani 21:48 So-

Nikhil Kamath 21:48 Anyone pitching-

Raj Shamani 21:50 So I actually, like, reached out to all of them, fly down, sat with them, tried to understand, and asked everybody to just not give me feedback, actually asked them to play devil's advocate. I was like: Just beat me down. You know, "Why do you think this..." Like, "I am coming here, and I know this will work. Tell me why this will not work." And because they gave me a lot of loops, probably that helped me. That was first. Second, I think the, like, why a lot of funds were interested in doing... So first, there was a growing interest in this space where, can you build media-led brands, content-led brands, creator or influencer industry-led brands?

Ananth Narayanan 22:27 Yep.

Raj Shamani 22:28 There was an interesting space because this was really popping in China, Korea, and US.

Ananth Narayanan 22:32 Mm.

Raj Shamani 22:32 Like, this was... There were a bunch of companies who were doing, and especially-

Ananth Narayanan 22:36 Right

Raj Shamani 22:36 ... when you, like, different ways. China has, like, live commerce and stuff. Korea is more into beauty, but different ways, and people were coming up with it.

Nikhil Kamath 22:42 Sorry, when you said

Nikhil Kamath 22:44 China is 20% online, how much of that is streaming?

Ananth Narayanan 22:48 I don't have the number off the top of my head.

Nikhil Kamath 22:49 But a large portion of that-

Ananth Narayanan 22:50 But I think now there's a fairly large chunk which is streaming.

Nikhil Kamath 22:52 50%?

Raj Shamani 22:53 Live streaming is big.

Ananth Narayanan 22:54 It's big.

Nikhil Kamath 22:55 Yeah.

Ananth Narayanan 22:55 15, 20% of that will be live streaming now, I think.

Nikhil Kamath 22:57 Twen- 15, 20 or 50?

Ananth Narayanan 22:59 No, I don't think it's 50. I don't think it's 50. At least we should check the facts, but my sense is it'll be, like, 15, 20%.

Raj Shamani 23:05 Yeah. It can't be so much.

Ananth Narayanan 23:06 It will not be so much.

Nikhil Kamath 23:07 What do you think about live streaming works? Why do people shop so much on live streaming?

Raj Shamani 23:12 So I'll tell you, I think, uh, o- o-

Ananth Narayanan 23:14 You please go ahead. Please go ahead.

Raj Shamani 23:16 So I'll, I'll conclude... I'll complete the loop, and then we'll come to li- live streaming. So I think there was, like, a growing interest in it, and the third reason why people sort of maybe believed in what we were doing is because of my past experience and the team which were helping me doing it. So my past experience was, I started doing business when I was 16 with my father,

Raj Shamani 23:38 and he was a small detergent manufacturer who used to completely discard branding. [chuckles]

Ananth Narayanan 23:44 [chuckles]

Raj Shamani 23:45 Like, he used to not believe in deterge-

Ananth Narayanan 23:47 Interesting.

Raj Shamani 23:47 He was like, "I want to build a great product, and if I've built a great product, it'll work."

Nikhil Kamath 23:51 Mm.

Ananth Narayanan 23:51 Yep.

Raj Shamani 23:51 So there was no marketing, no sales team, no distribution, no branding. He's like, "It just... This will work. I'll give it to one man- one guy, and then it'll automatically..." And he was doing it for 30 years, right? And he was able to do, like, I think when I joined, uh, he was doing around 40 lakhs a year, uh, in revenue. So that was a business scale I joined.

Ananth Narayanan 24:10 Yep, yep.

Raj Shamani 24:11 And then when I joined it and I took over, we divided the company into two parts. That one was market development, one was product development. We learned that through P&G. [chuckles]

Ananth Narayanan 24:19 Yeah. [chuckles]

Nikhil Kamath 24:21 [chuckles]

Raj Shamani 24:21 So I took over the market side, built distribution, went on villages to villages-... built a distribution-

Kishore Biyani 24:27 Oh.

Raj Shamani 24:28 -and built a stellar distribution of two hundred distributors, and scaled that brand. Like within 18 months, we were 10X of what we were doing. Then another 18 months, we were like 10X of what we were doing, so just scaled. And we went on from like a small factory to now, like four, five.

Nikhil Kamath 24:43 So what worked?

Raj Shamani 24:43 That was-

Nikhil Kamath 24:44 In branding and marketing the detergent?

Raj Shamani 24:46 So two things which were really, really different, which I believe we were doing. We went to villages where people thought nobody will buy premium.

Nikhil Kamath 24:54 Mm.

Raj Shamani 24:54 So what we essentially started doing, our detergent was 75 rupees a kg, which was, at that time, Tide was doing. Okay? Uh, and usually in villages, there was Ghadi and Wheel, which were doing ab- absolutely bang on, which is 50 rupees and below 50 rupees.

Kishore Biyani 25:07 Yeah.

Raj Shamani 25:08 So we went to these villages. We told them, "Every time you're wearing expensive clothes, this is an expensive detergent for your expensive clothes."

Nikhil Kamath 25:14 Mm.

Raj Shamani 25:15 So that clicked on in smallest, in the remote, remotest of villages where there were 10,000 population, 20,000 population. So I went on really deep. So from there on, the demand started beginning. The second thing, the second insight, I want to really thank, sir. Uh, it came from Big Bazaar, and my schooling was done there. And, uh, what I saw in Big Bazaar, there was my big- biggest homeworks I used to do.

Kishore Biyani 25:36 Okay.

Raj Shamani 25:36 After my college, after my work, I used to stand in Big Bazaar for, like, hours, and for months. And I used to-

Nikhil Kamath 25:43 How old were you?

Raj Shamani 25:43 I was 17.

Nikhil Kamath 25:44 Yeah, very weird kid. [laughing]

Raj Shamani 25:45 Yeah. [laughing]

Kishore Biyani 25:46 [laughing] How many kids stand in Big Bazaar at 17?

Raj Shamani 25:50 You're not... I don't think it's weird, kid. It's just... I think I was so insecure that I wanted to, like, get rich or make money so quickly-

Nikhil Kamath 25:59 Mm. Why?

Raj Shamani 25:59 ... that I was fine. I think I come from family where I was always an inferior kid. Like-

Nikhil Kamath 26:05 To?

Raj Shamani 26:06 To everybody. My cousins-

Nikhil Kamath 26:08 To siblings?

Raj Shamani 26:08 ... were toppers.

Kishore Biyani 26:09 Academically, you mean.

Raj Shamani 26:10 Academ... Then everywhere, like, I was not able to speak in English properly till my, till I reached 12th, so social group were, like, making fun of me.

Nikhil Kamath 26:17 Tell us a bit about that. Where did you grow up?

Raj Shamani 26:19 Indore.

Nikhil Kamath 26:20 Mm.

Raj Shamani 26:20 So I was in Indore, and school called National Public School.

Nikhil Kamath 26:23 What, what, uh, Marwadi family?

Raj Shamani 26:25 Sindhi family.

Nikhil Kamath 26:26 Sindhi family.

Raj Shamani 26:26 Sindhi family.

Nikhil Kamath 26:27 How can you not be good at business? [laughing]

Kishore Biyani 26:29 [laughing] Yeah, it's like in your...

Raj Shamani 26:30 So that's Ma ki pet se sikhya. [laughing]

Nikhil Kamath 26:33 [laughing]

Kishore Biyani 26:34 [laughing]

Raj Shamani 26:34 No, that was a learning. I, I saw my father growing-

Kishore Biyani 26:37 [chuckles]

Raj Shamani 26:37 ... so I went from... I actually saw my father growing from, in num- if, if you want to put it in lifestyle cycle, like, from one BHK to a bungalow.

Nikhil Kamath 26:46 Mm.

Raj Shamani 26:46 Like, I saw his, his first car, which was a third-hand Santro, it happened in front of me. His first Activa happened in front of me. So I think that-

Nikhil Kamath 26:53 Mm

Raj Shamani 26:53 ... helped me a lot. And because I was not, and I was in a school where everybody... You know, typical, like, a Indore Tier 2 city, where two or three of your friends are, like, politicians.

Kishore Biyani 27:04 Right.

Raj Shamani 27:04 You know, like, this happens. Like, two or three friends are, like, someone, someone's son-

Kishore Biyani 27:07 Yeah.

Raj Shamani 27:08 ... or someone's chacha or kaka owns, like, a BMW, so you're always, like, jealous of them. So because I was like- [chuckles]

Kishore Biyani 27:13 Right

Raj Shamani 27:14 ... kind of inferior to people who had money, more power than me, uh, not speak- able to speak in English, not, like, academically good, so I was like, "I want to prove myself."

Nikhil Kamath 27:22 Mm.

Raj Shamani 27:23 "I want to go out." And that's why, like, I used to just find out opportunities where I can do it.

Nikhil Kamath 27:27 Mm.

Raj Shamani 27:27 And the obvious choice was because my father is into it, let me help him scale, because baki toh kuch pata nahi tha.

Kishore Biyani 27:32 Mm.

Raj Shamani 27:32 In fact, usse pehle, I tried, I applied in, like, 60, 70 companies, FMCG companies, for internship. Nobody replied. [laughing]

Nikhil Kamath 27:40 [laughing]

Kishore Biyani 27:40 [laughing]

Raj Shamani 27:41 So nothing worked. So I stood in Big Bazaar.

Nikhil Kamath 27:43 Mm.

Raj Shamani 27:44 I saw something very weird, which I've thought was very

Raj Shamani 27:47 insightful at that time. This is 2013, '14, I guess, '14, probably, yeah. So everybody was move- this is Indore showroom, uh, Treasure Island. Everybody was moving from solids to liquids-

Kishore Biyani 27:58 Mm

Raj Shamani 27:59 ... and that was very, very cl- killer for me.

Nikhil Kamath 28:01 As detergents?

Kishore Biyani 28:01 As detergents.

Raj Shamani 28:02 No, no, no, detergent.

Kishore Biyani 28:02 Oh.

Raj Shamani 28:03 Everything.

Kishore Biyani 28:03 Everything.

Raj Shamani 28:04 So from bathing soaps, you were going to shower gels-

Kishore Biyani 28:07 Interesting.

Raj Shamani 28:07 ... hand soaps to hand wash gels.

Kishore Biyani 28:08 Interesting. Yeah, yeah, yeah.

Raj Shamani 28:09 Dishwash bars to dishwash gels.

Nikhil Kamath 28:10 What year was this?

Kishore Biyani 28:11 2013, you said.

Raj Shamani 28:12 2013, '14 time.

Nikhil Kamath 28:13 Just starting.

Raj Shamani 28:13 Just start, right?

Kishore Biyani 28:14 Yeah.

Raj Shamani 28:14 And all the ads on television by... So Lifebuoy, Dettol, they were big.

Kishore Biyani 28:19 Yeah.

Raj Shamani 28:19 They were doing only hand washes.

Nikhil Kamath 28:21 Mm.

Raj Shamani 28:21 They stopped advertising. So I was like, because they are advertising liquids-

Kishore Biyani 28:25 Yeah

Raj Shamani 28:26 ... in Big Bazaar, the biggest, the biggest, uh, their display is of-

Kishore Biyani 28:30 Was off

Raj Shamani 28:31 ... these products, of these products.

Kishore Biyani 28:32 Yeah.

Raj Shamani 28:32 So I was like, "Okay, that's interesting," and people were buying. And this was significantly at a higher price.

Nikhil Kamath 28:36 Mm.

Raj Shamani 28:37 And people were spending less time while choosing the liquids-

Nikhil Kamath 28:40 Mm

Raj Shamani 28:40 ... while, uh, than soaps.

Nikhil Kamath 28:41 Mm.

Raj Shamani 28:41 So I was like, "lok kam time lagate hai, log jyada paise de rahe hai, aur ad bhi jyada ho rahi." Killer, killer category. Okay? So saw that, and then at that time in Big Bazaar-

Kishore Biyani 28:52 Yeah

Raj Shamani 28:52 ... and in all kirana stores, and everywhere, there used to be more at that time as well.

Nikhil Kamath 28:56 How does one spot these trends for somebody trying to build zero to one?

Raj Shamani 29:00 So- [chuckles]

Kishore Biyani 29:01 Maybe I'll, I'll like to go on this, but anyway.

Raj Shamani 29:04 So I saw that, and then, uss time pe, I... how my framework was, why dishwash gel I chose, and that became on one of my biggest product.

Kishore Biyani 29:13 I know, after you.

Raj Shamani 29:13 Dishwash gel-

Kishore Biyani 29:14 Yeah

Raj Shamani 29:14 ... because there was handwash mein bahut sare options the.

Kishore Biyani 29:18 Yeah.

Raj Shamani 29:18 Big Bazaar ka bhi ek brand tha, Sach, S-A-C-H.

Kishore Biyani 29:20 Yeah.

Raj Shamani 29:20 I guess, right? Bahut sare products the, shower gels bahut the, dishwash gel mein sirf do hi the.

Nikhil Kamath 29:25 Mm.

Raj Shamani 29:25 There were only two, Vim and Pray.

Nikhil Kamath 29:26 Mm.

Kishore Biyani 29:27 Mm.

Raj Shamani 29:27 So because there were two products-

Kishore Biyani 29:28 Right

Raj Shamani 29:28 ... I thought, there's an opportunity, because there are two products I can do, and they both were very distinctively colored, green and yellow. So I was like, two different products, yellow maybe opportunity, green maybe opportunity. Let's try to do something.

Nikhil Kamath 29:39 And did you figure this out by sitting in a supermarket?

Raj Shamani 29:41 Yeah, i- in front of kirana stores. I saw that in kirana as well.

Nikhil Kamath 29:44 Will it work even today?

Raj Shamani 29:44 So I did an experiment. I'll tell you something-

Kishore Biyani 29:46 I'll tell you wh- why, why it works is with, with every transition,

Kishore Biyani 29:50 there is something... You know, every marketer's dream is to increase the per kilo or per liter price of everything. From soap to what, what you call, liquid, is an increase of price and upgrading of customers. And something comes about, like modern retail came about, and they were able to sell a new category and a new product.

Raj Shamani 30:06 Mm.

Kishore Biyani 30:06 And Big Bazaar always worked on category creation. So any new categories, I think we were the player that time-

Raj Shamani 30:13 Right

Kishore Biyani 30:13 ... to create a new category and move up the ladder for the consumers. So it, it's a simple story of a biscuit, Parle-G. Parle-G is hundred rupees a kilo.

Raj Shamani 30:20 Mm.

Kishore Biyani 30:21 And you can now go up to cookies, which is four hundred rupees a kilo, and-

Raj Shamani 30:24 Yeah

Kishore Biyani 30:25 ... go up to chocolates, which start from thousand rupees a kilo.

Raj Shamani 30:27 Mm.

Kishore Biyani 30:27 So it's always upgradation. I think after liquid, the tablets have come in now.

Raj Shamani 30:30 Correct.

Kishore Biyani 30:31 So-

Raj Shamani 30:31 Correct.

Nikhil Kamath 30:31 Why? Is it dependent on how much the shipping cost is?

Kishore Biyani 30:35 No, no, no. It's all about upgrading in life.

Nikhil Kamath 30:37 Ah.

Kishore Biyani 30:38 Everything does the same job.

Nikhil Kamath 30:39 Mm.

Kishore Biyani 30:40 So a biscuit, a hundred rupees Gluco biscuit, uh-

Guest 30:43 ... it's the vanity and the ego which you create through marketing and brand building.

Raj Shamani 30:46 I think it's the brand, right? Also, I believe, uh, that if you can find out a way to make people lazy, you can do a great job, like you will be able to sell more.

Ananth Narayanan 30:56 If you cut down the time taken-

Raj Shamani 30:57 If you cut down the task. So because, so powder, think of it, you open powder, you have to, like, put up a scoop, or haath se uthao phir dalo. You don't know how much you're putting-

Guest 31:05 Mm.

Raj Shamani 31:05 You don't know-

Ananth Narayanan 31:06 Yeah, yeah.

Raj Shamani 31:06 You don't know how to carry it.

Guest 31:07 I think all the brand marketers-

Raj Shamani 31:08 Everybody does it.

Guest 31:08 -do something called the neuro-linguistic programming. They condition your brain to look at things in a different way and accept what they are saying.

Ananth Narayanan 31:15 Mm.

Guest 31:16 So it was like the classical advertising of Coke.

Ananth Narayanan 31:18 Mm.

Guest 31:18 Earlier, it was always shown on a beach-

Ananth Narayanan 31:20 Yeah

Guest 31:20 ... and it quenches your thirst. They will show a hot summer-

Ananth Narayanan 31:23 Mm

Guest 31:23 ... and whenever you're drinking Coke, you used to feel that it's quenching your thirst.

Ananth Narayanan 31:26 No, but I was gonna say, I think, uh, if you, if you start now,

Ananth Narayanan 31:30 I think you can be much more... I think there's a lot more data available than there was earlier, right? So I have, by the way, a few brands where the product development happens primarily through thinking through search. So I have a brand called Botanic Earth, right? Or give you another example.

Raj Shamani 31:45 Thinking through search?

Ananth Narayanan 31:47 Yeah. So what happens is-

Raj Shamani 31:48 Search on what, Google?

Ananth Narayanan 31:48 S- search on Google, search on Amazon-

Raj Shamani 31:50 Mm.

Ananth Narayanan 31:50 -search on Flipkart-

Raj Shamani 31:51 Yeah

Ananth Narayanan 31:51 ... search on whatever else. So-

Raj Shamani 31:52 How do you get that data?

Ananth Narayanan 31:54 You... It's, uh, it's an API that you can integrate with. So Amazon allows you to integrate and allows you to get the data. It's completely legitimate. You don't get competitive data. You get search data.

Raj Shamani 32:01 How much does it cost? Can somebody building a brand afford that?

Ananth Narayanan 32:03 Yes, it's very inexpensive, Nikhil.

Raj Shamani 32:06 Mm.

Ananth Narayanan 32:06 So if you're starting now... Sorry, I'm forgetting the name. There is third-party software which costs, like, in the hundreds of rupees a month-

Raj Shamani 32:14 Right

Ananth Narayanan 32:14 ... type thing, right? Maybe thousands.

Raj Shamani 32:15 And it will tell you what people are searching for in all these?

Ananth Narayanan 32:17 It gets-

Guest 32:17 Yeah

Ananth Narayanan 32:17 ... you know what people are searching for, and that's a very good way-

Raj Shamani 32:20 Yeah

Ananth Narayanan 32:20 ... to sort of figure out where are the null sets. So what people look for is: where are people searching and not finding anything?

Raj Shamani 32:25 Mm.

Guest 32:26 Mm.

Ananth Narayanan 32:26 And that's what you start, start launching, right? So, you know, where, you know, we've, we've launched a bunch of interesting products, right? Um, uh, you know, including vitamin C serums, et cetera, which are not new, but they are searching for a different format of a vitamin C.

Raj Shamani 32:41 Yeah.

Ananth Narayanan 32:42 They are searching for vitamin C 50ml, and you find that there is not that many that are there in the 50ml. So I think the amount of data that's available, and free, and easy for anybody watching this podcast, is quite stunning, and therefore you can be much, much better, in my view. I don't think it takes away anything from going and seeing, right?

Raj Shamani 32:59 Right.

Ananth Narayanan 32:59 But you can also use this to make a better decision.

Raj Shamani 33:03 This is not part of the podcast. [laughing]

Guest 33:06 [laughing]

Ananth Narayanan 33:06 Like, I'm like-

Raj Shamani 33:06 You can try it.

Ananth Narayanan 33:08 I, I've heard so many different stories about this podcast, I don't know which part is real and which part is like-

Raj Shamani 33:12 Yeah.

Nikhil Kamath 33:12 You can ask us.

Raj Shamani 33:13 You can ask.

Ananth Narayanan 33:14 It's good.

Nikhil Kamath 33:16 You can take a walk as well.

Ananth Narayanan 33:17 Guys, I didn't realize this. Do you know the number of transacting customers online in India?

Guest 33:23 How many?

Ananth Narayanan 33:23 Huh?

Guest 33:24 How many? 10 crores.

Ananth Narayanan 33:25 Uh, 100 million.

Guest 33:26 Yeah.

Raj Shamani 33:28 Nikhil, I was just thinking-

Ananth Narayanan 33:29 Uh-huh.

Raj Shamani 33:29 You designed it this way.

Ananth Narayanan 33:30 Uh-huh.

Raj Shamani 33:31 It's very offline first.

Ananth Narayanan 33:32 Uh-huh.

Raj Shamani 33:32 It's digital first-

Ananth Narayanan 33:33 Uh-huh

Raj Shamani 33:33 ... and social first.

Ananth Narayanan 33:34 Yeah.

Raj Shamani 33:35 So that was the thought process behind it.

Ananth Narayanan 33:37 Yeah, because this is, the combination of this is today's brand building, right?

Guest 33:41 I'm actually very curious to learn about this, social and commerce.

Raj Shamani 33:46 Yeah, I know, I know.

Guest 33:46 And hype.

Raj Shamani 33:48 Yeah, so we were... Where were we? Why did people invest in me? [chuckles]

Ananth Narayanan 33:51 Yeah.

Guest 33:52 Yeah.

Ananth Narayanan 33:52 Yeah.

Raj Shamani 33:52 Okay, yeah,

Raj Shamani 33:53 so, so the- because of this background where I was doing this, two things worked really well. One was we went on village and village, where, like, smallest cities, where people thought that nobody will buy premium. And we were massive believers that if you can sell-- like, if you can teach them the value of it-

Guest 34:11 Yeah

Raj Shamani 34:11 ... they'll buy. Obviously, the volumes are gonna be less, but maybe that's worth a shot. Because you don't stand a chance in front of Unilever-

Guest 34:18 Yeah

Raj Shamani 34:18 ... or P&G in the place where they anyway dominate. Okay, that was first. And second was a, a marketing or a branding, or how do I say, framework that I still use, is we say, like, I believe in if I have, let's say, 200 rupees, I would only pick up one person instead of trying to promote it to 200 people. Us time pe ye mante the sab log, that people used to believe that if zyada dikhta hai toh zyada bikta hai, right? This was the basic-

Guest 34:46 Yeah

Raj Shamani 34:46 ... belief in distribution.

Guest 34:47 Yeah.

Raj Shamani 34:47 Like, if you are available, you can, you can sell. So how do I get my brand seen more? So the first thing was, do I have enough money to get seen? Do I have enough marketing brain to get seen? Do I have enough-

Guest 35:00 Yeah.

Raj Shamani 35:00 So n- none of it is that. I was like, "Okay, let's compare me versus Vim," because Vim was our biggest competitor in dishwasher gels. So Vim has more money than me to advertise in India? Yes. Vim has more money than me to advertise in my state? Yes. Vim has more money to advertise than me in my city? Yes. But does he have more money to market to these ten houses in my colony? Probably not. Because if I have only 10,000 rupees, and if I'm only promoting in one colony, I'll be seen in that entire colony versus-

Guest 35:33 Yeah

Raj Shamani 35:34 ... a MNC brand.

Ananth Narayanan 35:35 Is that an important insight, if you're starting afresh?

Guest 35:38 Yeah.

Ananth Narayanan 35:38 Micro geography?

Raj Shamani 35:40 So in distribution, in, like, physical distribution-

Ananth Narayanan 35:43 Mm

Raj Shamani 35:43 ... this worked well.

Ananth Narayanan 35:44 Mm.

Raj Shamani 35:44 Because my whole colony started believing that, "Oh, ye brand kuch naya chalta hoga."

Ananth Narayanan 35:48 Mm.

Raj Shamani 35:48 Because in the beginning, in distribution, people... So here's what

Raj Shamani 35:52 I believe, like, you know, there's a journey which a customer goes through: convers- uh, conversation, convincing, and conversion, okay? So first is a customer ask himself or herself.

Ananth Narayanan 36:02 Mm.

Raj Shamani 36:03 They converse with themselves that, "Hey, ye kahi dekha hai," uh, "maybe achcha dikhta hai. Bahot jagah dikh raha hai. Is it happening everywhere?" So that's a conversation going on. There's something.

Guest 36:12 Right.

Raj Shamani 36:13 Then second is convincing. So convincing is, you talk to your friends, you see someone else buy- sell it, buying it, or maybe in distribution-led India, where, where the physical distribution happens, the shopkeeper is a key influencer to convince you. He's like, "Bhabhi ji, ye le jao."

Ananth Narayanan 36:27 Mm.

Raj Shamani 36:27 And if the co- co- shopkeeper said it, Bhabhi ji will take it. You will take it. Bhaiya will take it, right? [chuckles]

Ananth Narayanan 36:32 How do you convince the shopkeeper?

Raj Shamani 36:34 Margins, and I'll come to that. [laughing]

Guest 36:36 [laughing] It's, it's all incentive driven, though.

Raj Shamani 36:38 Yeah.

Guest 36:38 I think, but your point, if you start something new, my sense is, I think being a shark in a pond is always better.

Guest 36:45 ... than doing something else. I don't know whether that's distribution or a niche, right? If you want to launch an ethnic, I wouldn't go against the big guys.

Nikhil Kamath 36:51 So you're saying when you're beginning-

Guest 36:53 When you're beginning-

Nikhil Kamath 36:54 Be big fish, small pond, not small fish in the sea.

Raj Shamani 36:56 Yeah, yeah.

Guest 36:56 I think so.

Raj Shamani 36:57 So that's the same thing which we did.

Guest 36:57 I mean, my, my read, right?

Nikhil Kamath 36:58 Do you agree, Kishore?

Kishore Biyani 36:59 No, I would, uh, I would... Obviously, that is correct, but I would come into a- I will come into the market by another route.

Nikhil Kamath 37:06 Hmm.

Kishore Biyani 37:07 So that's what they have done in a way. So you will find a niche and enter into the market-

Guest 37:11 Yep

Kishore Biyani 37:11 ... by a different way. That's it.

Raj Shamani 37:13 So that's where the second thing which worked for us, because we used no parking boards, digital boards, posters, just in one area. So it looked like-

Nikhil Kamath 37:21 No parking boards?

Raj Shamani 37:23 So in h- in tier two, tier three cities, there's a no parking board, which people put on their bungalows.

Kishore Biyani 37:28 To advertise.

Raj Shamani 37:29 To advertise, you put a no parking.

Nikhil Kamath 37:31 Ah.

Raj Shamani 37:31 And then up and down you put like-

Guest 37:32 And then on the up and down of that, you have your advertising.

Raj Shamani 37:34 You have your advertising.

Nikhil Kamath 37:34 Yeah.

Raj Shamani 37:34 So we used all of that, right?

Nikhil Kamath 37:36 Mm-hmm.

Raj Shamani 37:36 Then we, what we started doing is we sta- we stood on a transporting place.

Nikhil Kamath 37:41 Hmm.

Raj Shamani 37:41 Where we like, because we wanted to expand out of our city, Indore. So we said, this tran- these transport guys, "Apka jo rickshaw hai, whatever your rickshaw, the loading gaadi is, I'm going to repair it. Okay, I'll repair it for you. The, the, from the, just from the aesthetics of it." So the aesthetics and repairment would take us like 1,000, 2,000, 3,000 bucks. But then in exchange, I would paint my- paint your whole rickshaw into Jaduwer. So I got, like, thousands of these rickshaws who would roam around the entire state, and then there was a number, and people started calling me, right?

Nikhil Kamath 38:14 Hmm.

Raj Shamani 38:14 So this is what we did. We went really, really narrow, specific.

Nikhil Kamath 38:16 So you're saying people who do not consider real estate, I'm considering autorickshaw real estate-

Raj Shamani 38:22 Oh.

Guest 38:22 No.

Nikhil Kamath 38:22 If they don't consider it a asset today, you can convince them to brand your product and make it an asset.

Raj Shamani 38:29 So that's what happened, and then, so I did that. Then I left all of it.

Raj Shamani 38:35 So I left. Uh, three months, I was still in home. I started creating content-

Guest 38:39 Hmm

Raj Shamani 38:40 ... uh, at home.

Nikhil Kamath 38:41 In Indore?

Raj Shamani 38:41 In Indore. And in three months, I scaled from... I had, like, 50,000 followers already. I scaled from 50 to 300K because I learned patterns of around top hundred brands in the world, what they were doing right.

Nikhil Kamath 38:52 Hmm.

Raj Shamani 38:53 Learned that pattern, started creating content, reached 300K.

Nikhil Kamath 38:56 Hmm.

Raj Shamani 38:56 Got my first brand deal, came to Bombay, and-

Nikhil Kamath 38:59 Is there also a learning there for family businesses?

Raj Shamani 39:03 Yeah. I mean, from day one, set expectations, right? [chuckles] I don't... Or probably the second one would be, if I was convincing enough, probably, or I would have stayed enough, then things would have gotten sorted. So yeah, coming, like, cutting the story. So I left, came to Bombay, started hustling again, and there was time where the first money which I got from brand deal, I put it in, like, advance rent of three months.

Nikhil Kamath 39:27 Hmm.

Raj Shamani 39:27 And I was... I had, like, a good house-

Nikhil Kamath 39:29 Hmm

Raj Shamani 39:29 ... but I didn't have furniture, so I was sleeping on floor for a month, because I was like, "Brand deal agli ayegi toh paise aayenge."

Nikhil Kamath 39:34 Explain brand deal. New guy, has 300,000 followers on social media-

Raj Shamani 39:39 Yeah

Nikhil Kamath 39:39 ... moves to Bombay. How much does a brand deal pay?

Raj Shamani 39:42 Okay, so I- I'll tell you brand names and who paid me. The first brand deal was ever 70,000 rupees from UpGrad.

Nikhil Kamath 39:48 Hmm.

Raj Shamani 39:48 That was upfront.

Nikhil Kamath 39:49 Hmm.

Guest 39:49 Interesting.

Raj Shamani 39:49 They paid me. They were like: "Put up a story, tell our courses are there in digital marketing and content."

Guest 39:54 Yeah.

Raj Shamani 39:54 They paid 70,000 rupees. Uh, that 70,000 gave me money to come to Bombay. Then, while in 10 days, I was living in a hotel. During those 10 days, I got a deal from KEI Wires, Pink Insurance, and Amazon sellers.

Nikhil Kamath 40:08 Hmm.

Raj Shamani 40:08 How I got this, I started DM-ing them on Instagram and asked them that, "Hey, I can do this, this, this." I started se- telling them concepts of what I can do with them.

Guest 40:15 Hmm.

Raj Shamani 40:16 Together, these three brands paid me around nine lakhs.

Nikhil Kamath 40:19 Wow.

Guest 40:19 Wow!

Raj Shamani 40:19 That nine lakh became my six-month runway in Bombay.

Guest 40:23 And they paid you nine for how many, sort of, like-

Raj Shamani 40:25 Uh, two, two-

Guest 40:26 ... for a long period of engagement or like?

Raj Shamani 40:27 So two, two post each.

Guest 40:29 Okay.

Raj Shamani 40:29 And then the rights, I sold my... So I sold my rights to one of these brands, I don't remember which one, for six months to advertise on my face.

Nikhil Kamath 40:37 Hmm.

Raj Shamani 40:37 So that, I learned, and then it was all cold DM-ing. Once I did that, and then once you start popping up, automatically you start doing it. One quick lesson, if you want to put it out, everybody, whoever is creating content, reach out to B2B brands more than D2C brands.

Nikhil Kamath 40:54 Hmm.

Raj Shamani 40:54 And I'll tell you why, right? Because-

Guest 40:56 You mean platforms when you say B2B?

Raj Shamani 40:57 B2B is like, let's say Amazon-

Guest 40:59 Amazon, yeah, yeah

Raj Shamani 40:59 ... or Adobe-

Guest 41:00 Sure

Raj Shamani 41:00 ... or Google or Meta, WhatsApp, right? They pay you way a lot.

Guest 41:03 They have money. D2C brands have no money.

Nikhil Kamath 41:05 Is that how it works? You reach out to brands, not wait for them to come to you?

Raj Shamani 41:08 Now they come to us.

Nikhil Kamath 41:09 Hmm.

Raj Shamani 41:10 And still there's a, like, mix of inbound and outbound.

Nikhil Kamath 41:12 Hmm.

Raj Shamani 41:12 In the beginning, I used to do the outbound.

Guest 41:14 Hmm.

Nikhil Kamath 41:15 Hmm.

Raj Shamani 41:15 And why B2B brands work better? Because there's no one literally promoting them. So if you-

Guest 41:22 Hmm

Raj Shamani 41:22 ... can align your content with what Adobe wants to promote, like, how would you promote Adobe?

Guest 41:26 Hmm.

Raj Shamani 41:27 Right, so if you can align your content with that, there's a higher chance that you'll get paid versus a D2C brand.

Guest 41:31 Yeah.

Raj Shamani 41:31 D2C thinks of performance.

Guest 41:33 Yeah, yeah.

Raj Shamani 41:33 D2C thinks like, "Maine ek lakh diya, kitne lakh rupey ka mere ko sale aaya." Adobe can't do that with you.

Nikhil Kamath 41:39 So the influencer medium might be influencing a lot in sales, but we'll never truly know because it might not translate into direct.

Raj Shamani 41:47 Exactly.

Guest 41:47 That's right. That's right. I think that's a problem even now-

Nikhil Kamath 41:50 Hmm

Guest 41:50 ... I think-

Raj Shamani 41:50 Yeah

Guest 41:50 ... for everybody who uses influencers, right? Attributability is still-

Kishore Biyani 41:53 But it's still better than what, uh, advertising we used to do. [laughing]

Guest 41:57 [laughing] Yeah. No, no doubt at all. No doubt.

Raj Shamani 41:59 So yeah, that's, uh, the content-

Guest 42:00 No, no

Raj Shamani 42:00 ... I did, and then I built, I learnt a few patterns, grew from zero to now in two years, 400 million views a year. Uh-

Guest 42:08 Wow!

Nikhil Kamath 42:09 Give us the top four patterns you learnt,

Nikhil Kamath 42:11 because that, again, is-

Guest 42:12 Yeah

Nikhil Kamath 42:12 ... something so many people want to-

Raj Shamani 42:14 Okay

Nikhil Kamath 42:14 ... emulate.

Raj Shamani 42:15 Uh, number one, there's a format that I follow, which is called ECG. So, so you create five pieces of content which is evergreen.

Guest 42:23 Yep.

Raj Shamani 42:24 So that people, which is relevant something yesterday, it's gonna relevant today, and that's gonna relevant tomorrow. So what this gonna do is, keep your audience engaged. Ki chalo kuch apne topic mein bana raha hai.

Guest 42:33 Hmm.

Raj Shamani 42:33 Okay. C is controversial.

Guest 42:35 Okay.

Raj Shamani 42:36 So I create three pieces of content which are controversial, which are gonna reach to masses, so that even if it's my niche, I'm gonna talk about controversial stuff.

Guest 42:43 Yeah.

Raj Shamani 42:43 So let's say even if it's business, I'm gonna talk about the businesses which tank, the things which are going down, all of that stuff, because that will get me so many views and new-

Guest 42:51 Interesting

Raj Shamani 42:51 ... audience to pull in.

Guest 42:51 Yeah.

Raj Shamani 42:52 And then two pieces of content are growth.... so growth is only growing my core community. So I believe, so our why of what we do is to create more leaders and help them become personal brands. So I really love, because personal brand has shaped me into who I am, so, like, I wanna do that. So I create two pieces of content for that community to help them grow.

Nikhil Kamath 43:10 Hmm.

Raj Shamani 43:11 Because these are the people who are gonna actually become your promoters.

Nikhil Kamath 43:16 Hmm.

43:16 And this is five, three, and two every month?

Raj Shamani 43:18 Five, three, and two. I do... Depending on, like, it can be a month, it can be a week, it can be whatever. I create a content every day.

Nikhil Kamath 43:25 And, and, Raj, does that help? The frequency helps, like constant-

Raj Shamani 43:28 No, there's nothing related to frequency.

Raj Shamani 43:30 See, at the end of the day, what you really want to do is... There's another one thing, quick hack, is respect the platform if you want pla- platform to respect you. For example, you read annual reports and annual announcements of these platforms.

Nikhil Kamath 43:44 Yep.

Raj Shamani 43:44 Okay, Google, Facebook, what are they focusing on? So Facebook will automatically say, "Hey, this year, "" we are gonna promote short content."

Nikhil Kamath 43:53 Yeah, yeah.

Raj Shamani 43:53 So you know that you're not gonna talk about anything else. Twitter talked about that we wanna increase people's s- uh, average duration per user. So it means that the threads will work, because how will you do it? LinkedIn said that he want to make LinkedIn a fun workplace to be.

Nikhil Kamath 44:10 Yeah.

44:11 Did Twitter really say threads will work if you write a long tweet, the odds are higher?

Raj Shamani 44:14 Yeah. That was, I'm telling you, at that time when I did it, I don't know what's going right now.

Nikhil Kamath 44:17 And what did you say for Instagram?

Raj Shamani 44:19 Instagram, Instagram want to promote short, short content. This, I- when I started, I was do- this, and then LinkedIn said that-

Nikhil Kamath 44:25 Fun environment

Raj Shamani 44:25 ... we want to make fun environment workplace to do it. Fun means everybody was doing text, can I do videos, dumps, and posts?

Nikhil Kamath 44:33 Very interesting insight, yeah.

Raj Shamani 44:34 Right. So whatever the platform wants to promote, if you are, if your-

Nikhil Kamath 44:38 If you are all pointing to that

Raj Shamani 44:38 ... interests are aligned with that, they'll push you way faster than anyone else.

Nikhil Kamath 44:42 Hmm.

Raj Shamani 44:42 So that was the second thing which I did, and then bunch of things. The third and the most important thing, which I believe people do wrong in social, is they try to make branded content, performance content, and shareable content together.

Nikhil Kamath 44:59 Hmm.

Raj Shamani 45:00 And it's a losing strategy. So look at brands, right? They would promote, "These are the five things that we stand for." [beep]

Nikhil Kamath 45:08 Yeah.

Raj Shamani 45:10 Like, we don't, right? There... If you want to do it, do it in, like, phases. Like, once in a while you're talking about values, once in a while you're doing it, right? Now, the only thing if you want to grow, you should think about: how can you make people share more or save more? Nothing else matters. Nothing else matters.

Nikhil Kamath 45:25 Engagement, yeah.

Raj Shamani 45:26 The engagement-

Nikhil Kamath 45:27 Nothing

Raj Shamani 45:27 ... likes don't matter, views don't matter-

Nikhil Kamath 45:30 Only share and save

Raj Shamani 45:30 ... comments don't matter. Shares and saves.

Nikhil Kamath 45:32 And how do you get people to share?

Raj Shamani 45:34 So there are different tricks you do it, right? They're based on content. One of the basic contents is, if you're an educational content, right, pick up your target audience. Either you attack your target audience, or you make them feel smart, or you attack them. You break their belief system, so you'll get polarizing audience, but the half of the polarizing audience-

Nikhil Kamath 45:54 Really engage

Raj Shamani 45:55 ... they share everywhere.

Nikhil Kamath 45:56 Interesting.

Raj Shamani 45:57 Uh, one thing which you can do it, you can play on the relationships, right? You can take one side of a relationship and make a content, let's say, for every girlfriend to share it with the boyfriends, every boyfriend to share it with their- [chuckles] ... fathers, right? Like just-

Nikhil Kamath 46:11 Right. Right.

Raj Shamani 46:12 So you play on that. So there are multiple ways you can do it. So there's... You, you just think about how you can make your content share, because that's all matters.

Nikhil Kamath 46:22 This is incredibly useful.

46:23 Yes, the virality.

46:24 Everybody starting a brand from zero to one in today's world also has to build a social media following.

46:30 Yeah.

46:30 It's a big advantage, right? Their own distribution.

Kishore Biyani 46:33 Sharing and saving.

Nikhil Kamath 46:34 Sharing and saving.

Kishore Biyani 46:34 Sharing and saving. And ACG. [chuckles]

Raj Shamani 46:36 [chuckles]

Nikhil Kamath 46:37 No, very useful, yeah.

Kishore Biyani 46:39 Thank you.

Nikhil Kamath 46:39 Very helpful.

46:39 Very valuable.

46:40 Very valuable.

46:41 Kishore,

Nikhil Kamath 46:42 everybody knows already, uh, he's been here, and he's, like, the original rock star of this particular podcast. Uh, would you like to tell us, uh, what have you been doing since March, and any insights you're seeing in the market since then? Are you seeing that drop in consumption I was talking about earlier?

Kishore Biyani 47:06 Yes, we, uh, we are talking to a lot of people and... [clears throat] But I think this year is a, what you call, Adhik Maas. The Diwali is one month later.

Nikhil Kamath 47:16 Later, correct.

Kishore Biyani 47:17 So everything is one, one month ahead.

Nikhil Kamath 47:19 Yep.

Kishore Biyani 47:19 And unfortunately, every marketer follows the calendar month, and that's a serious issue.

Nikhil Kamath 47:24 Hmm.

Kishore Biyani 47:24 In India, you should follow the-

Nikhil Kamath 47:26 Hmm

Kishore Biyani 47:26 ... the, the other calendar.

Nikhil Kamath 47:27 Festival calendar.

Kishore Biyani 47:27 Festival calendar.

Nikhil Kamath 47:28 Correct, correct, correct.

Kishore Biyani 47:29 And that's normally followed-

Nikhil Kamath 47:29 The season is shorter

Kishore Biyani 47:30 ... so that's why I think there will be a little bit of mismatch. Secondly, I think inflation might be playing [clears throat] a little bit here and there. And-

Nikhil Kamath 47:38 Do you think interest rates have gone to that point where they've started seriously hitting consumption?

Kishore Biyani 47:43 I, I think the data of FMCG which came in for August was quite disappointing.

Nikhil Kamath 47:49 Was disappointing.

47:49 Hmm.

Kishore Biyani 47:50 It was showing 11 month, uh, 11% lower than last month, and even, uh, year to year it was around 12, 13% lower.

Nikhil Kamath 47:56 Yes, that's right.

47:56 I think that metric is true across the board.

47:58 Yeah.

Kishore Biyani 47:59 Hmm.

Nikhil Kamath 47:59 Me and Ananth were at a dinner, and I was asking one payment gateway guy, one electric vehicle guy, I was asking Ananth in fashion. Everybody offline seems to be saying consumption has fallen off in the last two months. Uh, I don't know how accurate these numbers are, but Amazon India grew by just about 5% this year. Flipkart, seven, eight percent based on higher end electronics and premiumization, which seems to be growing. But everything seems to be slowing down. Uh, and I was trying to figure out, is that it? Like, festivals, is there some festivals and interest rate?

Kishore Biyani 48:36 I always believe there are multiple reasons for anything to happen. There are multi- like, five elements make the planet, I think there are multiple elements which creates a market or makes the market go lower. So there are multiple. I think interest rate is one of the things. Festival calendar is another thing. Thirdly, there is a fat- uh, there was a f- little bit of a fatigue also.

Nikhil Kamath 48:53 Hmm.

Kishore Biyani 48:54 Because after COVID, the consumption came about, and then the fatigue factor also set in. I personally believe, uh, the inflation has played-... the j- the, uh, I think we are getting formalized as the economy, and formal economy is more expensive than a informal economy.

Ananth Narayanan 49:09 Hmm.

Kishore Biyani 49:10 I think that's playing around a little bit. For the first time, the formalization is quite complete now.

Ananth Narayanan 49:15 Yeah.

Kishore Biyani 49:16 And that is, that means 18% extra. And-

Ananth Narayanan 49:20 Yeah

Kishore Biyani 49:20 ... I think, uh, that's a big, that's a big hit.

Nikhil Kamath 49:22 Is that a big hit, this GST component and consumption?

Kishore Biyani 49:26 For a consumer, it is.

Ananth Narayanan 49:27 For a consumer, it is.

Kishore Biyani 49:27 For a consumer, it is.

Ananth Narayanan 49:27 For consumer, it is.

Kishore Biyani 49:28 For one segment of the population, maybe not, but for the rest of the segment of the population, it's, uh-

Nikhil Kamath 49:33 How much do you think in India in terms of trade happens offline, and how much happens with GST?

Kishore Biyani 49:39 I think the formalization is quite there now.

Ananth Narayanan 49:40 Yes, I think almost there, yeah.

Kishore Biyani 49:42 It's quite there.

Ananth Narayanan 49:42 I don't think- I think there'll be very few leakages. So, I mean, I just wanted to add, I, I think, by the way, on the consumption, I'll cover a little bit of the online, just a cou- my sense, by the way, is you really accelerated the online adoption and increased consumption for those 12, 14, 18 months during COVID, right? I think now it's stabilizing again, right? So you got a-

Kishore Biyani 50:01 But even what he's talking is even offline is showing some fatigue.

Ananth Narayanan 50:03 Yeah, so offline, by the way, I think two thoughts that I have. I think your point on inflation, I think, is absolutely true. The other is, I mean, if you do really compress the season, it, it, it's-

Kishore Biyani 50:14 No, I have a, I have another story also to talk about here-

Ananth Narayanan 50:17 Yeah

Kishore Biyani 50:18 ... which will be interesting. I, I think there are, uh... a consumer has a budget. I remember a time when mobile phone was just launched,

Kishore Biyani 50:25 and every mobile became a item of fashion, and which used to change every six months.

Ananth Narayanan 50:31 Yeah.

Kishore Biyani 50:32 And that time, the money, the budget of the com- the consumer went away from fashion to mobile phone.

Ananth Narayanan 50:37 Correct.

Kishore Biyani 50:37 So there are so many new interests which has developed.

Ananth Narayanan 50:40 No, and also, for example, travelers come back.

Kishore Biyani 50:41 Yeah, travel-

Ananth Narayanan 50:42 So I think India consumption, in my mind, people are spending on experiences.

Nikhil Kamath 50:45 Uh, in fact, even this year I was reading a stat that live shows, live concerts, and clubs-

Kishore Biyani 50:49 Growing the fastest

Nikhil Kamath 50:51 ... have gone-

Kishore Biyani 50:51 Growing the fastest

Nikhil Kamath 50:51 ... are growing really, really fast.

Kishore Biyani 50:52 Yeah, yeah.

Nikhil Kamath 50:53 So what, what-

Kishore Biyani 50:53 People are spending

Nikhil Kamath 50:54 ... what FMCG product would you add in the experience category?

Kishore Biyani 50:58 I think not experience, but look at the restaurants business. A lot of new restaurants, a lot of new experiences coming up, and everything is getting, uh, adopted in a way. So there are new categories which are emerging.

Ananth Narayanan 51:08 I think health as a focus has been interesting. I mean, you know, for us, one interesting thing is we have a peanut butter brand called MyFitness.

Kishore Biyani 51:15 [laughs]

Ananth Narayanan 51:15 I mean, I didn't think that peanut butter was that large a category, but it's growing like crazy. Because what's happening is people actually want to... The mother feeding the jam sandwich-

Kishore Biyani 51:25 Hmm

Ananth Narayanan 51:25 ... is now saying, "I want to do something healthier for the child." The vegetarian who's working out-

Kishore Biyani 51:30 Hmm

Ananth Narayanan 51:30 ... by the way, wants to sort of have some protein.

Kishore Biyani 51:33 Protein.

Ananth Narayanan 51:33 So it's interesting. So there's consumption shifting into more healthy eating, for example, right? And that, by the way, there's no growth slowdown, right? So I think your point of budget getting re-split-

Kishore Biyani 51:42 Hmm

Ananth Narayanan 51:43 ... into various other parts of consumption, I think is probably one of the biggest reasons.

Kishore Biyani 51:47 Also there, yeah.

Ananth Narayanan 51:49 Yeah.

Nikhil Kamath 51:49 Any other trends you're noticing in the last three, four months?

Kishore Biyani 51:52 The trend which is definitely emerging or which is being discussed is how a lot of new digital brands are shaping up.

Nikhil Kamath 51:59 Mm-hmm.

Kishore Biyani 52:00 And, uh, there's a new story which everybody's coming out with, and, uh, story is building that brand there. So that's what something which we are observing, and we believe that's another opportunity, because it's catering to one segment of the population.

Nikhil Kamath 52:14 Hmm.

Kishore Biyani 52:14 And that population has a lot of disposable income-

Nikhil Kamath 52:17 Hmm

Kishore Biyani 52:17 ... and they are experimenting with lots and lots of things, yeah.

Nikhil Kamath 52:20 Hmm. So me and Kishore were on a call recently. He was sharing his insights on, uh, can I say demographic, geographical insights?

Kishore Biyani 52:30 Yeah.

Nikhil Kamath 52:31 Should we go through that entire thing

Nikhil Kamath 52:33 just so that people can learn from it?

Kishore Biyani 52:34 No, I was presenting something which was saying that, uh, that 30, three, uh, 30 million, uh, what do you call, three crore households in this country-

Ananth Narayanan 52:43 Okay

Kishore Biyani 52:44 ... are basically contributing to 60% of India's consumption. And, uh, I was talking about value-added consumption-

Ananth Narayanan 52:52 Yeah

Kishore Biyani 52:52 ... and in terms of value.

Ananth Narayanan 52:54 Yeah.

Kishore Biyani 52:54 And within that three crore or 30 million families-

Ananth Narayanan 52:57 Yeah

Kishore Biyani 52:58 ... there is a Singapore, which is, let's say-

Ananth Narayanan 53:01 Yeah

Kishore Biyani 53:01 ... 60 lakh people-

Ananth Narayanan 53:02 Yeah

Kishore Biyani 53:02 ... they are exactly consuming like that-

Ananth Narayanan 53:03 Right

Kishore Biyani 53:03 ... they are living like that.

Ananth Narayanan 53:04 Yeah.

Kishore Biyani 53:05 Then there is, uh, a Poland, which is another two and a half, three crore people.

Ananth Narayanan 53:09 Interesting, yeah.

Kishore Biyani 53:10 Very interest... Similar GDP, similar per capita.

Ananth Narayanan 53:12 Yep.

Kishore Biyani 53:13 And then there is Mexico, which is around seven, eight crore people.

Nikhil Kamath 53:17 You want to talk about India 1, India 2, the distinction?

Kishore Biyani 53:20 No, that theory we did speak about last time also.

Nikhil Kamath 53:23 Hmm.

Kishore Biyani 53:24 And, uh-

Nikhil Kamath 53:24 But I think this time you've gone, like, a little bit in depth, right?

Kishore Biyani 53:27 Yeah, we've gone quite a lot in depth, and I believe, uh, that the rest of India-

Nikhil Kamath 53:32 Hmm

Kishore Biyani 53:32 ... which is, uh, the balance India, which is Singapore, Poland, and Mexico-

Ananth Narayanan 53:36 Yeah

Kishore Biyani 53:36 ... they are like sub-Saharan numbers.

Ananth Narayanan 53:38 Okay.

Kishore Biyani 53:38 1100 per capita.

Ananth Narayanan 53:40 Yeah.

Kishore Biyani 53:40 And, uh, and the value-added consumption, we don't see value-added consumption in this large group-

Ananth Narayanan 53:47 Hmm

Kishore Biyani 53:47 ... which is nearly 1.3 million people.

Ananth Narayanan 53:50 Hmm, hmm.

Kishore Biyani 53:51 1.3 billion. So, so the consumption which is happening, which is value-added, and that maybe-

Ananth Narayanan 53:55 Is in a much smaller group.

Kishore Biyani 53:56 Is a much smaller group, maybe around 10, 12 crore people.

Ananth Narayanan 53:59 Yep.

Kishore Biyani 54:00 And this 10, 12 crore people can be represented as what I say India 1. India 1 is anybody who has domestic help. They don't do some-

Ananth Narayanan 54:07 Interesting

Kishore Biyani 54:07 ... things on their own. And then there is India 2, which helps you to lead a better life, the drivers, the helpers-

Ananth Narayanan 54:12 Right

Kishore Biyani 54:12 ... the peons, the maids, the watchmen, the lift mans, and they are huge in numbers.

Ananth Narayanan 54:16 Right.

Kishore Biyani 54:16 For every one India 1, there are three, three and a half India 2s. And then there is India 3, which is the farm laborers.

Ananth Narayanan 54:22 Hmm.

Kishore Biyani 54:22 They make their ends meet, and they are on government aid. So where will the consumption ultimately happen, and where will the value-added consumption happen? Because the economy has to grow, the value-added consumption has to grow. And India has been created in a different- our societies have been built in a very different way, wherein the consumption is more by people who have, uh, reached somewhere.

Ananth Narayanan 54:44 Mm-hmm.

Kishore Biyani 54:44 And we don't give enough money to India 2 to make them-

Ananth Narayanan 54:48 But is India 1-

Kishore Biyani 54:49 Yeah

Ananth Narayanan 54:49 ... growing quite fast?

Kishore Biyani 54:50 Hmm, it's not growing so fast.

Ananth Narayanan 54:52 Okay.

Nikhil Kamath 54:53 Which is growing fastest-

Kishore Biyani 54:54 Can I add something?

Nikhil Kamath 54:54 ... India 1, 2, or 3?

Kishore Biyani 54:56 Uh, I think, uh, it, it's... I would say India 1 is only growing maybe, maybe a percentage a year, maybe less than that.

Nikhil Kamath 55:04 In terms of consumption?

Kishore Biyani 55:06 No, 1% adding up to that con-

Nikhil Kamath 55:08 Yeah, same

Kishore Biyani 55:08 ... that food.

Nikhil Kamath 55:08 Yeah. And India 2?

Kishore Biyani 55:10 ... India two is growing because India three, people coming to India two will always, they are the larger chunk in any case.

Nikhil Kamath 55:15 So you're saying the middle class is getting bigger?

Kishore Biyani 55:18 I don't know. Middle class is defined by income groups and all. In India-

Nikhil Kamath 55:21 Mm.

Kishore Biyani 55:21 -income groups don't, uh-

Raj Shamani 55:23 You know, can I add something on India one, India two, India three? Because I've been spending a lot of time on that, because I read it in It Happened in India Before [chuckles] right?

Kishore Biyani 55:30 I, I still stick to that, yeah. [laughing]

Raj Shamani 55:32 Yeah. So I believe, like, India one, India two, India three definitely has to do a lot with income, but it also has to do with awareness and choices. So I'll give you an example. India one, India two, India three, there's this, like, you know, divide... Put them, for lack of a better word, customer one, customer two, customer three.

Kishore Biyani 55:50 Yeah.

Raj Shamani 55:50 They all exist in same house with same income group as well, and I'll tell you why, okay?

Nikhil Kamath 55:56 Explain same house, same income group.

Raj Shamani 55:57 So I'll, I'll give you... Let's say me, my brother, my father, okay? My father would use one soap, "... Dove," he'll do one product.

Kishore Biyani 56:07 Yeah.

Raj Shamani 56:07 Right? He's using less products, just fifty to two hundred products.

Kishore Biyani 56:10 Yep.

Raj Shamani 56:11 I would do a face wash, a shampoo, and a body wash. My brother would do a shampoo, a conditioner, a face wash, a scrub, or, like, ten things, right?

Kishore Biyani 56:20 Right.

Nikhil Kamath 56:20 But the-

Raj Shamani 56:20 So he's India one-

Nikhil Kamath 56:22 But all-

Raj Shamani 56:22 -who's using, like, ten thousand products.

Nikhil Kamath 56:23 But all you, you all three are India one.

Kishore Biyani 56:25 Yeah, yeah.

Raj Shamani 56:25 So, no, I'm saying that customer one, customer two, customer three, like-

Nikhil Kamath 56:30 No

Raj Shamani 56:30 ... comparatively, my father would use only twenty-five to thirty products-

Nikhil Kamath 56:33 No

Raj Shamani 56:34 -uh, around it.

Kishore Biyani 56:34 Yeah, so he's consuming less number of items or SKUs, as we call it. Yeah.

Raj Shamani 56:38 So that's exactly the word-

Kishore Biyani 56:39 But, but ultimately, we'll come in that same family of India one.

Ananth Narayanan 56:41 No, but Kishore, your point is, by the way, there is-

Raj Shamani 56:44 Consumption

Ananth Narayanan 56:44 ... call it, um, see, I think one is the number of customers, which is you're saying, call it hundred, hundred and ten, hundred and twenty million, roughly, right? That's what you're saying.

Nikhil Kamath 56:52 If you assume for four people per family.

Ananth Narayanan 56:54 Yeah.

Kishore Biyani 56:55 Thirty, twenty million, roughly, yeah.

Ananth Narayanan 56:56 So the second, by the way, is maybe the number... Let's just take that number for a minute. The consumption of those hundred, hundred and twenty million, I think the point Raj is trying to make is it continues to increase.

Raj Shamani 57:06 Yes.

Kishore Biyani 57:06 Yeah, it is increasing.

Ananth Narayanan 57:07 Right.

Kishore Biyani 57:07 There is no debate. Uh-

Raj Shamani 57:08 But I think by a very low percentage.

Kishore Biyani 57:10 But that, no, that consumption of this twelve crore people is close to eight hundred billion plus.

Raj Shamani 57:16 No, I feel people who are-

Nikhil Kamath 57:17 Is that number going up, the consumption?

Kishore Biyani 57:19 The consumption-

Nikhil Kamath 57:20 By what percentage?

Kishore Biyani 57:21 That's going up. For this, uh, India one, the consumption is going up.

Ananth Narayanan 57:24 Yeah.

Nikhil Kamath 57:24 But then why is that not reflecting in, say-

Kishore Biyani 57:26 It's reflecting

Nikhil Kamath 57:26 ... Amazon, Flipkart?

Kishore Biyani 57:27 It's reflecting, but, uh-

Ananth Narayanan 57:29 See, I don't think you can take one quarter worth of data-

Kishore Biyani 57:31 And you can't-

Ananth Narayanan 57:31 -and generalize this, right?

Kishore Biyani 57:32 -categories alone.

Ananth Narayanan 57:33 I mean, and you can't... Yeah, yeah.

Nikhil Kamath 57:34 How much do you think it's going up by, percentage-wise? You said eight hundred billion.

Kishore Biyani 57:38 I, I think it's growing a lot. On this India one-

Nikhil Kamath 57:41 You would say upward of twenty, thirty percent?

Kishore Biyani 57:43 Maybe, uh, in excess of ten percent, for sure.

Nikhil Kamath 57:45 Do you think it's growing because of increasing consumption or premiumization? Is the-

Kishore Biyani 57:50 Both

Nikhil Kamath 57:51 ... volume growing, or is the-

Ananth Narayanan 57:52 It's-

Nikhil Kamath 57:53 -price point growing?

Kishore Biyani 57:54 I think they have discretionary income, and, uh, they have surplus incomes, and they have to spend that money. Like, in his family, like, uh, the, the next generation is consuming more than the previous generation. And, uh-

Ananth Narayanan 58:04 Uh, it is both, I think. For sure, there's premiumization, but I also think people buy more things.

Raj Shamani 58:09 Yeah.

Kishore Biyani 58:09 Yeah.

Raj Shamani 58:10 Yeah.

Ananth Narayanan 58:10 Right? I mean, you just end up buying more things, right?

Kishore Biyani 58:12 So I-

Nikhil Kamath 58:13 Awareness also is increasing.

Kishore Biyani 58:13 We did some analysis-

Ananth Narayanan 58:15 Correct.

Kishore Biyani 58:15 We did some analysis, uh-

Ananth Narayanan 58:16 Yeah

Kishore Biyani 58:16 ... Ananth, was India one consumes close to hundred thousand items in their lifetime.

Ananth Narayanan 58:22 Mm-hmm. Mm, mm-hmm.

Kishore Biyani 58:23 India two is maybe ten thousand, and India three is thousand.

Nikhil Kamath 58:27 And would you like to list the top items?

Kishore Biyani 58:29 Yeah.

Nikhil Kamath 58:29 I, I know you have it in your research. Where does India one spend the most money?

Kishore Biyani 58:33 I think, I think [chuckles] their lifestyle, food... But I think the-- look at the kind of food is, which is getting consumed today, uh, for, by India one. I would say the Singapore and the Poland side.

Ananth Narayanan 58:43 Mm.

Kishore Biyani 58:44 I think they have premiumized to a great, great extent, from asparagus, to avocados, to health food. Everybody is consuming-- every family member is consuming a different kind of breakfast and different kind of food. I think going out again-

Nikhil Kamath 58:56 Mm

Kishore Biyani 58:56 ... by India one-

Ananth Narayanan 58:57 Yeah

Kishore Biyani 58:57 ... which is Poland and Singapore, is significant. Even Mexico-

Ananth Narayanan 58:59 Mm

Kishore Biyani 59:00 ... in a way.

Nikhil Kamath 59:01 So how would you categorize the income ranges of Singapore, Poland, and all?

Kishore Biyani 59:05 Singapore would be, I would say, more than, uh, a family household income of thirty, forty lakes plus.

Nikhil Kamath 59:13 And what percentage of?

Kishore Biyani 59:16 That will be a small percent. I would say, no, this will be around sixty lake plus.

Ananth Narayanan 59:19 Yeah.

Kishore Biyani 59:20 Yeah. And, uh-

Ananth Narayanan 59:20 I mean, Singapore income will be closer to hundred, hundred and twenty K. I mean, US-

Nikhil Kamath 59:25 Mm.

Ananth Narayanan 59:25 So it's, it's, uh, you're closer to, like, a-

Kishore Biyani 59:27 Yeah.

Nikhil Kamath 59:27 Ninety lakes.

Ananth Narayanan 59:28 Ninety lakes to a crore. But-

Kishore Biyani 59:30 And the Poland would be in excess of twenty, twenty-five lakes, and Mexico would be much, little lesser than that.

Ananth Narayanan 59:36 Yes, yes.

Kishore Biyani 59:38 Maybe around twelve lakes.

Ananth Narayanan 59:39 Twelve, fifteen.

Nikhil Kamath 59:40 And majority of India one is in Mexico, right?

Kishore Biyani 59:42 Majority is in Mexico, around eight crores. Uh, uh, another research which we found out was the total packaged good consumption in India-

Ananth Narayanan 59:49 Yeah

Kishore Biyani 59:49 ... FMCG packaged good in value terms, is seventy percent of excess is by this India one.

Ananth Narayanan 59:55 Mm.

Kishore Biyani 59:55 Beauty, close to eighty-five percent.

Ananth Narayanan 59:58 Yeah.

Kishore Biyani 59:59 And, uh, eating out in restaurants, close to seventy-eight percent. So it, it's significant-

Ananth Narayanan 1:00:04 Yeah

Kishore Biyani 1:00:04 ... in the high fifties, sixty. Fruits, sixty-five, seventy percent.

Ananth Narayanan 1:00:07 Yeah, yeah. But I, I'll say, going back to, you know, you were talking about brand building, right? I mean, hundred and twenty million is still a very large number.

Kishore Biyani 1:00:14 A huge number.

Ananth Narayanan 1:00:15 Right. Still-

Nikhil Kamath 1:00:16 But I'm guessing for anyone planning to build a brand zero to one, has to focus on that one twenty million.

Ananth Narayanan 1:00:23 Yeah, I think-

Nikhil Kamath 1:00:24 Large

Ananth Narayanan 1:00:24 ... has to focus on a much narrower piece of-

Kishore Biyani 1:00:25 Wherever you want a margin-

Ananth Narayanan 1:00:26 Yeah

Kishore Biyani 1:00:26 ... of more than forty to sixty percent. [chuckles]

Ananth Narayanan 1:00:28 Correct, correct, correct. I have... Yeah, I have- I've now met some eight hundred, nine hundred of these founders, right?

Nikhil Kamath 1:00:34 Mm.

Ananth Narayanan 1:00:34 Eight thirty-two, I think is the exact number. But, um, I think there's a clear pattern on what works and what doesn't work for the first twenty crores of-

Nikhil Kamath 1:00:40 Are there any other insights here? Like, out of this one twenty million, how many of them prefer paying through UPI, credit card, cash? What percentage may be online versus offline?

Ananth Narayanan 1:00:52 This hundred million will all be online.

Kishore Biyani 1:00:55 Also online.

Ananth Narayanan 1:00:55 I, I think my sense is, by the way, they may not do all their purchases online, but they will hundred percent be online.

Kishore Biyani 1:01:00 They would have experienced online, definitely.

Ananth Narayanan 1:01:01 They would have experienced online, definitely.

Nikhil Kamath 1:01:02 So they have a credit card or UPI?

Ananth Narayanan 1:01:04 Hundred percent would be by say-

Nikhil Kamath 1:01:05 More likely UPI than credit card.

Ananth Narayanan 1:01:07 UPI more than credit.

Kishore Biyani 1:01:08 Credit card, also three crore users, three and a half crore users-

Ananth Narayanan 1:01:10 Yeah

Kishore Biyani 1:01:10 ... in this country, so they will all come here.

Ananth Narayanan 1:01:12 Yeah.

Nikhil Kamath 1:01:12 And are these users, this one twenty-... concentrated in between the metropolitan cities?

Ananth Narayanan 1:01:18 Oh, no.

Kishore Biyani 1:01:19 I would say the top 100 cities-

Ananth Narayanan 1:01:20 Yeah

Kishore Biyani 1:01:21 ... significantly. Significantly-

Ananth Narayanan 1:01:22 But top 100, right?

Kishore Biyani 1:01:23 Top 100.

Ananth Narayanan 1:01:23 Not metro.

Kishore Biyani 1:01:24 Not metro.

Ananth Narayanan 1:01:24 I mean, it's, like, very large-

Kishore Biyani 1:01:25 Top 100

Ananth Narayanan 1:01:25 ... as a spread.

Nikhil Kamath 1:01:27 How, how much do you think will be in the metros? 'Cause I'm trying to think of someone building-

Kishore Biyani 1:01:30 Around maybe 60% plus.

Nikhil Kamath 1:01:32 So if you open 10 stores, have a online thing, distribution in 10 cities, you cater to 60% of the-

Kishore Biyani 1:01:40 Yeah

Nikhil Kamath 1:01:40 ... 120 million?

Kishore Biyani 1:01:40 Yeah. For the value-added consumption, where-

Nikhil Kamath 1:01:44 Explain-

Kishore Biyani 1:01:44 Where the margins are higher.

Nikhil Kamath 1:01:46 Explain what is value ma- value addition.

Kishore Biyani 1:01:47 Value added is how much value you are adding. If you are creating, buying a pro- buying a product or making a product at one rupee, at what multiple you are selling it? It has to be in excess of three times. It costs to RTP-

Nikhil Kamath 1:01:57 And that value add by virtue of creating a brand.

Kishore Biyani 1:01:59 Yeah, then you are creating a brand.

Ananth Narayanan 1:02:01 By the way, one slight thing on the same topic, I think, I... It was quite interesting for me. If you take the top 100 cities, at least in the e-commerce world, the outside metro cities, I don't know what the exact split, is growing much, much faster.

Kishore Biyani 1:02:13 But it will be growing, but you have to see the value of the merchandise which you are selling.

Ananth Narayanan 1:02:17 Mm.

Kishore Biyani 1:02:19 I believe India is all about per-kilo realization, whether it's a garment, whether it's a towel, whether it's a FMCG product-

Ananth Narayanan 1:02:25 Right

Kishore Biyani 1:02:25 ... or whether it's a detergent. It's a per-kilo realization of something-

Ananth Narayanan 1:02:28 Right

Kishore Biyani 1:02:28 ... and where, where you can reach.

Ananth Narayanan 1:02:30 Yeah. No, the reason I'm saying is when we launched, I mean, at least in Myntra, when you launch premium products, it's quite interesting. Always, by the way, the places that didn't have the malls, but in the top 100 cities, would sell the most. I mean, Polo Ralph Lauren, when we launched, would sell in, like, Nellore and Chittoor and so on-

Kishore Biyani 1:02:46 Yeah, but it will sell, but how many people from that city?

Ananth Narayanan 1:02:48 It's... Actually, if you add up all of them, it was a sizable chunk.

Kishore Biyani 1:02:51 If you add up all the cities put together will add up for a particular city. There is a store in, in Bombay, Hermès, so, uh-

Ananth Narayanan 1:02:57 Mm

Kishore Biyani 1:02:57 ... it's the most popular brand of the world. 60 people account for 80% of the business, and that's among the top few stores of Hermès in the world.

Ananth Narayanan 1:03:05 How much does Nikhil account for? [chuckles]

Nikhil Kamath 1:03:07 And they're typically Bombay-based?

Kishore Biyani 1:03:09 They are... I don't know.

Nikhil Kamath 1:03:10 I don't buy anything from them. [chuckles]

Kishore Biyani 1:03:12 No?

Nikhil Kamath 1:03:12 So I'll tell you what, in the last-

Ananth Narayanan 1:03:13 For yourself or for friends, or like, no, none?

Nikhil Kamath 1:03:15 I'll

Nikhil Kamath 1:03:16 tell you, in the last three, four years-

Kishore Biyani 1:03:18 Yeah

Nikhil Kamath 1:03:18 ... I've completely stopped buying from ultra-luxury brands, like Hermès and LV and all that, because I feel they play you. Their entire marketing strategy seems to be to offend and get some kind of a reaction out of you, and then buy from them.

Ananth Narayanan 1:03:36 Right.

Nikhil Kamath 1:03:37 Like, you know, they'll tell you-

Kishore Biyani 1:03:38 He's... Nikhil has achieved nirvana. [laughing]

Ananth Narayanan 1:03:41 Got it. No more of the-

Kishore Biyani 1:03:43 [laughing]

Nikhil Kamath 1:03:44 You know, you know, that is the-

Ananth Narayanan 1:03:44 Top of the hierarchy. [chuckles]

Nikhil Kamath 1:03:45 That is the most offensive thing.

Ananth Narayanan 1:03:47 Yeah.

Nikhil Kamath 1:03:47 Like, to go to a shop where they're marking up a product one is to a thousand times-

Ananth Narayanan 1:03:52 Yeah, yeah

Nikhil Kamath 1:03:52 ... and then saying, "You can't buy this product until you build a relationship with us-

Ananth Narayanan 1:03:57 Get on a list. Build a relationship, yeah, yeah

Nikhil Kamath 1:03:58 ... get on a list," do all of these hoops that you have to jump through. It's not because they can't manufacture more of that. They can go make a million of those bags-

Ananth Narayanan 1:04:06 Of course

Nikhil Kamath 1:04:06 ... and stuff.

Ananth Narayanan 1:04:06 Of course.

Nikhil Kamath 1:04:07 But that strategy of being arrogant has worked so well for them that I think people have to be cognizant to that and, you know, kind of like...

Kishore Biyani 1:04:16 So, Nikhil, in early days-

Nikhil Kamath 1:04:18 Mm

Kishore Biyani 1:04:18 ... like, Big Bazaar was created on three things-

Nikhil Kamath 1:04:20 Mm

Kishore Biyani 1:04:20 ... greed, fear, and, uh, we used to call it, uh, uh, altruism, to a certain extent. The brand can be built on this. Greed is that it is available at a lower price. Fear is that it won't be available after a while.

Nikhil Kamath 1:04:34 Yeah.

Ananth Narayanan 1:04:34 Yeah.

Kishore Biyani 1:04:34 And secondly, all the brands are built on appealing to your ego and vanity, yeah.

Ananth Narayanan 1:04:38 Mm.

Nikhil Kamath 1:04:38 Mm. How does Big Bazaar do it? For example, like a budget supermarket distinguish themselves from a Hermès or Hermès, or however you call it. Like, what is the differentiation? What part of ego are you going after, and what are they going after?

Kishore Biyani 1:04:53 We are going after greed and fear, and they are going after your ego and vanity.

Nikhil Kamath 1:04:58 Yeah, I think all fancy shopping-

Kishore Biyani 1:05:00 Yeah

Nikhil Kamath 1:05:00 ... is based on manipulation.

Kishore Biyani 1:05:02 Yeah.

Nikhil Kamath 1:05:02 I feel when you go buy a BMW, for example, it has very little to do with how the car truly feels, but it is the perception subconsciously sold to you that a certain kind of person drives this kind of a car.

Kishore Biyani 1:05:17 Of course, of course.

Nikhil Kamath 1:05:18 Because in isolation, if we were not to be social beings-

Kishore Biyani 1:05:22 Yeah

Nikhil Kamath 1:05:23 ... if you had a BMW at home, after one week, you're not gonna go look at it, admire it, and drive it, and be like, "Wow, this is amazing!"

Kishore Biyani 1:05:29 Correct.

Nikhil Kamath 1:05:30 Any car you'll get bored of, right?

Kishore Biyani 1:05:31 Yes.

Nikhil Kamath 1:05:31 It's like everything else in life. But I think that marketing messaging, right? Like, what BMW has created-

Kishore Biyani 1:05:38 Yeah

Nikhil Kamath 1:05:39 ... they've forgotten the car for a second, and they said-

Ananth Narayanan 1:05:41 It's the ultimate driving machine

Nikhil Kamath 1:05:42 ... this per- this person-

Ananth Narayanan 1:05:43 Yeah

Nikhil Kamath 1:05:43 ... who you aspire to-

Ananth Narayanan 1:05:45 Yeah

Nikhil Kamath 1:05:45 ... drives this car.

Ananth Narayanan 1:05:46 Yeah.

Nikhil Kamath 1:05:46 I think we have to figure out how to help people who are building brand zero to one, build what BMW built in a different manner for a different world. I think Raj will have some insights there, because he's kind of building that bridge with House of X.

Ananth Narayanan 1:06:01 So I'll tell you, it's not only luxury brands. I think this-

Kishore Biyani 1:06:05 Yeah

Ananth Narayanan 1:06:05 ... also mass brands do the-

Kishore Biyani 1:06:07 Mass, mass premium brands

Ananth Narayanan 1:06:07 ... every brand does the same thing.

Kishore Biyani 1:06:09 Yeah, of course.

Ananth Narayanan 1:06:09 They try to play on showing you an ideal image of somebody you will become. Like, the classic examples in India I could give is the Complete Man.

Nikhil Kamath 1:06:18 Mm-hmm.

Kishore Biyani 1:06:19 Yep.

Ananth Narayanan 1:06:19 Like, you know-

Kishore Biyani 1:06:19 Thank you. Raymans.

Ananth Narayanan 1:06:22 Yeah. Like the Complete Man Raymans.

Kishore Biyani 1:06:24 Yeah, yeah. Yeah.

Ananth Narayanan 1:06:24 What they would do is, "Hey, a man, if you want to be a complete man, you would wear this," an ideal situation they're trying to sell.

Kishore Biyani 1:06:30 Yeah, yeah.

Ananth Narayanan 1:06:31 So they always do that. It's, it doesn't go with luxury, it goes with every, everywhere. In fact, it goes with kids as well.

Kishore Biyani 1:06:36 Yep, absolutely.

Ananth Narayanan 1:06:37 Like, "I'm a Complan girl, I'm a Complan boy."

Kishore Biyani 1:06:39 Yeah.

Ananth Narayanan 1:06:39 Everybody, they got a reason to do this, right? So at the end of the day, you wanna tell stories, and that's how you sell. And one of the classic examples is you sell an ideal state who you're not. So-

Kishore Biyani 1:06:51 By the way, always-

Ananth Narayanan 1:06:51 There's nothing new in it. There's nothing new in it.

Kishore Biyani 1:06:54 Yeah, yeah.

Ananth Narayanan 1:06:54 And in fact, one of the big... like, what I, what I believe in is, so let's say luxury brands don't wanna sell it to people who have money. They wanna sell it to people who don't have money, and the reason is that, like, that's, that's how they are able to build their brands in that way. So they wanna sell it to, like... You're not their ideal TG, Nikhil. [chuckles]

Nikhil Kamath 1:07:13 [chuckles]

Kishore Biyani 1:07:13 No, but, um, no.

Ananth Narayanan 1:07:15 But, you know, they wanna sell it to someone-

Nikhil Kamath 1:07:18 ... who will save for this LV bag for months and then come out-

1:07:23 But that's not happened in India yet.

Ananth Narayanan 1:07:24 Yeah.

Nikhil Kamath 1:07:25 No, no, it-

1:07:26 No. It's still there in, uh, I think it's happened in China-

Ananth Narayanan 1:07:29 In China

Nikhil Kamath 1:07:29 ... and a lot of other countries.

Ananth Narayanan 1:07:29 And the US maybe, but-

Nikhil Kamath 1:07:30 US, uh, not in India yet.

Raj Shamani 1:07:32 At least in, I-

Ananth Narayanan 1:07:32 Zerodha

Raj Shamani 1:07:33 ... I can tell you that I don't have any data, but my experience amongst my friends, people are saving up for the cars which they wanna show off.

Nikhil Kamath 1:07:39 The car, yes.

Raj Shamani 1:07:39 People are saving up for the watches they wanna show off.

Nikhil Kamath 1:07:41 Car, yeah, houses, for sure.

Raj Shamani 1:07:42 And the biggest thing that is happening is shoes, sneakers.

Nikhil Kamath 1:07:44 Sneakers, it just started happening, yes.

Raj Shamani 1:07:46 Yeah, so the people are saving up for sneakers.

Nikhil Kamath 1:07:47 Not for handbags and all yet?

Raj Shamani 1:07:48 Not-

Ananth Narayanan 1:07:49 Not for handbags, not for clothes yet, maybe.

Raj Shamani 1:07:51 So, but-

Ananth Narayanan 1:07:52 But your point is different

Raj Shamani 1:07:52 ... girls are, girls are saving for handbags. Like, a lot of my friends, and I can name 20 at least, I... not more than that, but 20 who've been saving to buy an LV bag on their birthday, or, like, a Gucci.

Nikhil Kamath 1:08:03 Interesting.

Raj Shamani 1:08:04 So I think-

Nikhil Kamath 1:08:04 We are out of touch, yeah. [chuckles]

Raj Shamani 1:08:06 Because this... [chuckles]

Ananth Narayanan 1:08:06 Yeah.

Raj Shamani 1:08:07 So our generation-

Ananth Narayanan 1:08:08 Yeah

Raj Shamani 1:08:08 ... people do save up to buy this. And in fact, surprising are the, like, boyfriends and girlfriends save up to gift to their, the partners, right? That this, this is... And it's happening, a lot of people can relate to it, because we do save.

Nikhil Kamath 1:08:20 Somebody was telling me 70% of iPhones in India are bought on credit. Do you think that's true for bags and sneakers as well? Are people borrowing to buy these things?

Raj Shamani 1:08:31 I don't know about bags specifically. Sneakers, I know-

Ananth Narayanan 1:08:34 Oh, yeah

Raj Shamani 1:08:34 ... there are a lot of people who do-

Ananth Narayanan 1:08:36 Yeah

Raj Shamani 1:08:36 ... buy on credits. There's a monthly payment system with retailers. There are mon- in fact, a lot of my friends, what they've started doing is, yeah, "Mira birthday, tu mujhe" like, you know, have friend peer-to-peer lending, and then they would buy something expensive to show it off and then do it. Like, that's-

Ananth Narayanan 1:08:48 All right, by the way-

Nikhil Kamath 1:08:49 Exactly

Ananth Narayanan 1:08:49 ... I think it's the fast, the... So there's a product

Ananth Narayanan 1:08:51 called BNPL, buy now, pay later.

Raj Shamani 1:08:52 Yeah.

Nikhil Kamath 1:08:52 Mm.

Ananth Narayanan 1:08:53 BNPL is among the fastest growing in all e-commerce firms.

Nikhil Kamath 1:08:55 Is that important?

Raj Shamani 1:08:56 Oh, yes.

Nikhil Kamath 1:08:56 Like, if you're building a brand from zero to one-

1:08:59 Yeah.

1:08:59 If you just figured out a niche-

1:09:01 Yeah

1:09:01 ... you started building a-

1:09:02 Yeah

1:09:02 ... consumer brand there.

1:09:03 Yeah.

1:09:04 How do you integrate BNPL? You're a new company, you're starting at zero.

Ananth Narayanan 1:09:08 Uh, I think, by the way, BNPL gets automatically integrated-

Raj Shamani 1:09:11 Yeah

Ananth Narayanan 1:09:11 ... as you think about e-commerce or even your own website, because all of them-

Nikhil Kamath 1:09:14 Once your platform has scaled, then do people come and approach you, or from the very beginning?

Raj Shamani 1:09:18 You can do that from day one.

Ananth Narayanan 1:09:19 From day zero, right. I think, there's-

Nikhil Kamath 1:09:21 But you do that with your credit card company or-

Raj Shamani 1:09:23 Also

Nikhil Kamath 1:09:23 ... your payment gateway?

Ananth Narayanan 1:09:24 You can do also, you know, you can do with your payment gateway.

Raj Shamani 1:09:26 Like, these are the people that do that.

Ananth Narayanan 1:09:27 You know, there are... So once you have a payment gateway and some data, there are multiple firms that allow you, uh, buy now, pay later facilities.

Nikhil Kamath 1:09:34 Mm.

Ananth Narayanan 1:09:34 Obviously, by the way, the Flipkarts, the Amazons of the world, all have inbuilt programs that are quite large.

Nikhil Kamath 1:09:39 Mm-hmm.

Ananth Narayanan 1:09:39 But even if you're a D2C website-

Nikhil Kamath 1:09:41 Yeah

Ananth Narayanan 1:09:41 ... you can get BP- buy now, pay later on board.

Nikhil Kamath 1:09:42 Do they share a part of the carry on the interest they charge with the platform?

Ananth Narayanan 1:09:46 Of course. Of course.

Nikhil Kamath 1:09:48 And what is the rate of interest typically?

Ananth Narayanan 1:09:50 I think it's high.

Nikhil Kamath 1:09:51 Oh, yeah.

Ananth Narayanan 1:09:52 I don't remember the rate off the top of my head, uh, the interest off the top of my head-

Nikhil Kamath 1:09:55 Twenty plus?

1:09:55 Yeah, 20 plus.

Ananth Narayanan 1:09:56 Uh, it'll be 20 plus, for sure. Be 20 plus, for sure.

Nikhil Kamath 1:09:59 Right, and, uh, very specifically, because we're talking about this particular influencer-led sales world, now, beyond these LV and all of that, what is quiet luxury? Why... What part of someone's psychology is making them buy something for a crazy price, while it should not look like it is expensive? What is working there? Anyone can answer that. Because I've read about this,

Nikhil Kamath 1:10:28 that show is there, no?

Raj Shamani 1:10:29 I think quiet luxury-

Nikhil Kamath 1:10:30 Yeah

Raj Shamani 1:10:30 ... in India is not yet a big of a concept.

Nikhil Kamath 1:10:32 No, Dhara, Dhara Rangan. [chuckles]

Raj Shamani 1:10:33 There's like Dhara Rangan. [chuckles]

Ananth Narayanan 1:10:35 But it will be a TG, which is like-

Nikhil Kamath 1:10:36 Very, very small TG

Ananth Narayanan 1:10:38 ... minuscule, right? I mean-

Nikhil Kamath 1:10:38 No, but it's still interesting if it's working.

1:10:40 Conscious capitalism?

Ananth Narayanan 1:10:42 Yeah, so I, I would say, Nikhil, firstly, by the way, my sense is, um, uh, I, I think the market in India for... I think we're not yet evolved to a stage of restrained capitalism, where you don't want to actually demonstrate that you bought something expensive.

Nikhil Kamath 1:10:56 Yeah.

Ananth Narayanan 1:10:56 I think that market is very, very, very small.

Nikhil Kamath 1:10:58 But I think the-

Ananth Narayanan 1:10:59 Right, um-

Nikhil Kamath 1:10:59 ... people who have arrived in life, and they don't need to prove anything to anybody, can easily move there.

1:11:04 But then why are they spending so much? Like, my point, my question is, see, I buy-

Ananth Narayanan 1:11:08 No, but for example, do you think a Patek is quite luxury? I'm just... You know, in my mind, you know, would that be?

Nikhil Kamath 1:11:13 Depends on which-

Ananth Narayanan 1:11:13 Because you can't see it, right?

Nikhil Kamath 1:11:15 Depends on which model of Patek.

Ananth Narayanan 1:11:16 No, if you don't buy a complication, you buy, like, a regular one.

Nikhil Kamath 1:11:18 If you buy, like, a Nautilus or something-

Ananth Narayanan 1:11:20 Yeah

Nikhil Kamath 1:11:20 ... it is not quiet luxury, because it's evidently an expensive watch that a lot of people know about. If you buy a Patek Constellation-

Ananth Narayanan 1:11:28 Right

Nikhil Kamath 1:11:28 ... or a Grandmaster Chime or something.

Ananth Narayanan 1:11:31 Correct. Right.

Nikhil Kamath 1:11:31 But I think regardless of that, I'm trying to figure out why somebody is paying $1,000 to buy a T-shirt, which looks like a $100 T-shirt-

Ananth Narayanan 1:11:39 Because-

Nikhil Kamath 1:11:39 ... or five, $50.

Raj Shamani 1:11:40 So, uh, I tell you, okay, so this is what my belief is.

Ananth Narayanan 1:11:44 Yeah.

Raj Shamani 1:11:44 This is nothing to do with data, but like a psychology-

Nikhil Kamath 1:11:47 Sure

Raj Shamani 1:11:47 ... which I've seen people, right?

Nikhil Kamath 1:11:48 Yeah.

Raj Shamani 1:11:49 So all of us and everyone, we all do things to signal something, okay?

Nikhil Kamath 1:11:55 Yeah.

Raj Shamani 1:11:55 So signaling value for everyone is high.

Nikhil Kamath 1:11:58 Yes.

Raj Shamani 1:11:58 Some people do signaling through just appearance, some people do that by doing certain amount of deeds, and some people do it by stories. So for example, you wanna talk about, let's say, an expensive watch in your hand, which a large majority of people can't see-

Nikhil Kamath 1:12:16 Mm

Raj Shamani 1:12:16 ... or understand.

Nikhil Kamath 1:12:17 Mm.

Ananth Narayanan 1:12:18 Yeah.

Raj Shamani 1:12:18 Right? But you wanna share that with your friends or the five people who care about, because they'll ask you. So you get your signaling value by stories, and that's quiet luxury. So a quiet luxury group-

Ananth Narayanan 1:12:29 I think it's a smaller community

Raj Shamani 1:12:29 ... will be able to spot on a T-shirt-

Ananth Narayanan 1:12:31 Yeah

Raj Shamani 1:12:31 ... which is really expensive, but it just looks like a normal T-shirt. So you wanna signal that particular value. So it just depends on, as a human being, who do you wanna signal to-

Nikhil Kamath 1:12:40 So it's bragging value-

Raj Shamani 1:12:42 What do you wanna signal?

Nikhil Kamath 1:12:42 ... amongst your immediate-

Raj Shamani 1:12:43 Who do you want? Like, who do you care about signaling?

Ananth Narayanan 1:12:44 And it's a very small community in this case, right?

Nikhil Kamath 1:12:46 Very, very, very small.

1:12:47 Very well said. I would say, like, uh, I don't wear a watch, nor a ring-

Ananth Narayanan 1:12:50 Yeah

Nikhil Kamath 1:12:51 ... nothing, uh, I don't show any brand on my clothes ever. Maybe that's the personality you want to show.

Raj Shamani 1:12:57 Yeah.

Nikhil Kamath 1:12:57 Because that's a signaling value you wanna show.

Ananth Narayanan 1:12:59 But, uh, actually, really, I also thought it was quite insightful. I think signaling is the key, sort of in this.

Nikhil Kamath 1:13:03 So basic-

Ananth Narayanan 1:13:04 Interesting.

Nikhil Kamath 1:13:04 So this message of what you want to signal, is it authentic and organically personality type, which determines what you want to signal? Or is it what is cool in society at that point of time? Is that a manipulation, too?

Raj Shamani 1:13:21 I generally believe it goes on three steps, okay?... first is because you just wanna become cool amongst your peers.

Speaker 1:13:28 Mm.

Raj Shamani 1:13:28 So whatever is trending, you wanna do that. That's a certain level of signaling. Once you're done with that, then it goes with your preferences and choices. And then third is to you, to achieve objectives that you wanna achieve. So first example is, like, if I am, let's say, a 50,000 rupee to 1 lakh rupee income person, I wanna buy a really expensive shoe to show off my friends, because that's the physical value. Because, like, "This is cool. This new Jordan is becoming cool, I wanna show that off."

Speaker 1:13:59 Yep.

Raj Shamani 1:13:59 Because it's trending, I wanna show that. Once I reach, like, an upper level of income or whatever, maybe a taste of-

Speaker 1:14:04 Go, go with all the brackets, it's just interesting.

Raj Shamani 1:14:07 Okay, so-

Speaker 1:14:07 So you're 1 to 5 lakh person, per month income.

Raj Shamani 1:14:09 And then when I reach... I feel this stays on with different products till a crore.

Speaker 1:14:13 Yeah.

Raj Shamani 1:14:14 And then after a crore-

Speaker 1:14:15 One, 1 to 1 crore.

Raj Shamani 1:14:16 1 to 1 crore, like 50,000 to 1 crore, this is just different... the things keeps changing. Today, you might just show off, like, a small watch.

Speaker 1:14:23 One key.

Raj Shamani 1:14:23 Tomorrow, you might show off, like, a big car.

Speaker 1:14:24 Mm.

Raj Shamani 1:14:24 So till 1 crore, it goes there. After, like, a crore to couple of crores, I don't know that bracket, I'm just making it up.

Speaker 1:14:31 Mm.

Raj Shamani 1:14:31 I'm just telling because of peop-

Speaker 1:14:33 Mm.

Raj Shamani 1:14:33 I can, I can spot people [chuckles] who I can think of-

Speaker 1:14:34 Mm

Raj Shamani 1:14:35 ... but not the income bracket. So there's a second group, they go with preferences and choices.

Speaker 1:14:39 Mm.

Ananth Narayanan 1:14:39 Okay.

Raj Shamani 1:14:40 Like, I want to show- signal that I am health-conscious person, I am a not branded person. I prefer that I am environmentally, uh, friendly, so that's why there's Beco here. Like, you know, th- this is just a signaling value-

Ananth Narayanan 1:14:56 Yeah

Raj Shamani 1:14:56 ... which you want to just put it out, people, that these are my preference and choices, this is what I stand for. And the third level, which I go for, which is- which I've seen, like, ultra-rich people, I've had, like, few encounters with people. They show off a certain level of image for a certain objective, and they wanna do that signaling because their larger purpose is around that.

Speaker 1:15:15 Explain.

Raj Shamani 1:15:16 So somebody would not be really, really, let's say, show off with brands and stuff-

Ananth Narayanan 1:15:25 Yeah

Raj Shamani 1:15:26 ... because they don't want other people to think that they are the branded stuff. They want to be like, "Hey, I have money, but I don't want you to see that I have this money."

Speaker 1:15:35 Mm.

Raj Shamani 1:15:35 Then the signaling value can be somebody does, like, a great charity, doesn't speak about it-

Ananth Narayanan 1:15:41 Sure

Raj Shamani 1:15:41 ... and want to hear it from other people.

Ananth Narayanan 1:15:43 Yeah.

Raj Shamani 1:15:43 That, "Oh, he did that, she did that," right? He doesn't wanna talk about it-

Speaker 1:15:46 [chuckles]

Raj Shamani 1:15:46 ... she doesn't wanna talk about it.

Ananth Narayanan 1:15:48 Yeah, sure.

Raj Shamani 1:15:48 Because that's a signaling value they want to put out, that for your larger purpose, you want people to think that you are too much into charity, that's why you don't talk about it, because if you talk about it, you technically come down to below level number.

Speaker 1:15:59 So, Nikhil, it's a very basic human trait that everybody's ego and m- vanity has to be massaged in some way.

Raj Shamani 1:16:05 Correct. Agreed, 100%.

Ananth Narayanan 1:16:06 Yeah, yeah. Correct.

Speaker 1:16:07 It can be done in a reverse way, and it can be done in a absolutely opposite way.

Ananth Narayanan 1:16:11 Yeah.

Speaker 1:16:11 I, I think the interesting part here is how people evolve to figure out what their signaling mechanism is and what they want to signal. And is there a insight from them, from that category, to build a brand to these people? Because these are things you can utilize.

Raj Shamani 1:16:27 Yeah. Content you consume and people you hang out with, large majority of-

Ananth Narayanan 1:16:31 Yeah

Raj Shamani 1:16:31 ... influence happens with that.

Ananth Narayanan 1:16:32 See, I think community to brand building is the next big thing in my view. I think

Ananth Narayanan 1:16:37 that-

Speaker 1:16:37 Yeah.

Raj Shamani 1:16:37 Explain, elaborate on that.

Ananth Narayanan 1:16:38 Yeah. So, uh, at least in the online world, I, again, right, I think my, my view is, look, uh, I mean, there are a ton of influencers, and I think, no- there's two sitting here. Uh, but I'm saying it is, uh, after a point, it's not about some influencer coming and telling you. It is about what your friends and your community that you trust sort of feel. I'll give you an example. We have a, again, gardening, like random, right? But gardening is very community-based-

Raj Shamani 1:17:06 Yeah

Ananth Narayanan 1:17:06 ... because you exchange tips, you, you think about why plants die, and, you know, what do you need to do, and so on, right? And so having influencer-based marketing sometimes may or may not work.

Raj Shamani 1:17:17 Yeah.

Ananth Narayanan 1:17:18 But actually, if you have a closed Facebook group, and there are many, many, many Facebook, like Insta groups, et cetera, where people genuinely actually talk about con- about what their problems are, and in those, if you start to infiltrate and say, the brand comes organically, that's a very different way of building a brand.

Raj Shamani 1:17:35 True.

Ananth Narayanan 1:17:35 Right? And I think it's a very organic, always-on way of building a brand. And I think there are interesting involved categories where this community-based brand building is starting to be quite interesting, right? And I think it's very sustainable. It's less expensive, it takes longer to build, but it's much more sustainable. This-

Raj Shamani 1:17:51 I'll add on to that. That's exactly what we're trying to-

Speaker 1:17:53 Mm

Raj Shamani 1:17:53 ... accomplish with House of X, right?

Speaker 1:17:55 Mm.

Raj Shamani 1:17:55 That's bang on.

Speaker 1:17:55 Mm.

Raj Shamani 1:17:56 We're not doing influencer-led marketing. We do attention and community-led mar- marketing.

Ananth Narayanan 1:18:00 Yeah.

Raj Shamani 1:18:01 Because here's what I believe in: content builds community, community brings culture-

Ananth Narayanan 1:18:06 Yeah

Raj Shamani 1:18:06 ... and culture changes the way you buy, right? That's exactly the pattern that you follow.

Speaker 1:18:11 Yeah, yeah, yeah, exactly.

Raj Shamani 1:18:11 So that's why you need a content person who can create such a content on such a niche-

Ananth Narayanan 1:18:16 Yeah

Raj Shamani 1:18:16 ... who can create a community around it.

Speaker 1:18:18 How important is it for somebody starting brand 0 to 1, to be able to create content and create community?

Raj Shamani 1:18:27 I think that's the way forward, and I'll tell you a logical reason behind it. The the biggest reason what I feel is, point of sale, every time the majority of influence happens on point of sale.

Speaker 1:18:40 Okay.

Raj Shamani 1:18:40 There's obviously different parts-

Speaker 1:18:41 Yeah

Raj Shamani 1:18:41 ... digital, discovery, different, different percentage.

Speaker 1:18:44 Sure.

Raj Shamani 1:18:44 But the large majority happens on the point of sale. So earlier, the point of sale used to happen on kirana stores.

Ananth Narayanan 1:18:50 Yeah.

Raj Shamani 1:18:50 Wherever. So there would be... So think about it, in a random day, I ran out of my toothpaste. I use Colgate. I go to my kirana store, and there's no Colgate available. He's like, "Buy your close-up "... I'll buy close-up and get home. That's point of sale. I'm influenced. If I like the flavor, done, I'm never using Colgate again, okay? So that's used to be the old way of doing it. The second wave, which I think we're going through right now, was retail and marketplaces-

Ananth Narayanan 1:19:17 Yeah

Raj Shamani 1:19:17 ... where you go in search of something, and you get convinced to buy something as well. That is Big Bazaar way, Amazon way, or all the places where you explore certain things.

Ananth Narayanan 1:19:27 Right.

Raj Shamani 1:19:27 So that's where the point of sale used to happen.... now, where the point of sale is, the influence is happening, on the right there on the content. So you're exploring Instagram every day, you're seeing... or YouTube right now, you're seeing, "Hey, this person is using this mixer. "... click," he clicks it, then in their Instagram autofills your information, and then you can check out. Depending on your income level-

Ananth Narayanan 1:19:52 Yeah

Raj Shamani 1:19:53 ... you can just check out. Somebody buy, like, a 50 rupee or 100 rupee product there, right in, right off the bat. Somebody would buy, like, a 10,000, 12,000, or 10 lakh rupee product right off the bat.

Ananth Narayanan 1:20:02 Right.

Raj Shamani 1:20:02 But the point of sale is changing, and because the point of sale is constantly changing because the content we consume, I think that's why people need to build content-led communities in order to go ahead. Now, does that mean that the kirana and the marketplaces and-

Ananth Narayanan 1:20:16 Yeah

Raj Shamani 1:20:16 ... online is gonna die? Not de- not at all. Did with marketplaces, kirana died? No. So every time a new layer gets add on, you just have to capitalize on all three. But I think there's an interesting play that you can start building community or creator-led, uh, commerce and start making products there. And then eventually, once you have enough money, you can play on other platforms.

Ananth Narayanan 1:20:36 So I've, I just had one question, actually, and then a comment. I think the comment is, I fully agree on the brand building through community. I think the question I had, actually, was, when you're in a mind state of consuming content, many times you don't transact, 'cause you're not, you're not gonna buy. I mean, when you're reading an article-

Raj Shamani 1:20:56 True

Ananth Narayanan 1:20:56 ... you're not necessarily in the mood to buy. The reason marketplaces like Myntra, Amazon, Flipkart, et cetera, work, 'cause you go in with an intent to shop, right? There's a commerce intent. Have you seen- are you seeing that change where people are actually buying more? Because Insta shopping hasn't really taken off globally-

Raj Shamani 1:21:11 Yeah, yeah

Ananth Narayanan 1:21:11 ... right, in any meaningful manner. I mean, at the Instagram level, I'm saying.

Raj Shamani 1:21:15 So-

Nikhil Kamath 1:21:15 But streaming in China has.

Ananth Narayanan 1:21:17 See, that's the only exception that I can think of, right?

Raj Shamani 1:21:19 Well, I'll tell you, uh-

Ananth Narayanan 1:21:19 And that is also, by the way, shopping-led streaming.

Raj Shamani 1:21:22 Because he... So his point is bang on, that when you go with the mindset of consuming content, do you shop or no? So live streaming and social commerce is working-

Ananth Narayanan 1:21:31 I think it is

Raj Shamani 1:21:31 ... because people go with the mindset that I want to buy.

Ananth Narayanan 1:21:33 Yeah, yeah.

Raj Shamani 1:21:34 I'm gonna get a great deal, I'm gonna buy it.

Ananth Narayanan 1:21:35 Yeah.

Raj Shamani 1:21:36 That's the mindset they're going with.

Nikhil Kamath 1:21:37 Okay, can I ask you a question? If you're shooting this podcast-

Ananth Narayanan 1:21:40 Yeah

Nikhil Kamath 1:21:41 ... and, say we're shooting this show, three years from now, if somebody likes the shirt you're wearing-

Ananth Narayanan 1:21:47 Yeah

Nikhil Kamath 1:21:47 ... they can just click it and it'll get bought-

Ananth Narayanan 1:21:49 Yeah

Nikhil Kamath 1:21:49 ... in a second.

Ananth Narayanan 1:21:49 Yeah.

Raj Shamani 1:21:50 Yeah.

Ananth Narayanan 1:21:50 Yeah.

Nikhil Kamath 1:21:50 You think the world will go there?

Ananth Narayanan 1:21:52 I, by the way, I mean, you know, never say never, but my sense is, I think that will still be a very small percent. Because I think human beings are still human beings, right? We're now or later. And I think, by the way, if you're watching something on content, right, you're trying to learn how to build a brand.

Raj Shamani 1:22:09 Yeah.

Ananth Narayanan 1:22:09 Right? And I think that's what you're really focused on. You're not focused particularly on shopping. Now, will some percentage convert? Of course, they will. But can you do brand building that way? Hundred percent. I agree with the community point, which is what we originally spoke about, and the brand building through community. I think that will happen for sure.

Raj Shamani 1:22:24 So here is... I was- I want to complete that loop, that when people go on to consume content, right? I think it's very difficult for us to decide if I am today in a mood to buy or not.

Ananth Narayanan 1:22:37 Yeah.

Raj Shamani 1:22:38 So because mostly majority of time of younger people, of gener- everybody, in fact, now-

Ananth Narayanan 1:22:45 Yeah

Raj Shamani 1:22:45 ... is spent on consuming content through different means, either by YouTube, Instagram, social media platforms-

Ananth Narayanan 1:22:50 That's right

Raj Shamani 1:22:50 ... or anything, you don't actually know whether you're in a mood to buy or not. You don't know it's a first day of salary or it's a last day of salary.

Ananth Narayanan 1:22:56 Yeah, yeah.

Raj Shamani 1:22:57 It's just you're in a hope that, "Okay, I'm gonna create content." So I was talking about three Cs, right?

Nikhil Kamath 1:23:02 Mm.

Raj Shamani 1:23:02 Conversation, convincing, and then conversion. All three can happen just there. I can have a conversation, the brand building gets-

Ananth Narayanan 1:23:09 Yeah, yeah

Raj Shamani 1:23:09 ... the brand gets built, that I'm talking about, "Hey, this T-shirt is amazing," and we talk about it. I can do a little convincing where we can talk about quiet luxury and stuff like that, and then someday there'll be technology where you can directly buy and convert. There'll be la- small percentage of conversion, but large percentage of convincing, and a larger percentage of conversation starts.

Ananth Narayanan 1:23:28 See, I've, uh, I think, great framing. I think only tweak I would add to it is, I think there are categories that are inspiration and browse-led-

Raj Shamani 1:23:36 Yeah

Ananth Narayanan 1:23:36 ... and there are categories that are functional, right? Just broadly.

Raj Shamani 1:23:40 Yeah, yeah.

Ananth Narayanan 1:23:40 If you think about browse categories, where you need to be... Nobody needs to buy three shirts or two dresses. I mean, you don't.

Raj Shamani 1:23:46 Mm.

Ananth Narayanan 1:23:47 Right?

Raj Shamani 1:23:47 Mm.

Ananth Narayanan 1:23:47 You buy it because you're inspired to buy-

Raj Shamani 1:23:49 Mm

Ananth Narayanan 1:23:49 ... because something.

Nikhil Kamath 1:23:50 Yeah, see the, the whole point of this, right? This is like a charity project.

Ananth Narayanan 1:23:53 Mm.

Nikhil Kamath 1:23:53 Like I keep saying this, every year-

Ananth Narayanan 1:23:55 So you want people to learn something?

Nikhil Kamath 1:23:57 I want people who want to build a brand today, young guys-

Ananth Narayanan 1:24:00 Sure

Nikhil Kamath 1:24:01 ... zero to one, to learn everything they might [beep] need-

Ananth Narayanan 1:24:03 Okay

Nikhil Kamath 1:24:04 ... from all of your experiences.

Ananth Narayanan 1:24:05 Sure.

Nikhil Kamath 1:24:06 Like, I don't mean, like, 20% of it, 30% percent of it, we want to teach them 100%.

Ananth Narayanan 1:24:13 Got it.

Nikhil Kamath 1:24:13 'Cause eventually we need more brands in India which are-

Ananth Narayanan 1:24:15 Yeah, yeah

Nikhil Kamath 1:24:16 ... going to scale.

Ananth Narayanan 1:24:16 Sure.

Nikhil Kamath 1:24:17 Which are Indian-led-

Ananth Narayanan 1:24:18 Yeah

Nikhil Kamath 1:24:18 ... Indian-owned, all of that.

Ananth Narayanan 1:24:19 Yeah.

Raj Shamani 1:24:19 True.

Nikhil Kamath 1:24:20 So I think next section, we'll take a one-minute break. [chuckles]

Ananth Narayanan 1:24:22 No, but are you gonna give us food at some point or no food?

Nikhil Kamath 1:24:24 Yeah, yeah, food. [upbeat music] You guys ready?

Ananth Narayanan 1:24:39 Should we?

Nikhil Kamath 1:24:40 Mm-hmm.

Ananth Narayanan 1:24:41 So I

Ananth Narayanan 1:24:42 think the question was starting, um, just getting started, right?

Raj Shamani 1:24:45 Yeah.

Ananth Narayanan 1:24:45 And I think my perspective comes from sort of talking to a bunch of entrepreneurs who have sort of built businesses, call it between 0 and 25, 30 crores, were the people that I initially spoke to, to try and get there. I think there are some patterns on what you need to do. Um, and I think the breakpoints for me are 0 to 20, 20 to 100, 100 to 500, and 500 and above, right, in terms of net revenue, we're talking about.

Nikhil Kamath 1:25:09 You're talking about crores.

Ananth Narayanan 1:25:10 Crores.

Nikhil Kamath 1:25:11 Mm.

Ananth Narayanan 1:25:11 So in the first 0 to 20 crores, in my mind, I think it is all product-driven, word-of-mouth driven, community that we talked about, and content-driven, but it is not performance marketing-driven. It... You should have great reviews, you should have great repeat rates, you should have great social media following, you should be part of a community, right? I think if you can build it that way, you're building it in a very healthy manner.... the, so the product quality is probably the most important thing in my mind to get right, followed by content and community, followed by distribution strategy. I think you talked about distribution strategy. I think from the 0 to 20 crores, if you can keep an 80/20%, where 80% is e-commerce platforms and 20% is D2C, it's a great mix. Because then you have enough consumer data, but you also have reach, right? That you can actually get to. So my theory is, if you can get the first 20 crores this way, it's like a very healthy way to grow if you're going to start a brand.

Kishore Biyani 1:26:13 But I don't agree at one place, 80% marketplace. Marketplace is very difficult to build a brand and talk about the brand.

Ananth Narayanan 1:26:19 Mm, I, yes-

Kishore Biyani 1:26:20 You get the top line, yes.

Ananth Narayanan 1:26:20 No, but yes and no. I think it depends on what the platform is. I think, for example, if you can actually take part in a program within an Amazon or a Myntra, I think you can actually get to showcase it. I'm saying, look-

Kishore Biyani 1:26:34 Not so easy

Ananth Narayanan 1:26:35 ... it's the easiest way to-- I, I think there are ways to grow, Kishore, in my view. I think, for example, if you are a D2C star program, and you can actually sort out an interesting deal in, uh, Myntra, it's a great way to grow because you have a brand page. You are able to represent it, right?

Kishore Biyani 1:26:51 But they... You are representing a brand in the way they want you to represent. That's the challenge.

Ananth Narayanan 1:26:55 Uh, yes, I think within some constraints, for sure.

Kishore Biyani 1:26:58 Yeah.

Ananth Narayanan 1:26:58 But I still think, by the way, it gives you... See, for me, I'm not trying to fully do brand building yet. I'm trying to make sure there's product-market fit and make sure that there's-- See, if you're a new person starting off, what do you need? You need to, you need to sort of get to some scale.

Kishore Biyani 1:27:15 Mm-hmm.

Ananth Narayanan 1:27:16 If you need external funding, you need to be able to get external funding, and you need to start having enough runway for you to be able to build from the 20 to 100, right? So for me, it is very practically, right, if you focus 100% on D2C, for example, I think you can represent the brand, but you'll end up bleeding money. Which means, by the way, you'll have to raise money much sooner, right? Um-

Kishore Biyani 1:27:37 I personally believe a little bit differently. I believe if the brand is not right, the packaging is not right, the color is not right... There are color codes, there is brand codes for everything.

Ananth Narayanan 1:27:46 Yes.

Kishore Biyani 1:27:47 And if you don't get it right, nothing will go right.

Ananth Narayanan 1:27:49 I, by the way, think, Kishore, the opposite. I think there are lots of bad brands that get sold through performance marketing.

Kishore Biyani 1:27:55 No, it's not about-

Ananth Narayanan 1:27:56 Uh, uh, just give me one minute, right? Just to complete this, right? So I can tell you fifty brands in Myntra that basically grew on subsidy, right? Which is either you threw a discount at it or you threw a performance marketing at it, but it can't sustain beyond a certain number because repeats don't come.

Kishore Biyani 1:28:13 I know.

Ananth Narayanan 1:28:13 Right? So I'm saying the first-

Kishore Biyani 1:28:15 That's-

Ananth Narayanan 1:28:15 ... 20 crores may get the consumer right, right?

Kishore Biyani 1:28:16 I'm not talking crore. I'm talking overall, if you don't get the brand right-

Ananth Narayanan 1:28:20 Yeah.

Kishore Biyani 1:28:20 Because I personally believe brand is like making a spaceship.

Ananth Narayanan 1:28:23 Yeah.

Kishore Biyani 1:28:23 People take it very lightly. Every... Because brand has to communicate a lot, it has to emote with you, it has to talk with you.

Ananth Narayanan 1:28:30 Fully.

Kishore Biyani 1:28:30 And if that is not correct, a great product also can't do anything.

Ananth Narayanan 1:28:33 But I'll tell you, by the way, just one thing. I think having a great brand view and not a great product also leads to death.

Kishore Biyani 1:28:40 No, brand and the product has to be right.

Ananth Narayanan 1:28:40 Right? No, I'm saying you have still a chance to correct the brand from 20 to 100. If you have to take a chance-

Kishore Biyani 1:28:45 I doubt it will not work. You will not reach 20 crores.

Ananth Narayanan 1:28:48 I think you can, right? [chuckles] So, uh-

Nikhil Kamath 1:28:50 Give us an example.

Ananth Narayanan 1:28:51 Yeah, so, uh, of a brand-

Kishore Biyani 1:28:52 And the brand was not right, and the product was great, and it happened.

Ananth Narayanan 1:28:54 No, I'll, I'll give you an example, right? I think, uh, Dennis Lingo, which is a brand of ours, wasn't particularly built as a brand. It was a 20 crore odd brand.

Kishore Biyani 1:29:03 No, but it works in India. We started a brand called John Miller. People accepted it as an American brand.

Ananth Narayanan 1:29:07 Yes, Peter England, by the way, did it right. I think so-

Kishore Biyani 1:29:09 The same thing, you used it.

Ananth Narayanan 1:29:10 No, no, but I'm saying, but, but you can build a brand-

Kishore Biyani 1:29:12 So there is a brand thought there, but there is a brand thought there.

Ananth Narayanan 1:29:14 No, I think there is a brand thought there, but I'm saying the first... See, the most limited time when you want to start something is your time. My question is, what are the four things you focus on?

Kishore Biyani 1:29:23 But somebody thought about the name, somebody thought about the brand.

Ananth Narayanan 1:29:25 Of course!

Kishore Biyani 1:29:25 So there was a work done there.

Ananth Narayanan 1:29:26 Of course, of course. That I'm not disagreeing with, Kishore. There has to be some work-

Kishore Biyani 1:29:29 But if you don't get the brand right, nothing goes right. That's my theory. We have seen it all, all life.

Ananth Narayanan 1:29:33 I have a different theory. We may not have to agree on it, right? [chuckles]

Kishore Biyani 1:29:36 Yeah.

Ananth Narayanan 1:29:36 But my different theory, by the way, is that I think it is important to be consistent, it is important to have great product quality, but I don't think you need the complete brand definition, because I think a brand can continue to evolve from 20 to 100 crores as well, right? Just different theory, right? And it'll be interesting to sort of debate out, because I can give you multiple examples of companies where if you don't get the product right, and there's a lot of focus on brand building-

Kishore Biyani 1:30:00 No

Ananth Narayanan 1:30:00 ... you know, getting the brand story, the brand book right-

Kishore Biyani 1:30:03 No, no

Ananth Narayanan 1:30:03 ... you spend on-

Kishore Biyani 1:30:04 Brand book and brand doesn't make a brand, yeah. Anyway, I think, uh-

Ananth Narayanan 1:30:09 Yeah

Kishore Biyani 1:30:10 ... we, we are saying the same thing, but, uh, coming from a different way.

Ananth Narayanan 1:30:14 Maybe coming from a different point of view. [chuckles]

Nikhil Kamath 1:30:15 Can I digress you a little bit?

Ananth Narayanan 1:30:17 Yeah, sure.

Nikhil Kamath 1:30:18 So many large

Nikhil Kamath 1:30:19 brands in India-

Ananth Narayanan 1:30:20 Yeah

Nikhil Kamath 1:30:21 ... from Louis Philippe to-

Ananth Narayanan 1:30:22 Yeah

Nikhil Kamath 1:30:22 ... Peter England-

Ananth Narayanan 1:30:24 Sure

Nikhil Kamath 1:30:24 ... to a certain extent, Jockey.

Ananth Narayanan 1:30:26 Yeah.

Nikhil Kamath 1:30:28 Jockey might be a franchisee, but the others-

Ananth Narayanan 1:30:30 Yeah

Nikhil Kamath 1:30:31 ... we put foreign models-

Kishore Biyani 1:30:33 Yeah

Nikhil Kamath 1:30:34 ... on a brand that has nothing to do with anything outside of India.

Ananth Narayanan 1:30:37 Yeah.

Kishore Biyani 1:30:37 Mm.

Nikhil Kamath 1:30:38 And call them names like, you know, like John whatever, and Peter whatever-

Ananth Narayanan 1:30:41 Yes

Nikhil Kamath 1:30:41 ... and whatever.

Ananth Narayanan 1:30:42 Yes.

Nikhil Kamath 1:30:43 It worked for a long time.

Ananth Narayanan 1:30:45 Yeah.

Nikhil Kamath 1:30:45 Will it work?

Ananth Narayanan 1:30:46 I don't think so. I mean, I think it, uh... So for example, we have a brand called Karigiri, and it's working just as well, and it's for sarees.

Kishore Biyani 1:30:53 But that's an ethnic product.

Ananth Narayanan 1:30:54 Ethnic brand.

Kishore Biyani 1:30:54 Yeah.

Ananth Narayanan 1:30:55 Um, the, um, you know, if you can find the right name, that actually... See, you're wearing western wear, some level. Why is it that a Peter England or an Allen Solly has some appeal, right? It connotes of western wear. I mean, so at some level, you know, I agree with you, Kishore, right? Saying ethnic wear is ethnic, but I'm saying western wear is western, right? I mean, at some level, the reverse is also true, right? So, but your... I, I have an interesting anecdote on the, uh, color of the models. So I think it's changing. But one of the things, for example, if you go to a Myntra, you find that everybody is fair-skinned.

Nikhil Kamath 1:31:35 White.

Ananth Narayanan 1:31:35 Right, white, to do this. And we ran an experiment where you actually look at click-through rates.... long time ago, and you find that the click-through rates are actually different. So purely economically, the click-through rates on performance marketing were higher. Now, I think that-

Nikhil Kamath 1:31:50 Hmm

Ananth Narayanan 1:31:50 -was fifteen years ago. Uh, sorry, that was five, seven years ago.

Nikhil Kamath 1:31:52 Elaborate. You're saying when you had a white person-

Ananth Narayanan 1:31:54 So if you had a-

Nikhil Kamath 1:31:55 -as a model-

Ananth Narayanan 1:31:56 Yeah.

Nikhil Kamath 1:31:56 -your click-through was higher?

Ananth Narayanan 1:31:57 Yeah, the click was higher. This was seven, eight years ago.

Nikhil Kamath 1:31:59 Why?

Ananth Narayanan 1:32:00 I don't know. I think it may be some-

1:32:02 It's a belief system.

1:32:02 It's a belief system. Maybe it's a mindset.

Nikhil Kamath 1:32:04 Hmm.

Ananth Narayanan 1:32:05 Right? As we sort of think about it, maybe people think it's more premium.

Nikhil Kamath 1:32:08 Hmm.

Ananth Narayanan 1:32:08 I don't know. But I think there is some instinctive mindset-

Nikhil Kamath 1:32:11 Is it some kind of colonial baggage that we believe that Western products are better than Indian ones?

Ananth Narayanan 1:32:16 Very well yeah, it has.

1:32:16 See, I... Yeah, I think for sure there is.

Nikhil Kamath 1:32:18 Hmm.

Ananth Narayanan 1:32:18 But, you know, look, I mean, I'm not big into theory, right? But the facts are the following: the click-through rates on one were better than the other, right? I mean, and that was a fact. And I think, will it change? I think the answer is, it will, but it will be slow progression. It's not going to change overnight, right? So going a little... Sorry.

Nikhil Kamath 1:32:34 Has it changed? If I were to be bu- building a brand of T-shirts today-

Ananth Narayanan 1:32:38 Yeah.

Nikhil Kamath 1:32:38 -should I call it John Jacob and get some white South Serbian models to look like American models on the campaign?

Ananth Narayanan 1:32:46 I don't- [chuckles] Yeah. So I think it's a good question. Um-

Nikhil Kamath 1:32:50 Myntra does it very well. [chuckles]

Ananth Narayanan 1:32:51 Yeah, yeah. [chuckles]

1:32:52 No, it does. It does. So I think the brand name, I agree a little bit with Kishore.

Nikhil Kamath 1:32:56 Mm.

Ananth Narayanan 1:32:56 I think you have to think through it carefully and thoughtfully. I think the name has to mean something, and it has to be a-- there is... See, people don't remember facts, Nikhil.

Nikhil Kamath 1:33:02 Hmm.

Ananth Narayanan 1:33:02 People remember stories.

Nikhil Kamath 1:33:03 Hmm.

Ananth Narayanan 1:33:04 I think we spoke about this slightly earlier. So the brand name has to have a brand story associated with it. It may not be fully crafted, but you need, you need a germ of an idea-

Nikhil Kamath 1:33:12 Hmm

Ananth Narayanan 1:33:13 ... right? In terms of what that is, and that needs to be consistent. Will I launch a T-shirt brand with a, with a Western-sounding name? Possible. Possible.

Nikhil Kamath 1:33:23 Will it work more?

Ananth Narayanan 1:33:23 But you have to think through it.

Nikhil Kamath 1:33:25 Today-

Ananth Narayanan 1:33:26 I'll tell you, uh, I'll, I want to add on this, right? It definitely works more, like even we have seen examples after examples.

1:33:32 Yeah.

Nikhil Kamath 1:33:33 Hmm.

Ananth Narayanan 1:33:33 But I think now that you can change that with content and community again. The reason why I'm saying this is, every time you buy a brand, you need to feel proud. So if you can make people feel proud in an Indian brand, they'll buy it. In a Serbian brand, they'll buy it. Something from Greece coming from, a buy. Is this you need to find out your people who can-

Nikhil Kamath 1:33:56 Hmm

Ananth Narayanan 1:33:56 ... actually find you worthy enough, and they can be proud in buying your things.

1:34:01 I think anyone, anyone-

1:34:02 Now, why does this... Now, why does this fair-skinned, foreign-looking model and foreign names work? Because it's not just you who's making that community proud. There are five hundred other brands also trying to do it. So that's why it just works better, because there are five hundred people trying to make this look really good. So think-

Nikhil Kamath 1:34:20 Explain, explain.

Ananth Narayanan 1:34:20 So example, let's say Peter England is trying the same thing, John Jacobs is trying to do the same, John Miller is trying to do the same thing, Dennis Lingo is trying to do the same. I'm just giving examples.

1:34:28 Yeah, yeah, sure.

1:34:28 Myntra. There are twenty more people, apart from you, who are showing this as a premium brand. That's where the consolidated money just grows up there and makes you feel more upgraded and premium-

1:34:39 Yeah

1:34:39 ... versus you individually just pushing it. But can you individually do it? Yes. The biggest community and content-led example is Baba Ramdev, right? You can sell that, you can do it, and make it super Indian, and actually do it. That's the biggest creator-led story in India that has happened.

Nikhil Kamath 1:34:54 Okay, I'm going to reframe my, reframe my question. Barring content and community, neither of which I have, I want to start a T-shirt brand today-

Ananth Narayanan 1:35:03 Yeah

Nikhil Kamath 1:35:04 ... where I'm going to put some print on the T-shirt, which is in English. What is the path of least resistance? Where do I have the most tailwind?

Ananth Narayanan 1:35:11 So firstly, by the way, sorry, sorry, sorry.

1:35:13 Go ahead.

1:35:13 I just had a slightly

Ananth Narayanan 1:35:14 different framing of this, right? If I want to start a brand today, I don't know, by the way, unless there's something reasonably unique about the T-shirt brand with some meaning that I want to start, whether I would start a T-shirt brand.

Nikhil Kamath 1:35:24 Really good quality.

Ananth Narayanan 1:35:25 Yeah, uh, it's too generic and too general, right? I think so, the, the first thing to do is, you know, how crowded is the space? How large is the space, and do I have a unique value proposition? So, for example, I won't launch one more ethnic brand-

Nikhil Kamath 1:35:39 How does someone learn that?

Ananth Narayanan 1:35:40 -or one more T-shirt brand.

Nikhil Kamath 1:35:40 How does someone learn that? If I'm thinking of T-shirt-

Ananth Narayanan 1:35:43 Yeah

Nikhil Kamath 1:35:43 ... how do I learn how crowded is the space?

Ananth Narayanan 1:35:46 I think the easiest way, actually, and the most practical way, is to go search for T-shirts on Myntra and find how many choices and how many brands you have. It's a representation of the market-

Nikhil Kamath 1:35:54 You'll have that for every category.

Ananth Narayanan 1:35:54 And where price points... You have it for a lot of categories, but I'm saying, you know, some categories are low ASP and huge variety.

Nikhil Kamath 1:36:02 What is ASP?

Ananth Narayanan 1:36:03 Uh, average selling price.

Nikhil Kamath 1:36:04 Hmm.

Ananth Narayanan 1:36:05 Right? So low ASP products with high, high competition is not something that I would go and do a brand in. See, if you want to launch something, right? So the first, you know, 20, the question is focus. We spoke about this earlier also.

Nikhil Kamath 1:36:18 Hmm.

Ananth Narayanan 1:36:19 Focus on something which is a niche. Be a shark in a pond, right? For the, for this, so that you can actually differentiate in some meaningful manner, at least for the first 20 crores.

Nikhil Kamath 1:36:29 Yep.

Ananth Narayanan 1:36:29 Right? Just to complete my framing, since it's taking a little bit of time, the 20 to 100 crore, in my mind, the skill, especially if you're doing it online, has to be around most efficient performance marketing, most efficient use of community for brand building, so that you don't spend a lot of money on brand building, but you build it organically.

Nikhil Kamath 1:36:46 How would you do that?

Ananth Narayanan 1:36:48 The more content that gets, which trans- which travels, and more people that get eyeballs without you paying Google tax and Facebook tax.

Nikhil Kamath 1:36:55 How do you do that?

Ananth Narayanan 1:36:56 It's viral content. It's around continuously putting out content. It's around creating a community. It's around answering questions.

Nikhil Kamath 1:37:01 Is that the key then today? To build a brand, is it content and community?

Ananth Narayanan 1:37:04 I don't-

Nikhil Kamath 1:37:04 Not just for influencer-led brand, but all brands.

Ananth Narayanan 1:37:06 Mm, I think it is a large part of it, but it is not the only part of it. I think it's a big part of brand building between 20 and 100 crores.

Nikhil Kamath 1:37:14 Hmm.

Ananth Narayanan 1:37:14 Because it's a less... It's a more... So again, I'll give you an example. For us, we do a lot of our brand building through MensXP and iDiva.

1:37:21 Yeah.

1:37:21 It doesn't cost us. We own the content platforms. For the 20 to 100 crores, it's the most effective way to do it, because you spend one, two percent of your revenue, as opposed to four, five percent of your revenue, and you get to the same kind of reach, right? And, and that is an easier and more cost-effective way of doing it. I think the hard part and the boring part, especially if you're more online, offline also, I think, we- I'm, I'm sure you'll have added points. On the online side, knowing how to do growth hacking or performance marketing on Amazon-

1:37:50 ... Flipkart, Myntra, Google, Facebook is a core skill between twenty and hundred crores.

Nikhil Kamath 1:37:55 Can you tell me what is growth hacking?

Ananth Narayanan 1:37:58 Yeah. So in an offline space, your shelf space and your location matters. Yes? Where you're placed matters. In the online world, the first six swipes on a mobile phone are the only thing that matter. After that, by the way, your attention span, you know, you never get reach, right? So you search for trousers, right? You find, you find a bunch of trousers, you swipe the phone six times. The first six pages matter. Now, the first six pages you can get to by two ways. One is by paying Amazon, Flipkart, Myntra, Nykaa, et cetera, a lot of money, which is you pay for it and you get a slot, right?

Nikhil Kamath 1:38:37 How much does it cost?

Ananth Narayanan 1:38:39 Uh, I think it varies by category, few hundred rupees.

Nikhil Kamath 1:38:42 For, for T-shirt?

Ananth Narayanan 1:38:42 For, for an SKU. So just think about it. Uh, uh, a T-shirt sells for, call it $3.99, right? You may end up paying thirty percent, hundred rupees, for a, for performance marketing and, and getting a slot. So it's quite expensive to do. So what is growth hacking? How do you get to those spots without paying for it? And how do you do it?

Nikhil Kamath 1:39:03 But you're saying hundred bucks per click.

Ananth Narayanan 1:39:06 See, by the way, the cost per click will be less.

Nikhil Kamath 1:39:08 Mm.

Ananth Narayanan 1:39:08 The cost per click for an average T-shirt will probably be in the thirty, forty range.

Nikhil Kamath 1:39:13 Mm-hmm.

Ananth Narayanan 1:39:13 But you'll need to sort of do performance marketing for a long period of time. You have to stay there for a long period of time, right? And the conversions are not that high. So there's cost per click, and there's cost per conversion, right? And there's a long drop between the two, just because-

Nikhil Kamath 1:39:25 And since you're the platform guy here, give me, like, three specific hacks which can bring down this cost-

Ananth Narayanan 1:39:32 Yeah

Nikhil Kamath 1:39:32 ... for me, who started a new T-shirt brand.

Ananth Narayanan 1:39:33 No, very simple. You have to find out... It's a little bit like what Raj said. You have to find out what each platform values. Myntra values freshness.

Nikhil Kamath 1:39:42 Myntra values?

Ananth Narayanan 1:39:43 Fresh stock, so new styles coming on all the time. Therefore, if you want to make Myntra your primary platform, you basically have to introduce more frequent drops, and you have to get tagged to What's New. So it's an easy hack, right? So you value-

Nikhil Kamath 1:39:58 Explain tagged to What's New.

Ananth Narayanan 1:40:00 Let me give an easier example-

Nikhil Kamath 1:40:02 Mm

Ananth Narayanan 1:40:02 ... because Myntra is the more complicated one. Um, Amazon values consumer reviews and ratings. Yeah? So getting the first hundred reviews and ratings, right, through customers, through friends, through family, all legitimately, there's an Amazon Vine program that you can do all of that, actually matters the most for you to be placed on top.

Nikhil Kamath 1:40:21 So do you manufacture these ratings?

Ananth Narayanan 1:40:23 You don't manufacture them. You actually, by the way, make it happen through, uh... Amazon has a program where basically people give honest reviews, but you can pay Amazon for a review, right? So there's no problem. Whatever the review is, the review is. If the product is good quality, you can actually do it. I, I'm sure there are lots of ways to do it outside, but I'm saying the, the, the legitimate way to do it is Amazon has a Vine program, which is very, very cost effective.

Nikhil Kamath 1:40:46 Vine. Spell Vine.

Ananth Narayanan 1:40:47 V-I-N-E.

Nikhil Kamath 1:40:48 Uh.

Ananth Narayanan 1:40:48 Right? Where you can basically sort of get the first hundred reviews or hundred ratings to get the ball rolling.

Nikhil Kamath 1:40:53 So I'm a T-shirt company. I figured out some co-packer-

Ananth Narayanan 1:40:56 Yeah

Nikhil Kamath 1:40:56 ... who makes T-shirts.

Ananth Narayanan 1:40:57 Yeah.

Nikhil Kamath 1:40:58 I want to print something on it.

Ananth Narayanan 1:40:59 Yeah.

Nikhil Kamath 1:41:00 I printed it.

Ananth Narayanan 1:41:00 Yeah.

Nikhil Kamath 1:41:02 I go to Amazon.

Ananth Narayanan 1:41:02 Yeah. [clattering] I get it listed.

Nikhil Kamath 1:41:05 How does the, how does the listing happen? Like, how do you get it listed on Amazon?

Ananth Narayanan 1:41:08 Yeah, so I think this is like getting back to very 101.

Nikhil Kamath 1:41:11 Yeah.

Ananth Narayanan 1:41:11 But I think the first thing is you have to register as a seller-

Nikhil Kamath 1:41:13 Okay

Ananth Narayanan 1:41:14 ... which is a little bit of a process. Amazon is very easy and self-serve.

Raj Shamani 1:41:16 Very democratic, yeah.

Ananth Narayanan 1:41:17 Flipkart and Myntra are very hard, uh, just because it's not a self-serve.

Nikhil Kamath 1:41:20 So what, what do you need to register as a seller?

Ananth Narayanan 1:41:22 You just need a GST number-

Nikhil Kamath 1:41:24 GST

Ananth Narayanan 1:41:24 ... and a company, right? There's nothing that's needed.

Nikhil Kamath 1:41:25 So you need a private limited company?

Ananth Narayanan 1:41:27 Yeah.

Raj Shamani 1:41:27 No, no, no.

Ananth Narayanan 1:41:28 No, no, you don't need a private limited company.

Raj Shamani 1:41:29 You can do proprietorship as well.

Ananth Narayanan 1:41:30 Yeah, you can do a proprietorship. Most companies, a lot of companies, sellers are actually proprietorships, by the way.

Raj Shamani 1:41:34 Proprietorship, yeah.

Nikhil Kamath 1:41:34 Okay.

Ananth Narayanan 1:41:34 So, uh, it's very easy on an Amazon, little less easy on Flipkart, harder on Myntra, harder on Ajio. I think in that order, [chuckles] right?

Nikhil Kamath 1:41:42 Why is that?

Ananth Narayanan 1:41:42 As far as fashion. Because Amazon is the most self-serve of the lot, which is, you don't need to talk to a person in order to make this happen.

Nikhil Kamath 1:41:50 Right.

Ananth Narayanan 1:41:51 In most other platforms-

Nikhil Kamath 1:41:52 Mm

Ananth Narayanan 1:41:53 ... you have to talk to somebody, and that takes time, effort, and convincing.

Nikhil Kamath 1:41:56 Mm. I'm sorry, sorry, I'm going back a step, but if I have an idea of how a, how a T-shirt should look, how do I find the right manufacturer for it?

Ananth Narayanan 1:42:05 So, um, I mean, there are many ways you can do it, but-

Nikhil Kamath 1:42:08 But how do I find a good one?

Ananth Narayanan 1:42:09 Yeah. So there is a list of maybe fifty, hundred manufacturers. So firstly, by the way, it depends on your order quantity. I think depending on every size-

Nikhil Kamath 1:42:16 Mm

Ananth Narayanan 1:42:16 ... there are people who can actually manufacture it for you.

Nikhil Kamath 1:42:18 And where do I find this list of fifty?

Ananth Narayanan 1:42:18 So T-shirts, by the way... No, T-shirt is, you go to Tirupur, and you walk around, and you can get T-shirt manufacturers.

Nikhil Kamath 1:42:23 Online or-

Raj Shamani 1:42:24 IndiaMart.

Nikhil Kamath 1:42:25 Online, you find out.

Ananth Narayanan 1:42:25 Or you go to IndiaMart-

Nikhil Kamath 1:42:26 Uh

Ananth Narayanan 1:42:26 ... and you can find a manufacturer, right?

Raj Shamani 1:42:27 The quality is definitely not [chuckles] at par, but you can get like a sense of what you can do.

Ananth Narayanan 1:42:31 Yeah. So Nikhil, by the way, sorry, maybe taking even more of a step back, right?

Nikhil Kamath 1:42:35 Mm.

Ananth Narayanan 1:42:36 You know, I think brand building requires a little bit of thinking and effort, right? You can't come and suddenly say... So, for example, if you want to go start a T-shirt brand, I think it's actually quite difficult to do, because you need some level of expertise. You do need to understand something about-

Nikhil Kamath 1:42:48 Yeah

Ananth Narayanan 1:42:48 ... T-shirt manufacturing and so on. There has to be something you can't-- I mean, it's like neat, right? As opposed to, you know, you can't just do starter, right? I mean, in my mind, you need-

Nikhil Kamath 1:42:56 What is, how do you-

Raj Shamani 1:42:57 Can I inculcate that learning? Okay.

Ananth Narayanan 1:42:59 Yeah.

Raj Shamani 1:42:59 So I was... Can I add something to this?

Ananth Narayanan 1:43:01 Yeah, please, please.

Raj Shamani 1:43:01 Uh, how to start a brand thing, because I think I've started a lot of it and failed at it [chuckles] multiple times. So, and I've done this trading, buying from IndiaMart and selling on Amazon. I've done this, like, as a side hustle for the longest time, right?

Nikhil Kamath 1:43:14 Say that again.

Raj Shamani 1:43:15 So I used to, what I used to do, I used to buy from IndiaMart and sell it on Amazon.

Nikhil Kamath 1:43:21 Mm.

Raj Shamani 1:43:21 Okay? So there was no brand, nothing.

Nikhil Kamath 1:43:23 Mm.

Raj Shamani 1:43:23 I saw that the mops were growing in India, the thousand-rupee mop. I don't know if you've seen this.

Nikhil Kamath 1:43:28 Yeah, yeah.

Raj Shamani 1:43:29 Right? That... I don't know how to explain. [chuckles] Like, that's a mop.

Nikhil Kamath 1:43:31 The one which sucks up the floor.

Raj Shamani 1:43:32 Yeah, yeah.

Ananth Narayanan 1:43:33 Yeah, yeah.

Raj Shamani 1:43:33 Right? So I, I saw that that was popping.

Nikhil Kamath 1:43:35 And there's, there's another bucket where you squeeze it in.

Raj Shamani 1:43:36 Exactly. So you can go on IndiaMart. From Gujarat, you can get somebody to give, give you that at two hundred to three hundred rupees. You call it, and then you list it on Amazon, you sell it for thousand rupees. And then, Sarah, commission, omission, "...", you get, like, hundred, one fifty rupees per.

Nikhil Kamath 1:43:50 How much commission does Amazon charge?

Raj Shamani 1:43:52 So it depends on different categories, different, but... And there's so many-... you know, that's Amazon's, I think, the biggest problem, that there's, there's no ac- exact transparency on everything on commission basis. Because there is definite twenty-two percent is somewhat which you end up paying-

Ananth Narayanan 1:44:06 I would say, by the way, lowest is fifteen, highest is thirty-five.

Raj Shamani 1:44:08 Right.

Ananth Narayanan 1:44:09 Depending on what you do.

Raj Shamani 1:44:10 But you keep getting, like, it's... That is something which you face problem if you're starting out, and that's the problem.

Ananth Narayanan 1:44:15 Yeah.

Raj Shamani 1:44:15 Right. So I used to do this. I used to sell vegetable choppers. I ended up making ten lakh rupees as profit of vegetable choppers, uh, because I bought a fifty rupee, sold for four hundred. This, I used to do on Amazon. So I'll tell you, in this thing which I learned about how to start a brand, there are two definite questions that you've got to ask yourself. First is: what is your strength? Some people's strength might be getting products in cheap, because ""jo khareed sasta sakta hai, woh bech sasta, bech sakta sasta sakta hai,"" right?

Ananth Narayanan 1:44:44 Mm.

Raj Shamani 1:44:44 If you can't buy it in cheap, you can't sell it.

Ananth Narayanan 1:44:46 Mm.

Raj Shamani 1:44:46 So if your strength is not negotiating and buying and have-

Ananth Narayanan 1:44:49 And sourcing

Raj Shamani 1:44:49 ... control over sourcing-

Ananth Narayanan 1:44:50 Yeah, yeah

Raj Shamani 1:44:51 ... you can't do that. So let's say that's not your strength.

Ananth Narayanan 1:44:53 Yep.

Raj Shamani 1:44:54 Then is your strength building content, community, something like that? Then you do that. What if my strength is design? So let's say... Yeah, I'm coming to that. Let's say you design, that's a product differentiator. Hmm. Okay? So now that's your strength. Hmm.

Ananth Narayanan 1:45:07 Yep.

Raj Shamani 1:45:08 So do you have... I think there are three type of strengths. One is brand building and content, second is sourcing, and third is unique innovation and design, and, uh, everything of that type.

Ananth Narayanan 1:45:15 And the fourth is your ability to... Some people have a dramatically better ability to growth hack Amazon, growth hack Flipkart, grow, growth hack-

Raj Shamani 1:45:21 I was coming to that. I was- [chuckles] Is that such a big distinction?

Ananth Narayanan 1:45:24 I think so.

Raj Shamani 1:45:24 Yeah, yeah, absolutely.

Nikhil Kamath 1:45:26 In the, in this new world-

Raj Shamani 1:45:27 In this new world- Yes, yes ... I think it is for sure.

Ananth Narayanan 1:45:29 Right? I think-

Raj Shamani 1:45:29 Even in the old world, if I have connections-

Nikhil Kamath 1:45:31 In the shelf space, yeah.

Raj Shamani 1:45:32 No-

Nikhil Kamath 1:45:32 Yeah, the entry and the shelf space and the-

Raj Shamani 1:45:34 Yes, exactly.

Nikhil Kamath 1:45:35 Hmm.

Raj Shamani 1:45:35 So even in the old world, if I have connections with Big Bazaar or DMart- Mm ... I can probably, like, get listed and start selling much faster than anyone else.

Ananth Narayanan 1:45:41 Yeah.

Raj Shamani 1:45:42 So that used to happen.

Nikhil Kamath 1:45:43 How does someone build... This I find more interesting than the rest. How does someone build the knowledge of these growth hacks, or hire someone who has that knowledge?

Ananth Narayanan 1:45:52 I think, uh, can I just take that?

Raj Shamani 1:45:53 Yeah, yeah.

Ananth Narayanan 1:45:53 Maybe you can, uh, add to it, right? So, uh, Amazon is the most straightforward to become more expert on, because I think there is lots of case law. You can-

Raj Shamani 1:46:01 Knowledge available.

Ananth Narayanan 1:46:02 Knowledge and availability, because you have it, it's happened in the US-

Nikhil Kamath 1:46:05 Hmm

Ananth Narayanan 1:46:05 ... it's happened elsewhere.

Nikhil Kamath 1:46:06 Hmm.

Ananth Narayanan 1:46:06 And therefore, by the way, it's easier to learn. And the algorithms are more transparent. You can go read up online, you can figure out what to do. Um, I would say most of the other platforms, Flipkart is almost there as well. I think getting closer and closer to self-serve, and Walmart and so on. I think on Myntra, et cetera, the way I would sort of think about it is, I would actually go talk to ex-Myntra people. The most practical way to do it is to go talk to two category managers. So let's say I want to do T-shirts, since it seems like your favorite brand to launch. [chuckles] Um, I would go talk to the category manager on T-shirts-

Nikhil Kamath 1:46:41 Hmm

Ananth Narayanan 1:46:41 ... right? Or actually, I would go talk to them and say: firstly, is there an opportunity for a T-shirt?

Nikhil Kamath 1:46:46 Hmm.

Ananth Narayanan 1:46:46 Is there an opportunity at a certain price point?

Nikhil Kamath 1:46:48 Hmm.

Ananth Narayanan 1:46:49 Is there an opportunity at a certain design? So people are looking for plus sizes, people are looking for oversized, whatever, right? People are looking for pop culture, like what Raj was saying. Whatever it is-

Nikhil Kamath 1:46:58 Hmm

Ananth Narayanan 1:46:58 ... I would get some insights from one of these guys to narrow this down. In terms of what does it take to growth hack on Myntra, by the way, I'm now finding more and more blogs that are available and so on. I don't know if you guys have searched for it, but it's quite interesting. People talk about Myntra being a visibility-led platform. So there are two types of platforms. One is you go search for something, and you get to a product. The other is you go browse for something, and you get inspired to a product. So that's visibility-led, the other is search-led. Amazon is search-led, Myntra and AJO are visibility-led. There, the real thing to understand is: what are all the visibility triggers? So you go look for filters. What's new, what's hot, you know, price low to high, right? Size, right? So you go keep looking for what is it that the platform looks for. It's no different than this idea on Google and Facebook-

Nikhil Kamath 1:47:49 Hmm

Ananth Narayanan 1:47:49 ... on Insta.

Nikhil Kamath 1:47:49 Hmm.

Ananth Narayanan 1:47:50 Insta wants to do reels, therefore he does reels. Myntra wants to sell what's new, and therefore you figure out how to hack that way into it, right? So that's how you go find out. I think the easiest is to... There are now some online resources, but talking to a few ex people is the most practical way to get started.

Raj Shamani 1:48:05 Can I add a layer on there? The other most important- so these are the skills that you can develop on go, and you can talk to these people, and you can do it. The second most important question you should ask yourself is: where is my ideal customer spending time?

Nikhil Kamath 1:48:20 Hmm.

Raj Shamani 1:48:20 Okay, so I'll give you an example of a pizza company. They did crazy, really, really well in this. This is in the US. So they found out that their ideal TG is spending a lot of time on multiple platforms. One of them needs to be dating sites, dating apps, right? So let's say pick up a Tinder or a Bumble or something like that. They started showing ads there, and they were like, "If she gives you number faster than we deliver our pizza, you get thirty percent off." Now, that's a growth hack.

Ananth Narayanan 1:48:49 Yeah.

Raj Shamani 1:48:50 This is what growth hack mean. So you need to ask yourself a question. Now, imagine that's a massive-

Nikhil Kamath 1:48:54 Hmm

Raj Shamani 1:48:54 ... massive, massive technique, because a lot of people would do it just to satisfy their ego, not because of that.

Ananth Narayanan 1:49:00 And correctly correct.

Raj Shamani 1:49:01 So you need to ask yourself: where are your people spending time? And need to find out underpriced attention in that. Because if you can't find underpriced attention, that's very hard to sell a very, very, you know, difficult product or as basic product as T-shirt. And now coming to the starting point where you asked me, how- if you want to start a T-shirt company, how would you do it? So here's I ask a question myself: If I don't have a differentiated product, I try to think of if I don't have a uni- unique selling preposition. I ask myself, do I have a unique show-off preposition?

Ananth Narayanan 1:49:34 Unique?

Raj Shamani 1:49:34 Because you can... Show-off preposition.

Ananth Narayanan 1:49:36 Branding proposition.

Raj Shamani 1:49:36 Because if you can build a show-off, brand, brand-worthy brand-

Ananth Narayanan 1:49:38 Branding proposition

Raj Shamani 1:49:38 ... you can do it. Let's say I have none of this. I don't know how to show off, because design comes in the show-off play. You're a great designer, you can build something that people will show off. If, let's say, I don't have any of this, I would al- I always ask myself a question: what's pre and post? Because, so this goes when the, my most FMCG, like, you know, not, not clothing, like, not fashion, I would like-... personal grooming and stuff like that, right? So if there's a shampoo market which is popping in India-

Ananth Narayanan 1:50:05 Mm.

Raj Shamani 1:50:06 -I don't want to launch another shampoo.

Ananth Narayanan 1:50:07 Mm.

Raj Shamani 1:50:08 I would ask myself a question, "What can I do to sell somebody who's using shampoo, after shampoo?" Post-product or a pre-product, or pre-... Before shampoo, what they can do?

Ananth Narayanan 1:50:18 Yeah.

Raj Shamani 1:50:18 Or post-shampoo, what they can do? Because that's how I get an entry to somebody who uses exactly my thing, and once I get an entry, automatically I'll start selling my other products as well.

Ananth Narayanan 1:50:28 Yeah, and by the way, uh, the, the way we sort of- I mean, the way I would sort of do it, just building a little bit, Raj, on that is, pre-post is one.

Ananth Narayanan 1:50:36 I think literally, by the way, um, again, I, I go back to the very basic thing. Amazon, actually, you can go and find out long-tail key search words.

Raj Shamani 1:50:46 Yeah.

Ananth Narayanan 1:50:46 You can find out where there is null sets. You can say, "By the way, in the last month, what are the search results that led to zero?" And you find all of them, and you stack rank them by volume.

Raj Shamani 1:50:57 Mm.

Ananth Narayanan 1:50:57 And then you say, "That's what I want to go do." I'm saying this, I think unfortunately- I mean, so since, since this is a podcast where people want to... I think there's so much of data out there. If you actually make a little bit of effort, you can actually make dramatically better judgment calls than 90% of the population, right? And this growth hacking applies to Google and Facebook the most. So if you start D2C, right, the real question there is: how do you not pay as much Google and Facebook tax? And there, there's an entire science behind it, right? How do you actually think about SEO? How do you think about the structure of your website? How do you think about what keywords to bid on? How do you-

Nikhil Kamath 1:51:29 But that's beyond, you're saying 25 to 100, the next phase.

Ananth Narayanan 1:51:32 That's the 20 to 100.

Nikhil Kamath 1:51:33 Mm.

Ananth Narayanan 1:51:34 So 0 to 20, I know we had a slight difference, but not dramatic, but my sense is great product, initial brand value proposition, 80% marketplace, 20% D2C.

Nikhil Kamath 1:51:44 Mm.

Ananth Narayanan 1:51:45 20 to 100 crores, by the way, continue to crack something that's unique. It can be, I think, to Raj's point, it can be sourcing, it can be design, it can be whatever. And crack performance marketing, whether it's Google, Facebook, Amazon, content, whatever it is, build something around it.

Nikhil Kamath 1:52:01 Mm.

Ananth Narayanan 1:52:02 Hundred and above, to 500, you have to figure out how to make offline work. This is a different skill set for a lot of people who have started it this way. You have to figure out and really make sure that the product goes from push to pull. What do I mean by push to pull? What is the percentage of organic sales versus what is the percentage of adrenaline sales, which is performance marketing? That percent from 20 to 100, maybe call it 50/50, performance and organic. Hundred-plus, that performance-based sales should come down to 30%. Because if it doesn't, 30, 40%, it doesn't... It just, the cost of it keeps going up and up and up and up and up, right? In the Amazons of the world.

Raj Shamani 1:52:41 You know, the one

Raj Shamani 1:52:42 interesting thing how you can build a brand is also, uh, that used to happen in offline, at least. You look at categories which are super unorganized, and what are getting organized.

Ananth Narayanan 1:52:53 Yeah.

Raj Shamani 1:52:53 So, for example, atta.

Ananth Narayanan 1:52:55 Yeah.

Raj Shamani 1:52:55 So I read, this is again 2013, '14, I read that 94% India still buys chakki atta. That was 2013.

Nikhil Kamath 1:53:02 Mm.

Ananth Narayanan 1:53:02 Yeah.

Raj Shamani 1:53:02 I was like, okay, because 94% is still or-unorganized, the way it's, like, not... It is going away from cities, probably there's gonna be a time where this won't happen, and that's why there's an opportunity to build, let's say, an atta brand.

Nikhil Kamath 1:53:16 Makes sense. Any opportunity you are seeing now?

Raj Shamani 1:53:18 Unorganized to organized? Uh-

Nikhil Kamath 1:53:20 Happening right now.

Raj Shamani 1:53:21 I think toilet, specifically, I see as an opportunity.

Nikhil Kamath 1:53:24 Give me an example.

Raj Shamani 1:53:25 Like-

Ananth Narayanan 1:53:26 Cleaners and so on?

Raj Shamani 1:53:26 ... toilet cleaners, pre-sprays, post-sprays-

Ananth Narayanan 1:53:29 Yeah

Raj Shamani 1:53:30 ... uh, you know, seat sprays. I don't know, I don't know what product. I've not spent enough time.

Nikhil Kamath 1:53:34 Like that Zerodha is doing a lot of this, so be safe.

Ananth Narayanan 1:53:37 Yeah, yeah.

Raj Shamani 1:53:37 I've not spent enough time to understand what products, but I think toilet as a category is popping up, because a lot of people now just don't want their house to smell good, but also their toilets to smell good.

Ananth Narayanan 1:53:48 I think pets is the other big one in my mind.

Raj Shamani 1:53:49 Yeah.

Ananth Narayanan 1:53:50 It's immediate, and people are spending-

Nikhil Kamath 1:53:51 Cocoa for it?

Ananth Narayanan 1:53:52 Yeah, so I mean, look, uh-

Nikhil Kamath 1:53:53 There's one new store which has opened here, which is huge.

Ananth Narayanan 1:53:55 Heads Up or Tails.

Raj Shamani 1:53:56 Heads Up or Tails.

Ananth Narayanan 1:53:56 Yeah, Heads Up or Tails. So I think pets-

Raj Shamani 1:53:58 Huff

Ananth Narayanan 1:53:58 ... is interesting. I mean, you know, everybody's heard of DINKs. Apparently, there's something called DINKWAD.

Nikhil Kamath 1:54:03 What is, what is DINKs?

Raj Shamani 1:54:04 Yeah.

Ananth Narayanan 1:54:05 Dual income-

Raj Shamani 1:54:05 Double income

Ananth Narayanan 1:54:05 ... no kids.

Raj Shamani 1:54:07 Okay.

Ananth Narayanan 1:54:07 Right? My daughter was explaining now this to me, saying, "There's DINKWAD?"

Raj Shamani 1:54:11 Yeah.

Ananth Narayanan 1:54:11 "There's double income, no kid, with a dog."

Nikhil Kamath 1:54:13 Mm.

Raj Shamani 1:54:14 That's me. [chuckles]

Ananth Narayanan 1:54:14 Right?

Raj Shamani 1:54:15 No, I didn't know-

Ananth Narayanan 1:54:15 Not double income yet, but I have a dog. [chuckles]

Raj Shamani 1:54:17 Yeah, yeah.

Ananth Narayanan 1:54:17 But I didn't know, no-

Nikhil Kamath 1:54:18 Second income is in Indore. [laughing]

Ananth Narayanan 1:54:19 Yeah, yeah, second income is in Indore. So, uh, so, uh, so this population-

Nikhil Kamath 1:54:24 Mm

Ananth Narayanan 1:54:24 ... is growing.

Nikhil Kamath 1:54:25 Mm.

Ananth Narayanan 1:54:26 And they spend on the dog or the cat-

Nikhil Kamath 1:54:29 Mm

Ananth Narayanan 1:54:29 ... as much as they spend on their baby, right? I mean, or child. But I think this is an interesting space.

Kishore Biyani 1:54:33 There's a market, uh-

Ananth Narayanan 1:54:34 There's a market, and I think it's going to explode, right?

Kishore Biyani 1:54:36 Singapore.

Raj Shamani 1:54:36 Yeah, that's like very-

Ananth Narayanan 1:54:37 Singapore

Raj Shamani 1:54:37 ... small market, yeah.

Ananth Narayanan 1:54:38 Singapore, but I think it, the Singapore will spend.

Nikhil Kamath 1:54:41 We were talking about naming a brand in between for a second.

Kishore Biyani 1:54:44 Yeah.

Ananth Narayanan 1:54:44 Yeah.

Nikhil Kamath 1:54:44 How does, how does one figure out what to name a brand? Let's stick to the T-shirt example.

Ananth Narayanan 1:54:51 Mm.

Nikhil Kamath 1:54:51 What should I name this brand I'm starting? Let's say I have borrowed, managed to get 10 lakh rupees. I'm starting a T-shirt brand. I need to figure out the name first. How do I go about naming my brand?

Kishore Biyani 1:55:04 So I'll tell you, uh, uh, a colleague of mine, [clears throat]

Kishore Biyani 1:55:07 who's a brand authority in a way, and, uh, his daughter started a brand, and she started exactly with a T-shirt.

Nikhil Kamath 1:55:14 Mm.

Ananth Narayanan 1:55:14 Mm.

Kishore Biyani 1:55:14 And she named her brand Creatures of, Creatures of Habit. In the first instance, I didn't understand much, and it was a D2C brand, and I think they are, they are now profitable.

Nikhil Kamath 1:55:27 What worked?

Kishore Biyani 1:55:29 I think the brand, the product.

Nikhil Kamath 1:55:31 But the name worked for a particular reason, Creatures of Habit?

Kishore Biyani 1:55:34 I think, I think the D2C world is accepting a little bit of a odd name.

Raj Shamani 1:55:38 Story.

Kishore Biyani 1:55:39 A story. It's telling a story.

Raj Shamani 1:55:41 Yeah. By the way, new research-

Kishore Biyani 1:55:42 I-

Raj Shamani 1:55:43 ... uh, there is-

Ananth Narayanan 1:55:44 Yeah

Raj Shamani 1:55:44 ... just adding to this, nine out of, uh, 10 Gen Zs believe in advertising.

Kishore Biyani 1:55:50 Yeah.

Raj Shamani 1:55:51 M- maybe different ways-

Kishore Biyani 1:55:52 Yeah

Raj Shamani 1:55:52 ... different sorts, but if you tell them that you're advertising, people are receptive to see that advertise and buy something on that.

Kishore Biyani 1:55:59 So you can-

Raj Shamani 1:55:59 There's no level of mistrust.

Kishore Biyani 1:56:00 So you can name your brand, uh, anything. You can name your brand, uh, Nikhil also, I think.

Ananth Narayanan 1:56:04 Yeah.

Kishore Biyani 1:56:04 It- and we can create a story around the word Nikhil, and-

Ananth Narayanan 1:56:07 Yeah, see, that's what I was gonna say. [chuckles]

Nikhil Kamath 1:56:08 But if the word inherently has a story in the word, is it a-

Kishore Biyani 1:56:11 It helps, Nikhil, it helps.

Ananth Narayanan 1:56:12 Of course, it helps, right? I mean, we have Tesla.... and you're running an electric car company, I mean, it helps, right? So I think having a name-

Nikhil Kamath 1:56:18 Can you just come up with a name for a T-shirt company which has a story in the name?

Raj Shamani 1:56:23 Can I add?

Ananth Narayanan 1:56:24 No.

Raj Shamani 1:56:24 Like, I wouldn't choose any name which is, like, which is popular. I would choose a name which is easily available on SEO and-

Ananth Narayanan 1:56:31 Correct. That's what I was also going to say.

Raj Shamani 1:56:32 So I would come up with something which has no meaning.

Ananth Narayanan 1:56:34 Yeah.

Raj Shamani 1:56:35 Because if you choose a word which has meaning, then you're fighting against something already.

Nikhil Kamath 1:56:39 So would you say something which doesn't have a meaning truly, but sounds like-

Raj Shamani 1:56:44 I think-

Nikhil Kamath 1:56:45 It means a certain thing?

Ananth Narayanan 1:56:46 And, and it, it sounds like something, it sounds interesting.

Raj Shamani 1:56:48 So I'll give you an example of our brand recently we named Blanco. It's a perfume brand.

Nikhil Kamath 1:56:53 Yeah.

Raj Shamani 1:56:53 Okay? So we named it Blanco because King, in his day-to-day lingo, in language, he uses blanco as a substitute for winning lifestyle and confidence. So he has given meaning to it-

Nikhil Kamath 1:57:06 Blanco like white.

Raj Shamani 1:57:08 Blanco is... It has no meaning, but blanco is, is equal to-

Nikhil Kamath 1:57:12 Blanco sounds like a very-

Raj Shamani 1:57:13 ... confidence in winning

Nikhil Kamath 1:57:13 -French way to say white. [laughing]

Ananth Narayanan 1:57:15 [laughing] Yeah, it could be. So-

Raj Shamani 1:57:17 It just means confidence in winning.

Ananth Narayanan 1:57:18 I think-

Raj Shamani 1:57:19 So he's giving a meaning to the name which has no meaning.

Ananth Narayanan 1:57:21 Yeah.

Raj Shamani 1:57:21 And then it cat-

Ananth Narayanan 1:57:22 So Nikhil-

Raj Shamani 1:57:22 catches up on the story, which is-

Kishore Biyani 1:57:23 Nikhil, my, my nephew started a brand on gut health.

Nikhil Kamath 1:57:26 Mm.

Ananth Narayanan 1:57:27 Mm.

Kishore Biyani 1:57:27 And, uh, they were working, the whole insight was, uh, there are good bacteria and there is bad bacteria.

Nikhil Kamath 1:57:33 Mm.

Kishore Biyani 1:57:33 So how should you... And we want to attack that, uh, good bacteria has to be more to kill the bad bacteria.

Ananth Narayanan 1:57:40 Yeah.

Kishore Biyani 1:57:41 So we worked on, uh, along with them, and we called the brand The Good Bug.

Nikhil Kamath 1:57:45 Mm.

Kishore Biyani 1:57:46 And it caught on quite well. Had the brand not been The Good Bug, I think the story would have been different.

Ananth Narayanan 1:57:52 Yeah.

Nikhil Kamath 1:57:53 That's a good name, actually.

Raj Shamani 1:57:54 Yeah, that's a good name.

Kishore Biyani 1:57:54 So everybody liked the name, so-

Ananth Narayanan 1:57:56 No, but, uh, for peanut butter, right, call it MyFitness.

Raj Shamani 1:57:59 MyFitness. That's a great name.

Ananth Narayanan 1:57:59 It's a great name.

Nikhil Kamath 1:58:00 But doesn't that get lost, MyFitness?

Ananth Narayanan 1:58:02 No. Actually, by the way, trademark is available, which is why it was- [laughing]

Raj Shamani 1:58:05 [laughing]

Ananth Narayanan 1:58:05 -done. But MyFitness is extendable, right? And basically, you have to take a brand positioning. You can either say, "Mother giving the child healthy things," which is one positioning. The other is, you're an athlete or a gym-goer who needs protein, in which case MyFitness is a perfect fit. Both are use cases.

Nikhil Kamath 1:58:21 Is there another trend that anything food-

Ananth Narayanan 1:58:23 Yeah

Nikhil Kamath 1:58:23 ... where you add fitness is just selling more today?

Kishore Biyani 1:58:26 No.

Ananth Narayanan 1:58:27 I don't think so.

Kishore Biyani 1:58:27 Nothing like that.

Ananth Narayanan 1:58:28 I don't think so. I mean, this case on peanut butter, it was a good name, but I think it-

Kishore Biyani 1:58:32 I think peanut butter, the, it was exactly the time where it was just happening.

Ananth Narayanan 1:58:36 Yeah. Correct, correct.

Kishore Biyani 1:58:36 And we in FoodHall created a machine and where we were selling, people could, uh, take out the peanut butter.

Nikhil Kamath 1:58:40 I've been, I've seen that.

Ananth Narayanan 1:58:41 Yeah, yeah, yeah.

Nikhil Kamath 1:58:41 You can take any nut butter.

Raj Shamani 1:58:42 Yeah.

Ananth Narayanan 1:58:43 Correct, correct, correct. But it's really taken off now, I mean, as a trend. It's really become scale.

Raj Shamani 1:58:46 Well, FoodHall is, is, is crazy. I just wanna... Because you named FoodHall, I wanna give you an insight on what I saw. So what I did, there was raspberries-

Ananth Narayanan 1:58:54 Yeah

Raj Shamani 1:58:55 ... uh, just put there, okay? This is, I'm talking about, I think, Santa Cruz wala FoodHall, right?

Ananth Narayanan 1:59:00 Yeah.

Raj Shamani 1:59:00 So the raspberries, right? So it was, let's say, priced at, for example, thousand.

Ananth Narayanan 1:59:05 Yep.

Raj Shamani 1:59:05 There was, right next to it, I think, thoda age jaake, there was, like, Brazilian raspberries or something, like there was some country's name in it.

Ananth Narayanan 1:59:12 Right.

Raj Shamani 1:59:12 Same, and that was, like, two thousand something. That was expensive. I don't exactly know the price, but there was just, just one country name. I kept it both of them together, ten, ten. I just stood there to see, like, what happens. The two thousand one-

Nikhil Kamath 1:59:25 [chuckles]

Raj Shamani 1:59:25 -got finished, like, quicker than the thousand rupee one.

Nikhil Kamath 1:59:27 Is that a thing?

Raj Shamani 1:59:27 So FoodHall is a market. Like, people, if you add a story to it-

Nikhil Kamath 1:59:31 Mm

Raj Shamani 1:59:31 ... that it's Brazilian or Portuguese or something, people buy. Like, i- is that true or like-

Kishore Biyani 1:59:35 Yeah, origins are matter.

Raj Shamani 1:59:36 Yeah, origins matter.

Ananth Narayanan 1:59:38 Yeah, yeah, yeah.

Raj Shamani 1:59:38 It was very crazy to me just to write an origin-

Ananth Narayanan 1:59:40 Right

Raj Shamani 1:59:40 ... and it would fly faster-

Ananth Narayanan 1:59:42 Yeah, yeah

Raj Shamani 1:59:42 ... than the thousand rupee one, because the price was crazy different.

Nikhil Kamath 1:59:44 If the price is higher, do people automatically assume higher quality?

Ananth Narayanan 1:59:49 Uh, yes, within a brand.

Nikhil Kamath 1:59:51 Explain.

Ananth Narayanan 1:59:52 So, for example, if you basically say... You know, you guys- [chuckles]

Raj Shamani 1:59:55 No, no, no, I, I, I think that's true, what you're saying, like, just go on.

Ananth Narayanan 1:59:58 No, I- see, look, I mean, um, uh, let me give you, um, let me give you the MyFitness example. We charge more than our competitors-

Raj Shamani 2:00:08 Mm

Ananth Narayanan 2:00:08 ... who are in the same sort of space, right? I don't know, Happy Little, X, Y, Z, right? Whatever. We charge more. We charge by twenty percent more. The minute you get to fifty percent more, there is actually a basket cost. See, because, by the way, a, a, a, a five hundred grams lasts for-

Nikhil Kamath 2:00:27 What is basket?

Ananth Narayanan 2:00:28 See, basically, if you want to buy something, right-

Nikhil Kamath 2:00:29 Mm

Ananth Narayanan 2:00:30 ... you know, you have some amount that you spend on grocery.

Nikhil Kamath 2:00:32 Mm.

Ananth Narayanan 2:00:32 Right? Uh-

Nikhil Kamath 2:00:33 Can't you buy that bag that they give you and put everything in it?

Ananth Narayanan 2:00:36 No, no, no,

Nikhil Kamath 2:00:36 You don't need a basket.

Ananth Narayanan 2:00:36 No, just hear me out, hear me out.

Nikhil Kamath 2:00:37 Mm.

Ananth Narayanan 2:00:37 So, you know, there is a certain amount of money I want to spend.

Nikhil Kamath 2:00:40 Mm.

Ananth Narayanan 2:00:40 Right? It can be at a premium, but it can't break the bank. So, for example, if I'm spending a thousand rupees on five hundred grams of peanut butter, suddenly you start to think a little differently. But if I'm spending two hundred rupees more, there is a break point.

Nikhil Kamath 2:00:58 Mm.

Ananth Narayanan 2:00:58 Right? So I don't know if that's making sense, right? So there's a band for every one of these. Within that band, I think premium people think it is actually you're charging a little bit more. The packaging makes a difference, all of that makes a difference. But I don't know, maybe, Kishore, you can comment on it, but if you charge five times for a utilitarian thing, then I think it gets to be tough.

Nikhil Kamath 2:01:15 I have to say, like, digressing here, my favorite kind of shopping is supermarkets.

Ananth Narayanan 2:01:20 Yeah.

Nikhil Kamath 2:01:20 There is some- the only kind of shopping I'd go do in person.

Ananth Narayanan 2:01:23 Yep.

Nikhil Kamath 2:01:24 There is something so therapeutic about being in a supermarket, picking up all these random boxes, which have, like, weird colors on them. So they've got something in the physical shopping bang on. I don't know how much research has gone into it.

Kishore Biyani 2:01:38 A lot of research.

Ananth Narayanan 2:01:39 A lot of research.

Kishore Biyani 2:01:40 Lot of research.

Ananth Narayanan 2:01:40 Yes.

Kishore Biyani 2:01:40 So there are, there are codes for every category, so you'll find similar color codes for a particular category. So every category, uh, is thought in a particular way, and if you move away from that code, it just doesn't sell.

Nikhil Kamath 2:01:53 Mm.

Kishore Biyani 2:01:54 The consumers get used to a certain... Like, if you look at the toothpaste, you will find the red and white-

Ananth Narayanan 2:01:58 Yeah

Kishore Biyani 2:01:59 ... uh, as a color code.

Nikhil Kamath 2:02:00 Mm.

Kishore Biyani 2:02:00 If you move away from that, it becomes difficult, yeah. So, so packaging, design, how the mind works, I think so much of research has gone into building a brand, packaging, design, everything.

Nikhil Kamath 2:02:11 So you guys said health, if you necessarily add into every product, is not selling more?

Kishore Biyani 2:02:17 It doesn't mean that, exactly.

Nikhil Kamath 2:02:19 But the

Nikhil Kamath 2:02:20 odds of it selling more go up?

Kishore Biyani 2:02:22 ... maybe for, maybe for a while. I, I think something which we, uh, has not been discussed also is l- whatever you create, what is the longevity of that?

Ananth Narayanan 2:02:30 Yeah.

Kishore Biyani 2:02:30 And what does brand mean? Brand means you are getting f- uh, instead of a commodity of X rupees a kilo, you are getting X plus-

Ananth Narayanan 2:02:36 You're getting a multiple

Kishore Biyani 2:02:37 ... twenty percent, thirty percent-

Ananth Narayanan 2:02:38 Correct, correct

Kishore Biyani 2:02:38 ... something.

Ananth Narayanan 2:02:38 Correct.

Kishore Biyani 2:02:38 That's what the brand is all about. And you have to position the brand in a way that you keep, keep on getting that premium, until when you will be able to get that premium. So as a peanut butter, now, how is he building the brand that it will have that longevity to get that premium-

Ananth Narayanan 2:02:52 That's right

Kishore Biyani 2:02:52 ... throughout the year?

Ananth Narayanan 2:02:53 That's right.

Kishore Biyani 2:02:53 Throughout the lifetime?

Ananth Narayanan 2:02:54 Yeah.

Kishore Biyani 2:02:54 I think that's where the brand will stand out.

Ananth Narayanan 2:02:56 Yeah.

Nikhil Kamath 2:02:56 And I think, by the way, cons- sorry, sorry.

Ananth Narayanan 2:02:58 Yeah, yeah, yeah. [chuckles]

Nikhil Kamath 2:02:58 No, no, just to maybe just complete that, I think the longevity point I really think is important, because I think brands get built up over decades, right?

Kishore Biyani 2:03:05 No, but if you build on growth hacking, how will the brand, uh, longevity happen?

Nikhil Kamath 2:03:08 No, no, sorry. I think there are two different things, Kishore. I think there is a distribution, and how do you optimize the distribution?

Kishore Biyani 2:03:13 Fair enough.

Nikhil Kamath 2:03:14 Right? It's like getting the right mall space, right? You, uh, in your-

Kishore Biyani 2:03:17 Yeah, I mean-

Nikhil Kamath 2:03:17 ... in your days, you would get the mall space. I think that's a different problem than building brand, building product, a- and so on, which is absolutely important for me to do. So I'm saying growth hacking is the new way of getting a great space in a mall, right? The, uh, the analogy, right? I think here on brand building, I think this consistency point is important. You have to be known for something that compounds over time, right?

Kishore Biyani 2:03:37 Mm.

Nikhil Kamath 2:03:38 You know, it can be taste, it can be, um, a, a... So for example, in our My- in the, in the My Peanut, in the p- in the peanut butter, right? I think there is usually oil separation that happens, because it's emulsified. So we have done an emulsification, which is make sure that it, it still, it still separates, but it doesn't feel like oil. So when you take it and taste it, when you open it, it just is nicer. It can be, it can be small thing, right? It can be a large thing, but you need something that differentiates this, and it's consistent over time. Or if you have a fashion brand, right? You need some design direction that may change, but the ethos is still consistent over a long period of time, right? Because I think it takes compounding to build a brand, right? A- and my point is, they are not at odds with growth hacking. My point is, growth hacking is distribution for me.

Kishore Biyani 2:04:20 Fair enough.

Nikhil Kamath 2:04:20 Cheap distribution, right?

Kishore Biyani 2:04:22 So, like, the two brands which comes to my mind in the new digital world are, one was Mamaearth,

Kishore Biyani 2:04:28 which was built around onion as a ingredient.

Ananth Narayanan 2:04:30 Mm.

Nikhil Kamath 2:04:31 Was it?

Ananth Narayanan 2:04:32 Yeah, onion oil was the...

Kishore Biyani 2:04:33 Ingredient, uh, and through which now they have extended the brand to many products and categories, but they-

Nikhil Kamath 2:04:38 Why did onion o- oil work for them?

Kishore Biyani 2:04:41 I think people had memories about onion oil being healthy for the hair.

Nikhil Kamath 2:04:45 But nobody had-

Kishore Biyani 2:04:46 Nobody had thought about it, and they came into that market. And there was another brand which was built around coffee.

Nikhil Kamath 2:04:52 Which is?

Kishore Biyani 2:04:52 mCaffeine.

Nikhil Kamath 2:04:53 mCaffeine.

Ananth Narayanan 2:04:54 mCaffeine.

Nikhil Kamath 2:04:54 mCaffeine.

Ananth Narayanan 2:04:54 Yeah.

Nikhil Kamath 2:04:55 Do you know of any other things like onion oil which have not been realized?

Kishore Biyani 2:04:58 We are, we are just, uh, uh... My son-in-law is launching a brand called, in beauty space-

Nikhil Kamath 2:05:03 Mm

Kishore Biyani 2:05:03 ... which is, uh, which is a milk as a base, dairy as a base. The science of milk.

Nikhil Kamath 2:05:08 Mm.

Kishore Biyani 2:05:09 And milk, again, has been a lot of connotation around beauty, but nobody-- Dove uses milk, uh, they uses milk as a insignia. They use it in the packaging, but they don't use milk in the product, but they use it [chuckles] in the packaging.

Ananth Narayanan 2:05:20 Right, right.

Kishore Biyani 2:05:20 So milk has a lot of connotation in Indian, uh, culture.

Nikhil Kamath 2:05:24 So you're saying pick something from... I think Ayurveda, many people have over-

Kishore Biyani 2:05:29 But everything old and new form-

Nikhil Kamath 2:05:30 Uh.

Ananth Narayanan 2:05:31 Yeah, yeah

Kishore Biyani 2:05:31 ... is coming in.

Ananth Narayanan 2:05:32 See, I think there's a, there are two ways to sort of play the beauty game, right?

Nikhil Kamath 2:05:36 Mm.

Ananth Narayanan 2:05:36 I think there is a Ayurveda versus science axis, right?

Nikhil Kamath 2:05:40 Do you think the Ayurveda market has been overdone? I can see Kama and Forest Essentials as the leaders in that premium, and Patanjali at the bottom.

Ananth Narayanan 2:05:48 I think there is still... See, I think beauty as a market is still-

Nikhil Kamath 2:05:51 Mm

Ananth Narayanan 2:05:51 ... so under-penetrated.

Nikhil Kamath 2:05:52 Mm.

Ananth Narayanan 2:05:52 There's room for many, many brands. I do think you need some real differentiation, however.

Nikhil Kamath 2:05:56 Mm.

Kishore Biyani 2:05:56 Mm.

Nikhil Kamath 2:05:56 What could be a differentiation?

Ananth Narayanan 2:05:56 I think just putting Ay- just putting Ayurveda doesn't mean anything, right? I think you need efficacy, and you need to [chuckles] actually build a little bit of real research.

Nikhil Kamath 2:06:04 Why doesn't anybody describe efficacy, or why does somebody not compare product A to B based on efficacy?

Ananth Narayanan 2:06:12 So firstly, by the way, I do think people do more. So at least when I was growing up, I, I don't think I ever looked at the back of a bottle on what the ingredients are. [chuckles] My kids today, by the way, look through every ingredient, yeah, and then whether it's cruelty-free, paraben-free. See, these are things that don't register, but I think the next generation actually does look at this-

Nikhil Kamath 2:06:31 Mm

Ananth Narayanan 2:06:31 ... and does look at the ingredients. So firstly, I think that is changing.

Nikhil Kamath 2:06:34 Mm.

Ananth Narayanan 2:06:34 I think except for maybe Raj, the rest of the TV-

Nikhil Kamath 2:06:35 Is that a factor of affluence, or is that India One largely?

Kishore Biyani 2:06:40 India One.

Ananth Narayanan 2:06:41 India One, for sure-

Nikhil Kamath 2:06:42 Yeah

Ananth Narayanan 2:06:42 ... but I also think it's awareness, uh, yeah, right?

Nikhil Kamath 2:06:43 So that one hundred and twenty million people will care about these things?

Kishore Biyani 2:06:47 Very much.

Ananth Narayanan 2:06:47 Very much. And they're, the one twenty care more about it now-

Nikhil Kamath 2:06:51 Mm

Ananth Narayanan 2:06:51 ... because there is more information available online and content, and so on. So I think there are people talking about it, so there's more awareness.

Nikhil Kamath 2:06:57 So we did-

Kishore Biyani 2:06:58 Can I add on this?

Nikhil Kamath 2:06:59 Yeah.

Kishore Biyani 2:06:59 So every time you're going to build a brand which is in a cluttered category, you can either build it by aspiration or education.

Nikhil Kamath 2:07:05 Mm.

Kishore Biyani 2:07:06 So you can either aspire people for your product, to buy them, that your product is significantly better value, or you can educate them about the efficacy and the stuff that you were talking about. So for example, Minimalist did the exact same thing. Minimalist came here, started educating people on certain ingredients-

Nikhil Kamath 2:07:22 Yeah

Kishore Biyani 2:07:22 ... certain things-

Ananth Narayanan 2:07:23 Yeah

Kishore Biyani 2:07:23 ... which were always there-

Nikhil Kamath 2:07:24 Mm

Kishore Biyani 2:07:24 ... but nobody talked about it so honestly and transparently.

Nikhil Kamath 2:07:27 Right.

Kishore Biyani 2:07:27 And that's what works. So either you educate people or you aspire people to do and build your brand in a certain way.

Ananth Narayanan 2:07:33 Especially in a cluttered category, right?

Kishore Biyani 2:07:35 A cluttered category, that's what I'm talking about.

Ananth Narayanan 2:07:36 It's a lot fine.

Kishore Biyani 2:07:36 Like, when you do basic product-

Ananth Narayanan 2:07:38 Then it's no-

Kishore Biyani 2:07:38 ... you need to be-- because, and this works, by the way, even in tier two, tier three villages as well.

Ananth Narayanan 2:07:43 Mm.

Kishore Biyani 2:07:43 You educate them on certain things-

Nikhil Kamath 2:07:44 Mm

Kishore Biyani 2:07:45 ... they, they buy. So it just works.

Ananth Narayanan 2:07:48 Yeah.

Nikhil Kamath 2:07:48 So we did, we did health kind of helps, but not necessarily the only factor in determining which product you would pick.

Ananth Narayanan 2:07:55 Yep.

Nikhil Kamath 2:07:56 What about, and we said breaking down the ingredients, using what is not harmful-

Ananth Narayanan 2:08:03 Yep

Nikhil Kamath 2:08:03 ... matters to the one twenty people, one twenty million people in India A, India One.

Ananth Narayanan 2:08:08 Yep.

Nikhil Kamath 2:08:08 What about sustainability and climate change? I see, like, whenever I look at a pitch from a consumer-facing brand, everybody by default has health, sustainability. These things are very generic and common.

Kishore Biyani 2:08:21 Clean beauty.

Nikhil Kamath 2:08:22 Ah. [chuckles]

Ananth Narayanan 2:08:22 Clean beauty. [chuckles]

Kishore Biyani 2:08:23 Clean beauty. [chuckles]

Nikhil Kamath 2:08:23 So if everybody is doing them, is there any value left in them?

2:08:27 ... I think it should be done, but-

Ananth Narayanan 2:08:28 Can I, I, I-

Nikhil Kamath 2:08:29 Is it a sales point in the manner that people are selling it?

Ananth Narayanan 2:08:32 So, so there are three phases of any beauty brand or FMCG. This I'm only learning from Korea, because Korea has been absolutely-

2:08:38 Is, is ahead of it. Yeah, yeah

2:08:39 ... ahead of it, right? So there were three phases.

Nikhil Kamath 2:08:42 Mm.

Ananth Narayanan 2:08:42 First thing is beauty.

Nikhil Kamath 2:08:44 Mm.

Ananth Narayanan 2:08:44 Okay? Just like beauty products, they will come with a certain level of value. You buy it, function, and you go ahead. Second was performance.

Nikhil Kamath 2:08:52 Mm.

Ananth Narayanan 2:08:52 So performative beauty, as they call it, functional beauty, how they call it.

2:08:55 Yeah.

2:08:55 They spot on say, "This product will make your acne disappear."

2:08:59 Functional.

2:08:59 This product-

2:08:59 Solves the problem.

2:09:00 Very solve. Okay? And then third level comes with the clean beauty, okay? Because... So I don't think India, where performative beauty is being deployed so well, from clean beauty like it's I- gen- this is my view, I think we are far from that-

Nikhil Kamath 2:09:12 But I'm telling you, I've looked at-

Ananth Narayanan 2:09:13 If you want to become a massive brand

Nikhil Kamath 2:09:14 ... 100 pitches from brands in food and beauty.

Ananth Narayanan 2:09:17 Yeah.

Nikhil Kamath 2:09:17 And 95 of them have sustainability written in their pitch deck somewhere.

Ananth Narayanan 2:09:20 Yeah, so I think a little bit of this is-

2:09:21 It's like, it's very small, I believe, like it's not my sense is-

Nikhil Kamath 2:09:24 AI was in tech in the last five years.

Ananth Narayanan 2:09:25 No, but-

Nikhil Kamath 2:09:25 Everybody had to put it on a pitch deck

Ananth Narayanan 2:09:26 ... but I think it's a pitch deck thing.

2:09:28 Yeah.

2:09:28 I don't think it's a differentiation thing-

2:09:29 It's a real thing

2:09:30 ... right? In my view, I mean, the real question is, will somebody pay a premium for it? I think the answer will be-

2:09:36 Yeah

2:09:36 ... almost nothing, but it-

Nikhil Kamath 2:09:37 Yeah.

Kishore Biyani 2:09:37 Same thing about the or- organic also, in a way.

Ananth Narayanan 2:09:39 Yeah.

Nikhil Kamath 2:09:40 Mm.

Ananth Narayanan 2:09:40 Correct. I'm saying, will somebody pay a premium for it? Because it costs more to get to be sustainable.

Nikhil Kamath 2:09:44 Mm.

Ananth Narayanan 2:09:45 The answer is almost always no.

2:09:46 Yeah.

2:09:46 If the answer to that is no, there's no economic model.

2:09:48 Yeah.

2:09:49 So I think, should one do it and be responsible? The answer is yes.

Nikhil Kamath 2:09:53 Mm.

Ananth Narayanan 2:09:53 Is it a selling factor for a customer to be able to pay more? My in- my current sense is no.

Nikhil Kamath 2:09:59 Kishore, would you like to go with the insights, like some of them from what we are discussing? [coughs]

Kishore Biyani 2:10:05 I think we, when we, we started understanding the new age

Kishore Biyani 2:10:09 consumers, who are digital-first consumers-

Ananth Narayanan 2:10:11 Yep

Kishore Biyani 2:10:11 ... and we looked at, uh, their color of pursuit, the new lifestyles, and we found something very interesting. We found a group of, uh, a lot of women coming together and, uh, getting into, uh... Especially in restaurants, you can see them, a bunch of them together.

Ananth Narayanan 2:10:26 Yeah.

Kishore Biyani 2:10:26 Not the, the evening time, not in morning time you used to see them. I think it's happening because of, uh, a lot of free time, and, uh, and people want to go out and experience a lot of new things.

Nikhil Kamath 2:10:38 Mm.

Kishore Biyani 2:10:38 And, uh, I think, and getting that freedom to go out. Then there is a chemical know-it-all, like we were mentioning.

Ananth Narayanan 2:10:45 Yeah.

Kishore Biyani 2:10:45 His younger child-

Ananth Narayanan 2:10:46 Yeah

Kishore Biyani 2:10:46 ... wants to read everything behind.

Ananth Narayanan 2:10:47 Correct.

Kishore Biyani 2:10:47 So there are a lot of consumers now who wants to live-

Ananth Narayanan 2:10:49 Yeah, yeah

Kishore Biyani 2:10:50 ... uh, read everything-

Nikhil Kamath 2:10:51 Mm

Kishore Biyani 2:10:51 ... what's written on the back of the pack, and-

Nikhil Kamath 2:10:52 Mm

Kishore Biyani 2:10:53 ... they are very conscious about the ingredients getting used. Another community we are looking at is gated communities. People who live in-

Nikhil Kamath 2:10:59 Mm

Kishore Biyani 2:11:00 ... the gated apartments.

Nikhil Kamath 2:11:01 They're gonna-

Kishore Biyani 2:11:01 And, yeah.

Ananth Narayanan 2:11:02 And-

Kishore Biyani 2:11:02 It must be the B- Belandur community, I don't know.

Nikhil Kamath 2:11:05 No, he lives here.

Kishore Biyani 2:11:06 Okay, okay, great. [laughing]

Nikhil Kamath 2:11:07 [laughing] They need it.

Kishore Biyani 2:11:07 So this is another community.

Ananth Narayanan 2:11:09 Yeah.

Kishore Biyani 2:11:09 So I think the community, and I think they have a lot of common interests. They play a lot together-

Nikhil Kamath 2:11:14 Mm

Kishore Biyani 2:11:14 ... they share their travel.

Ananth Narayanan 2:11:15 Yeah, we try and play a lot together, too. [chuckles]

Kishore Biyani 2:11:17 Mm. And another, a huge, uh, another lifestyle, which is X free life. I don't want gluten-

Ananth Narayanan 2:11:23 Mm

Kishore Biyani 2:11:23 ... I don't want this, I want this. Well, uh, I think there are so many no's in the preferences of, um, a lot of consumers.

Nikhil Kamath 2:11:31 So in a way, are you saying India is now so broad and diversified, that instead of saying we will build for even India A, which is 120 million people, you need to break it down to micro-niches and build specifically for them? Like, I need to build a-

Kishore Biyani 2:11:45 You, you can build a brand around that, and then it can expand to a lot... Because ultimately, you have to enter a category.

Nikhil Kamath 2:11:51 Is that how a brand should be built, 0 to 1, identifying a micro-niche, not going too broad?

Kishore Biyani 2:11:55 You can't go broad.

Ananth Narayanan 2:11:56 I think so.

Kishore Biyani 2:11:56 Very difficult to build.

Ananth Narayanan 2:11:57 Fully agree. The sharpen upon the-

Kishore Biyani 2:11:58 Very difficult to build.

Ananth Narayanan 2:12:00 You have to be niche.

Nikhil Kamath 2:12:01 You have to become the big fish in a pond first?

Ananth Narayanan 2:12:04 Yes.

Kishore Biyani 2:12:04 Yeah.

Nikhil Kamath 2:12:04 Yeah, and then-

Kishore Biyani 2:12:04 And then enter in somewhere, uh, like, uh, like how Mamaearth entered in.

Nikhil Kamath 2:12:08 Mm.

Kishore Biyani 2:12:08 And now they have expanded into many, many categories.

Nikhil Kamath 2:12:10 Would that also mean for categories which are really large, with ITC, and HUL, and Marico, and all these companies, there's no point wasting time to try and compete with them?

Ananth Narayanan 2:12:20 I don't think so.

Kishore Biyani 2:12:20 I think they are, they are, they, they know that they have a very strong balance sheet, and ultimately, every brand which is getting built, which will be successful, will be, [chuckles] will be bought over by them. Because they will take it to that next 200 to 1,000 crores.

Ananth Narayanan 2:12:32 Yeah, yeah, for sure.

Nikhil Kamath 2:12:33 So no point building there?

Kishore Biyani 2:12:35 No, they have the distribution, they have the reach.

Ananth Narayanan 2:12:36 Yeah.

Kishore Biyani 2:12:37 They can touch-

Ananth Narayanan 2:12:37 Directly competing with one of their products without some differentiation, I think there's no point-

Kishore Biyani 2:12:41 Because they don't allow you

Ananth Narayanan 2:12:42 ... massive reach.

Kishore Biyani 2:12:42 They don't allow you. In our earlier avatar, we had a brand called Tasty Treat-

Nikhil Kamath 2:12:46 Mm

Kishore Biyani 2:12:46 ... which was into biscuits, and, uh, we garnered quite a substantial market share.

Nikhil Kamath 2:12:50 Mm.

Kishore Biyani 2:12:50 In bourbon, we captured 3%, uh, in, uh, wafer biscuit, we captured 25%. But, uh, the amount of cases they, uh, they came after us, uh-

Ananth Narayanan 2:13:01 Yeah

Kishore Biyani 2:13:01 ... on everything.

Nikhil Kamath 2:13:01 By cases, what do you mean?

Kishore Biyani 2:13:03 Uh, your brand is identical, similar. They'll find something or the other.

Ananth Narayanan 2:13:07 Right.

Kishore Biyani 2:13:07 They will not let you survive. They, they believe that, uh, that shelf space-

Ananth Narayanan 2:13:11 Right

Kishore Biyani 2:13:11 ... and the mind space-

Ananth Narayanan 2:13:11 Right

Kishore Biyani 2:13:11 ... belongs to them.

Ananth Narayanan 2:13:12 Right.

Kishore Biyani 2:13:13 And it belongs to nobody.

Ananth Narayanan 2:13:14 Right.

Kishore Biyani 2:13:14 And they will not let anybody come into that area.

Nikhil Kamath 2:13:16 And when they buy you, do they buy you at a premium?

Ananth Narayanan 2:13:19 Yes.

Kishore Biyani 2:13:19 Yeah, yeah, yeah.

Ananth Narayanan 2:13:20 Yes. I think all the-

Kishore Biyani 2:13:21 Huge

Ananth Narayanan 2:13:21 ... recent D2C purchases have been at a premium.

Kishore Biyani 2:13:23 Huge.

Nikhil Kamath 2:13:23 But I think the odds of succeeding there are so low that you should not attempt it.

Ananth Narayanan 2:13:26 Yeah, I... That's what I was gonna say. I think-

Kishore Biyani 2:13:28 I think it's not bad.

Ananth Narayanan 2:13:29 Yeah.

Kishore Biyani 2:13:31 And, uh, because they, they, they can't do that innovation, they can't build it. And secondly, you have to start somewhere, in a niche.

Nikhil Kamath 2:13:36 Right.

Kishore Biyani 2:13:37 Uh, not that HUL has not ap- attempted. They was- they went in, they attempted something like a good life, so a long name. I think, uh, it, it didn't work.

Ananth Narayanan 2:13:45 Yeah, yeah. So I think the niche thing is... Because, uh, see, can you compete? So I think the only counter to that is my sense, and I think even that is changing quite rapidly. If you asked me three, four years ago, I would say most of the big players were not digitally very good.

Nikhil Kamath 2:14:00 Mm.

Ananth Narayanan 2:14:00 So you could actually still create some scale online, and then figure out a way to see if that was enough.

Nikhil Kamath 2:14:05 Mm.

Ananth Narayanan 2:14:05 I don't think that's true anymore.

Nikhil Kamath 2:14:06 Mm.

Ananth Narayanan 2:14:07 I think all of them are now quite good digitally, and so I would certainly not go head-to-head competition-

Nikhil Kamath 2:14:12 Mm

Ananth Narayanan 2:14:12 ... especially if you're starting.

Nikhil Kamath 2:14:13 Right, right. Would you like to go with another insight? Kishore is the OG, he can give us hundreds in

Nikhil Kamath 2:14:18 a line. [chuckles]

Kishore Biyani 2:14:18 No, there is a... I, I would say-

Ananth Narayanan 2:14:19 For sure. [laughing]

Kishore Biyani 2:14:19 ... somebody has to, somebody has to start a brand around something. I would rather do it for gamers and gamblers.

Nikhil Kamath 2:14:25 Gamers and gamblers.

Kishore Biyani 2:14:25 There's not a single, single brand for them, and they are huge in numbers.

Ananth Narayanan 2:14:29 ... Right. What do you mean gaming companies?

Kishore Biyani 2:14:30 People who game a lot.

Ananth Narayanan 2:14:32 Okay.

Kishore Biyani 2:14:33 And people who went into-

Ananth Narayanan 2:14:35 Chair for them, keyboards for them.

Kishore Biyani 2:14:36 Whatever.

Ananth Narayanan 2:14:37 Right.

Kishore Biyani 2:14:37 No, no, no, maybe some brand around that.

Ananth Narayanan 2:14:39 Brand around them as well.

Nikhil Kamath 2:14:40 Hmm. Yeah, yeah.

Kishore Biyani 2:14:41 You will be subconsciously talking to them in a particular way, and they will relate to you. Midnight Scholars, that's a huge community again.

Nikhil Kamath 2:14:48 Like nootropics, stuff like that? Which is-

Kishore Biyani 2:14:50 Not that product. I think they are a, a group of people-

Ananth Narayanan 2:14:53 She's, she's looking for a community

Kishore Biyani 2:14:54 ... who have common- They are a community by themselves.

Ananth Narayanan 2:14:56 They're a community, and can you build a product for the community?

Kishore Biyani 2:14:58 Yeah.

Ananth Narayanan 2:14:58 So you're not talking about utilitarian stuff anymore.

Kishore Biyani 2:15:00 It's positioning.

Ananth Narayanan 2:15:00 You're talking about positioning.

Kishore Biyani 2:15:00 Positioning.

Nikhil Kamath 2:15:01 Positioning.

Ananth Narayanan 2:15:01 Yeah, yeah, yeah. Interesting, interesting. I think that's interesting.

Nikhil Kamath 2:15:03 That's, that's the way of hitting a micro-niche.

Ananth Narayanan 2:15:05 Yeah, yeah.

Kishore Biyani 2:15:05 Yeah.

Ananth Narayanan 2:15:05 It's a micro-niche.

Nikhil Kamath 2:15:06 Right, right. Another insight? [laughing]

Ananth Narayanan 2:15:08 Wow. [laughing] This is good.

Kishore Biyani 2:15:11 No, I-

Ananth Narayanan 2:15:12 I think-

Kishore Biyani 2:15:12 ... like, uh, uh, like we want, uh... My daughter wanted to get into, uh, something around children.

Nikhil Kamath 2:15:18 Hmm.

Kishore Biyani 2:15:19 So we thought of, uh, of getting into through a furniture brand, building a ... Not a furniture brand, but getting into furniture as a category.

Ananth Narayanan 2:15:26 Yeah.

Kishore Biyani 2:15:26 But then we thought of a-- she thought of a name-

Nikhil Kamath 2:15:29 Hmm

Kishore Biyani 2:15:29 ... that, uh, how can we design it around, uh, the, the child?

Nikhil Kamath 2:15:34 Hmm.

Kishore Biyani 2:15:34 And how, uh, you can work around the well-being of the child-

Nikhil Kamath 2:15:38 Hmm

Kishore Biyani 2:15:39 ... and the imagination of the child, and child's, uh, growth.

Nikhil Kamath 2:15:42 Hmm.

Kishore Biyani 2:15:42 So we call the brand Smartsters.

Nikhil Kamath 2:15:44 Hmm.

Ananth Narayanan 2:15:45 Hmm.

Kishore Biyani 2:15:45 We entered through-

Nikhil Kamath 2:15:46 Hmm

Kishore Biyani 2:15:46 ... a category which is very niche.

Nikhil Kamath 2:15:49 Hmm.

Ananth Narayanan 2:15:49 Yeah.

Kishore Biyani 2:15:49 Study, study tables. India has two and a half crore babies produced, and even 12% of that is thirty lakes-

Ananth Narayanan 2:15:56 Yeah, yeah

Kishore Biyani 2:15:57 ... in the community which we want to make them spend money on.

Ananth Narayanan 2:16:00 Right.

Kishore Biyani 2:16:01 Then into beds.

Nikhil Kamath 2:16:02 Hmm.

Kishore Biyani 2:16:02 Uh, we can, uh, getting into toys.

Nikhil Kamath 2:16:04 Hmm.

Kishore Biyani 2:16:05 The, it's, it's sm- it's smart around childhood.

Nikhil Kamath 2:16:08 But, like, if I slept on a Smartsters bed from when I was five to 15, when I'm 22 and making a shopping decision, will I remember Smartsters?

Ananth Narayanan 2:16:17 You, no, no-

Kishore Biyani 2:16:18 You, you-

Ananth Narayanan 2:16:18 Yeah.

Kishore Biyani 2:16:18 You will not.

Ananth Narayanan 2:16:19 You will not.

Kishore Biyani 2:16:19 But you are not-- But we are catering to that audience only.

Ananth Narayanan 2:16:21 But I think-

Kishore Biyani 2:16:21 Yeah.

Ananth Narayanan 2:16:21 See, there's enough of a replacement market, I think.

Kishore Biyani 2:16:23 Yeah.

Ananth Narayanan 2:16:23 I think children's market, I mean, we have, uh, there's-- it's for some reason, there are not many large brands, and I think there-

Kishore Biyani 2:16:29 There's not a single brand.

Ananth Narayanan 2:16:30 Yeah. And so I think there's a huge opportunity in children's clothes, children's accessories, all of them, right?

Kishore Biyani 2:16:34 So this brand now can be extended into clothing also, but very limited line of clothing, which talks educational, uh-

Ananth Narayanan 2:16:41 Yeah

Kishore Biyani 2:16:41 ... messages.

Nikhil Kamath 2:16:41 Okay, another very, like,

Nikhil Kamath 2:16:44 intrinsic to the conversation que- question I had: How important is it to have many SKUs if you're starting a new brand in fashion, clothing-

Ananth Narayanan 2:16:54 So-

Nikhil Kamath 2:16:55 ... cosmetics?

Ananth Narayanan 2:16:56 It's a great question.

Nikhil Kamath 2:16:57 Or is it better to start a brand with fewer SKUs and focus on those?

Kishore Biyani 2:17:01 I think, depends on the category you're getting in.

Nikhil Kamath 2:17:03 Let's talk about fashion.

Kishore Biyani 2:17:04 Fashion may, I would say if you are doing a D2C, not more than 60, 70 options to start with.

Nikhil Kamath 2:17:12 And that's across sizes?

Ananth Narayanan 2:17:13 Yeah.

Kishore Biyani 2:17:13 Sizes are separate options.

Ananth Narayanan 2:17:15 Yeah, yeah. So 60, 70 options in full size sets, I would agree with that. I think the only, um, thing-

Nikhil Kamath 2:17:20 Sizes are separate?

Kishore Biyani 2:17:21 No, sizes are separate. Separate-

Ananth Narayanan 2:17:22 So you'll-

Kishore Biyani 2:17:23 The total number of SKUs will be large.

Ananth Narayanan 2:17:24 Large, right?

Kishore Biyani 2:17:25 Hmm.

Ananth Narayanan 2:17:25 So 60 times-

Kishore Biyani 2:17:25 Then-

Ananth Narayanan 2:17:26 ... the size set, which is 32 to whatever, right? So, uh-

Kishore Biyani 2:17:29 Very difficult to manage otherwise.

Nikhil Kamath 2:17:31 And is the way to build these-

Ananth Narayanan 2:17:32 I, I, one-

Nikhil Kamath 2:17:32 Is the way to build these brands, you create a bunch of inventory and keep it, so you're able to fulfill or you ship that?

Kishore Biyani 2:17:38 I, I, I believe that, uh, I come from a physical world, and the digital world is very different-

Nikhil Kamath 2:17:43 Hmm

Kishore Biyani 2:17:43 ... uh, in fashion.

Nikhil Kamath 2:17:44 Hmm.

Kishore Biyani 2:17:44 And I believe digital brand in fashion has to do m- X number of stock turns, otherwise there's no sense.

Ananth Narayanan 2:17:49 Yeah.

Kishore Biyani 2:17:49 At least their, their stock turn has to be in excess of seven, eight percent- seven, eight times, minimum.

Nikhil Kamath 2:17:54 So what is a stock turn?

Kishore Biyani 2:17:55 In the phys- stock turn is h- what stock you are holding and how many-- how much you are able to rotate it, how fast.

Ananth Narayanan 2:18:00 How much... It's working capital management, Nikhil, right? So I, by the way, fully agree. I think, uh, firstly, the only tweak I have is, in general, online values width more than depth. The reason is purely algorithmic.

Kishore Biyani 2:18:16 Yeah.

Ananth Narayanan 2:18:16 What happens is you have 600,000 SKUs in a Myntra. Number of SKUs that are tagged to a same brand name is one weightage in an algorithm that basically then says you're a large brand, and therefore you get automatically more visibility, right? So width is valued more than depth because you have no shelf space limitation in the online world. Therefore, by definition, when you're doing it online versus offline, you need more options, right? I 100% agree, I think, with Kishore. I think in online, um, I'm going back a little bit to my McKinsey sort of days, right? It is important to think about what I call design for fast turnaround.

Kishore Biyani 2:18:56 Yeah.

Ananth Narayanan 2:18:57 Right? Um, and what I mean by that is, by the way, you know, a standard lead time for making a product, maybe 60, 90 days, but we don't operate like that. So the question is, what can you standardize? Right. So can you keep the same fabric, and can you customize it? Right. Can you sort of dye the fabric different colors, but keep the base fabric, gray fabric, the same? So I think quick turnarounds, which is, I think, Kishore's point, and thinking about a manufacturing back-end supply chain that works with width is really critical. Incidentally, by the way, I think it's equally critical for beauty. What do you find this-

Nikhil Kamath 2:19:29 Can you start a beauty brand with 60, 70 SKUs? If I have-

Ananth Narayanan 2:19:32 You need much fewer. Um, so-

Kishore Biyani 2:19:34 You need much, much, much less

Ananth Narayanan 2:19:35 ... you need much less, right? I think-

Nikhil Kamath 2:19:36 Like five SKUs, 10 SKUs?

Ananth Narayanan 2:19:37 Yeah, so 10 SKUs, you're fine, right?

Kishore Biyani 2:19:39 I, I, I said 60 options, uh, not SKUs.

Ananth Narayanan 2:19:41 Yeah.

Kishore Biyani 2:19:41 So that's a lot of different designs.

Nikhil Kamath 2:19:42 So what is the difference between a-

Kishore Biyani 2:19:44 60, 60 designs.

Nikhil Kamath 2:19:46 In all sizes?

Kishore Biyani 2:19:46 Yeah.

Ananth Narayanan 2:19:47 Yeah. Stock keeping unit versus a-

Kishore Biyani 2:19:49 Hmm

Ananth Narayanan 2:19:49 ... right, right.

Nikhil Kamath 2:19:50 Option.

Ananth Narayanan 2:19:50 Yeah. But I think it's, uh, you know, I think this width versus depth is, I think, one of the most different interesting things-

Kishore Biyani 2:19:56 We are totally in a digital world

Ananth Narayanan 2:19:57 ... in the digital versus the... And, and I think there's, again, this is