Opinion: My advice for entrepreneurs who want to start business in India
I grew up in India, had been living in the US for the past 11 years, and recently returned to India full-time to launch a business after identifying an opportunity in the market. Prior to moving back to India, I worked as a venture capital (VC) investor in Florida, funding start-ups and early stage companies operating in the consumer and technology industries. I also served as the Chief Operating Officer of one of our venture capital portfolio companies, an international e-commerce business that sells watches, apparel, and accessories in over 30 countries.
One evening I was talking to my parents who described a recent painful mattress buying experience in Pune. They spent weeks searching for a mattress similar to what I had in the US but to their disappointment what they found was either very expensive or unavailable. They ultimately bought one of the old well-established brands at a high price. I immediately realised that this was a pain point that needed to be solved.
I gathered a team of experts to solve this problem. My old friend Vishal Mundhra, who loves to sleep, and is a tech expert, joined the team as the Chief Technology Officer. My former VC colleague, Joe Roos, a seasoned venture capital investor and retail industry expert, joined the team as the CFO.
We travelled the world to find the best components and technology to make the perfect mattress for India. We studied the competitive landscape and identified a number of key differentiating factors that would allow us to offer a superior product at an affordable price. It took us three months to figure out a name - we paid people to help us, completed surveys, but ultimately, I am proud to say that the name came to me when I was nodding off to sleep at my laptop.
Now the next step was how do we solve the pain points - we had to re-think the old mattress business model. We eliminated the traditional brick and mortar store model and focused on online sales. Rather than suffer the experience of dealing with aggressive style sales tactics in the store with pushy salespeople we created a beautifully designed and user-friendly website to showcase all the key features. By eliminating costly overhead and middlemen we could offer a superior product and pass the savings on to our consumers.
This has been a difficult entrepreneurial journey full of many risks and sacrifices. I left a comfortable job in the US and moved to Pune to build the business from scratch. I even left my supportive wife behind in the US because we both believe so strongly in this opportunity. The road so far has been full of ups and downs and last-minute surprises. Every step requires a tremendous amount of work, long hours, and often quick decisions. On the legal side we had to figure out the best structure to setup our company and how to react to the new GST regime in India. Since our materials are imported, we also had to deal with Indian Customs officials, which involves a lot of red tape and delays.
My advice to fellow entrepreneurs moving to India to start a business is that you must approach the market with an open mind - this is an amazing market but nothing is predictable. You must also be incredibly honest with yourself and others. You must pursue your dreams for the right reasons. The entrepreneurial path can be lonely, even when you assemble a great team, but I have never felt more passionate about any opportunity in my life and ultimately the sacrifices will be worth it. We are not simply selling a product, we are delivering happiness to consumers and providing them with a foundation upon which their dreams will be made.
The Indian market is incredibly dynamic and unique. Indian consumers can be demanding, frugal, and very price/value conscious. Very early on, we had to ensure that our deliveries were timely and precise to ensure a high level of customer satisfaction. We use high end vendors to fulfill our deliveries and go the extra mile to ensure our customers are satisfied. We have focused intensely on product quality using only the best internationally certified materials. We designed beautiful packaging to ensure that when the consumer receives our product they feel excited to open it and proud to own it. Every step of the customer journey is designed to ensure that we build lifelong relationships so that each customer feels that they are part of our family.
One of the most difficult aspects of a start-up is first demonstrating a minimum viable product (MVP) and product market fit. We were careful to demonstrate a clear market demand before investing and growing the business. Our early revenue traction confirms there is clear demand and feedback from our customers indicates additional demand for product extensions such as pillows. At this stage of the business you often must make a decision - do you continue to bootstrap the business or do you seek outside funding to help scale the model and promote growth? We ultimately decided that there is value in taking in outside strategic capital that will support our growth and allow us to leverage network resources. We are actively raising an angel/seed round and have found the Indian market to be highly fragmented on the investor side.
One of the biggest difficulties I face as the CEO is operating the business while also actively meeting prospective investors. I believe the key is to hire the right people and delegate as needed.
A start-up CEO's first reaction is to do everything on his own but that keeps us away from the more important strategic work. So as you grow the business get the right team in place to ensure that execution doesn't suffer and you keep making progress. Cash burn is very important so we focus on hiring inexpensive interns and using low rent space to ensure that the recurring cash burn is low. Cash should be spent on active marketing and revenue drivers at this stage. We are intensely focused on ROI and profitable spend avoiding anything that we deem wasteful or unnecessary.
Joe and I have reviewed thousands of start-ups across the course of our venture capital and private equity careers. The simplest advice that we can give would be to listen more than you talk. Learn from the mistakes of others and learn as much as you can as often as you can about your business, competitors, and the overall market. And don’t be afraid of taking risks!
(Sandeep was a venture capitalist and an investment banker prior to starting his own company.)
(Disclaimer: The opinions expressed above are the personal views of the authors and do not reflect the views of ZMCL)