The Indian market is seeing several startups offering innovative products in the D2C & FMCG segment.

One such innovative brand is Rage Coffee.

Founder Bharat Sethi launched Rage Coffee in the year 2018. It offers a variety of vegan-friendly, vitamin-infused instant coffee flavours. The brand is currently present in 2,500+ retail outlets pan-India and plans to expand its offline presence 5X within a year by strengthening its distribution channels.

In today’s episode, we talk with Bharat Sethi who has been a serial entrepreneur about his entire journey so far and how does Rage Coffee stands out as a brand, the mistakes he made being a founder and what are his future plans for Rage Coffee.

 

Notes –

02:02 – Intro

02:47 – Family background & what led him to entrepreneurship?

06:35 – Conceptualising PosterGully in 2012

11:09 – Exit from PosterGully

11:50 – Zoho Sponsored – Prashant Ganti on Where do founders struggle with Payroll and how can they fix it?

12:59 – Mistakes and learnings from iDecorama

18:45 – Ideating for Rage Coffee

25:55 – Milestones & Growth over the years

Bharat 0:00

The exit was about three and a half times of annualized revenue, but it was a deal that we stuck with the buying party. So the deal was essentially, we formed a new entity where some part of the money was being allocated for the growth of that business. And I was a director, shareholder and obviously, building that business out. So that the deal was structured in a way where everybody got the returns, I was logged in to kind of build something larger. And that was it, as a 24-25 year old, 25 year old rather, I feel that those six months where the acquisition happened, it showed me the mirror on how business really works and how m&a really works and that’s the time I read this book, The Art of War. And there’s a lot of strategies that I use, started to implement in negotiation in just getting the right output when you sit in the room. So it was a great exit, but limiting of sorts, because if we had known all of the end points then it would have been a different journey, but it was something exciting, something exciting for sure.

 

Nansi 1:30

Hi, everyone. Before we begin, I would like to share that this podcast is brought to you by Prime Venture Partners. An early stage VC fund led by Amit Somani, Shripati Acharya and Sanjay Swami. Prime is often the first institutional investor in category defining tech startups in FinTech, SAS, healthcare and education, such as Mygate, Quizizz, PlanetSpark, Bolt and Glip. To know more about Prime, visit https://primevp.in/

 

Siddhartha 2:01

Hi, this is Siddhartha Welcome to 100x Entrepreneur Podcast. Today I have with me a serial entrepreneur, who started building d2c When d2c was not even a category in itself. Welcome to Bharat Sethi, founder of Rage coffee, one of India’s premier coffee brands, the brand is backed by Virat Kohli. He’s the brand ambassador, the former Indian cricket captain, and Bharat has started his entrepreneurial journey way back in 2011-2012. When he built India’s first large scale, d2c commerce in posters, the brand called PosterGully, which was further acquired. So fantastic to have you on the podcast.

 

Bharat 2:38

Thank you, thanks Siddhartha.

 

Siddhartha 2:41

I’ve known Bharat for more than five years today. I would love to know the Genesis of your entrepreneurial journey, your background, your family, where you come from, and what landed you into entrepreneurship.

 

Bharat 2:54

I was born in Delhi. And I think one good thing that happened to me very early on in my life was I realized that I have an inclination to lead because I was the one who was maybe trying to become a school monitor, I was the captain of my school football team became the head boy of my school, I was always interested in collecting people for a mission as a we can say that, and that was my, that was the big learning that I had in my school life. And I was also academically very bright, but most of my heart was in sports. So I played football, I played a lot of sports, I was into athletics. So my only whole purpose in growing up was to be able to convince my mom to let me go and play. So the trade off was to study and then go and play in the evenings. And that was my first love football or the first love.

 

So I learned a lot looking back, I learned a lot by being involved in sports, discipline. We had our practices starting at 4:30 in the morning, I also played for Delhi under 14. So, that was a big experience of my life and then overall, think beyond leadership, it was also an understanding that I did not want to do what everybody else was doing. So engineering or medicine, when there was no interest, I had very, very little inclination towards any of the generic paths people were taking, and in my house they had to let me be free because I would otherwise just simply be there but but, I mean, so there was a lot of times when they would they would ask me to do something but I will not just just as a form of revolt.

 

So they realize their key they should let me be and let me kind of take charge teaching my own and I come from a business family, love do tick and my family there’s no buddy who’s done a job. And then the businesses of all kinds, all forms or sizes. So naturally, I think there’s some inclination. I think it was my blood or it was, as soon as I graduated from college, which I barely graduated because from 98%, I fell to 60%. In college because I lost interest. I lost interest in the entire classroom teaching model. And I started working with an affiliate marketing agency and Flipkart had come up. We used to do a lot of work for Flipkart content creation in 2010 and Myntra customization platform had started doing really well.

 

So I was exposed to that world very early on SEO on page, off page, all of this marketing, marketing content marketing, things I started to fiddle with. This was a journey and I tried to work after college. I worked in a large corporation for about four days. I left after 4 days because I couldn’t just feel free, feel like myself there. And just six months out of college, I started to struggle. So the bug hit me very, very early on, thankfully.

 

Siddhartha 6:07

And can you share your journey of PosterGully and how you conceptualize that, how did you exited that?

 

Bharat 6:14

PosterGully was a passion project, it was something that I really wanted for myself. And then because I was not able to get it, which was basically I was a fan of a lot of these rock bands and football stars. And I always thought Why do we not have something like this in India? I could actually not buy it anywhere in the country, not just in Delhi or in the metros. And just the idea that you could, the first disruption was obviously the power of internet the power of being able to sell something online because, the entire arts business or the merchandise business is very limiting if you’re just having 15 skews in a shop or 100 skews in a shop, because the idea is to have a variety and that’s how you get repeats in that business. So I wanted to change my wall, my room wall every month as a 20 year old. So that was the idea of how we get fan merchandise, copyrighted merchandise online. And then I started working with a trader based out of Australia. So he started shipping, they started shipping me license merchandise.

 

So it started from there, it was a passion project. First I bought for myself, then I started to sell it. And after this happened, I realized I think six or seven months into the journey, and people told me that somewhere it was not striking what I’m sitting on, or what is the potential of something like this because I was very young and made a lot of mistakes. And then somebody told me you should create a marketplace because there’s so many artists who want to sell their work, then we did that and that’s when we’d rather just try to take off at that time. The first thing was all just building. I was a one man team, one person teams packaging, cataloging and even logistics. I had delivered so many of the products in Delhi NCR. But it grew very fast. I think we were very fortunate we used Content Marketing at that time, because Facebook was a business that was built on Facebook and Facebook was I mean, it was a great tool that time to reach out to the audience.

 

So we created a lot of organic content, scaled very fast from the first of the business to the fourth of the business, we put your very lean team, they’re very cost efficient, you’re always building for the right reasons, the idea was to make money. So we are 50% net margin business and in the last few businesses we talked more than 10 crores with a 50 People team. So it was a great journey. It was a very thrilling ride. And it taught me a lot and it built my character as an entrepreneur. I learned everything on the job basically. Everything about business, everything about e-commerce brand building, about just managing business and life together personal and professional life. I saw it all, I saw legal, I saw accounting issues, I saw team issues, I saw everything.

 

And by the time I was 25, I’d see more as an entrepreneur than most people see when they’re 14 maybe and that’s what gave me the confidence. It has become a way of life. It became like that, for me, I think that time when I was exiting the only thing was that I cannot go back to A Life Where I’m a job seeker. I have to be a job creator. And how do I create and I was very, very impressed by some people who were around me building 100 People company 200 people company I was thinking that I have to do this one day. I want to build large teams and I want to mobilize large amounts of people for a certain cause or a certain mission. And that’s what I did. That’s where Rage started, I also started something in between after PosterGully which completely tanked so yeah.

 

Siddhartha 10:13

Which year you exited the business. And if you can share, like roughly how much was the exit size?

 

Bharat 10:18

The exit was about three and a half times of annualized revenue, but it was a deal that we stuck with the buying party. So the deal was essentially, we formed a new entity where some part of the money was being allocated for the growth of that business. And I was a director, shareholder and obviously, building that business out. So that the deal was structured in a way where everybody got the returns, I was logged in to kind of build something larger. And that was it, as a 24-25 year old, 25 year old rather, I feel that those six months where the acquisition happened, it showed me the mirror on how business really works and how m&a really works and that’s the time I read this book, The Art of War. And there’s a lot of strategies that I use, started to implement in negotiation in just getting the right output when you sit in the room. So it was a great exit, but limiting of sorts, because if we had known all of the end points then it would have been a different journey, but it was something exciting, something exciting for sure.

 

Siddhartha 11:48

Before we dive further into the podcast, I would like to welcome Prashant Kunti, Head of Product Management at Zoho payroll and Zoho Books. Prashant, where do founders usually struggle with payroll? And how will they fix it?

 

Prashant 12:04

Thanks Siddhartha. Founders want to give their best for their employees. And they realize very early on. Payroll and compensation is a very, very important part of what they are going to handle. However, what we have seen is, where they miss out is usually on finding out the best solution that can grow along with that business. And that’s where, for example, the payroll complexity can grow very quickly. Initially, when you have just a few, four or five employees, that’s okay. But when the employee size count keeps on, the payroll complexity grows by leaps and bounds. So it’s best for me founders to invest in payroll, automated solutions, right at the very start. So they have one less thing to worry about.

 

Siddhartha 12:54

Thank you, Prashant. Dear listeners, you will find more about Zoho payroll in the show notes. Now, let’s further continue with the podcast.

 

And this was 2016. When you exited? Can you share those years, whatever you’re doing between the exit and starting Rage?

 

Bharat 13:14

Yeah, immediately, one big mistake I made was I did not take a break at all, because PosterGully was a great ride. But it got to me, I realized later on that not taking a day off for years is not not a good thing to do. And I wanted you to take out time, so that you could put your mind to work and your mind to rest so that you can build something larger. But that did not happen. So I immediately just started to build this marketplace for architects, designers, builders, with basically all the stakeholders of the home improvement space, or home renovation space together on one platform. That was the idea there that we ate something that kind of links all the key stakeholders of this market, the brands, the professionals and the homeowners.

 

So that was the idea. And I immediately started building a team. And very quickly, I think six months into the business, I realized that it will take time for PMF to come because the market is trying to build something which is early. And that clarity was very important obviously. I think I made a lot of mistakes. When I started, obviously one was not doing enough primary research before starting that business, not knowing enough about the customer, not knowing our right to win, basically for that product and that category. So those two years mostly were spent in making mistakes and learning. So a lot of pivots. So in six months we realized that the app model is broken. For this category. We need to do something offline. So we started doing offline meetings, which was not very scalable. Then we launched the directory, then we launched a physical directory. It was incremental revenue every time you’d add another lac or two lac a month kind of a thing. We did events, which were very popular, but those events were far and few, that’s something that we did.

 

We started a magazine, we did a lot of things in those 18 months, but I think my passion was not there, my heart was not in that category. That was the, I think one of the biggest reasons and I would be a consumer guy. I understand consumer psychology, I understand brand building, the revenues were b2b driven, largely. So I realized it’s not something that will take me where I want to be. And also, by this time 2018-17 I had gained so much exposure, and so many mistakes were made. And so many learnings were there that I realized the consequences for the My target was that I set a revenue target for myself, 500 crores in five years, what is what will take me to this number? And yes, some people can argue that this is not the right way to do it. But for me, all of the learnings around, market sizing around the macro, it can only be true if you have a, and again, this is my opinion, if you have a revenue figure in mind in 10 years, five years this is where my company should be.

 

And this is how I worked, the process was to work backwards. So, then I looked at the category and another learning that I had that time was that as an entrepreneur, I’m giving 24 hours, I’m giving, every day I’m giving 10 hours, plus I’m building the team, I’m doing everything that can be done with the limited resources that we that are there, what will be the Delta? Why would some companies become very, very large very quickly, and why some companies can’t do it? And the answer that I had was the macro economics, like if you are, as an entrepreneur able to predict the macro. For example, in 5 years,10 years, this will happen. What will happen the next two years, what will happen next three years, if you were able to predict that closely enough, and if you’re able to time it right, I think that’s where the winners are. And that’s what I kind of wanted to do.

 

So, this was the journey before it started. And it taught me everything not to do. Like PosterGully was mostly what to do, how to aggressively how to hustle. But this really mellowed me. It made me think like, actually, you can do everything, but not get it right also.

 

Siddhartha 18:00

So you realize that this is not your circle of competence. And your heart lies in building brand, doing commerce reaching directly to customers? And this was something and you exited the business in 2018 I believe?

 

Bharat 18:15

It was just a sheer swap that we did.

 

Siddhartha 18:19

And what was the time that you spent on conceptualizing Rage coffee? And how did you finalize this brand and this is a category that I want to build.

 

Bharat 18:34

So in 2017, I got married. And that changed a lot also for me because when you have a family to feed, and you have the pressures of a family, your risk taking appetite goes down number one. But I also know that this is all the only thing I know. I only know how to build, I am the creator but creation will need time, will need failures and will need money. First of all, we need that effort. So I told myself and my family that if they give me three years, I need three years without three years. I would not like three years to be the minimum that I would need to build something of substantial scale that I am happy and everybody’s happy around me and where all of my clients are going to be prone.

 

So the thinking was three years, first year, second year, third year, this needs to be done. And 2018 January is when I started building and the idea was I used to maintain this green notebook. And by the end I think I still go back to that book many times many times when I want to relive those moments where I started making a very scientific model on how I want to approach the category. So they were the mega trends I wanted to go after health and wellness was one mega trend. and direct to consumer was one mega trend grocery was highly under penetrated. And FMCG overall, I think as a category is something that had to grow, it’s the largest consumption basket of the country, it had to grow, but it was under printed online. So the big bet was that it will also go into double digits in five years, the share of market cap.

 

So those are some mega trends. And then obviously, I wanted to get the learnings to repeat once. So without a good repeat business, there should be no returns. So food came about and consumables came about that. And I took a lot of understanding from mature markets like the US and China. So it was a very pragmatic, very primary research driven approach. I also made it a point to travel a lot during that time. So I traveled to almost five countries in that one and I started kind of taking notes from all people including roasters, suppliers, manufacturers. Sometimes I tell my wife now that in that green book, every category that I mentioned, and deep dive into is now either very well funded as a category or have already broken all the myths supplements. One big category, Whitman’s a part of this thing. innerwear was one category that I really, really wanted to go after.

 

So there were more such, but then coffee happened because it was my passion. Coffee became a topic of interest for me. And then the market opportunity was very visible. Because of the approach that we take people look at, your coffee is so competitive, everybody tells me like the first thing is, but if you deep dive into the category, not now four years back, if you dip that into the category, 70% market share was with two players who were not innovating at all. 70% of the market was with South India, whereas the cafe business was growing in the North. The food service business was growing and not the premium foodservice business of coffee . Multiple data points say I met the distributors of an important brand that was doing 200 crores by just sitting on the shelf. That brand is actually sold in European luxury supermarkets, that was sitting on a ration store shelf and selling.

 

So there are multiple of these data points, but they were largely primary in nature. In fact, all of that was primary research, talking to the retailer’s talking to the trade network, talking to the manufacturers talking to the consumers, then we’re a deep dive into the realization there, this is a goldmine, this is what I need to go and then we start building the product. So this entire process was a year long process. I also went against the norms of the market to be it the branding side with the marketing, black and purple kind of branding never existed, the name, the manufacturing, we we reimagined the entire supply chain of incident because everybody was using really low grade beams to make coffee instant, we decided to go with something that was high quality. We wanted it to be, we went with the entire functionality aspect.

 

Because our goal became that we want to because again, during this time, my learning was there is no novelty in complicating coffee, like this batch, this roast level, even aficionados of coffee, don’t get coffee in India. So how do you upgrade an average consumer of coffee by appealing to their two aspects. One is the sensories, the taste and the aroma. The second is the caffeine kick. Our discovery was that Gen Z and millennials who are going to spend on coffee consumption, want a caffeine kick. That’s why they’re paying you that 150 bucks 10 bucks, without that there is no point. So then we went ahead and changed that. So there are many, many things to manufacture. We were not able to find manufacturers for the product we wanted to build. So we built machinery for it. We built custom machinery for it. Small Scale only at that time, but still.

 

So everybody told us in fact, insiders in the market used to tell us that this is never going to work. Obviously, once you scale. How will this be a two and a half kg batch machine, very small setup customized for us. But we did scale and because we put four or five of them, and then we got the output from it, and then we scaled obviously then we made a bigger hopper and everything was sorted. But higher but there were many of these things which were like, at every point there was a decision to make every day there was a decision to make because this has never been done before. What’s the right path? Should we take the blue pill or the red pill every day?

 

Siddhartha 24:56

And can you share some milestones in your journey like, for example, one kind of milestone can be, in 2018 You did this much to analyze sale 2019, 2021 And right now 2022. So how has that grown over the years?

 

Bharat 25:10

So I will give you some context on the scale of that, I won’t be able to share the revenue numbers exactly. I’ll give you a ballpark so everybody has context and also some KPIs on the business right. So firstly the business had five people and we closed the business and got a crore of net sales. And this is the 12 month, this is not the FY number. So at the end of the second year of the business, so the first year of the business, not selling commercially was all building the product. ran out of money and had to launch it in January 2019 and planned to do it in June because the product packaging was not there, but we had to launch it.

 

So January 2019, December 2020, fully bootstrapped so far, but we raised over 15 lakhs from one angel investor. And till now we were at about 10 people. I was the one marketing, I was the one doing the tag, I was the one doing the branding and we had people operations in the machine operators and all this you operate out of 2500 square feet space in a 3000 square foot space. So it was very small. So today we have about 150 people, and this is the trade off, you’re selling commercially with 1250 people. We have about 40,000 square feet now 25,000 square feet is our manufacturing unit blending unit. Then we have an additional 15,000 square feet which is storage and corporate office. We are on track this year to achieve 100 crores in sales. We have grown at 500% since we started.

 

So this is the fourth financial year of the business. And we’ve grown at 500%. We have raised venture capital as well in between from Sixth sense ventures from Nine unicorns from Refix capital. So yeah, this is the current scale of the business. We are also now present from somewhere in Ladakh to somewhere in Dimapur to somewhere in Kanyakumari, kolam and Kochi, retailers can get our stock next day we have about 120 distributors, we’re adding about two to three distributors every week right now actually more than that four to five distributors a week. We have four CFAs, 15 super stockers. By the end of this month we’ll be at about 150 distributors or so. So this is the current scale present in about 30 to 100 outlets available everywhere online available in UK, GCC, US, still building blocks there, but we’re available.

 

Siddhartha 27:57

Thank you so much Bharat. It’s been a very interesting journey of yours seeing from your eyes how to build the only channel brand and what are the first principles that you share how to build an omni channel brand, how to think about going after brand building, how to think about customer love, differentiation and product. Thanks a lot.

 

 

 

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