Transcription
In sauces, you are number one. You sell over 1000 crore. Where did the conviction come from that I will sell my house and run a business? I started going to Domino's office. I used to go five days a week, and Domino's gave me an order of 70,000 kilos. One year later, we have Domino's, Burger King, Pizza Hut, Taco Bell, KFC, Starbucks. At that time, I felt it for the first time. This company will now run. I want to add one caveat. Please don't sell your house after watching this podcast. It was a dumb idea. It worked for me. It may not work for the next guy.
Name three food products. You are seeing an uptick. Chili, spice. We are seeing a category of wellness. And third is nutrition-based food.
How do you become a judge in Shark Tank? First, I was only surprised. They were calling me for Shark Tank, really? Do big companies let small companies run? It's a market. A little bit of ragging is also justified. In an FMCG company, I think the most important person is the shopkeeper. If the retailer doesn't trust you, no matter how good a product you make, where will the customer buy it from? What is the sweet spot for an entrepreneur, that in the beginning, somehow I keep the goods, he will sell them, and the money will come back? If the estimated sale in your one shop is 100 pieces, then five pieces. And then you do this in 20 shops. In 20 shops, you also give a display. If your goods are not sold even then, then forget the goods.
Today, if someone wants to build a 1000 crore business, what is the biggest growth hack you see in India? [Music] You took a loan from the bank, started a restaurant with a lot of aspirations, but it failed and had to be closed. Still, he did not give up, and a friend trusted him and gave some money as a loan, and he sold his house, from which his company, Viba, started. The same Viba whose sauces, spreads, and ketchup are in every other house today. Today our guests are Viraj Bahl, the founder and MD of Viba and Walk Talk. How can you build a 100 crore business in India today? What skills are needed for fundraising, and how did he scale Viba so much? Watch this episode till the end and tell me in the comments what you learned from this episode. Because today our guest has been a judge on Shark Tank. He has built one of India's largest food startups. And how can big companies be beaten by starting a small business? He has explained it with a step-by-step process. And today, if any food entrepreneur wants to start a business, which ideas should he work on to make instant money, that has also been discussed. Enjoy the show.
Today, if someone wants to build a 1000 crore business, what is the biggest growth hack you see in India? Like, what is that one thing which people can learn? There was a time when 99% of our revenue was B2B. Today, our total B2B revenue is about 7-8% of our company. If I look at the remaining 92% as a whole, which is our distribution business. Out of our distribution business, 70% is GT. 21-22% is in GT. If you go to any bakery and see VB's sauce sachet, that also comes under our GT. GT is about 70% of our business. 21-22% is modern trade, which includes DMart, Reliance Spencer's, and all these. And 7-8% is e-commerce. In e-commerce, Quick being the largest share, and then the non-quick ones like Amazon, or you know, Flipkart, not Flipkart minutes, Flipkart, so these all became Big Basket, not Big Basket, that's in Quick, normal Big Basket. So that is 7-8%, growing rapidly. Where I see a lot of founders today are making the mistake that, no doubt, quick commerce is scaling up, it's the era of boom, they are wholly and solely focusing on quick commerce only. There is a world beyond quick commerce, this is very important. And if you want to build a 100 crore, 150 crore, even I say 200 crore brand, it can be built on Quick. So when, when we want to build a 1000 crore business, you have a very, very right team, right partners, right product, and sell wherever possible. But where do you see the growth? Today, if an entrepreneur is looking, then which framework, which thing should he look at to think about something, because many people say quick commerce, right? It's a fast-growing thing. So create products around quick commerce, there is a great opportunity there. What do you see where the opportunity seems to be? For someone who would have been building it in 2015-16 or 14, it was like, what can you sell on Amazon? How can you become Amazon partners? Think about that, it will grow quickly because this is what happened with like an MMAM earth or a boat, this retail which was there. They benefited from that boom. I am not saying that their business was built because of it, right? Boss, look, Amazon, it's a closed universe. So you don't know who you're selling to. Agreed. Okay? Now think that 90% of my business comes from Amazon or 70% comes from Amazon. Amazon has all the data. You don't know anything. What stops Amazon from launching their own thing? Their own thing. All the data is with them. They will give a better deal. It is that we are there on Amazon, and we are probably category leaders. So I don't disrespect Amazon, and we service them like crazy. But I cannot, I will be a very bad founder if I leave all my business's reliance on Amazon. But you should start from where you get more growth, right? Like, you can be smart about it. Like, sorry, there is a caveat, growth will be there, it's like, think of it like my B2B business. Growth was there but with discipline. I used to crack a joke in my office, Domino's sneezes, we get pneumonia. Being in that position is very dangerous. There was a time when Domino's was 95% of the turnover, then Domino's became 50% of the turnover because we took more B2B clients. Today, B2B is about 7% of our turnover. I agree. And GT has a special feature. Again, I keep saying this as a joke, but let's say Raj opens a sauce company. Raj, don't open again, but if you open a sauce company, you can go to Amazon. You can go to Swiggy Instamart. You can go to Blinkit, Zepto. But how will you go to my 2 lakh shops in GT, GTR? One mistake founders make is that we have to enter GT. We cater to the top 10 metros, and that is our sample set. You will be 100% successful in the top 10 metros, not 100%, but definitely successful. But if you are successful in the top 10 metros, that is not equivalent to the next 500 cities of India. So if you want to do 10 cities, you choose a cluster. You do Delhi, but with Delhi, do Chandigarh, which is, you know, Tier 2, then you do Ludhiana, Phillaur, Hoshiarpur, Bhatinda, like that. Because that is then a sample set of India. But if your first 10 cities are Delhi, Mumbai, Bengaluru, Pune, you know, Kolkata, Hyderabad, Surat, Ahmedabad, Vadodara, that is not the sample set of India, boss. So you cannot do this, I did this in 10 cities. Then a VC fund sits. Wow, I did this in 10 cities. He will put it in an Excel sheet, into 700, he will do. Consumer brands are not built like this. You have to choose the right sample set. So it is very important to choose easy with difficult. Now it is important to choose a combination of metro and non-metro. So again, going back to the question that you asked, I work with full intensity in quick commerce. As soon as the scale comes from quick commerce, I grab a cluster and study my GT product's market fit on that. Once my product market fit comes, then I take it forward. It is also possible your price points have to be different, right? What sells on quick commerce, that price point will not sell on GTM. So you have to figure that out also. Agreed. So today, if someone has to build a very big brand in India in India, so the growth hack today that we all see is quick commerce. See how to do it through that, and as soon as it starts to form a little bit, expand and enter GT, right? 100% India runs on GT, is it true? Man, 100%? Raj says, it's very simple, people, every GT shop is a micro-bank. How can anyone compete with that? I will give you an example. Explain this. This is amazing. Every GT, that means every grocery store, is a micro-bank. Bank. Micro-bank is like this. Called, send two bottles of mayonnaise. Send VB's. Send two bottles of Viba mayonnaise. I will definitely do a plug-in. Okay. Send two bottles of mayonnaise. Okay, Bhabhi, and also send 3 kg of Jadugar detergent. Jadugar, good. Bhabhi, I'm adding the money to the diary. The money is paid when Bhaiya's salary comes on the 1st or 5th. Then the shopkeeper of GT comes and gives the money to Chhotu Bhaiya, sends it quickly, in 5-10 minutes, those two bottles of mayonnaise and 3 kg of Jadugar detergent will be delivered to your home in 10-15 minutes by a Chhotu Bhaiya. Money is given at the end of the month when the salary comes. How can you compete with that? In a country where the middle class is still being created. Don't just think that because our friends and our friend circle have gone to quick commerce, that is India. It is a very big misconception. GT is not going anywhere. Is quick commerce doing a great job? Yes. Of course. But to think that quick commerce will do this in 750 cities, no. Quick commerce is doing it in metros, doing it in high density, this thing. Where you can reach in 15 minutes. But in areas where there are no apartments, the houses are scattered. It will become very difficult to reach. GT is still there and will remain. So we will see a lot of quick commerce making a lot of inroads, but quick commerce is not going to be taking, let's say 30-40% of retail of India. If it happens, we are decades away from that happening. So right now, I think I think the work that Zepto and Blink and, you know, uh, Swiggy Instamart are doing is great now. Flipkart has entered under the name Flipkart Minutes. I think they are doing a phenomenal job, but if you talk to them too, I don't think they are thinking in their minds that we will finish GT. That is not going to happen. Do you think these people will finish brands like DMart etc.? I think the first impact C, first of all, the people of DMart are much more intelligent than us. So they are also very big. They are also very big, and there is also a lot of respect. But if both of us are sitting here talking about this, DMart will be thinking 10 steps ahead of us. DMart's plans of quick will be ready somewhere. So I would say GT will be India's number one this thing. Modern trade and quick commerce will find a synergistic approach on how to go forward. But and I reserve the right to be wrong. But have you ever seen that your sales are decreasing in DMart after quick commerce? Our sales are decreasing in DMart, no, but we have definitely seen that it is decreasing in one store of DMart because there is quick commerce in Hiranandani. In Hiranandani, DMart has a very good store. But it is a very densely packed population and upmarket population. There we are seeing that quick commerce is doing very well. So there, per-store sales in DMart will also be showing less influence of quick. Absolutely. But as a, as a DMart, as a client to VRB, our sales have not dropped. Because this is what my guess was, that is, from purely logic, why does someone go to DMart? One reason is that he has a lot of variety that a normal grocery store does not give. Variety of so many things, and second is price because so many things are there in bulk, so I will get it cheaper. Right? So because of variety and price, someone will travel from their home outside, we, right? The variety problem has been solved on quick commerce. Raj, I would disagree, it has not happened. The maximum complaints we get from our consumers about any of the formats are that your favorite product is this. Why is this not available on Blinkit? So because we are getting there, no, dark stores are small. So our total listing is 45 SKUs. Now, 80 of our SKUs are listed in Reliance. Because their stores are big. They have that. Uh, so that is a challenge. Until the time that dark stores do not become double the size or two in one area, this will be a, this will be a challenge. Two years ago, three years ago, when this started, it was even less, then one chocolate used to come, if they bought that, now five variants of the same chocolate have started to be available. So I feel the variety problem was, it is more or less getting solved, at least for the urban audience, it is getting solved, so it will gradually get solved for mid-urban and also for rural, I mean, it is not even there in rural, but that is my guess that the variety thing is getting solved, so the most affected will be, not GT, it will usually be empty, modern trade will be more affected, or comparatively to general trade, because even today, a lot of quick commerce comes to my house, me living alone, quick commerce comes, but even today, more general trade comes. The grocery store bhaiya is fixed, and the account is the same with them, send this, send this. Maharaj Ji keeps calling them, sends a weekly bill. Yes, this vegetable, this flour, this, this, this, that, at the end of the month, he brings a bill, it gets done on that bill, and they move on. You never thought about this, you are doing it out of convenience. But at the end of the day, Raj can afford it. You are looking at the convenience factor, but at the end of the day, he is financing your kitchen, so micro-banks have become. Yes, yes, so this is an amazing thing that people do not respect enough about GT, and which is so true. And shall I tell you another thing? The customer of GT is the shopkeeper, for them, their customer experience is, a businessman is running his own shop. He does not see that this company gave me a 16% margin, this one gave me a 14% margin, he sees. I am taking home Rs 1 lakh, Rs 3 lakh at the end of the month, Rs 1 lakh. But what he does not see is what he cannot even see is that a customer came to him. Raj Maharaj called and said that send me Viba's South West Chipotle sauce. He has it. He cannot disappoint his customer. He will not see that he is earning Rs 12 or Rs 14 on it. He will see that I cannot disappoint Raj Shivani. So he will keep it. Quick commerce does not care about Raj Shivani as one individual. They see you as part of a group and customer profile, customer profile. So even though they want to give you the South West Chipotle, but if it is not fitting in their whole thing, then they will not give it, then they will say that we need this much margin. So that is something India runs on GT, and the fire we have to do business and the fire to earn money and customer satisfaction is, it is that feeling, it is not going to go from this country.
Tell me, we were talking about quick commerce and GT. You are into food. You see a lot of things. Name three food products that you think can be profitable in the future. Today, if someone has to start a new business, you are seeing an uptick in these three categories or three specific things. So I will tell you, we are seeing one trend of heat, chili, spice. Okay? We are seeing this as a big trend. Whether suddenly Bhut Jolokia has become very popular, Koreans have become very popular. Heat has become popular. Whether it is sauce, noodles, or spice. So we are seeing a category of chili becoming big. We are seeing a category of wellness. Better for you, healthy, low sugar, low fat, low salt. We are seeing that category, wellness. So today, if someone has to enter, I think heat, wellness, these are two categories, and third is, I don't want to say something as scientific as nutraceuticals, but nutrition-based food, whether it is Ashwagandha, multivitamin tablets with probiotics or prebiotics, nutrition-based food supplements, I think that is another trend. These are nascent companies today, but I feel they will become very big in the years to come. We will talk about each one. First, chili. Tell me one chili product which, if you have to start, someone watching this podcast, give them such a product in hand. No, no, what product is it? What will happen in chili? You mean to say that one can build a whole company just on spices. Today, I think this trend is here to stay. I think today you can set an FMCG brand on Korean products, Korean noodles, Korean sauce, Korean spice, Korean salad, kimchi mix, and there is such a big market just on Korean. I mean, I was fascinated, what are they called, our Korean noodles are selling more than our masala noodles. I will say go after Korean, take out any spicy Korean thing. Yes, or even sauce, ketchup, and like, no, anything from noodles to spices. Good, anything, anything. Yes, and it will run on QC, at least today, the demand will run. Then, second, you said wellness. Yeah, wellness is like, for example, you have become focused on healthy in the last eight months, so this population will keep growing, you know, vanity is becoming a big thing. So you want to look good, you want to feel good, and you want to be generally healthy, you know, so all these three put together. But think, bread without palm oil, bread with, you know, clean fats. The market size of bread is very large. Bread goes to every house. But bread is generally unhealthy. You know, it is full of maida. Many times, brown bread is just maida with color. You know, while following the law. But, but the most important things of bread are that if you are putting fat, then more often than not, it is palm oil or something like that. So low fat, better fat, low salt, low sugar is a very big opportunity. I mean, you have to consume bread. If you can get it in a better way. So if you don't have kids, but your children have to consume ketchup, then sugar-free ketchup, that's why it's doing well. Or our low-fat dressings, it is doing really well. You have to consume mayonnaise, so make low-fat mayonnaise. Or South West Chipotle, make low-fat South West Chipotle. So consumers in metro cities, I, I feel this trend will go fast into Tier 2 also. In metro cities, it has already become aware, and they started asking us, and I am really happy, proud to tell you that whenever we tell our consumers the answer, they are very happy, and they buy the product. But the metro consumer has started asking, brother, how much salt is in this, how much sugar is in this. So that is a trend. So what happens in metros, non-metros usually follow. So I think wellness is a big, you know, built there. If you had to start from zero today, Viba, let's say, does not exist. And let's say it exists, and now something new is being started from zero. After so much learning today, what will you do step by step? Tell me the first step, second step, third step. So
I do a little bit of philosophical talk. Then I tell you the steps. If I could give advice to my younger self today, let me put it in a way that I can advise my younger self. First of all, I would say don't quit your job. Secondly, I would say, dude, chill a bit. Don't take so much stress in life for everything. Learn to learn to relax and enjoy a little bit. I think these are the two mistakes I have made in my whatever 12, 13-year career at V. I needed or should have relaxed. So, I tell this to all young founders that it is not a journey. It is a road itself. So you need to learn to enjoy. You are going to do this business not for one year, not for two years, but for five years, ten years, twenty years, thirty years. Don't forget to enjoy. So these are my two philosophical things to anyone.
But today, if I had to start, I think I am coming back to the same thing. I would choose areas which have a large market. Choose one your favorite. Mine is currently leaning towards bakery and beverages. I think there is so much potential to do better in beverages and bakery. So I would choose those categories today. I would like, I would not choose sauce because if I have to start from scratch today, Viba is already there. So VB is doing a damn good job in sauces, dominating the markets. Yes, doing a damn good job in sauces. I would not go and let's say, why should I unnecessarily pick a fight? What will you do in the hyper-competitive beverage market? In beverages, I would definitely work on better bases. I would work on beverages with pre- and probiotics. I would work on bases with a little bit of apple cider, maybe you know that that excites me. So, I think a little health angle, a little health angle, but tasty. So, and I would stay away from the flavored cola, the flavored orange, and the flavored lemon. I would stay away from these flavors. There are so many other flavors that India can drink. So we do not have to focus only on the deep-rooted flavors. So I would do an aerated beverage with a little, with reduced sugar or zero sugar, a little bit of goodness and tasty. So beverages. And I keep saying this that I see a lot of potential in breads. Again, I am saying in breads, I have no plan to launch. But I just feel that these two markets are the markets. With all my knowledge today, I would have entered these markets.
You said something in between that if I had to do sauces today, I wouldn't because why take unnecessary fights with bigger players. When you started, there were also big companies. Yes, unnecessary fights were taken then too, many unnecessary fights, right? Many slaps too, slapping discussions with big companies, they let small companies go. So see, first of all, I would say it's a market and some ragging is allowed. If you join college in the first year, then the third-year students do ragging, right? So if they are doing a little bit of ragging in the market, they have decades of experience, and you go there and say, "Sir, I am a sweet child. Let me sell sauces." No, some ragging happens, and some ragging is justified. The second thing is, take it with your, I mean, chin up. Okay? We, you know, we are trying to do something. You are challenging someone, so why will they not treat you? You know, just because you are an Indian startup, they will not say, "Let's give in; you come and walk all over us." So, first of all, you have to be ready for it. Secondly, you have to be patient. And thirdly, what we did, we did not, till very late in our journey, we did not go head-on with the biggest boys of the country. We first went niche, those who were not playing the big boy's game, southwest Chipotle, mint mayonnaise, sweet onion, like that. We built a brand in that. What do you call the shopkeeper? Don't keep his goods because they are not committing. So when we established our brand there, then we went down one more category and started playing in mayonnaise, hot and sweet. Then we went down another category. Green chili sauce, soy sauce, vinegar. Then we went down another category, ketchup. So if I had gone with ketchup on day one, they would have squashed me like a bug. We first established ourselves as a brand distributor, and that is, I say, FMCG is not tech, patience is critical over here. You are going to build a brand, and you are telling a customer, "Sir, open our bottle, you eat, feed your child too."
To answer your question in two parts, number one is, don't go head-on; you go three levels above the brands you mentioned, and then come down. But for that, you will not have that six months or 50 lakhs on the first day. You will have to go slow for three years. Very slow. You have to build the brand, win the customer's trust, and then do an ad campaign. That is how you take on the big boys. The second thing is quality. Just because an Indian company is entering the market does not mean that our quality standards and quality processes will not be better than the biggest names of the world. They have to be. That is my bare minimum guarantee to my customer. We were talking about big companies, we are talking about retail, technically a mafia operates. So when you go, there is a brand that controls 70% of the grocery stores, this company, right? You know, I don't know, but it controls 70%. All their products are theirs, and I used to compete with them in the dishwash gel category. I had convinced the retailers; my dishwash gel was cheaper, better quality, the perfume, the fragrance was very different, made from fruit pulp, many things were there. So by convincing, I got the first space on the shelf and placed it there, and I see that within five days, it was removed from there. I thought it was sold, but they picked it up and put it back inside, behind. Now I said, I don't have brand recall, nor am I a very big brand. So how will someone ask for it? If someone sees, they might ask, "Look, another brand's comes for 110 rupees. This one, Jadugar's comes for 50 rupees. So I'll take the 50-rupee one," right? Because that dishwash gel was new at that time. There were not many others in the market. I'm talking about 10-12 years ago. So I didn't have an opportunity left, and that's how I got out.
So what do you do? Go to the second shop, they will do the same there. Go to the next, meaning they don't give space, don't let it be seen. That's what I'm saying, see, first of all, it is very important to understand that if this happened to you, it is very important to understand that you are the founder of the company, okay? This is your life, what this company is doing to you is not being done by the company's MD or founder. No one sitting in an ivory tower is saying, "Put your foot on Jadugar, press it down." This is being done by an over-excited ASM or RSM or SO of that local area. It is very important that if you lose one shop, go to the next. If you lose that, go to the next, if you lose that, go to the next. But a founder's patience, grit, and perseverance will win over the ASM, RSM, and SO's ego. So you have to keep, they will remove you from one shop, and I am telling you with a guarantee. From the shop where I was removed, today we sell good goods from that shop, I mean, very good goods. Today we are back. Maybe if someone removed us, that person has left, or whatever happened, I don't even care what happened, but okay, he removed me from one shop, he couldn't remove me from the next, how many will he remove? How much more patience does he have than me? Come on, let's play, let's see how much he plays.
You are a very big man, one of the biggest, in fact, in sauces, you are number one, you sell over 1000 crores, right? How did it start? I remember I heard somewhere that I had to sell my house. What was that? Before I talk about selling the house, I want to add a caveat. This camera, this is to say, please don't sell your house. Selling your house after seeing this podcast was a dumb idea. It should not be a hero story. At best, it was a story of naivety. It worked for me. Who knows if it will work for the next person. And at the time when I started, so in 2008, I started restaurants. So my idea was, why can't India have its own QSR? Why can't we create our own McDonald's and KFC? So with that dream, again naivety, I thought I would open India's McDonald's. And I opened a chain of restaurants called Pocket Full. It looked like McDonald's. But you go there, butter chicken pocket, pockets made of naan, with butter chicken, masala fries, and lemon soda, that type, or Shahi Paneer pocket, Kadhai Paneer pocket, Indian flavors, very good products. So, but that failed restaurant business gave me two lessons. Number one, there is a lack of sauces. In that world, in India, there was only mayonnaise, tomato ketchup, and hot and sweet sauce, and I didn't get anything. So I realized if I'm looking for sauces, someone else must be looking too. And the biggest business lesson of my life, frugality. Explain frugality more. Many Indian entrepreneurs are like that, who have at least seen businesses being built at home or who have a middle-class upbringing. Many people are like this. See, is it good or bad? I sold the house for double the price I bought it for, and that 5-6 crores became Viba's startup capital. As soon as that money came, I went and bought a factory. So now giving you examples of frugality. There was no money, sold the house. Went and bought a factory for 6 crores. But if I were to go out with my friends at that time and even pay bills of 100-2000 rupees, I thought, "Dude, that's too much." So that was, and my friends would say, "Dude, you just bought a factory for 6 crores in Neemrana yesterday, why are you doing this to pay this bill?" For 1000 rupees, they are making a drama. For 1000 rupees, he's making a drama. So it became very clear to me after the restaurant business that, the right expense at the right time. No doubt, today God has been really kind. I don't go and look at restaurant bills, obviously. But that was the time. So you have to be patient.
Where did this conviction come from that I would sell my house and run a business? We had just failed. I know this is, we are doing a podcast on business, but in my story, God has played a very, very big role, and God has been extremely kind to me. And so, where did the conviction come from? There was no conviction. I hadn't even thought about it. Then, as luck would have it, there is a guy called Deepak Shadapur. Great guy. He started a consumer-only fund in 2013, called DSG Consumer Partners, and Deepak is today one of my closest friends, and Viba was Deepak's first investment. He also had a passion that India's consumption story has just started. He was looking for founders. We both met, and he made his first investment, and I got my first check in 2013. And that is how, the first check? Don't even ask. It was, you know, around 5 crores or 6 crores. It was, it was, you know, today I can say it was small. Hmm. Because, but when the fund comes for the first time, 5 crores is a lot. A lot of money, a lot. And with 5 crores, the whole company is built. It seems like that. It got built. In my case, it got built. I was very clear from day one that this company will one day be a distribution-led company. Because in India, without distribution, you cannot build a business. And in FMCG, you absolutely cannot. And as I said, I am a very proud Indian. So I had to do distribution. But distribution is expensive. I made a goal in my mind. The day this company does 100 crores, we will do 100 crores in B2B. The day we enter B2C, and you know, the team also said, "Baba, very good, what's the plan, what's the plan?" So I said, "Let's catch Domino's." When business comes from Domino's, then I started going to Domino's office every day. Every day, meaning every day, if you say every day, then I used to go five days a week. I remember the front office person feeling sorry for me, why, but I was very happy in my heart. At night, I thought, "My office doesn't even have AC, at least I am sitting in AC in Delhi's heat in AC." Domino's will not give you business until the time your plant is not world-class. So they have people coming in from the US; they will audit your plant. This business-seeking process starts after the plant audit is passed. Otherwise, there is no point in getting business. And some really great people, you know, Ajay, Khol, Sharwan, Marwa, they are no longer with Domino's, but Aseem, these guys gave me my first break. And Domino's gave me an order of 70,000 kilos. 70 tons. At that time, 70 tons of sauce, sauce. Meaning tomato sauce. Pizza sauce. Yes. We, and at that time, I felt for the first time that this company will now run. What was your production capacity? 70 tons. Okay, the whole, I mean, 70 tons wouldn't be there. 50-60 tons would be there. The order was more than that per month. Okay. To put things into perspective, today it is half an hour's production, but at that time it was one month's production. And I remember feeling that now I will run it. I know it. And then something happened because Domino's, being India's largest restaurant company, still is, at that time it was.
Business came from Domino's, within one year from Domino's, one year later, we had Domino's, Burger King, Pizza Hut, Taco Bell, KFC, a little bit of Starbucks, and we were on track to do our 100 crore revenue. In 2016.5, our run rate of 100 crores came. And then we entered retail. We entered retail only after 100 crores. Yes, I was very clear. It's that Salman Khan line, but if you make a commitment, you made it. But in 2016 and a half, we entered retail, and then swear to God, I don't know what happened. The consumer gave us so much love. So much love. If you open your fridge, you will have more consumers of V who have two SKUs in their fridge than one. So we have two, then one, then three. Which FMCG company will not give their little finger to get a stat like this? So when we entered retail, we became tight, obviously you can understand, we had hired, and you know, we had spent in branding. We became tight, so inventory was equal to money. What did we do? Imagine you are a shopkeeper. I would go to you, "Sir, you have a sale of 12 pieces. There is space for 12 pieces. I would tell you, sir, take six pieces." Now what happened unknowingly, we gave you six pieces. If I gave you 12, eight would be sold, and four would be left. That means that shop has the capacity to sell eight. I was giving you six, so all of them were being sold. And no doubt, I was losing sales. Obviously, in scarcity sales, you lose sales. But what is bigger than losing sales? What happened to us? The shopkeeper started trusting us. So we said, whatever goods we are putting in, they are selling. They are being sold. So suddenly, the shopkeeper's trust came. Till date, Viba's sales people have this, "Dude, make your own order because we don't unnecessarily push goods. You don't do any dumping." Ask any retail founder. What gives us the biggest, I mean, the blood rush? Go to a shop, your goods are placed from top to bottom. But that didn't happen. Yes. Tertiary is important. I'm so glad you used the word tertiary, because when I say tertiary, everyone asks what tertiary is. But tertiary is the thing. Explain to everyone what tertiary is. So, before tertiary, there is stock transfer, then primary sale, then secondary sale, then tertiary. From the company's warehouse, it went to your consignee or super. Stock transfer happened. Then it went to the distributor, primary. From the distributor to the shopkeeper, secondary, and after secondary, when it goes to the customer, that's tertiary sale. Tertiary is what, agent, or today we can't follow tertiary sales, my funda has become a little different. My funda is very simple, if the goods are sold, the money has come, that's fine. One thing, people make a mistake in retail, sales per store. If your company grows, your sales per store are bound to decrease. Your sales per store are not increasing, that's wrong. If I was in five shops in Juhu before, and now I am in 70 shops in the same Juhu, obviously the sales of those five will decrease somewhere, right? So sales per store, so your minimum stock keeping unit, in our case, one sales team member, their sales are decreasing or increasing, that becomes important because the shops will have some ups and downs, ups and downs.
Now, around the time we entered, I am connecting the dots for our viewers, around the time we entered sales, we did a round two of the bridge we had built, and our second fund came into this thing, from which we started spending on retail, in a very small way, first Bollywood association, and sauces, Neha Dhupia was our first brand ambassador. She was so kind to me. I went to Neha, "No money, please," whatever is best. She was very, very encouraging of us. She did, she was our first brand ambassador. So a little bit, we didn't have TV money, so we used to do Delhi Times, Bombay Times, etc. And through scarcity sales, we started keeping goods in the shops. The second thing, the problem we lived with, we operate in a hyper-competitive industry. So in metros, all the shopkeepers were completely full. So what did we do? We started from non-metros. Money started churning from there, Raj. Which maybe we didn't get from metros, and money started coming. The company started making goods. From there, side by side, we raised funding, Sama came, and more money came. So suddenly we were ready to go into metros. So this happened, again, I get a lot of credit for this, but this happened purely out of desperation and lack of money. I only had one funda, where the goods are selling, sell them there. We'll see the rest later. In a consumer company, in an FMCG company, I think the most important person is not the company, it's the shopkeeper, retailer, retailer. If the retailer doesn't trust you, if the retailer doesn't give you space, no matter how good a product you make, where will the customer buy it? Customer's love comes later. Until the retailer gives space, how will the customer give you love? I am telling you a very secret ingredient for our budding entrepreneurs. For entrepreneurs, all our targets are only on secondary. We don't believe in primary targets; we don't believe in stock transfer targets. What's the benefit? There is no point. So if there are three steps to reach, so first is consignment sale. Number one, every company, you also don't start tomorrow, sauce company, brother, talking, but let's say you will start a cream company, face cream. Step one is consignment sale. You will give goods; if the goods are sold, the shopkeeper will give the money. If the shopkeeper gives, then the distributor will give you the money. So the first step is consignment sale. Step two is PDC, that they will get so much trust in this company's goods that they will be sold, so the distributor gives you a 30-day post-dated check, and step three is advance payment. So you get the whole, so if you don't get the money from Indian retail in 28 days, please assume that you will not get the money.
The coming ones. So you shouldn't show in your books that my receivables are currently 3 crore. If out of 3 crore, 2.5 crore are those that are not coming for more than 28 days. So Indian retail is ruthless like that. It is you have to be patient. It takes time. It is not a tech company that you suddenly, you know, you will have a spike. Consumer company is a game of patience. You have to be slow. You don't have to be slow. You have to be agile but you have to be patient. You have to be steady. So it takes time. You know, consumer. It is not even a cream that you are applying on your hand. It is going inside your child's tummy. So you have to give the mother time to trust you. I will show. Exactly. So many things that you and I have done the same. Every day I used to go and sit at DMart daily. 10, 20, 30 days, I don't know how many days I sat there, finally I got a scope there where I purchased.
DMart, you got a break in. Yes. So I got to sit in front of the DMart purchase manager. Not going to pitch to the purchase manager. I said I want to sell here. Tell me how to sell. They told me the whole process. See, this is how it happens, this is how it happens, this is how it happens. And they said that if we give an opportunity to a local detergent player, we don't give it to anyone else. At that time in DMart, it used to be that there would be only one regional player, the rest would be national players. I don't know what happens today. I think it's the same. So I was like, this is a monopoly type of business. And then he started selling me that, look at DMart today, you are seeing one. Now four are coming in Indore. So many are coming in Madhya Pradesh. From here outside Chhattisgarh. Antennas stood up in my mind, and he told me numbers we were out of my thinking. I thought he was saying that we will lift goods worth one crore at once, what is he talking about? So I just got excited, take whatever deal you want, like that was a biggest stupid mistake, but at that time you do a lot. Sat a lot, a lot of talk happened. Again, next day meeting, third day meeting, it went on for a long time. This process lasted for two months. Finally, after begging and requesting, they gave me the first order. How much? The first order was given for ₹1 lakh, which is not like a big order. That ₹1 lakh was sold. Then I said, now I want to do that 1 crore one. I want to do big business. So he said, no, I'll give you buy one get one. That's his thing, okay, I'll give you buy one get one too. But on buy one get one, we decided on 20-30 lakhs, and that was our change, like just a moment which changed everything. And then one DMart, then two DMart, then three DMart, then four DMart, and it exploded. Like the turning point for business, that now we know that our car has started. That was because of DMart visibility or people started seeing us, and before I went to DMart, everything of mine was ready and the work got stuck. Why? On PO. Guess what? Because I didn't have a barcode. Then what? I put stickers on, I didn't even know what a barcode was until then. So I was a child, 18 years old, 19 years old. What? You don't know anything? You are fresh? So on the first lot, we put stickers on the barcode. Yes, so the first time barcode, then we did something called GS1, where the barcode was applied. I don't know who all I called, somehow I got the barcode number. And then sent the stickers over there. And that's how the whole journey started. But saying that, we also have the same DMart, Reliance also has the same stories. We just knew what a barcode was.
That's only talking about capital management, we were talking about. A lot of money is spent. It takes time to create distribution, man. Either you first give distribution from your place to super stockists. Super stockists give it to distributors, distributors give it to wholesalers, wholesalers give it to retailers, they keep making it, it's a very long process, money also gets stuck in it. In the beginning, we don't get advances, it gets stuck, and there are also bad days. Yes, both things happen, bad debts. Yes, yes, absolutely happened, even today they happen. No, they don't happen today. Today we work 100% advance. So super stock, SS, will come from SS, right? 100% our SSPs have reduced, our own depots have opened. So now we have more of our own depots. Uh, so now the thing is, plants, we have two plants, on both the plants, we send to our own C depot, CNF, or the super, from there to distributors, and from distributors to shopkeepers and small restaurants or whatever the case might be. So we do this, and obviously you have to understand, distributors are in thousands, right? So it becomes quite a large infrastructure. What hurts is giving business to the distributor. Order booking is with you until, you know, until you are a 34, 500 crore company, order booking is with you. Uh, it will sound like jargon, but half of my life was spent in TCPC. TCPC, TCPC means Total Calls Productive Calls. So TCPC is the backbone of the entire retail. Yes, the backbone. Absolutely correct word. TCPC is the backbone, and these four words decide whether you will be successful in retail or not. You are making 40 total calls, but if 20 are productive, then the overhead of the salesperson can never be justified. So you have to keep telling the salesperson, my brother, if those 20 people are not taking from you every week, then stop going to them, find 10 new ones. Find 10 new ones. So if your TC versus PC is not 75-80%, then you will be a liability to the company. So what is the sweet spot for an entrepreneur, how much stock should he put on trust, that in the beginning, somehow I keep the stock, keep the stock, then he will sell it. If he sells it, the money will come back. Because in the beginning, you are not getting anything in advance. You are not some Turram Khan for whom you have a very simple formula for this. It's a mathematical formula. And again, people don't realize it's so simple. If your estimated sale in one shop is ₹100, 100 pieces, they say 10 pieces, then put five pieces. I don't even know what my sale is. I am new. I am going to a new shop. No, no. Okay, how much does that shop sell, that one is known. If that shop sells 100 pieces, let's say, Lex company's, 100 pieces, no, total 100 pieces of washing powder, then your aim should be that I should take 10% of it in a day, then you have 10 pieces, and you have to give five pieces there. But if you come and tell me that, man, I don't know how many pieces he sells, then there is a flaw in you. So the estimation of the shop, that how much it sells, the potential, 10% of the total market, and in 10%, I have to give him only 5% of my goods, that much should be sold, that much should be sold. And then you do this in 20 shops, and I say give displays in 20 shops too, create the best-case scenario of your company. You have to give a ₹5000 display, then give it. If your goods are not sold even with that, then the fault is in the goods. So with a display, with only five pieces, or 5% of the market size, if your goods are not selling, then you have to decide in how much time the goods sell. Three months. If the goods remain on the shelf for three months and do not move, then there is some problem with your goods, another good. Yes, then you are wrong, either you are in the wrong market, or in the wrong product. And there is nothing wrong, I have been more wrong than right, you know. The only year VRB has declared a solid, significant loss. I became cocky. I mean, what little success did I get? I thought I was the one. We launched a nutrition brand for children called V Nourish. What a launch! SRK, IPL finals, biggest advertisers, two years SRK as our brand ambassador. The only good thing which came out of that brand is I got to spend time with SRK, nothing else good happened. I have learned so much from him, so much, life lessons, I don't think he will remember me, I mean, there will be many people in his life, but humility in this, in success, and humility in that kind of success. Work in success and work in that kind of success. I mean, the two days I got to spend with him, over two days of shoot, I took a decade's life lessons from him. I mean, what did I learn from Shah Rukh Khan? The first thing I learned was kindness towards the people around. When he enters the studio, I don't know what happens, everyone turns and looks at him. Whether it is the brand owner, they will talk to me even better. Whether it is the spot boy there, he will talk even better. The humility that man has after seeing the success that he has seen. I mean, God, even 10% of that would be enough for me. Number one. Number two, knowledge, like I don't know how he has that knowledge, but he knows, I was talking about protein content, PD cash, he knew all that too. Knowledge at his level, they are still taking knowledge from him, how is it coming? Third is kindness, you know, I remember, the shoot ended, I mean, we tried very hard to shoot seven or eight ads in one day's shoot. And we reached ad number six, and the shoot time was over. So the director packed up. Because sir's time is only that much. So I went to the director, I said, sir, why are you packing up? There are still two left. He said, you know, SRK's time. So I said, but our shoot is still left. He said, no, I can't do anything, it's like the world revolves according to his time, brightly. So he said, let me talk to him, I swear, Raj, I went to him and I said, sir, our... He said, he patted my back, he said, why are you worried, man? We will finish and go. We were all tired, Raj. I mean, that day had already crossed 8-9 hours, etc., etc., and another two-three hours after that, and I am definitely 15+ years younger than him, and I was tired, he wasn't tired. So at that level of success, that level of hard work, and that level of humility, I can't say that after that day, I will come out as 100x his fan. And what legend is the right word.
Has a legend ever cheated you? In business? Yes, it has happened. Give me an example. What happened? Many times it has been very bad that we got someone who was trying to make fake products of ours. Obviously, it didn't happen in your company, no, no, no, like outside, putting fake labels of Veeba or doing all that. Obviously, something as serious as this, you involve the authorities, and it was cleaned up, it was sorted through the authorities, that some things got sorted immediately. In small places, people keep doing something somewhere. See, again, we are not that big, uh, technically it's difficult to make our product. Now, to make a fake mayonnaise is also not easy. To make a fake pumpkin sauce is easier. Put color, put this, put that. Making mayonnaise is a bit technically challenging. So, we have that benefit of technical difficulty. Second, our team is in the market. So we are not, order booking to a very large extent is still with us. Almost 70-75% of the business is still with us. And where it is with us is the top 100 cities or the top 200 cities. So if fake ones have to come, they will come in those only. In small centers, where the sale is only ₹500 or ₹1 lakh, there is no such thing as making fake ones. So that was, we are very, very protective of that. Uh, and third is that, so whenever our team is going into the market, they have to note which is the previous stock, if by chance that batch number doesn't match, a red flag will automatically come in. Or so. Tell me in India where fake happens or where the problem comes. In imported products. Imported products because there is no company person there. Those products are lifted from the market when they expire. Someone buys a bottle for ₹10, he has bought a ₹5 lakh inkjet printer, you know, in his shed. With the inkjet printer, he gets a solution for erasing. He erases it there, that two-year-old sauce suddenly becomes fresh, and there are so many such reels in the market in which they say that ketchup is made from rotten tomatoes and they are crushed with feet. See, the first thing is that ketchup is not made from tomatoes. Ketchup is made from tomato paste. So 1 kg of paste is equal to 7 kg of tomatoes. It is a concentrate of tomatoes. Because tomatoes come twice a year. Now, if our company is there, we buy 400 tons of tomatoes, then we can buy them only during the crop time. So how you make tomato ketchup is by preserving it in the form of paste. It is aseptic? No preservatives added, nothing. But you keep it in pure form. What you are saying, that doesn't happen in quality companies, national level companies. By the way, many small videos run here and there. Then you start losing, you start losing trust in people, which is fair, that big companies won't do it, but just out of curiosity I ended up asking you this question. I will show you this, like check this. Okay, look, look how it's being made, look. So you see the wall flooring, with the flooring you see the tile, and hey, there is fungus on the wall. Yes, see, in what it is being made. God, look at his boiler. And the boiler cannot be in the same room as the... No, but Raj, this is not a company, this is a kitchen operation. Somewhere someone is trying to make something, a little bit. In food. Especially what you are putting inside your kids' tummies, you have to trust companies which are larger companies, national companies, because we have too much to lose if we do not follow quality. Man, I think this is a wrong statement said, everyone is a small company at one time, so if someone doesn't trust VB in the beginning, then it's wrong, otherwise you can't choose a larger company from day one. You can choose a smaller company, but you see who makes a qualitative product. Exactly. So even when we were a small company, we were never like this is. Yes. So that's what I am saying, that every small company will not be like that. I am sure that if someone starts their business with even ₹1 lakh, those who are quality obsessed, I have seen them very well, they make it at home, just like a test tube. No, no, I completely agree with what, 100% agree with what you say. What I am trying to say is that if you are in doubt, it is always better to choose a national company over a... If, for example, you are having doubts about a local player's ketchup, that it will be bad, the color is there, or it is too red, it's a safer bet to take a national player, that's all I am trying to say. But yes, smaller companies, including us, people trusted us with something. Should you trust a small company? No, if you trust small companies more, then how will they ever become big? But it is also the owner's life on the company to earn trust. So you know that is true. So the owner has to create trust by actually delivering good stuff. And how is that? The one-word answer to that is consistency. Customers only understand consistency. You had our honey mustard or barbecue sauce. Every time the same taste is being delivered. You like a taste. Imagine you like our South West Chipotle. Next time the taste changed. Then you will not trust it. Okay. To your credit, we buy Veeba 100%, and you didn't give me any money for saying this. So I want to tell you very honestly, I didn't even know South West until I tried Veeba, right? And today it is my favorite sauce. Oh, Fish Spam is my favorite sauce too, I mean it's so tasty. It's just amazing. I used to eat it with chips every day. Then it started happening with fries. Then with fries, in every meal of mine, like I used to eat green chutney in the day. There is a culture in my house that there is always green chutney with food in the day. I started eating South West with that. I was crazy about roti at one time. And I was like this. But I eat South West with prontí. It tastes very tasty. Very tasty. No, I stopped after that. So my children, what do they say? When they ask for food from outside. So they like Mexican food. So what do I do? One day, when chicken or paneer is left over at home, I take roti. Add upkal, add raw bell peppers, and three lines of South West Chipotle, I mix it, wrap it, and sell it to them, they eat it very happily. It tastes, no doubt, it's tasty. No doubt, I stopped, and it is healthy, but you won't eat it with French fries or chips. Don't blame me. And you spoke about Shah Rukh Khan a little bit, brand ambassador. Do we speak about brand ambassadors in today's time? 100%, you have worked with many celebrities. Yes sir, 100%, 100, 500%. I will tell you why. In India, celebrity means big company, big company means, if you are a big company, you can afford celebrities, and if you are a big company, you will follow quality. So it is not so much about the sale but about giving the mother the confidence that if it is a big company, then it must be following quality, so maybe it is safe to give to the child. Trust comes on a big company. It comes on a big company that, man, if they have money for Neha Dhupia or, you know, SRK, then it must be a big company. So it must be following quality guidelines. That, that is a big thing because whatever you are putting in your child's stomach, you are doing everything to win trust. Thing. So, you know, one of the biggest food properties of India is a show called MasterChef. It has been Amul's property for, you know, for the last two years, it's Veeba Presents MasterChef India. Now, when we agreed to MasterChef, we didn't agree, we thought we would do it, which also meant taking on Amul head-on. I thought that a golden team would come, would give me a Malavala and say wow, thank you. It was the opposite. They said, okay, but first they do something called a trust study on the brand, whether this brand is capable of being the title partner for MasterChef, because if you are, let's say, theoretically speaking, making an instant noodle brand, or a 2-minute noodle brand, or a 5-minute noodle brand, you are against the philosophy of MasterChef. You cannot be a quick food eating brand. So they do a trust study on you, they do a seven-eight state brand study on you. Then you are allowed to sponsor MasterChef. Because even if they drop your name from the title, they cannot remove you from the content. Because on every table, there is Veeba's ketchup or mayonnaise or sandwich spread, something or the other is there. This year it has become even bigger. You know, Ranveer Brar is obviously there, Vikas Khanna is there, Farah Khan has come this year, and all the contestants are also celebrities. So they have changed the name to Veeba Presents MasterChef Celebrity. So the viewership is so insane that years are passing by. Yes sir. And compare celebrity endorsement with a content endorsement, like you did with Diljit now, behind the show, his... I saw that, right? So Diljit Dosanjh's content-led endorsement versus a brand ambassador, very similar, very, very similar to that. So this will be cheaper. Cheaper, why? You are making only one content, right? You are making one or two things, not like... Yes, but the making of the content is with you, like in the case of Diljit.
How long can you use that content? That is why the cost comes right. But I think it is similar because when you are using it, when your time period of using it is, let's say, two months or three months, I suppose to one year, you will also bombard it more in that time so that you make it as, yeah. So from a cost point of view, it doesn't make that much difference.
And even when you are endorsing someone or you are taking the endorsement for a year, no company, any company, even the big boys, always on a 12-month budget, does not exist. You are always on, like you are on for three months, then off for three months. On for three months, off for three months. You can't be always on for 12 months. Right? It's too expensive. So, at the end of the day, it all evens out. It's not and both have a very good. I think for a launch we needed to have that splash, and I think Diljit Dosanjh again has been very kind to us. He was very supportive, incredible human being, and yeah, I know, the way he did it behind the show, incredible. I, I really liked it. Yeah.
Shark Tank, how do you become a judge? How do you become a judge? How do you become a shark? I mean, going and sitting on the seat, giving money. Oh no, I mean, how did your opportunity happen? I guess they reached, I mean, in my case, they reached out to us, and we had a conversation, and then I went. I think you cannot influence Shark Tank in that sense. So you have to wait to be good. So, they came, they contacted you. They did try, like they contacted my team in this scenario, and then uh, you know, first, I was only surprised. Seriously, are they calling me to pitch or for the Sharks? So what is the process? Then screening, etc., does all that happen? Or not? Screening, no. I didn't give any audition, TV audition. You once everything is agreed, you reach the set, and then you start shooting. Yeah.
And how was your experience? Excellent. I think again, I keep circling back to being a very proud Indian. But imagine, we had founders from Darbhanga, smaller towns, coming and pitching. What a good feeling it is. And also, it is a lot of fun, you know, because I think for any founder in India today, that is the epitome of being there. But it is also a privilege, which needs, you have to be responsible about it because for you it is one pitch, but for the guy who is pitching or the woman who is pitching, it is a very important chapter of their entrepreneurial journey. So you have to give them the respect that they deserve. So that is, you know, responsibility I personally take very seriously. I am not disengaging or dismissive or disrespectful towards any picture because it is their moment to shine. It is not, you know, Shark Tank should actually be called Pitch Tank because it is their moment, not the Sharks' moment.
What one mistake do they make which kills the pitch, for me? Hmm. What mistakes do founders make while pitching? For me, other than the usual jargon of passion, uh, details matter in business, details matter. So I am not expecting you to know India-level revenue, but if you are operating in South Bombay or West Delhi, at least you should have the details of your areas. What is the market size in your area? What are the distributors? Which distributors are there? Which shopkeepers are there? Details matter. What I dislike, not only in Shark Tank but in life, I dislike lazy founders. So, if you have come on Shark Tank, you are taking someone else's position. Be respectful towards the, not the Sharks. The Sharks are, as I am saying, not the most important ingredient, the pitchers are. So, if you have made it to Shark Tank after three rounds, the least you can do is know the details of the business you are in and the market that you operated in. Not on a macroscale but in the microspace. You know, in business details matter, period, full stop. That's it.
Fair enough. On that note, thank you so much, sir. Thank you. Pleasure having you. Long chat, long chat. With what you achieved in life, how does that excitement stay? I don't think I have achieved anything yet. I get intellectually humiliated every day. That's my job. People think that I am in the business of making people stars. I am in the business of actually getting intellectually humiliated every day. Wow! What a way to put it. Yes? Everyone has a different why. My why is just to learn. I took a picture up there just now. It's such a beautiful line. Don't forget why you started. Yeah. Thank you so much for watching this episode till the end. Now you have to do three things. First, subscribe to this channel because the more you subscribe, the better and more valuable guests we will be able to bring for you. Number two, tell me in the comments what you liked and disliked in this episode so that we can avoid repeating those mistakes. And which guests do you want to see back on our podcast so that we can bring them and give you as much value as possible. And number three, share this episode with one person because one conversation can change someone's life. I will see you next time. Until then, keep figuring up. [Music]