Winning with a D2C Brand

Winning with a D2C Brand seems like a done deal. We live in the age of individual and local brands. Our social media feeds and YouTube accounts are full of advertisements for local brands. We are flooded with brands that replace seasonal niceties, such as Mangoes, beard grooming oils, and tender coconuts, to name a few. Not a day passes without discovering a brand in cosmetics, food, or another category. The advances made by industries make it possible for anyone to launch brands and products with a bit of work.

This looks like an amazing thing. You discover a story on popular media platforms and think you should be one too. But you are not sure what winning with a D2C brand entails. When to launch? What to consider? Which niche or segment to get into etc.,

In this in-depth episode, Co-Founder of the successful spa chain Four Fountains De-Stress Spa and Co-Founder of Pilgrim Cosmetics Anurag Kedia takes us thru his journey, how he spotted the opportunity for a D2C brand, how they succeeded in launching during Covid and other aspects. If you want to win with your D2C brand and in online commerce, listen to Anurag here.

The Age of Individual brands

The late 19th and 20th centuries witnessed innovation on a massive scale. Right on the heels of the Industrial Revolution, its discoveries and inventions came the 19th and 20th centuries. World Fairs that took place in prominent cities such as Chicago, New York, Paris, London, et al., gave rise to new brands and a new mood across the industrial world. Small town brands such as Hershey’s started spreading beyond their local regions.

The World Fairs also gave the World things, such as the Eiffel Tower, which was built for the World Fair. Considered ugly when unveiled, the Eiffel Tower today is a major attraction driving millions in revenue for France.

The so-called rust belt of the United States comprising Indiana, Illinois, Michigan, Missouri, New York, Ohio, Pennsylvania, West Virginia, and Wisconsin is full of companies that once started as small local companies. Many consumer and industrial brands, such as Kellogg’s, Whirlpool, Walmart, Dover etc., have become global brands.

A New Trend?

It is hard to say whether India will witness home-grown brands becoming global brands like those in the United States. However, ambition certainly exists, and when you couple that with the ingenuity of cost engineering and packing exceptional value, Indian D2C brands might have the formula to pull it off.

In this episode, Anurag talks about how he is doing just that. He has touched 100,000 consumers and is just getting started to go to the next stage. Listen to it to understand more

Episode Transcript

The following is the episode transcript. Please note that this is an automated transcript and errors may exist.

Nithin Kamath:
Be very honest. If I was a VC, I wouldn’t have funded myself. Like, you know, how bad the presentation was. You know, to build scale, you have to think scale. Sometimes I think too much of money restrict innovation. I think that’s a sad part. So destiny finds you on the road that you take to avoid it. Whenever you get seat on a rocket ship. We don’t ask with seat.

We didn’t really ask ourselves like too many questions in terms of how big can we get it. So it was very hard to explain what is UGC. We want to implement something first. Again, we had basic team struggle, struggle, struggle. But every day was just learning, which was just amazing. Listen to founders about their stories and how they built their startups here on maharajosov scale. With me, your host Krishna Janakadla, co founder of Mango Mobile TV and Watch.

Krishna Jonnakadla
Hey people, we are back again and after a little bit of a break, we have Anurag Kedia of Pilgrim with us today. It is something interesting because we are right now in the D2C era and the D2C era is throwing up a lot of interesting brands. For me, I personally think the D2C era is nothing but a sort of modern version of people building small businesses. Today we have with us Anurag Kedia, who is going to talk to us about his journey and what he’s doing with Pilgrim. And we thought after the little bit of break that we did for our podcast, Anurag would be a great guest. Anurag, welcome to the show.

Anurag Kedia

Thank you so much, Krishna, for having me. I’ve been listening to your podcast for a long time now, so very happy to be here and having a chat with you.

Krishna Jonnakadla

Wonderful. Anurag, tell us a little bit about yourself and what are you working with right now?

Anurag Kedia –About Origins

Yeah. So I come from Bilaspur, that’s in Chattisgarh. My schooling was in Bellaspur. Came to Bombay in 97 to 2001. I was at IIT Bombay, worked for a year or more and did not work out. Was a part of a company, would say, but did not enjoy. Was in a tech company and I did not enjoy the role at all. So to get out of tech, I decided to do an MBA. I got lucky, got into IIM Ahmedabad.

Post my MBA. I started my career with Tata Administrative Services. Worked for close to 18 months, then worked as a consultant with KPMG for close to 18 months. Got chatting with a friend of mine, in fact, Junior from IIT, Bombay, Bachelor from my Mandavad, who was with H-U-L. And we got chatting and decided back in 2006 that we should start something together. And the opportunity we identified was to launch a chain of day spas or health spas.

The decision to launch

In 2007, this was my first venture. We started a chain of spas called Four Fountains. So my co founders, Sara Benson and me, the three of us were there. 2007 to 2018, the three of us ran a chain of spas salons, Ayurveda clinics. I also got appointed as a director with a chain of Hair and Scalp clinics. So spent close to twelve odd years in the field of beauty and wellness. That’s what I did for twelve years 2019, all three of us decided to move on to different journeys.

The Pilgrim Journey

In 2019 is when I started working on Pilgrim. And obviously the brand name was not there. I didn’t know what I wanted to do, but there were a couple of realizations. One realization was that tech as an enabler who’s helping businesses grow much faster than the traditional offline businesses. So when I started working on Pilgrim, I didn’t know the term D2C. This is what the investors told me that, oh, you’re trying to build, etc. I called it e commerce.

I said I’m trying to build an ecommerce brand. But the one thing I knew was that why I had got into spas 15 years, 14 years back, was because I was excited by consumer brands. That passion continues. And between 2007 and 2018, all I did was beauty and wellness. The domain was beauty and wellness. So I said, let’s do something in the intersection of consumer brands, beauty and wellness, which is tech enabled. And later on I realized that this is what the modern term is to call it D two CBT. So that was the start of the journey.

Krishna Jonnakadla

Amazing. I’m glad I discovered many of these things as a surprise. I do research my guests, but I don’t do a whole lot of research because I want serendipity and some amount of surprise to drive. And I think just your opening intro has done that. I don’t know how many people that you meet actually say that they know. For example, I know of the Spot chain. In fact, I think my previous startup, which was in offline deals, we had an exclusive tie-up with your Four Fountain Spa in the year 2015.

And I didn’t know that you were associated with four functions at all, so that’s fantastic. I think it was a great venture. But the funny thing is the spa have been very cyclical. There have been a very few of them that have actually figured out how to make them work. And the occasional Thai massage parlor actually gives many of them a real bad name.

But otherwise I think it’s fantastic. But let’s come to that in a second. You covered a lot, and it is not every day that you run into a founder that says, I got started with tech, but unfortunately tech was not for me. The funny thing is I’m a chartered accountant, and I love tech. I never trained myself to be a coder, but a lot of people that know me actually are surprised that I don’t. I’m not a coder and that I know so much and they say, dude, if you had just finished learnt coding, it would have been so very different and you would have been much more impactful.

Maybe some other time. But you’re the first person I’m running into who is sort of like against the trend that is on right now, right? Everybody wants to call themselves a tech founder. Even the ones that don’t want to say that, oh, I love tech and stuff like that. But you are doing just the opposite. What was your it? What was the major?

Anurag Kedia on his Education

So I’m a chemical engineer by qualification. So when I introduce my friends from IIT Bombay to my kids, I have to correct myself. Earlier, I used to say we studied together and then I have to correct myself saying we went to IIT together because I can’t say whether we studied or not, but we were in the same class as the correct description.

Krishna Jonnakadla

Okay, that’s actually chemical engineering was the branch that I wanted to take, but I didn’t end up doing engineering for a variety of reasons. In 9th and 10th grade, chemistry was my favorite, the periodic table and all the experiments. So I thought I’d be a chemical engineer one day. Maybe if I was, I would have possibly ended up somewhere in the Middle East in some refinery and that would have been possibly the end of it. I don’t know, but it’s amazing. So what happened? The trees with tech? You didn’t like it? Why was it today, now that you’ve seen technology evolve and become, is it still the same or what exactly is the story behind that?

Anurag Kedia on his professional style

Krishna? So just to clarify, I love tech, right? As a user, as an enabler, I love tech. As a developer, as a coder, I am not. And the job I had got, that’s what I meant when I got into my first job and it was a tech job. Many times you start with a QA kind of a role and I realized that I was just getting very bored. Had it been a coding, even coding, it requires a lot of attention.

Debugging bugging from outside project looks a lot more glamorous and sexy, but when you actually start doing that’s, my perception, it’s a lot of effort and lot of hard work which goes behind what’s happening. And it requires a lot of patience and attention to detail. Probably I’m more of a width person than a depth person, so hence I enjoy if there is a lot of variety in whatever I am doing. I can go into depth, but for a short speed period of time, but I have to quickly come out and move on to something else.

Krishna Jonnakadla

Interesting. I’m glad you touched on the width aspect there, but just on the glamour part. I think there’s a common misconception for everyone, no matter what it is, whether you’re an Olympian or most effective people, the ones that are singled out are usually individual performers, people who are artists people who are musicians and people who are in the film industry, they all are singled out. But a lot of them are really single sports. Right. So Serena Williams, yes, there’s a coach behind her, there is a team, but it’s still her performance. But whether it’s a sports person or a business person, if somebody is making something look glamorous and effortless, there’s another side of it. They’ll be playing and whatever they’re doing looks so effortless.

What I have seen is that almost every single one of them have gone through a journey. They have paid the price. They have done a lot of hands on work and with that hands on work has come this effortlessness. So when you see them, they’re essentially in some sort of a flow state. And that flow state comes from all the things that they’ve done. What is sort of your natural inner self and that external thing when they are meeting, it doesn’t feel like effort at all. It just feels like you’re dancing literally inside. Right.

So I think somewhere when you’re talking about the width part, you’re looking at field of vision, you’re looking at it. Why? That’s what’s happening to you. Because that’s who you are. Right. And I’m very certain you put in the same amount of detail, the same amount of depth in what you do, but you are doing it so unconsciously and you’re thinking you’re actually wide. But the real thing is in what you’re doing.

You’re already quite deep. Right. So amazing. Let’s talk about the Four Fountains story a little bit. Twelve years is a long time and as far as my knowledge goes, it’s spread across the country, square scale quite a bit. I don’t know the funding angle and the growth angle and how big it got. So talk about that and talk about why you shut it down and why the three co founders, whoever ran it, you decided to go your different ways and then we’ll talk about so

Anurag Kedia on his first brand

Krishna. It still runs. Incidentally, four founders, as we shut down, there is a professional management team which runs it. I see. Okay. Just the operationally my own three co founders moved out. So when we started Four Fountains, the funding hypothesis was we looked at the east and leave the sleeves apart. Thailand, Bali, Indonesia, massages are very big.

Startup Idea Spark

We looked at the west and spas and massages were very big. And when we looked at India back 15 years back, we said whenever a baby is born in the country, both the baby and the mother are given a massage irrespective of the region religion, caste, Creed, every day, very religiously because massages are considered good for health. However, the moment you became an adult and you were earning actually and you said do you go to spas? People said this is about pampering, I don’t have the time, I don’t have the money.

So we said our massage is about pampering or our massage is about taking care of your body. It’s like overhauling the body, like the way you get your car serviced. And that’s the mindset we wanted to change. So the fundamental hypothesis with four countries was the pampering element is inherent. This is not to take away the hospitality or the pampering element, but the fundamental reason why whenever we spoke to consumers at four fountains, why they were coming to take a massage was because they said,

I’m tired, I’m on the laptop entire day, or even if I’m not working, I’m a housewife. There is a lot of stress. There is back pain. My shoulder muscles get stiff, that kind of stuff. So I come to take a massage to get release of muscle pain. I want to relax my body and mind. I want to cut off from the world. So it was in the stress release and sometimes almost in a spiritual domain. But the perception of the auras paths created was very romantic and very luxury in a market because parts were always in a five star space. Anything you put in a five star hotel, right, it becomes luxury and out of reach.

We said, can we bring it out in the open, offer price points which a common man can afford. And we started offering very interesting membership plans. We were the pioneers of Happy Hours in spas. So what that meant was we offered a 50% discount during weekdays anyway, which was a lien. Capacity time for us. We learned from the airline industry during our MBA days. We learned that there’s something called a bucket pricing in the airline industry, that the same seat is sold for different prices, which as consumers, we are familiar, right? And we learned this interesting term called bellobaba curve and some fancy mathematics which our professors used to do.

Differentiating the brand

We simplified that and we said, we will sell the same massage at seven different price points to our consumers and tell them transparently how you can avail which price point this allowed to increase the capacity utilization of our sparse to 50% to 60% throughout the week. The fundamental problem with a business like spas is that most the entire industry almost operates at a capacity utilization of, let’s say, 30 35%, which means a 2020. 5% utilization during weekdays and a 50% to 60% utilization on weekends. Because of our price point strategy, we operated at a 40 50% utilization during weekdays and 50% to 60% utilization over weekends. And hence our utilization was much higher. Because it’s a fixed cost business like an airline industry, we could offer very competitive pricing to our consumers and make it a regular habit. Right? That was the fundamental.

We borrowed different concepts from different industries. We learned from McDonald’s that whenever you order a burger, they will always try to upsell saying, do you want to add fries to that? And they’ll increase the ticket size by 20%. Our French fries equivalent was a head massage. Incidentally in India, a champion or a head massage is taken for granted. But except for the Ayurvedic massage, where a head massage is a part of the massage, all the other massages don’t have a head massage as a part of the offering. A Swedish massage, aromatherapy Thai massage. All of these are neck and down.

But as Indians, we love a Champi, right? So we would offer the option to upgrade a massage with a Champi or a head massage and make that 15 20% extra ticket size per customer because almost everybody would take it. So these were concepts which we learned from different industries and we tried to apply it to the spa industry to try and become viable in an industry which was unviable in the past.

In the day spa format, we had investors called Falcra Ventures, which are from Chennai, used to be a family office. Now they have a professional fund, which is, I think close to this is their fund too, in the professional of that, which is probably close to 600 700 rows. Now they come from a lot of Pharma and consumer background experience. In 20, 18, 19, when we had operationally exited, we are still stakeholders. Me and my co founders, we had scaled to a level of close to 30 spa. Many of them were franchised out 2021.

Decision to move on

Obviously, Covid hit very badly, revenues plummeted. All of that and a couple of centers had to be shut down. But largely all the centers continue to operate. The franchisees showed a lot of determination and support. The brand waived off the royalty and other charges the brand normally charges on a monthly basis. And it continues to run just that. The three of us have moved on to different paths. Sunil now runs a trading prop book with a friend of his. Saurob is one of the co founders of NoBroker.com.

They’re also angel investors at Pilgrim. I have 21 angel investors, Krishna, and all of this was done on three or seven days, right? So we didn’t do a formal fundraise. I said there are people who had told me at different points of time that whenever you’re doing something next, I want to be doing some investment with you. So right from some batch mates from It, Bombay, some of my domains from Mlaba, my first job tasks post MBA, some of my bashmates from Tas, then four fountains, all the other two co founders. I was a director at Richfield, which is a chain of errands calculating the promoters of Rich Field, the vendors of Richfield. Some of my friends from the building where I stay, 21 people have invested.

There was no pitch day. In fact, I remember very distinctly my Dom made Ashley Patchmate from Mdavas. I sent out a message on my Dom group saying, I’m starting something new if you want to invest it. Ashley committed some money over the next DM, and then after two days he called up saying, My wife is saying, what are you building? I don’t know, because there was no pitch and I forgot that I didn’t even tell them I was going to build. Now what I know is the D2C beauty brand. That’s the way our fundraise happened. Very fortunate to have a very supportive set of angel investors. And yeah, that was the start of Pilgrim.

When we started looking at the market, we realized that there were some very large D2C brands which are coming up across categories. And D2C was opening up in a phenomenal way. I don’t know whether the D2C term is completely relevant because these are digitally native brands, not D. Two serially marketplaces contribute significantly to our sales. And Amazon gift card Nica and now Mentor Purple. These are very important channel partners for us. So we are digitally native not really need to see in that sense, one third of our sales comes from a website, but two third of our sales comes from the important channel partners.

Krishna Jonnakadla:
Very interesting. Let me ask you a couple of things. The cosmetics industry per se. There are brands that have been there for a very long time, even today, at least as a kid. Indian branch that we grew up with are Vico, Duba, Bajaj, and then you have the lack of line, and those are all the Indian ones. And then you had ponds at one point in time. I don’t think ponds exist anymore. It does, of course. Funnily enough, I don’t see any of their products around where I am. And today we have Biotique. You have the Body Shop, of course, is not Indian. Himalaya, have forest essentials, and then Mama Earth. And have your brand. There are a whole host of them.

So when you looked at that and just like I don’t know if you’ve ever shopped in an American supermarket in India, if you go try to buy Orange juice, you’ll just see Orange juice. Maybe one or two. One is low sugar. One, I haven’t shopped for Orange juice. But if you were to shop for Orange juice in an American supermarket, usually you’ll have 25% Pul, no pulp, great pulp, sugar without sugar. You’ll have 40 varieties or maybe 50 varieties of Orange juice, some from concentrate, some from freshly squeezed, some all sorts of things. Right. So I thought at some point in time, cosmetics was already there.

When you look at shampoos without sulfur, Ayurvedic so when you saw the market, of course, I’m sure some of your spy experience has come in handy in terms of the stuff that you use there. Right. So talk to me about three things. One is how you saw the market, what was the opening that you saw, where you thought something new had to happen? And then your own background as a chemical engineer and your spy experience, if they played any role at all, how they played a role. I’m just making a note of these questions here. Yes. Don’t worry about it. I’ll repeat them.

Anurag Kedia on reading the market
Very interesting, Krishna. So the first question is how did you see the market, what sort of an opening and how did you identify? I want to talk about two macro thesis here and then I’ll come to a little more specifics about why and what we are building. It will be one is my entire hypothesis for DTC is that if there is one very large opportunity for one single product that belongs to the legacy brands, that belongs to the MNCs or the larger Indian MNCs, right.

That is not a D2C operation. Right. So if there is one face wash which can be a couple of hundred growers, chances are any of the larger brands or the larger companies with very deep pockets will do a better job than what a DTC brand can do. The entire D, two C opportunity is a very long tail opportunity. And I’m not talking just beauty, I am saying across categories. This is my hypothesis.

So you have to offer a lot of variety. Exactly what you said about the US supermarket. That one Orange juice, you have 25 varieties, right. If one specific variety of Orange juice becomes very so if 50% pulp is the one big Orange juice which is 70% market share, it will attract all the big boys who will outshot you in marketing, who will distribute the product better than you in online and offline and occupy that space.

But what about the other opportunities which are 2-5-3-8 which require a very long tail opportunity for Orange juice? And you’re talking just Orange juice. What about the pineapple juice guy? What about the pomegranate juice guy and what about the mixed fruit juice guy and then all the other varieties? So if you had to look at any category fundamentally consumers are variety seeking every consumer we speak to.

Now I’ll take a little example from the beauty space and you have to speak to women. You know, men are a little more hesitant to kind of talk, accept and understand what skincare is. Every single woman we have spoken to over the last 20 years, I’ll say will tell you my skin is unique. So I am always passively looking out for a better product, sometimes actively, but almost always passively, which is that product which will suit me for me. Right.

So consumers are not bothered about what the brand has to offer. Consumers are trying to solve a problem which they have in the context of beauty or otherwise. And that problem the consumers sometimes will vocalize, sometimes may not vocalize, but they have a fair understanding, especially when they made certain kinds of offering to say that this is what I want. Right. So this is the fundamental D2C hypothesis, which I have, the second hypothesis which I have, which is not relevant to D2C. But for any startup, any business, you need to have an unfair starting point over the rest of the market to be able to create a difference in the market or to be able to succeed. Right?

So our unfair advantage was the little bit of experience I had had in the beauty and wellness space which links to the spa background. And it was not just spas, salons, spas, Ayurveda clinics here and scalp clinics. Incidentally, it so happened that I was the guy who was responsible for all the product sourcing, which was either for inhouse consumption or sometimes for retail. I have personally been involved in launching more than 200 products either for inhouse consumption or for retail. And I have seen how consumer preferences have evolved over the last 1520 years.

So earlier vegan, cruelty free, environmentally conscious. These are not what the consumers were bothered about 2006 810. But slowly, as consumers are becoming more conscious about some of these choices in their life and hence in the context of beauty, they are asking brands to be offering these product attributes. But this is a hygiene factor for all digital beauty brands. Today. We are Incidentally at Pilgrim PETA certified cruelty free PETA certified vegan.

Our products are dermatologically tested. Products are plastic positive which means we recycle more plastic than what we use for our packaging. But this is not why our consumers buy us. If we are not there, the consumers will not buy us. But this is why this is a hygiene for any digital native brand. To my mind, the incumbent brands are still not caught up. They will at some point of time. All of them want to be I think I would like to believe every brand would like to be plastic positive or at least plastic neutral. They would like to be cruelty free is the faith in humanity and hence the bigger brands.

I have from a category perspective where we differentiate is on two counts. When we spoke to consumers they said we get a lot of cosmetic products back to India when we are traveling abroad. So when they were looking for international brands, whenever they were traveling abroad, because when they were available in India, the duties and the custom duties and the overheads were so high that a brand which was, let’s say mass market in Korea or in the west became a luxury brand in India.

The second problem with these brands is the dollar to rupee conversion. So something which is 15 USD abroad, the moment you bring it to India and it is $200, $1200 is not what the average Indian consumer wants to spend on every single product. In the beauty context, one or two products, they might be willing to spend that money.

That is the second part of the problem. The third part of the problem again, this is a problem for all this is the opportunity for DTC brands versus incumbents is that incumbents are used to having a monologue. I know it all. I will tell you what you need as a consumer. Today’s millennial consumers are not this. They are saying I will engage with the brand and tell the brand what I want and you have to cocreate with me. This is true across categories. So these are the three, four fundamental things which we thought will help us in building Pilgrim.

At Pilgrim. The differentiating factor is that we are bringing international beauty ingredients, international beauty traditions, international beauty formulations to the Indian audience at a price point which is India friendly. We are still three X to forex more expensive than the FMCG brands than the premium FMCG brands, right. But we are two to three X cheaper than the international brands which by the time they enter the Indian market are in the luxury segment. So we operate in what again, the jargon is mass premium or mass cheap segment, but that’s where we operate. Pricing is between 300 to Rs800, typically for one unit of product which we retail. Then we try and offer different engagement programs. I don’t like the word loyalty.

I think consumers don’t need to be loyal to brands. Brands need to be loyal to consumers, right? So that’s our thesis on the loyalty piece and that’s what we are trying to build at Pilgrim. Honestly, I don’t know how much of the chemical engineering I’m using at Pilgrim, but the engineering mindset, yes, I think the engineering mindset of being able to problem solve any given problem that is important. On the D2C bit. There is a lot of tech which we use, while it may many times we develop with partners and we may not be developing in house, but I think that mindset of being willing to learn any new technology and work with the team to kind of get it right for the brand. That’s what has helped us in scaling to whatever extent we have.

Krishna Jonnakadla

Amazing. You covered a lot of ground there from the spa experience, how COVID ended up being a headwind and how you ended up funding. And I’m glad you took time to cover the various three or four strategic points of view. The openings, the contrast with a global brand, a niche brand or a mass brand that might exist by an Indian might covet that brand and then expect not just Indian. I’m sure wherever you go, local people would always expect, hey, can I get something that is actually from here, but essentially it’s the same quality and something that can work with me.

So I want to pick on let’s dig in deep on three or four things. In the very beginning you said you alluded to the long tail aspect of it, right? From what I have seen at least. And my knowledge of FMCG branch is a little limited. So consumer branch is a little limited, but it makes it two of us. I’m a big consumer brand fan, whether it is in physical products or in tech products. I love B 2 C.

I’ve built one successful business in there and still working to build another one. But I’m quite sure I find it very exciting, the challenge and all of it. I’m sure you resonate with that. In most of these launches, there is a hero product. Right. And when I say hero product or a hero in product, whatever, what I mean is you don’t launch with 20, you launch with one or two. So for instance, somebody would say, have you tried their scalp serum? It’s amazing, right. So they might have 20 brands or 20 separate products, but they’ve done one for some reason.

Maybe it’s their own formulation, maybe it’s something else. There is a hero product that starts off. Right. And that sort of creates the path for the rest of them. It’s literally the pioneer for that. So when you say Long Tail, what I understood from Long Tail is that, okay, you have the people are main Orange juice drinkers. There are people who want pulp. They want 15% pulp, at least in the Indian sense. There aren’t yet companies that can cater to them.

So therefore, I’ll pick the 25% pulp, I’ll pick the 50% pulp. So when you aggregate all of these Long tail, and then it becomes some big Mark in itself. That’s the opportunity you’re talking about. Absolutely right. And then that’s what you went out. Did you have a hero product? Talk about the beginning. What did you do launch with? How is that? And after you’ve done this, there are a couple of questions on product launches and all of that, but I’ll come back to that.

Anurag Kedia
So our belief is that you can’t decide to launch a hero product. The consumers will tell you what is your hero product. So we keep identifying consumer needs in the long run. Right. We launched with, I think, nine products when we had launched we launched with nine products in our first phase. I can’t even call it a launch because it was in May 2020, right in the middle of COVID, we started selling nine products, is what I will say. Okay. Right. We started selling nine products. But obviously, even in that 20 product, even in that 20 or 25% of the market, we are trying to create too.

There is a piece which is at 8%, and there is a piece at 1%, at 2%. But instead of and there is some competition which is existing at various levels in each of these segments. So how that 2020 5% will translate into your sales or your revenues may not be the exact break up of where the market is, because maybe even in that 25%, there was that 2% which was completely vacant. You launched a product for the 2% that became your hero product. And that’s where your success came. From the market perspective, it was still a 2% Incidentally, the beauty segment or the beauty and wellness products plus services.

The data is a little all over the place, depending upon which report you look at. But my sense is it’s between 60 to 80,000 crores per annum. So if the larger pie, if we are able to get one percentage of that larger pie, we are done. We’re still talking basis points for a brand to become very sizable. So even that 1%, zero, 1-5-2 of the larger pie for one DTC brand can be very, very large. So that’s where our thesis is that you can’t decide that this will be my Euro products.

In fact, some of the products where I thought we had done an exceptional job on the product front, where nothing in the market came close by, our poorest performers in terms of sales. So I have stopped guessing which product will be a hero product. We want to do right by our consumers by trying to identify these white spaces, launch a product. I cannot even say white spaces. Each consumer need, right? So if you look at face, traditionally, the consumers have said there are four skin types, brands have said consumers have sped and that’s the language which has evolved.

There is a combination skin, oily skin, dry skin, and what is now politically incorrect to say normal skin, whether it’s normal or balanced. And what I have to go there, I’m just saying four skin types in the common parlance and there are consumer needs, right? So I could have a dry skin, but I am not dehydrated and I could have oily skin, but my skin is dehydrated. Traditionally, testing state acne prone is combination or oily skin, but I could have a dry skin and acne skin problem. There are eight to ten consumer needs, the larger needs and there are four skin types. So four into ten. There are 40 parts to the grid of just phase. Incidentally, this has started evolving further.

Now, undereye is a different part of the body and different set of products. Lips, what was earlier lip balm. Now there are four products or five products in the lip category. This is just phase. I have not gone to hair, which was going to further get treated to her and scalp because the PH and the needs of her and scalp are different. So coming back to face, which we said is 40 grades are not considering lip or under eye. Right now, there are multiple product offerings required for each part of this grade, even if you consider a five to seven part product offering, which is, let’s say face wash.

Now, face wash has different formats and consumer preferences are different. But a face wash, Toner, moisturizer, sunscreen, serums, face mask, face scrub into cotton. Just imagine the kind of long tail which we need to contain as a brand. Then you come to lips, then you come to under eyes. At some point of time, nose might be a different part, chick might be a different part.

I don’t know today that consumer segment is not very large or not very obvious. Hair, scalp, intimate areas started getting separated from the body. Elbows and knees have got separated out, saying they get dry and itchy and very rough skin. Underarms has been a different part of the body. Hands have always been considered separate. Feet are separate. So you start now. There is one international brand, the entire brand. The hero product is a product called Bum Bum Cream. Right.

So just imagine the kind of long tail architecture which the market is moving towards. And even that 20%. If it is 20% today or whether we will start eating into the other 80%, 70% because it’s 20% will start expanding because there are not enough offerings today. Once the market starts seeing enough offerings to that 20%, maybe that 20% starts becoming 40, 50, 70% and the larger opportunity of 80% anyway shrinks down. So that’s how we look at the product architecture. It’s the same. Amazing. So let me pick one part of it and say identifying the white space. I’m curious about the mechanics that go behind identifying a particular white space.

So take an example product that you have created. And I’m glad you initially said that you cannot launch a hero product. I got that the market makes a hero out of the product. That’s what ends up happening. So talk about how you ended up identifying a particular white space. What sort of expertise goes into that and does your own past experience play a role in that? So I think the larger white space. We are actually Christianized at the brand level where we are saying that consumers are excited and wanting, aspiring to buy beauty brands, beauty ingredients which are available globally, same quality, but at Indian prices.

Then we marry this with a little bit of an engineering exercise where we have this grid created face, skin type benefits. What are the different products which can go there? Then we look for beauty ingredients and beauty traditions across the globe, saying which part of the globe is best suited to fill this white space? For example, antiaging is a need the market has. So when we started looking for antiaging ingredients, we realized that there is this tradition of red winebased products in France.

We know red wine in the context of beverages. And obviously we know that the best red wine comes from France. In Bordeaux, Incidentally, red wine is also used in beauty products and cosmetics. And we said red wine is a very powerful ingredient. To marry with the concept of antiaging and bring it to Indian consumers, we do some level of consumer testing. It is not a quantitative study. We believe a lot more in qualitative feedback than in depth qualitative feedback.

This is something we were talking to each other even before the podcast. That how globe Gyan doesn’t help. But very pointed feedback on specific aspects of any business is very helpful. That’s what we try and do with our consumers. We deep dive into what the consumer is feeling about a set of ingredients, set of benefits. Even if we do that with a few consumers and not 100 consumers marry that with our conviction of what could. So there is some level of gut feel which is involved. And obviously our experience in the beauty feel helps there.

So whatever. I’ve personally been involved in launching a couple of hundred square.

Krishna Jonnakadla

Yeah. Let’s get a little more specific. So let’s say the red wine on your website right now, I see this red Wine Face Cream SPF 30 you spoke about. Let’s say Face Cream market is about 1000 crops. Let’s say when you zero in that there is a niche, 2% or a 3% niche, which is a white space that you can potentially occupy.

There are two parts to it, right? One is the product configuration itself. And then the second one is that the consumer is looking for something like that. So today red wine may be phenomenal in France, but I’m not aware of it. Yes, I’m a man. I don’t know. So maybe a few globe trotters in India have shopped in Paris and then they know red wine. I mean, I’ve been to Paris. I went two, three years ago, but I didn’t specifically find that to be a trend or anything.

So take Face Cream or any other product that you want as an example and walk through how you ended up identifying. Hey, I think this is the 2% space. This is going to be interesting for us because then there is also the thing of positioning because you have to position it in the market.

So what you alluded to right now is red wine in a sense is like a positioning because it’s a space that at least in France has worked and then you position it as an analogous thing that is helpful here. But that still is a position that you have taken. It’s not a position that the market wants you to take. So walk through that process a little bit.

Anurag Kedia

So, Krishna, two things here. One market is not interested in one specific ingredients or the consumers are not interested in one specific ingredient or one specific tradition. Correct. Consumers are interested in solving their problem. Correct.

So if their problem is they are trying to solve with antiaging. Incidentally, Red Wine Face Cream with SPF 30 is one of our hero products, then we have different choices of offerings we can make to them. And from the global beauty space, we identify all of those and we do some level of consumer qualitative testing to identify which is resonating the most. And we marry that with our own intuition and our own gut feel.

It’s a combination of both to say which one to launch for the Indian consumers, which one to launch for the Indian users. At the same time, we are not trying to identify which 2% will become big for us. We will go and launch products for every 2% or every .2% which exists in the Indian market in a short span of time. We already know.

Krishna Jonnakadla

Understood. Yeah. Sorry. What I’m trying to get at is in face cream or let’s say in shampoo. What sort of a process do you go through to say there is a space here, for example, anti sulfate? I’m sure it’s just somebody identified went through the ingredients and many of these I don’t believe everything is rightly motivated. There’s a whole host of trends that have just created overnight just to create spaces for brands to spring up. Some of them are positively motivated. Some of them are not. But let’s say, do you consciously identify a gap and how do you do that? That’s what I’m trying to get at.

Anurag Kedia

Yeah. So I’ll go back to the long tail product architecture. Yakisha. We will go and launch all the products in that grid. Right. That’s the starting point. So face, four skin types, ten different needs, 40 sell grid into, let’s say, five products in each grid. All the 200 products we will populate over a period of time. Then what we have to do is we have to back work and see which ingredients can deliver the most benefit and which ingredients are the consumers most excited about.

So there could be a lot of market feedback and testing. Yeah. Okay. So let’s look at the development process per se you spoke about earlier. You alluded to having overseen 200 product launches, and I’m assuming, are they all in health and beauty? Mostly all in health and. Okay. All right. So talk about that space a little bit. What goes on in the background? What are the mechanics of it? At least the outsiders. We’ve only seen these white lab coat technicians in these fancy glass offices sitting in front of a microscope and then using that. I’m sure that’s not what actually really happens.

What happens to the sourcing part because you have to source a lot of ingredients. What sort of processes, testing processes do you go through? How much work goes on before you really launch a single product? What happens at the back? Yeah. So I think the one benefit of being in India Isha, is that the pharmaceutical industry is very evolved Pharma. The manufacturers in India have been supplying to global Pharma companies for decades now. V

ery large listed companies, unlisted companies are doing a great job there. Hence the entire and the beauty industry is not too far away from the Pharma industry in terms of the ingredient supply chain, and hence that ecosystem already exists from a sourcing perspective. You need to know how to tap into that ecosystem and make use of the ecosystem with the Pharma industry is already created. How we go about this entire process is once we have identified this consumer, once this grid is created and we are constantly testing what consumers are looking for in terms of ingredients and benefits, we create what we call is a blueprint. That blueprint is a very detailed note of what goes to the development team.

It will talk everything in a theoretical manner. In the category, VR efficacy cannot be compromised. Consumers are going to look for a problem to be solved. But there are a lot of emotional needs which a beauty product has to satisfy. So when you pick up a beauty product, how does the packaging look? What does the packaging tell you about the product?

Is it transparent about the ingredients? What is the storytelling you are doing about the brand, about the ingredients, about the range? How are you explaining the directions to use then when you open the carton, how does the jar fill in your hand? Or how does the bottle feel in your hand when you open the jar or the bottle? What is the kind of sensorial which the product has to offer? The kind of texture which the product has?

The kind of fragrance the product has or not have? And different consumers will have different consumer preferences. And as a larger market also preferences have evolved. Ten years back in terms of textures, Indians or Indian consumers like textures, which were a little more thicker, provided great coverage. But now the trend is to have lighter textures which are not very heavy on the skin. And this could change again in future.

And at the same time, there could be Indian consumers who would like a product to offer great coverage, to hide whatever skin blemishes, et cetera. So these needs, where do you identify them? Do you do a lot of primary research or you look at secondary research? What are the mechanics of identifying the needs? So there are a couple of different ways we do this, Krishna. One is a lot of data is available. So if you work closely with the I see. Yeah. If you work closely with the channels, there are tools available which can scrape data in terms of what searches are happening by the consumers.

The channel category managers have a lot of deep understanding in terms of what are the trends they are seeing, what are the white spaces in the category they are seeing, which sometimes is articulated? Sometimes you have to dig out by in conversations with them because it’s there in the back of their mind, but they have not put it down on a piece of pen and paper. This is on the data we do a lot of so when you say channel, it could be a marketplace cosmetics product like Marketplace.

So cosmetics product range or a face wash range for buyer in Amazon or Flipkart or could be even in Lifestyle or Shopper Stop. These so called merchandisers, as they have been historically called. Those are the kind of people that you’re talking about, right? Yes. In the new world, these are called as account managers or category managers, so they’ll be ahead of beauty. If it’s a market place, then he will have a team or she will have a team of people and their care is to grow the category.

And one of the ways to grow the category is to identify white spaces which consumers are looking for and help the brand with that quantitative insight. But this is part of the journey. The other side is we go and dig deep into the data on the searches which are already happening and there are tools which have been built around to help you with some of this data. Then obviously there is Google trends and Google searches data which is available. The next leg of data we try and collate is from our own Instagram community where we go and speak to consumers and ask them.

We conduct polls, quizzes to find out what they are looking for in general, from the category and from us as a brand. And we also do anonymous polls on Facebook. Earlier days when you have to do a quantitative research, get 500,000 2000 responses. It costs at least a couple of laps. Today on Facebook, it cost a couple of thousands. Right. So it’s very Democratic.

You can roll out a poll today, you can identify exactly which PG you want to get the responses from, get the responses out in two days, three days. Do some analysis, go back to the same consumers or a different set of consumers, do a lot of old host of this on the consumer fees. Then we have a community of consumers who have been buying multiple times from the brand, who we go back to and ask their feedback on what we are already doing and what they want us to be doing as a brand.

There is a cohort of influencers we work very closely with because influencers are the new age experts. They are working with multiple brands and they are identifying trends ahead of time. So they are the equivalent of category managers or influence key opinion leaders. Like the way you have opinion leaders in the tech world that certain set of people start saying this is the new technology innovation you should be adopting to.

There are influencers who are influencing trends in the market, then obviously there is some knowledge which we have as a team, different team members, as consumers, as experts. We marry all of this to identify which is the next set of products to be launching in which priority order.

Krishna Jonnakadla

Amazing.Thank you for going into that level of detail. As we spoke before, we hit the record button, it’s the details that I really look for and I’m sure it will help a lot of listeners not just to research brands that are similar to yours, but to identify white spaces. Some of them are known, but I guess the insight that I took away today is the category managers, the account managers, they can be a treasure trove of the market understanding. That’s great.

So let’s talk about the initial launch, how you plan the initial launch, what went into the planning? What did you expect the market to respond with initially? And you spoke about launching this right in the midst of COVID. Right. I don’t know if it was a bold strategy because you were launching it online. I don’t know if there were any COVID related positioning that you did at that point in time. So talk about the launch itself, how the market responded, and then what your numbers are today and how you’ve grown to this.

Anurag Kedia

So as we were discussing our first set of products, which we launched was on the tradition of Korean beauty. And we saw some ingredients like volcanic lava, white Lotus and Camelia from the Ju Islands in Korea. Okay. Korean beauty. We know that there’s been a focus effort by the Korean government to export Korean culture. Kramer K pop, K beauty across the globe. So the aspiration for Korean beauty was already pretty high in the country. Okay.

And we said, why not take an easier go to market? Because Korean beauty was already known. Many of the other traditions which are launching now are not perhaps as known. And we will have to do a little bit of hard work to create that aspiration and do some consumer education there. You decided to swim with a tide. Yeah. So we were ready with the first set of products in March 2020. This is before Covet and we just started listing them. We were not selling.

We were planning in terms of how to do the launch and which is when a Prime Minister came on the television, he said, okay, let’s sit at home for a couple of months and we’ll figure out what has to be done next. So March April was a lot of anxiety for us, for our team members, young company, very little funding. While there was an angel around, practically bootstrapped.

We were a team of five people, if I’m not mistaken, and not knowing what next, et cetera, may when slowly things started opening up. Still don’t know what to expect. Didn’t know next week what will happen. Supply chain was still broken at many levels. So the warehouse would open one day, next day they’ll say no. Cops are saying shut down. We don’t know when we’ll open next.

And then a few orders have trickled in after a couple of weeks, our packaging vendor, we wanted to place a second batch packaging vendor is saying, I can’t make anything because my guys are not in or I sent out the truck last week, but it stuck somewhere and I don’t know where it stuck. Supply chain was a big issue. This was wave one. So thankfully things are not as bad as wave two. So there are delays. We ran out of stocks. All of that was happening. A lot of anxiety.

But I think all D2C brands, all online brands have benefited from consumption moving from offline to online in the Kobe wave. So we were also a beneficiary, I would think, and anybody who had stocks even that became a differentiating factor in certain weeks where many brands were out of stocks. And if you had stocks, you were the only ones or you were the few brands you are selling.

That was one of the few things which helped us in the early days because we had just started selling and we had stocks to sell. So a combination of all of these and we started doing well. A few Euro plus started emerging. Some channels started emerging to be doing well. We started learning in terms of how to work with the channel partners. All of that started happening.

And in fact I remember that I target for month twelve from launch. Before my first business plan had said that we’ll do 25 blocks in a month. In month twelve from launch, we hit that. I think in the third or fourth month of launch we were very happy ecstatic saying we are ahead of time, but that was more to do with the market, partly to do with the part we were offering. And yeah, from there onwards, I think we have been fortunate that consumers have liked whatever we are offering and have grown very today. I think we serve close to 100,000 consumers every month. That’s the kind of run rate we are at and growing between ten and 20% month on month.

Krishna Jonnakadla

What are your overall numbers like right now?

Anurag Kedia

Yeah. So we’re doing a secondary sale of close to five crores a month. Okay. Channels. One third of it comes from the DTC website, two third comes from the channel partners. Okay, amazing, 100,000 consumers. You touch 100,000 consumers on a monthly basis. And this is literally right because this creams are touching the face or whatever other parts.

Krishna Jonnakadla

So when you look back, what has been the most relishing part? What has been the most challenging part? Kobe, I’m sure was quite a challenge, but that was a challenge everybody had. So in some sense, as they saying goes, misery loves company. You look at other people and say, okay, I’m not alone in this. Usually when you’re alone in misery, that’s when you feel lost. What are some unique challenges that you faced and what have been some amazing moments?

Anurag Kedia

I think as a consumer brand team member, I think one of the biggest kicks for us is when somebody who doesn’t know you, they tell you that I use your product. Oh, I love Pilgrim. Are you a part of Pilgrim? Right. And this started happening six months into a journey. One of our team members, his sister had moved to Coimbatore for a job and her roommate was using our night serum. So she called back his brother, saying, your product is in my house without my recommendation.

That was the first time a third party feedback reached us directly. And we were a team of six, seven people as recent as yesterday. I was a part of a conference and a lady walked up to me saying, I’m using your products, I love them. And obviously we got chatting because every time a consumer tells you they’re using your products, you want to know which product, why, how did they find you? What are they liking? What can you do better? All of that conversation happened. I think consumer love is what we live for, what keeps us going in the ups and downs challenges. I don’t know, Krishna.

If there has been a macro challenge, I think there have been multiple smaller challenges and learnings on every front. Right. Talk about some of them. Yeah. So every front. Right. So we have had issues with we had lost a sunscreen which we thought we did a phenomenal job. The moment it went to the market, we got feedback that it was leaving a white cast. Now, that’s something which all traditional sunscreens do.

And our hope and aspiration was that we launched a sunscreen which was not leaving the white cast. Sunscreen was leaving one. Right. Okay. We had to recall that product. This is the only product recall we have done in close to 70 products which we have launched. I see. That was the learning that maybe the diligence required for launching a product was higher.

One of the serums we launched, we realized that the dropper is very fancy and very satisfying to look at. But the way to use a dropper correctly is that you have to press the nozzle outside the bottle, create an air fraction in the pipeline, then tip the dropper. If you press the nozzle inside the serum, an air bubble gets created and the serum suction is not as good. Okay. So we started getting complaints the nozzle doesn’t work. It actually was working. Okay.

We had to do some additional pamphlet insert with each bottle saying you need to press the nozzle outside the bottle and not inside the bottle for this specific packaging specialty because of the serum consistency and the fancy packaging. Okay. Right. There have been products which have not done well. I was telling you about some products which I personally think we have done an exceptional job, but probably we have not got the pricing right.

We always try and do the right pricing, but which would mean that I will need to go back and do a smaller pack and see if they start doing well. Maybe they still don’t, but at least we need to go and do a smaller pack and see. Maybe the entry barrier to try out the product was slightly higher than what the consumers would have wanted to see in that specific subcategory from Bellybug Two, I think was quite lethal.

We had everybody different team members not being, well, having personal family challenges. Our investors fireside have been very supportive. They managed to get us a special camp organized to get the first dose of COVID vaccine for the entire team. The second dose, the situation has started normalizing in terms of supply chain for the vaccine. The first dose was very critical. It was not easily available. You had to stand in huge queues. But we were able to facilitate that for our entire team and their families without any cost, which we thought was our responsibility.

So there have been different, smaller challenges in different parts of the business. We ran out of money. By the time we hit the market for a three series with Fireside, we thought we had enough money in the bank. Then we had to scramble around me and my co founder Gagan to kind of infuse some money from friends and family, from accounts to keep us afloat.

By the time we received a term sheet, it takes a couple of months between the term sheet and the DD to get completed to receive the actual money. Right? So that couple of months was very stressful because we were continuously running out of money and we wanted to make sure that we were paying salaries on time. So we pay salaries on the first of every month, sometimes 31st, if the payroll processing has been done and we want to stand by that in Kobe time.

We have done that even a week before. So when we realized that people were having personal challenges, we said, let’s pay salary on 22nd whenever possible, as early as possible, so that people are able to take care of the expenses and you are operationally profitable today. We are profitable at the CM Three level. D Two, C jargon. Cm One, CM Two, CM Three. We’re profitable at the CM Three level. We are investing a little bit of money on the brand side, really optional in some way. We can stop investing that money if you want to.

Ebitda level, we make a little bit of loss, but that’s by design, by choice. We can decide to turn profitable, but because we have some cushion in terms of funding, we are not taking that part right now. Interesting. Amazing. And CM Three is at some product level. I’m assuming CM Two is at a channel level. Cm Three is after allocation of brand expenses below. Cm Three is only a corporate overheads and salaries.

Okay, so it’s corporate overheads and salaries that you need to cover. Now, interesting. At the Krishna last financial year, for the financial year, we were okay. Not FY 2021, our first year of sales, we paid tax to the government and we are very proud of that. We made a patch profit and we paid tax to the government. Last year we ran into a little bit of losses, but the first year of our sales, we actually pay the tax to the government.

Krishna Jonnakadla

Amazing. In the channel, do you find your one third that comes directly from your website has a higher level of profitability versus the channels. Is that a given? Honest question.

Anurag Kedia

I think all DTC brands the force sale is a struggle to make it profitable. Okay. And because we are in a hyper growth mode, we are acquiring a lot more new consumers than the percentage of contribution from repeat sales. At a D2C channel level, we make some losses. Okay. If we decide to slow down the growth on the D2C side, we will return profitable. Okay? Right. But at this moment, I think our intent is to increase the funnel for the D2C. We’re not in a hurry to turn profitable on the DTC side.

We are seeing very healthy cohorts in terms of repeats, consumers coming back, repeat rates, retention rates, average ticket size of repeats, and hence we are saying that we’ll continue to focus on new customer acquisition and something which you will hear from all DTC brands is the Facebook challenge after the iOS update. So that’s not helped us. But I think that’s good and healthy for the business because it’s forcing us to think profitability and repeats a lot more closely than what we were doing in the past.

Krishna Jonnakadla

Interesting. I have to admit this has been a very different conversation from the ones that I’ve had in the past. And as a listener yourself, we’ve covered ground today, which we haven’t covered. We spoke about how you identify white spaces. It took us a couple of iterations to get to at least the point, the kind of info that I was looking at. And it was also very enlightening to hear you talk about because the unbundling of the spa experience from a luxury context and keeping it still accessible.

Luxury, maybe affordable luxury, if that’s a term that’s sort of like the overarching thing that made you start that and working with that and eventually evolving into before we go into closing comments, tell me something. So the experience of looking at the market at that level, the long tail identification, the needs, did that come from the spy experience or is that something that you learned eventually? Because I found it very fascinating.

Anurag Kedia

Honestly, the credit goes to our investors, Fireside, and just to kind of take a step back, Fireside invested much later, but they were in touch in conversation for a fairly long period of time. Okay. And Wine, who is on our board, he was very kind to share a lot of learnings and which they had across the portfolio and many of the larger thousand core plus brands. Unicorns.

I’m not particularly fancied by the valuation aspect of unicorns, but just the sheer size that you build something very scalable and large in a startup environment. I think many of them in the D2C space have come from Fireside’s portfolio. One or two happened to be, I think, personal investments before the Fireside fund was from their partners.

So a lot of their learnings were available to us even before the investments happened and then speaking to other founders. So I’m very fortunate to have a very supportive ecosystem. D2C ecosystem overall evolving, has evolved, and there is a very large founder community who is very open to helping. So very rarely will you hear in a D2C set up that you reached out to another D2C founder, irrespective of the scale, small, big, moderate, and he did not take out the time to speak to you or help you.

And I do that very often. I reach out, I call on many D2C founders, introduce myself, and try to have a chat with them and see what I can share from our learnings and at the same time, what we can learn from their learnings. Because every startup journey is very unique and there are always at least a couple of takeaways. And I’ve always found that we are all up against the big boys. We’re not fighting for market share amongst each other. So there is only to collaborate with other D2C founders in duty category and across other categories.

So even this evening, as we speak, I’m having dinner with two other D2C founders, both of them who have been very, very supportive in our journey. And to the extent that I have access to the Facebook account, the Amazon account, they have access to our accounts, they are not in the beauty category. So it helps. But that level of trust we have demonstrated to each other, saying, if there is something you can deep dive into my account and learn and teach us, we could be doing something wrong and we reciprocate that.

Krishna Jonnakadla

I think that’s the kind of ecosystem we are working in, and that’s how we have learned. Amazing. It was unheard of in Indian circles. I still remember two, three years ago, Kunal Shah talk about how Chinese founders help each other, but it was sort of an unheard thing in India. I think it’s changing as our challenges become ones that are much, much bigger than us because they’re not easily surmountable, even by a team. And when I say team, not just the immediate team, your investing community, even your larger community, then it always makes sense.

You may have someone who’s been there, done that, maybe not all of it, but some of it, because not everybody’s challenges are the same. The challenges are unique. The challenges change. So it always makes sense to compare notes and see where you can go. It’s very heartening to hear that. I’m not going to ask the obvious question of the journey because I think you’ve just begun.

It’s good to see you cover all of this ground, and it’s good to see a very refreshing perspective that you are at least bringing to this very feels casual, which means in some sense a happy attitude to building this brand and the stable of brands that you’re doing. So this is good stuff.

In closing, we spoke about a lot of things today. The high points, the low points, the challenges, your journey. You know, LVMH, correct. Louis Vuitton Moet Hennessy. Yeah. A lot of people in the cosmetic and the personal care category idolize and look at LVMH as sort of the epitome of what they can be. And I don’t necessarily think that that should be the place to look at. If they look at, then the next thing is to start appearing in duty free shops and jostling for space in the same place where all of these foreign luxury brands appear. Do you see your next evolution in the same way or do you see it differently?

Anurag Kedia

Krishna I think Indian consumers want certain price points. We would like to offer a luxury experience at a price point which is India friendly and what our consumers want. So the kind of brands you’re talking about, they will typically also charge a certain kind of pricing and offer a certain experience. Hopefully we are able to offer an experience which is close are almost there, but not at those prices.

Krishna Jonnakadla

As a consumer, I don’t want that myself, and I don’t think our consumers want that as well. But I think one trend I’m seeing Anurag in the last couple of years, at least postcode. It’s a weird development. Post covet. A lot of money is there in the system, and a lot of that money is actually coming out. Many Indian consumers, and given the size of our country, are even willing to go way beyond what the Western audiences are willing to pay for certain things. I don’t think money is a challenge in India.

And in many ways, in reality, I don’t even think we are a $3 trillion economy. I actually think we are a much larger economy. It’s just not evident. I’m good with numbers. I can do back of the envelope calculations and prove that we are already 5 trillion and there’s a lot of money in the system.

But this price angle of India, there’s this saying in The Dark Knight, the Batman, the second movie in the trilogy, says, you die a hero or you live long enough to see yourself become the villain. But the other version of it is you may be a villain in the beginning, but someday you’ll be a hero. So in the 90s, when I was still in high school, population was considered to be a problem.

Today population is supposed to be an advantage for us, right? And price, to be honest with you, having built products globally, seen products globally, and the kind of unnecessary things that actually go into a product, the price angle of India has this uncanny ability to say, let’s make it super efficient, because today people there was a time when Indian consumers would accept a cheap product because they were price conscious. Today, that’s no longer the case.

Like you said, you want to offer what an LVMH offers, but at an Indian price point. I think what that can do if for a truly innovative person, it can challenge them to look at places that are inefficient look at things that are really non essential. And that doesn’t always mean stripping down features. That means that you have waste in your company somewhere. Maybe you’re not negotiating your vendor products in the right way. Maybe you’re borrowing wrong. Maybe your pricing is wrong. Maybe you’re throwing too much money at certain marketing promotions. So it forces you to look at so many things and say, can I still deliver? Because the market is huge and you will benefit.

That Oxymoron is niche mass, as it’s actually called. You’re able to build such huge niche mass, which looks like mass, but it looks like niche, but it’s actually mass and make so much more money in the process, right? Yeah. So I think we’re into some interesting times. I think hitting middle age at this point in time feels great because one, you have some amount of money and you have some amount of experience to be able to take advantage of this. And I’m sure you are feeling the same thing as well.

Great conversation today. Thank you for sharing all of your insights. Any closing comments before we sign off?

Anurag Kedia

Yeah, I think I’ll close it with one thing which has helped me personally, Krishna. I speak to other founders and I realized the kind of stress and burnout which is there in the lives of founders and early startup teams is phenomenally high. Last night I was with a bunch of friends, incidentally both from IIT, Bombay my batch mates and also running D2C brands. And at least half an hour was spent on talking about the kind of stress and the pressure which founders take on themselves. So I don’t think that the pressure is from the market or the team or the investors.

I think we create stress for ourselves. And one thing which has really helped me going. I learned meditation in 98. I followed the Art of living when I was at IIT, 98 to 2022. Almost every single day of my life. I spent 45 minutes every single morning meditating and I’ve seen a difference. And being an engineer, I’ve done a B testing saying I’ll go for a week without meditation.

I’ll go for a day without meditation and see if there is any short term impact. Long term impact. Who knows whether the brain cells are getting rewired or not? And I have seen impact. I have seen that every morning. It’s like taking a bath, taking brushing your teeth. If I’m doing my meditation, it keeps me going when I come back from my office or post a dinner meeting, even if I get those ten minutes at home with my kids, or sometimes it’s a longer duration or over the weekends, if I’m meditating, I am able to take care of the stress much better. So I will really urge everyone to take up meditation in some form.

There are different techniques available. Something will work for you. If the first technique doesn’t go and try the second, the Sudarshana Kriya works for me. But if it doesn’t for you, go and try out something else. But please start meditation. I am guaranteeing that anybody who’s done it for a couple of weeks, a couple of days has said that, yes, it does help.

Then out of laziness, people drop out, but it’s just about pushing because mental health, being able to cater to stress is very critical. I think a lot of realization itheir postcode, but hopefully people also start acting upon it. A lot more people are acting, but a lot more needs to be done.

Krishna Jonnakadla

Thank you. Anurag. I think that’s fantastic. I would add working out in some form of action on a daily basis. I have been doing yoga for a very long time today. This morning, the Chumpy that you spoke about, I had one when I went to the salon for a haircut. And what I realized is there is one aspect of yoga that not a lot of people talk about.

If you do yoga the right way, not just body movements, but if you do it deep enough, what actually yoga does is take that stress out of the day that you’ve actually gone through. And personally for me, I found it beneficial doing it towards the end of the day as opposed to the beginning of the day. And if you worry so I bicycle twice a week, go swimming a couple of days, nice and all of that.

You tend to bring in a lot of new energy as well. And you add meditation on top of it. And I think in some sense there’s also this angle of expectation management. Turn off media BS, which is media is like I was born yesterday, today I became a unicorn and I was a baby yesterday. Today I’m a unicorn founder. That’s sort of like the media narrative. Yeah. There is a quote attributed to Einstein. Apparently he never said it goes like this. It says if you judge a fish by its ability to climb a tree, it will live its whole life feeling stupid, right? Yeah. So we all have our unique journeys to make.

Not every journey is the same. And I think that’s the beauty of life. So life is a self fulfilling prophecy. If we are out there, we’ll make it happen. I know, like the old saying goes, be careful of what you wish for. You’ll actually get it. We will get what we want, maybe sometimes earlier than we anticipated, sometimes later than we have anticipated. But when it does, it will happen. And in fact, I think it will happen in a bigger size than normally you anticipate.

So for a lot of the founders, I think that expectation management is key. Many of them are young and many of them, especially the IIT ones, they’re all seeing their batch mates do XYZ raise funding and then they have the FOMO effect actually set in. Right. Today, a payment startup works very different from a D2C startup. You launched, you are close to inching to 100 crores. You can also why didn’t I become 7500 crores? Right. So it is not an apples-to-apples comparison. You have your journey. They have their journey, right? Yeah. Today.

Look at all the rogues in politics today, right? So lot of people in politics, it’s just the nature of that field that they’re able to do things like that. A lot of them have no discipline. They have no working out, nobody meditates. They have literally valueless, literally all the things that we stand against. They embody. Most of them embody that. And then if you measure it by any normal benchmarks of success, they’re all successful, right? They have money, they have power. They have big houses. They roam around in cars. But then so you have to come back and look at yourself and say, what is your inner voice?

What is your expectation? And if somewhere there is dissonance using Jordan Lucas star wars is the force within your inner a good place. If it’s in a good place, that growth is going to come, right? Yeah. And I think meditation is a great way to trigger it. Create awareness for it and the space for that to evolve. I’m glad you chose that as the closing comment. I think Pilgrim is in great hands. The product and the brand looks fantastic. We wish you the very best. And when you hit 500 crores, we’ll come back and talk to you and see what that journey has been like and what advantage point looks like.

Anurag Kedia

Thank you, Krishna, for having me. Have always been a fan of your podcast and very happy to be here today and having this chat with you.

Krishna Jonnakadla

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