Pivoting, Scaling, Creating Impact and Profitability in Local India
Aditi Balbir(@aditi_balbir) loved travelling and stumbled upon V Resorts(@VResortsChain). As a VC, she fell in love with a portfolio company. She took the plunge and navigated through the destination called Entrepreneurship, adding ‘Views’ to the resorts and providing glimpses of the local world.
In this episode, she talks about her unique model, now recognized by the UN. She routes through the hospitality business’ nuances, competition and what is not competition. She shows how women are breaking the glass ceiling. Much like her venture itself, Aditi is a confident Maharani, offbeat and recreating profitable India from the grassroots itself.
Here are some interesting excerpts from the conversation of Aditi Balbir on Maharajas of Scale
I’ve never really had any thoughts of becoming an entrepreneur to be very honest, I’ve always thought of myself as a professional. Travel is my first love. So when the opportunity came, I really thought that – here’s my chance to do something interesting. And trust me when I tell you, for anybody who’s making ppts and excel sheets for a living, they’d love the switch.
Understand The Laws First Says Aditi
I’m actually really figuring out why we do all these things. What part of the MBA program is structured to take you through real life? I have no idea. So no, I really don’t think so. To a large extent, I must say my law degree helped me a lot actually. So in fact, I would suggest that anybody who wants to do anything in life needs to first understand the laws that are governing that particular industry. I’m very comfortable and I’m very happy reading all complex documents myself.
But the real art I must tell you often entrepreneurs need is how to write an email, and that life can’t prepare you for that. So there are times when there are hard times, when you have to write to your employees. There are times where you have to beg investors for money, you have to write very delicate mails. And I think that’s really the core.
3 Key Points By Aditi
If you read the reviews of our hotels, they will usually name a person and say, this guy was fabulous, and you did a great job in making our stay comfortable, and so on so forth. So we really figured very quickly that this was our manpower model.
Now, the second thing that we figured was that as hospitality companies have everything centralized for them. So we started looking for local entrepreneurs and local vendors. And we had to come up with a 100% procurement policy, which was local.
Then the third thing we figured was that our staff is mostly male. Now the women are at home, they’re doing nothing. So we involved them in something creative. We told them to start making interesting products. We figured that we could package them interestingly, and we saw that customers were very keen to see what they’re doing, and to buy the products that they were making.
Aditi Says People are Sticky
This model actually has been recognized by the United Nations as the First model coming out of a developing country, which really looks at using the resources of a developing country and is perfect for that, and create something called a circular economy, which is what the United Nations sees is the way forward if I was to survive in the next 10 years or so. So, very interestingly, we kind of just stumbled across this local model. And it’s really done wonders for us. People are sticky, people stay with us. People are sticky, they don’t want to leave because mostly we are the only commercial center in that village.
In fact, I would say that the hero of our model, and the reason why we can, not only scale, but we can take up properties where traffic does not exist, which means that we can actually develop destinations as against a Ginger or someone who has to look for a destination where the footfalls are already there. So the hero of our story is basically the fact that we are able to, or our cost structure allows us to break even at a 20% occupancy level.
Woman As Entrepreneurs Breaking Barriers
Being a lady helped me in at least from the operational standpoint. I think these guys were in shock. I infact have lots of photos with some locals where they looked very shocked. Honestly, I haven’t really found anything but in terms of the investing space, I must say that definitely a glass ceiling somewhere. Somehow women aren’t really taken too seriously or they are not able to raise the $1 billion. So in fact, I was reading this article on why the women are not getting the one billion dollar project. And I came across an article which said that last year globally, there were 28 women whose businesses had crossed the $1 billion mark. So I guess we’re getting there. But “han kahin pe to hai, thoda sa glass ceiling to hai”
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Aditi Balbir on Maharajas of Scale shares her story, filled with a passionate view of how to scale while keeping the local authenticity of India intact.
Read more about Aditi @foundersdiary
Learn more about V Resorts
Read about UNWTO and VResorts
Here is a word cloud with some interesting words used through the episode
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properties, people, resorts, model, airbnb, fact, scale, hospitality, company, business, local, fund, venture, owners, locations, india, krishna, training, figured, money
Krishna Jonnakadla 00:01
This is maharajahs of scale, a podcast where we go behind the scenes and talk to founders who are demolishing the myths around building and scaling a big business in India. These are the stories that have shattered the assumptions around Indian consumers and of changing the game completely. I am Krishna Jonnakadla, serial entrepreneur, co founder of flip profession located in town and startup mentor, bringing you the stories. Okay, fabulous Friday afternoon. Hey everyone, this is Krishna Jonnakadla from Maharajas of scale. Believe it or not, we've been waiting for this moment for quite some time now. Today we have our first Maharani of scale. at the table. We have V resorts. It's exciting. I think she's got a terrific game going. I'm looking forward to this session. I'm sure you all do as well. Aditya, welcome to the show.
Thank you, Krishna. It is also my first podcast. So I'm very excited as well.
Krishna Jonnakadla 01:03
Oh, that's awesome. So then, I guess, you know, our listeners will get to hear a lot of stuff you haven't said before anywhere I suppose. Yeah. Great. So I think the Bellas what do you do? You know, what is V resorts do?
Sure. So Krishna, I am of course, as you know, the founder of V resorts. This is basically a company that is managing small hospitality assets. In the leisure travel category, so means that we like to give people great holidays. And we are really managing the properties that are branded under us. So anything which is small room, and mentary, anything which is less than 30 rooms, is what we traditionally like to manage. So in a nutshell, that's really what we do at resorts,
Krishna Jonnakadla 01:56
oh, you're breathing life into smaller properties. Can we say that? Absolutely. Terrific. Terrific. So tell us some interesting numbers about your venture that you would like to share with the listeners?
Yeah, sure. We began in 2014. So we are still relatively new. We've invested about $10 million into the business, as you see it. Now, I'm very happy to tell you that when we started, we had only about five properties. And today, we have over 125 properties under management all around India, just to give you another, you know, great, let's say a feather in the cap that we're trying to do is that by the end of this year, we should also be breaking even operationally. So which means that we've always been pretty focused on making money. I don't want to say anything to the other guys that are bigger than me. So you know, I'm sure they know what their business is like. But in our case, it's very simple. We are drawing revenue and withdrawing profits from these small properties. And essentially, we are at a level where the number of properties are enough to cover our corporate costs. So that's really what we are doing.
Krishna Jonnakadla 03:17
So the first off, congratulations, operational profitability is an enormous step. Especially for, you know, burgeoning company like yours. That's phenomenal, I suppose.
Yeah, wonderful for an entrepreneur because you know, then you're not really so focused on looking at your next fundraise. So it really takes a lot of pressure off your back.
Krishna Jonnakadla 03:43
While you're busy growing your company and doing the right thing, well, fundraise is also the right thing. But you know, I would rather be busy focusing on customers and growing the company than because fundraise. It's a it's more than a full time job on its own. So, and I also got that hint of hair versus tart dice, signal that you gave out. Oh, God. So that's great. What is V stands for, by the way, I've always been intrigued. So so
we everybody else's o v stands for the view. So what it means is that, you know, we promise our customers that wherever we are, and whichever location we are, you're going to get a great view. Which also means that you know, we're never going to be in the middle of a city. We will always be in places which are nice, pretty green full of nature. Yeah, so that's, that's the promise that we are making.
Krishna Jonnakadla 04:43
Somerset mom's room with a view. Yeah. Awesome. So that's great. But let's, let's talk about how you ended up doing this. Was this Was this your passion? How did you end up founding this was it all was V resorts always doing what it's doing right now?
Well, no, actually interesting that you asked. V resorts was actually founded by a group of individuals way back in 2011. And their idea was actually very much like the oil that we see today was to aggregate properties, mostly in the ledger location still, but it was basically to be an aggregator. And they started this in 2011. Sorry. And, you know, I mean, initially, it was going pretty well. But what we did see, and what we did come across was that, you know, the reviews were very mixed. Because once you aggregate, the issue is that obviously, one owners returning his property beautifully, whereas the other owner, not so much, or maybe his degree, you know, of quality is different. So customers who were going to one property, we're not really liking the experience at the other property. So the reviews weren't very great. And of course, by that time, we also figured out that an aggregation business needs a huge amount of capital. So these guys weren't quite able to run it. And it almost it kind of shut down in 2013.
Krishna Jonnakadla 06:15
Yeah. So on, how did you end up holding the? Yeah, how did you end up holding the baby
in 2014, we were on the outlook, we still felt that the business had potential. Because at that time, if you recall, there was no air BnB, there was no oil, none of these players really existed. So we were quite sure that the business model did have its merit. And because, you know, I was from a venture background, I decided that, look, let's look for some institutional funding, let's see whether any of the large players are interested. And in 2014, when we got the interest from a couple of people seed fund included, you know, we decided that, okay, you know, it was time to sort of also fix the model. And then, of course, the hypothesis was that anything in India always suffers in terms of quality, the properties and all you can, the quality, standardization is always a huge piece here. And so to do that, it would only make sense if we were actually a full fledged management company, which meant that we are also, you know, we're doing everything, we are training people, we're recruiting them, we're doing vendor management, we're standardizing procurement, so that whole hub of how you see any other hospitality company, it could be a star Ward, or a Marriott, or any of them, they all have these services under their vertical. So in 2014, we decided to pivot. Now, interestingly, I was, you know, in the on the fundraising side, but however, seed fund felt that, you know, since I'd taken the deep position in, you know, looking for money, and so on, so forth. The company definitely needed a, you know, a founder. And so, you know, given also the fact that I love travel, I decided to sort of move here full time, and leave the job at a venture capital company. So that's really how it happened.
Krishna Jonnakadla 08:11
So interesting. So I want to get this V. Right. You keep saying we, and so you were not part of that founding team that began this aggregator?
No, no, not at all. In fact, I was part of the venture comm venture capital fund that had given seed capital to those two gentlemen, who had started.
Krishna Jonnakadla 08:30
Oh, I see. Oh, oh, we are talking about the V as in the alphabet, we not. So that's, that's, that's dramatic. You don't see. A lot of people actually do that the last time. I'm not sure there is a you know, very well, the fund manager in the US who invested billions of dollars in Sears Roebuck, I'm not sure if you're familiar with that. if my memory serves me, right, I think Bill Ackman and he was trying to, he had doubled down he had invested, I think, two or $3 billion, he was trying to steer the company in a direction. But unfortunately, you know, that didn't end well for him in that place, so you don't see quite often that there is an investment that is that you believe is has got potential, and then it could pivot and you yourself could lead it. That's, that's amazing. How did you make that leap?
Well, honestly, if I tell you, I mean, I've never I've never really had any, you know, any thoughts of becoming an entrepreneur? To be very honest, I've always thought of myself as a professional. But you know, the whole sector itself I mean, travel is is my it's my first love. So when the opportunity I, I really thought that, you know, the, here's my chance to do something interesting. And trust me when I tell you, for anybody who's making ppts and excel sheets for a living, they love the switch. So I'm quite happy with the switch, honestly. And even if I wasn't doing this, I know that a career in venture capital is not meant for me. So that's quite clear.
Krishna Jonnakadla 10:22
So we should say here, here, those of you considering a career in venture capital, you know, take it from someone who's been there done that it's not quite. So awesome. So amazing venture capital. Was that where you began your career itself? Or do you have any past experience,
I started my career with bearings, private equity, and then I worked with McKinsey as a consultant for two years. Then I went off to do an MBA at ISB, I did a half and a half an ISP, undue fuel for business in the US. And then I came back and joined the venture capital fund. That's my background.
Krishna Jonnakadla 11:05
Check all the marketing
activities anymore. Oh, by the way, we still have to make a lot of DVDs because you know, as you know, every time you raise around, so the first thing that you have to make is a pitch deck, and you have to get your business model straight. And then everybody has a different comment on it, you got to go back work the numbers. I mean, there's still a lot of it. There. Sure.
Krishna Jonnakadla 11:31
That's interesting. So let's, all this experience and all of this management education. Would you say? Did that? Did that help? Or did that prepare you for what you were about to embark on at the resort? So no, it was rather the emotional side of you.
It absolutely did not. I'm actually really figuring out why we do all these things. I mean, what part of the MBA program is structured to take you through real life? I have no idea. So no, I really don't think so. I mean, to a large extent, I must say my law degree helps a lot, actually. So in fact, I would suggest that anybody who wants to do anything in life needs to first understand the laws that are governing that particular industry, that really helps honestly, because I never get scared when I see an essay or anything, I'm very comfortable. And I'm very happy reading documents myself. So that's something which usually entrepreneurs stay away from. And then of course, Honestly speaking, I mean, because you're from a background in finance. Even those are the there's no, you know, you don't get daunted over equities in Excel. So those that extent I guess they it has prepared me, you know, but but the real art, I must tell you of an entrepreneurs how to write an email, and that life can't prepare you for right. So there are times when there are hard times when you have to write to your employees. There are times where you have to beg investors for money. Super, right, very delicate males. And I think that's really the core. So So MBAs should really definitely have this whole email writing course, as it were, which I don't think is there. But other than that, yeah, not not really doesn't really prepare.
Krishna Jonnakadla 13:19
So it was really the passion for travel. And that angle that sort of, well, I guess, maybe a little bit of lack of awareness of the challenges, because every step of this nature is involved, just leap of faith, though, and that means it a lot of leaps of faith can come only from not being completed. I think
you're quite right. If you don't know what's going to happen, like for example, if I if someone told me now let's start something. I mean, I would just be like, Oh, my God, are you you know, are you serious? I would not do this again. So I you know, when people say I'm a serial entrepreneur, and all I'm like, how do you even do it? Where's the energy? Because it sucks everything out of you to do your own venture for the first time. So yeah, absolutely. I I was not aware at all of the obstacles. In fact, I was very comfortable. And as you said, I just went with the flow. Every year I learned new things, and I'm still learning. That's how it's happening.
Krishna Jonnakadla 14:19
Not a topic for this episode. But yeah, I'm, I'm a serial entrepreneur myself. Much more than I do. You know, Winston Churchill said, enthusiasm, or rather, success is going from failure to failure without loss of enthusiasm. I suppose that's the case.
You have some successful exits under your belt. And so you know, that is the of course the real kick comes from there. So I guess if I see an exit here, then I might contemplate doing something else. I'll be confident enough that say
Krishna Jonnakadla 14:54
do you know I believe the greater an exit a mega exit sort If a situation is postponed or an exit is postponed, the chances of bigger payout is that much more likely if you don't give up. If you read Ray Kroc, you know McDonald's Ray Kroc story. Before McDonald's, McDonald's Ray Kroc, life was absolutely completely unremarkable
one store, and I know exactly what to give, right? I mean, all these guys when they're making the money 180 so it's giving me lots of hope.
Krishna Jonnakadla 15:35
So let's talk about 125. And they're all separate looking at separate locations. Yeah. Oh, that's, that's no mean accomplishment. You keep saying these are small hotels, having them 125 locations, that means you're dealing with so much diversity, so many different things. And you have to keep it all together. So before we talk about how you're keeping it all together, and how you're making all of this magic happen, how did you get to you know, this, I would say decent level of skill.
So, you know, that's an interesting story. In fact, my scaling story is, is pretty interesting. So, you know, when we started off our first five properties, as you can imagine, were in very obscure locations. So, one Viva Viva even though they appear to be scattered, they're not quite scattered, because what we do is that we have locations which are clustered around the major metros, at the present time, we are catering to Delhi, Bombay and Bangalore. We will then be catering to Puna Tamil Nadu sorry Chennai and Calcutta later on, but at the present time these three cities is what we are looking at and all my properties are basically within drivable distance of the major metros. So, even though now, you know from Bangalore, I can be in Karnataka I can be in Kerala and I can be in Tamil Nadu, rupees and tn and, you know, so is the same workflow by an art is all in Kerala, and, you know, move county and all that is an article. So it is even though I have properties in these three states, but they are essentially for people in Bangalore to take a weekend getaway. So, in terms of the geography, it's not as scattered as you think, number one. Number two is that, you know, when we started scaling, we had five of beat properties obscure because these owners were taking a punt on us right, and our brand was not known at all at that time. And they just sort of brought into the story that we'll be able to manage and monetize these assets which are very awkward. Now when we start with
Krishna Jonnakadla 17:50
Verizon Delhi based
since I'm Delhi based, in fact, even now, you will find the major concentration of properties around that. So we cover almost every location that Delhi I would look for, for short vacation, be it a quick trip to you know, Srinagar maybe drive to the Marcelo truck and drive to Rajasthan or maybe a quick flight to the airport. So it's actually all depends upon the locations that Delhi is comfortable. And we even have a property within Delhi, that if someone cannot go even for an all nighter, he can just take the day or the whole day off, and he can spend the whole day at that resort. So, you know, that's the whole idea that you capture the customer looking for the break in that particular Metro. Now, when we started you know, so the first issue that we came across was manpower, because obviously now people who are from the hospitality Institute's are looking to join the charges of the world, they are not interested in, you know, in the small properties, which are 20 rooms, and they're all paid right. So, we figured that we had to hire local talent. Now local talent obviously has no training, they are not trained they unskilled or semi skilled, right. So we set up our training institute in 2015 itself, where we knew that every individual who is running our resort has to be trained in what we want. Now interestingly, we are also not hospitality people, right. So we ended up with having modules which are very simple. You see people at these resorts or people at these locations are already very well cultured very well. are very hospitable. You don't have to teach them how to deal with a customer. You have to teach them how a tray will be laid. You have to teach them how a bed will be made. And you have to teach them what is dirty and what is stained because dirt is something they don't even look at. So these are very simplistic modules like that is what we developed and how we train these people. And very early on, you know, in 2015 itself, we figured that the reviews are fantastic. If you read the reviews of our hotels, they will usually name a person and say, you know This guy was fabulous. And he did a great job and making our stay comfortable, and so on so forth. So I guess we really figured very quickly that this was our manpower model. Now, the second thing that we figured was that as hospitality companies are there, everything is centralized for them, right. So they have vendors, so that quality is standardized. We couldn't do that, in our case, because the last mile connectivity is so broken, and it's so tough to reach that place, that we felt that the cost will be crazy, you know, we'll be actually sending taxis and cars to the property to deliver things like soap. And so we figured that's not possible. So we started looking for local entrepreneurs and local vendors. And we we had to come up with 100% procurement policy, which was local. Now we did that. Then the third thing we, you know, we figured was that, you know, our staff is mostly male at these properties. Now, the women are at home, they're doing nothing. So we figured let's get them, you know, involved in something creative. We told them to start making interesting products. We figured that, you know, we could package them interestingly, and Wi Fi, we saw that customers were very keen to see what they're doing, and to buy the products that were that they were making very simplistic stuff like, you know, say, a place like Muhtar Kent is known for its fruit. So they were making squashes and jams and you know, simplistic things like that. We already had a food license for our property. So we were able to even license those products and sell them. You know, so things like that. So what I'm trying to tell you that my scaling story actually became so local in nature. And that's exactly the reason why we did not face hurdles. And we have not faced the challenges that a company would usually face if they are to scale. And especially where there is centralization involved. Now, this model, in fact, I'm sorry, and I'm jumping two steps forward. But this model actually has been recognized by the United Nations as the first model coming out of a developing country, which really looks at using the resources of a developing country and is perfect for that, and create something called the circular economy, which is, you know, what the United Nations sees is the way forward if our Earth was to, you know, survive, and the next million years or so. So, very interestingly, we kind of just stumbled across this local model. And it's really done wonders for us. See, people are sticky. people stay with us, people are sticky, they don't want to leave because mostly, we are the only commercial center in that village.
Krishna Jonnakadla 22:36
So 2015 when you decided to establish this Training Institute, how we had 25 doctorates? Yeah, you had 25. Okay. And I'm just guessing here that all of this realization did not obviously happen at once. There was possibly a realization, you know, about local sourcing. So how did did the numbers at some point in time, how much of this came from the people that you implied? And and so, so take us through that journey, you covered a vast amount of number of inferences, and, you know, strategic moves? Yeah, just just a few minutes. How did that evolve? Were there some inflection points that drove each of these evolutionary parts?
You know, so when we started, like I said, it was a very simplistic venture that we will not provide holiday destinations or holiday properties to people who are around the main metros, who are looking for a short break. So we will never be gearing ourselves for the long haul. 1520 day breaks at that time, which I must tell you has changed over the years, because someone wants to write a book is actually now going to our properties staying there for a month. So all those things, of course, is happening now. Still, majority of the people are the people who are looking for that break. Right now. 2014, all of 2014 video really struggled with the with how the property should look and feel. So in fact, we did not have a branding, you know, ready? We actually hired an agency and in fact, Seed Fund. I don't know if you know, but is run or is one of the partners is my age Muti? Who is the creative hub of canovee. Right. So Steve really was a very integral part of really helping us to develop our brand identity to helping us develop the story, you know, what the V stands for, as you said, by the way, the name was their way before, you know, way before the view thing came up. The view thing came up with us, but before that, also it was branded v results. So I don't know what thinking they had before that, but we are spin on it as is the view. So so he was quite instrumental and all of 2014 I think we just sort of figured how these five properties will be branded And I think in the end of 2014, I think only two of those five properties were branded, we were yet to complete the work and the other three properties. So that's the 2014 journey. 2015 In fact, when I say I had 25 properties in 2015, it means that at the end of 2015, so at the end of 2015 16, marks 16, I had 25 properties. So that journey was more like, you know, people getting interested because they found that Okay, there is this one company who is able to take their pain away. And honestly, in in that year, most of my, you know, the owners who came to me by the word of mouth of other owners, friends of those other owners, or they were through my, you know, we I had done some promotion in the ISP aluminide network or in the Duke network, I was basically to my own network that these people were coming in. So all of that year, of course, the scale happened only through that. And and the idea was that okay, well, as we get these properties, they will look and feel a certain way and this will be the pitch to the customer. At that time. Also, we we started grappling with a manpower issue in 2014. Because that was when we started getting a lot of properties, see arranging one pokier. And arranging one RM there is easy, but when you look at, you know, getting all of them together for say, 25 properties you have, you know, three housekeepers for property, you have three how f&b service people per property. And those are the guys who really need the training, they really those guys who are, you know, who need those who need these modules. So that was when we started finding the same point. And we decided that, okay, we have to develop these modules, they have to all be visual in nature. In fact, we had someone as a consultant, she was the xo, running the x override School of Management. So she came on board, and she is really the one who developed all our modules, even today, we're using that modules developed by her. And then we of course, made videos, we, you know, so one, the first training is a hands on training, where the the trainer is in front of you, and they're teaching you how to make it and you have to make the bed in front of them. The second training will be online, where you're seeing the video, and then you're answering us a few questions. And the third training is when our own corporate manager, operations manager will go to the that property, we'll see from the reviews, what are the issues coming, will audit the property, and then we'll provide training on the things which are not going. So there are these three steps of training that, of course, we have developed, again, obviously, over these couple of years, because that year, of course, we just made our videos. And we just had this one lady here, who was running that whole show. So that's a whole of 2006 1516. Now, 2016, and 17, are actually the two years where we scaled very rapidly. So from 25, we grew to 55. And from 55, we grew to about 100. And then we kind of stopped. So even after 100, this 125 has happened purely organic tea. So one interesting thing, which we never did, and which even despite the fact that now there were other players in the market, who would look after small room inventories like oil, or fabhotels, or treebo. And they were in fact throwing a lot of money in the market as well. We never had to struggle with really getting the leads of properties. So I think the word of mouth was strong for us, we never spent any money in getting those leads, we never did advertisements, we never did anything. And those leads pretty much came to us also, you know, which we which I feel is because the pain point in the industry is definitely very apparent. So just in terms of the pure supply, if you look at any of the websites, they make my trip or booking.com or even TripAdvisor, you will see there are over 50,000, unbranded properties with small inventories and holiday destinations. And this is in fact you can find it quoted in the make my trip annual reports as well. So you know, this is where you know that there is a genuine pain point. People with some money build a pretty resort or a cottage in some part of the country. They feel they're going to come there and probably live out their life but never happens. And then they grapple with the problem of management. So yeah, so this is basically Yeah, more or less about the scaling.
Krishna Jonnakadla 29:45
I'm a little surprised you didn't touch upon the economics angle, they're a bit because you you have properties that possibly fall into two sorts of categories, right. There are properties that are able to generate traffic. But that are really dying for the right kind of management towards the right kind of practice. So that is one. And I don't know what your experience has been. My experience has been that unless there were, and this is kind of true for most of Indian companies as well, you know, we, it's a personal belief that as a country, we do not have a working culture, we do not defy, we do not have defined processes. And that's almost, and if you happen to see something that's mostly borrowed. I know, I know, that's a sweeping generalization. And somebody will judge me for it. But but that's the case. So what I'm trying to say is, if you went to a property, and if you had a good experience, it's rather an outcome of somebody, somebody some person's passion out there, as opposed to a set says, as opposed to how Marriott or Hyatt or Hilton would do, which is, which is a cookie cutter, you know, he, that person, anybody who gets into that role knows exactly what he or she is supposed to do. Right? So so you have, but I, you know, having traveled across lived and treebo properties, lived in a state sorry, stayed in OIOS, the tribals possibly a couple of notches better than they owe us. Most of my experience with oil has been below average, I think they're a great scale story. But I don't think they'd be brought out the impact in terms of standardization that they possibly hope to do. Sometimes you sacrifice, you know, some things for scale, which looks like you know, you're taking the opposite direction. But let's talk about the economics angle A bit. So for instance, let's take ginger, right, Ginger is a slightly different business model. But, you know, when they grew, they also ended up tying hands with, in, I think, a couple of cities, where hotels were already built. And eventually, you know, those stayed within the ginger fold. The ginger is a Tata brand. And this properties, took two or three years of brand mileage out of ginger. And then, you know, went back and when when I chatted with a couple of those people I know, you know, they would say, hey, the economics didn't work out. Right. So in this, in this case, when you went from 25 to 55. What was it? That means that for the first 25? The touch that you brought about from an economics and the standardization perspective was possibly both when was that the case?
Okay, sure. So let me explain to you how that works. So you're in fact, I would say that the hero of our model, and the reason why we can not only scale, but we can take up properties where traffic does not exist, which means that we can actually develop destinations, as against a ginger or someone who has to look for a destination where the footfalls are already there. So the hero of our story is basically the fact that we are able to, or our cost structure allows us to break even at a 20% occupancy level. Now, that's actually what we do. And that is actually what we take to the hotelier that look, you are at 35% occupancy and you're still not making money, right. Now, of course, there are some pros and cons of this. So I'll explain that in a bit. But the first which set we tell them is that look, give us your property, so that the first thing that we would do is cost correct to run a 12 room property, we believe that we for the services that we provide, we do not need 60 people running the show, we need only 14 to 15 people. So, a maximum of one is to one or one is to 1.2 is the ratio that we use for our properties, that ratio actually goes down as the property number increases. So for a 20 room property, I would say a point eight ratio, which is 16 people are more than sufficient to run the property. Now you have to understand we are venture funded in the hospitality, they basically this daily raid system is is very used. What it means is that when you have peak seasons, you know you suddenly get 10 more people from outside to run your property. And when you are not in peak season, you have only five people who show on your payroll. That is how hospitality companies traditionally and even now make money. Because we are venture funded, we could never actually do away with a minimum wage. We had to keep people on our roles and we had to make sure that we adhere to the minimum wage. In fact in our policy, we say that it is 10% above minimum wage is what we will be paying our people. So the ratio had to firstly work, the the people were always on our roles whether the occupancy is 0% or 5%. With those people also what we did was that we were able to showcase the hotelier that you drive the occupancy to 20% on an overall annualized basis, and you will be able to see a breakeven level at a profit and the gross profit level, which is, I think, the hero of the entire show. Now, there are caveats here, for a pure budget play where the pricing is between say anywhere between say 500 to say 1200 rupees, this model does not work. So, the budget category, the retail status, 2000 rupees, this model will not work, you need a realisation of 3500 to 4000 rupees, or to break even at 20% occupancy, right, that's the first thing. Secondly, for a luxury property, where the pricing is anywhere in more than 7500 rupees, again, the model does not work. Because there even though the price realization is very high, the costs of running that property is way higher. And our cost structure of that one is to one will not fit for a luxury car. So, our model really fit for the mid market segment like the serovars and the lemon trees of the world, or the Royal Oak, it's where this price point of 3500 to 4000 5000 rupees all inclusive means I'm including the meals and experiences as well, is where the model very books. So we had to narrow down from this 50,000 pool of properties that we have in on the sites, we have to narrow it down to this sort of a property where the price is justified or 3000 3500. Interesting, which is what we really do as well.
Right. So like I said, that's really the hero that 20% breakeven is the hero. And then after that, whatever you're making is really coming to your bottom line. And that's I think, where the owners are also very happy with us. Secondary, we are the management company, right? So we take our fees, and our fees are nowhere near any of the audience, the much lower were incentivized on driving profitability. So that way, I think the owners always did find that our model was better than any of the others, I must tell you that, you know, during that time when we had just started, and the whole idea was to capture the market, they were giving things MGS they were giving big minimum guarantees to owners. But we never steered that way, I think we were pretty clear from the beginning that we will stay true. And like I said, our model is quite interesting, because for us to really hit the numbers which you know, which look IPO, because obviously every investor wants to see that we need only about 1000 on properties. So we can really, truly cherry pick from the supply that exists out there. Which is why I was also very careful about building a brand which was local consumer conscious, you know, things which only very few people will I mean, not the entire mass basically will not understand. And they will see a premium, sort of a positioning to my product, visibly the other people in the sky, it's interesting.
Krishna Jonnakadla 38:19
So, yeah, you know, for the country of our size, I believe, you know, we need to use not just one tool in the Swiss Army Knife of strategies, everything, we need an oil to go out there and say, Hey, you know what? We need to you know, make make the sector hot, right? Somebody has to take upon to get out there and say, yes, hospitality is vague. There are a lot of Indians traveling there there is there are in the realm of possibilities. There is a lot that can be done, I think, which is what Oh, you did?
No, I knew that. But the one thing we really thank oil for is that before them, nobody even recognize the fact that the domestic traveler is really the king. We are not I mean, every time we went for a travel conference, we were only told about the numbers of foreign tourists are a good number compared to the Indian tourist, okay, like, it's 10 million, visibie 100 million. There's no like, you know, this thing. And the whole idea was that they were the guys really brought it to our, you know, to the forefront, that the domestic travelers really the guy who needs to be catered to. And we also by the way, the same thing that you know, we will go to we really want to scale we want to be outside India as well, but we will basically go Indians, and that's our entire pitch as well. Our product is absolutely suited for the urban traveler in these cities. who's looking to take a break so absolutely suited for the domestic problem. In fact, we have control Not going out to the to the foreign club,
Krishna Jonnakadla 40:02
I think it's high time, we've always been a big market, a big, big country. It's just a few tweaks that we had to do in the way we had to look at it. And I think that's amazing. So I'll come back to that a bit in a bit. But I do have one question. All of this, obviously, came with its own set of challenges, right, working with local people. Well, you know, the lack of maybe familiarity with procedure. So in essence, what you did was, all these people are already nice people that genuinely know how to talk to people, let's say courtesy, all those people skills they have, what the what they needed was, I'm going to use a term sophistication, right, a little bit of modernization, right? So give them that polish. So that they come across, and they understand and the degree of standardization comes in. So that's great. But But all of this, I'm sure was not a bed of roses. They were challenges along the way, what were they like,
we've had our share of strikes and the property, we've had all that we've done all that. I think what it takes is strong, strong management. Earlier, I used to be involved in these issues. Now I'm not, it is see operations is a very manpower heavy business, no doubt about it. And maybe that is also one of the reasons that we could never pull in the large amount of funding, because we were always seen as a very operationally heavy company. That is absolutely, you know, that's absolutely are given. So we have we've had our share of people leaving, you know, what, but I grew up echo buggy and all those sorts of things. And we've learned from it. So we have a hub and spoke sort of a model. So you know, just about Yeah, come to see, tell us a bit that school and stuff like that.
Krishna Jonnakadla 42:02
No, in effect, I was thinking, were there some moments that sort of shook you? What, whoa,
this is not the area that has caused me pain in that. Honestly, this is the area that has really caused me it has given me a lot of joy. I mean, I know a lot of people by name, the my initial five properties I spoke speak to them on the phone even now. They're wonderful people, I showcase them, I've done videos on them, and I've tried to showcase their story. This is the part that is truly amazing, you know, Christian pitch now because, I mean, we think that you know, all these problems must be existing in our villages. Now they must be dirty. Those people must be illiterate, they must not know how to speak Moffitt kidney cases, or they own gay of this and that crime muthanga It's so sad that we don't know that so many cities know your villages minneota they're the most wonderful places in the world. They are wonderful people. They are lovely to speak to so this part of the business has given me joy. It hasn't caused me causing any stress. Even in a strike situation. I know why they have done it, because they have found that I'm a property kid. You know, the Wookiee salaries increase cardiac rehab, any Can you know stuff like that? Pretty genuine. I must tell you, so. Yeah. So I've never had any any issues with them. They've helped me when I needed to. So SFO issue nine. Yes. training them is not so easy. So you guys can let the operations team speak for the for themselves. Whenever there is a quality issue and all obviously there is somebody to be blamed. So training is an ongoing thing. It's a hospitality company. And trust me, I've heard of, you know, worms coming out of fruits, even in tabs. So yeah, this is part of the business and you have to be okay with it. But specifically against a single staff member, I have not come across a single complaint. So I must be doing having this model that is something right about this model. It's difficult to put into words. The challenges have not quite been on this level. The challenges have actually been on trying to, you know, some properties you think they're wonderful, but the business in your town may you know, so scaling the distribution part has been pretty challenging for us pretty challenging. Also, because to a large extent people do not get our proposition even today. It's very tough to explain to somebody that you know, people will say a child they say dodge so calluses Hey, neemrana tow heritage here to upload your head to Japan Cata via local people don't really get it buscaglia mazovia local counter, you know, so And even now maybe I'm not so great at communicating what we really do. You have to go there to experience it to actually immerse yourself in that culture. Forget about Delhi see SATA the way that you will See, you know, maybe you're up, okay. And that's the sort of stuff I said, it's very difficult to communicate to a travel agent. It's very difficult to communicate that to a customer. When you get calls. Also, you'll see the same, I think rules yourself. And I really want to say your rooms to allow an hour both with a jacket to the core. But that I think, is the part that we struggle.
Krishna Jonnakadla 45:24
Are you seeing that changing with the advent of Airbnb, while in Bangalore, for example, the last three years, I can definitely count four or five properties that would fit into the, you know, the V resorts, kind of a property. Definitely. And we've also done homestays, so where it is, it is local, okay, maybe I don't know, maybe I have a different way of understanding things. So I get I get what you're trying to do. So now that Airbnb, is there in India, to a certain extent, there is a greater degree of awareness? Are people able to get your promise better? Or is it still a struggle?
more confusing? No. So I tell you what Airbnb is right. Airbnb is a marketplace, okay? You have a property. In fact, you don't really exactly have a hotel, you have a homestead. And you have, yeah, you have put your homestead on Airbnb. And usually as it is in the West, no one is managing that home. It is there. And you can take the keys from the owner open it and basically make that your home for a couple of things. That is traditionally the Airbnb model. Okay, now, here. So here, however, we are completely different. We are full service, we are a hotel company. So we have everything you can have one service you can do. We have a souvenir store, we have activities, we have experiences, we have guided tours, we have tracks, we have full day dining, we have two options for dining, we have the proper restaurant inside, and we have outdoor seating outside. So we have a full whole walk. I mean, you come to us, we pamper you. It's not like an Airbnb where I just so in fact, let me tell you the more use Airbnb for our own stays, which are serviced, I might add. But we use Airbnb as our partner to drive sales. So they are not competition for us in any way. Then you talk about Airbnb, because the problem with Airbnb, in fact is that they use the word no live local, they use. So because of that reason, we are even more confused now than then earlier. And honestly, there is only one answer to this, in my opinion. And that is to spend some advertising money in educating the consumer. That is the aspect we have never gotten into I myself am not from a marketing background that I could drive it myself. So that I think is one aspect which is clearly missing in our business. And I found that to be one difficulty in scaling also that how do I scale? I'm not being able to build a brand without, you know, some concrete communication about what we're doing. So So yeah. So Airbnb, for like a partner, not not so much competition.
Krishna Jonnakadla 48:17
No, what I actually meant was not as a competition, because Airbnb was the one that sort of showed the world that there was an alternative, you know, hotel option, right? So,
in India, not so much Krishna in India, became ojo treebo. Five, we were all there. So I think breaking now we were able to establish the fact that alternative accommodation exists. And you know, we are the guys were doing it in the small inventory space. And I think Airbnb came into India in 2016. So, by that time, yes, we had, we had pretty much established that
Krishna Jonnakadla 48:58
you're the best of both worlds, isn't it a local experience, plus all the frills that comes with a full size hotel?
To say that we are a service champion? Anybody who asked me out of India, no, because then there everybody knows Airbnb. So the best way to say is that I am not oil, and I am so history Caribbean, just in one line to explain what.
Krishna Jonnakadla 49:21
So I'm asked, I'm going to ask you this in a slightly different question. Just, you know, change lanes a bit. Being a lady being a woman. Has that been helpful? Was there a glass ceiling? Was there any was was was it any time tough? You know, to do what you're doing right now.
Being a lady helped me in at least from the operational standpoint. I think these guys were in shock. Okay. Someone here in bed, have lots of photos with some local Where they are they look, they look very shocked that they have to stand with me and take pictures. So I think they didn't quite speak me initially. And even now, they're very sweet. So I think being. Yeah, I think it was very good at that time to really, you know, for the shock value of it. But But I think in terms of the investing space, you know, I mean, honestly, I haven't really found anything. But in terms of the investing space, I must say there definitely a glass ceiling somewhere. Somehow women aren't really taken too seriously, or whenever able to raise the $1 billion. So in fact, yesterday, also, I was reading, I was gonna do this article on via women not getting the $1 billion. And I found I came across an article which said that last year, globally, there were 28 women whose businesses had crossed the $1 billion mark. So I guess we're getting there. But But how can you pay for hair loss sunglasses, ceiling hacking?
Krishna Jonnakadla 51:00
coming from you, you've been in venture capital? You know, I must say, you know, there's possibly a glass ceiling. But But you know, something. I follow a playbook. And I'm part of this thing called startup leadership program. I mentor startups there a couple of years ago. They said, Hey, what are some of the hacks that you've done? come and talk to us about it? And I said, in the list of hacks, and even today, it's a strategy that if I were to hire, and also co founder, nine out of 10 times, I would, I would pick a lady. Okay. I've just seen that. The, the, the perspective, the approach is so different and refreshing. I would say, you know, what, how big is your team? I would say, Okay, how many? How many women and that not so much as a, you know, what, you need to change the gender quotient or nothing of that sort? Yeah. I say, Well, why are that guy? Yep. Personally, for me, it's not about checking that diversity box or anything. Yeah. But I've seen that when, when there are women, the whole game, the the, the strategies that you employ, they bring such a refreshing perspective, it only strengthens or possibly multiplies what you already have. So that's a definite thing. I don't know someday, maybe one of these days, the investing communities will wake up. Hey, you know, you're at 125, you will possibly hit 1000. Soon. If you're checking the economic box. If you're checking the economics box and the management box, and you seem to have a win win situation, you will gallop to the 1000 fast and at that a billion dollars is easy. Yeah, I don't see that being a problem at all. Right. So okay, so awesome. So let's talk about family. what's what's what's family? Like? Does being kids, how many kids one kid? One kid's good. Right?
even fathom anymore? But yeah, so my kid is 12 he's in school. And as he you know, like I say, I don't know her makeup up chiamato body six standard yoke or not? Because the problem is that, you know, I go home and the first thing is that, okay, what's their homework? Tell me first. So I'm getting the homework done as well. So that's a bit of a tough one. And as he progresses, I can't keep up with the math and the science because I'm a commerce student myself. So I'm like, I don't know what the hell you're up to. So yeah, so it's getting tougher. And I'm really appreciating the English literature. I can't tell you how much. So that's something. And of course, my husband has dabbled himself in startups. He was with a company which had had the solution and blockchain I have to say that correctly. So not in crypto, but in blockchain and then funded by the by the naukri. guys enjoy it. Yeah, so he's done that as well. Otherwise, he's from a transactions background. So he was an MMA. So that's him. And I mean, it's, it's very volatile. I must tell you, so it's like, Okay, are you home today is fine, get the homework done. If I am home, I get the homework done. And ptms We both read because we know that family dynamic or non productive, because, you know, the teachers are like, you know, his work doesn't come on time. And I'm like, that's because we don't go on doesn't come on time. So
Krishna Jonnakadla 55:00
Do you have you cultivated a set of mentors and advisors that you sort of fall back upon when you need some advice?
Absolutely. I think that is critical. I don't think anybody can do anything without that. So actually, you know, the person who was in the venture fund, initially, before we started, he's still around, and he's one of the mentors, then Seed Fund, you know, the professionals who's actually looking after our company, they're very much around. So, initially, I mean, it's weird, but my initial male investors turned out to be the mentors. And for everything, even now we are basically we keep going back and forth. I always say that it is a board run company, because the three of us are usually the ones taking decisions together. So yeah, so they're very much
Krishna Jonnakadla 55:57
what are some of the founders or people that you admire and follow? And channel?
It's more individualistic. I mean, I know a lot of people must say that. But for me, My role model is Oprah. Not so much because she's rich. And she's you know, not not so much because of that. But more because of, you know, if you really hear what she says, she's got the she's got a trick to sort of navigate this world, right. So it's almost as if she could see the matrix. And she is sort of the Oracle. Right. So she is one of the people I love and really look up to Arianna Huffington. I'm sure everybody says that. She's great, too. Let me think of some of the Indian women. If you've heard of your story, that's a great one as well. shatta has done some great work. And in terms of what's that other lady's name? She knows they're doing some great work too. So yeah, some some great women entrepreneurs here as well. So we always get together done new things.
Krishna Jonnakadla 57:15
So any names you can name mentors, you have on speed dial?
Yeah, sure. To like I said the investors. Both of them are on speed dial. That's way way behind me from bedrock ventures, and Shelley's Vikram Singh from seed fund.
Krishna Jonnakadla 57:33
And I you know, I saw your Twitter timeline. So Game of Thrones. Had Harry Potter.
Complete fantasy free complete. I've seen everything. Lord of the Rings, Harry Potter Game of Thrones, you name it
Krishna Jonnakadla 57:52
outside of the professional life. what's the what's the reality? Like what what does she like? You know, what does she like to hang out with?
very boring? Yeah, I watch everything on Netflix. It's Netflix and chill for me. So my typical Friday or a Saturday evening would be, you know, resume watching Netflix eating some junk food. Perfect. And I'm quite a foodie, by the way, so I love my knowledge. And yeah, some me time. Sounds great. I'm completely addicted to content. So anything and everything is what I'm What do you read?
Krishna Jonnakadla 58:30
Are you a reader? I read a lot as well. Yeah, I am. I am always reading some book. Amazing. What are some notable recent reads
recently right now I'm reading this book called Lord of the butterflies. So if you've heard of button poetry, you know, this institution. So it's this sort of poetry very different, but it's come out of Chicago. And, you know, it's a different form of prose. So this is a book which is nominated for I think, the Booker this year. So I'm reading that these days. Interesting, different, very different. And other than that I've read, I've read a lot of stuff. Now I read a lot of fantasy again. So you know, which ones can I talk about? I none of them None? None of the ones where there are any movies or anything. But I've seen everything from Twilight to you know, all those series. Anything in the fantasy genre. I love it. And yeah, and other than that, I have what else to wear it. I love peak oil. I love him. In fact, he is you see that he's the one I retweet the maximum. So the lady and the mom is one of my favorite books. When I'm feeling down at any time I pick it up, start reading it. His life is fascinating, isn't it? Because, I mean, somehow you can just leave his family for six months and traveled it's pretty much offered. You so you know, it's quite fantastic. myself a lot. So it's okay. I, if I had to, you know, actually do the numbers, maybe I leave them for about three months in the year and I'm traveling, it's amazing
Krishna Jonnakadla 1:00:15
what well, one more passion. Yeah, as soon as maybe you get to 1000 properties and do the IPO and then you can say I'll hang up my boots and socks. So what so talking a fantasy, what's the fantasy outcome for the T and V resorts?
So I think we're quite clear about so I haven't spoken about this. In fact, let me speak a little bit about it. Like I said, we stumbled upon the fact that we were really creating a lot of impact at the local level. without really, you know, thinking about anything to do with sustainability, we were actually, you know, doing things differently, so that people could benefit and at the same time, the business benefits as well. So the economic benefits, like I said, the it is the model that allows you to break even at 20% if you had to hire somebody from an IHS. So there in itself, that model is done away with, right. So the fact that you are able to hire local people, is one of the major reasons of being able to break even at that 20%. So I think those we have now started gaining recognition for the work that we're doing at the local level, other impact level, and there is a whole impact space out there. Again, I'm not from this background. So I'm learning the ropes as we go about it. But there is this whole area of impact, there are investors who are there, there are funds of of countries, like the Danish fund, if you are like the CDC, which is the UK Fund, which are looking at developing countries, interesting models coming from there. And now after the UN WTO Award and the affiliation, were able to actually see that, you know, some countries like say, Armenia are coming to us saying that, Okay, can we replicate your model in this country? So our model actually is perfect for a place a developing country. Think about America where there are actually no kirana stores? Right? So model Dominika?
Krishna Jonnakadla 1:02:17
Yeah, it sounds like sounds like a happy, happy. I would I want to say happy accident. Right? Yeah. Actually wonderful. I mean, we didn't quite expect to it's not by design, but it was by accident. But it's a happy accident.
Oh, yeah. Completely. I mean, I'm very honest about it, because I'm like, Look, Viva I am an entrepreneur how to make money. So we were always, you know, more motivated by the economic goals. But see, that's the beauty of it. The even in hospitality, when you look at sustainability, people think that Okay, I will invest today, I will have to invest 100 rupees today, and I will see the benefit of that 100 rupees over the next three years, I am trying to tell them that you do it this way, you don't have to spend as much money. You know, today, instead of 100, you're spending 90 rupees, it makes sense, there is no other way to really put it. And see, we've also spent more money in this business, because we were also learning things as we went. Now, if we were to start it with all our knowledge, I mean, we wouldn't be so capital efficient, it's not fun. So I think my dream is really truly to show that this model can create what everybody's talking about. It's a very large dream, I know. But it is something that I really need to prove that, you know, this model can be taken global, it can work for developing countries, and I'm really sort of focused on that.
Krishna Jonnakadla 1:03:48
Hey, big, hairy audacious goals are the ones that excite us right? So what are we here for so awesome. We had a terrific time chatting. This has been amazing. Everything sounds like pixie dust to me, maybe you're just going out there and then you know, sprinkling pixie dust from your fantasy dust? Oh, we will. Certainly certainly one of one of these days, maybe do a lot more than just touring the property as well. So, we know we will see u and v resorts, you know, scale greater heights. And mirages of scale will be there to you know, cheer you and also you know, do another session to show the world what that vantage point looks like. Thank you Krishna sounds really wonderful. Thank
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