Rohit Bansal 00:00

I think in India, e-commerce is still so new that the largest businesses would be doing 10 to 15,000 orders a day and we land up in China and we visit one of the companies. They were doing two and a half lakh orders that particular day when we were in the warehouse, and that just blew our mind.

 

Siddhartha Ahluwalia 00:15

I believe Ola, Urban Company and Mamaearth are top three of your investments. If you can recall the stories behind how you met— what are the sparks that you saw in these entrepreneurs?

 

Rohit Bansal 00:23

We actually prefer investing in businesses where the market may seem extremely small right now. But what they’re doing is an absolute, quote — unquote, 10x experience. The only thing that matters eventually for any business, who’s your customer? What do they want from you and can you give it to them better and more cost efficiently than anyone else? That is by definition, the business. The GDP of India is regularly growing. People’s disposable incomes are growing and as a result every year, a very large number of families in India cross the orbit of having met their basic needs and have some money to spare. That incremental small amount of money to spare creates new businesses because now they have the money. They aspire for better things. In first year of college, they ran a poll of what students want to do when they graduate from IIT Delhi. Of all the career options, the number one was becoming an entrepreneur!

Siddhartha Ahluwalia 01:18

Hi, this is Siddhartha Ahluwalia. Welcome to the Neon Show. Today I have a very special guest. A person who’s responsible with his co-founders of building the guardrails of Indian e-commerce. Rohit Bansal, co-founder of Snapdeal and of Titan capital. One of the most recognized seed stage firms in India, investing into startups. Rohit, so proud to have you on the Neon Show. I’m looking forward to this conversation.

 

Rohit Bansal 01:45

Thank you. Thank you for having me on the podcast Siddhartha. It’s really my pleasure.

Siddhartha Ahluwalia 01:49

So before we dive into the journey of Snapdeal, of Titan and of the large landscape of Indian e-commerce, the insights into Indian consumers… Would love to tap into your memories of your childhood, right. You grew up in a small town near Bathinda, which is in itself a very small town— [chuckles].

 

Rohit Bansal 02:09

[Laughing] Yeah, I think most people know Bathinda post “Jab We Met”.

 

Siddhartha Ahluwalia 02:12

Yes!

 

Rohit Bansal 02:13

Outside of “Jab We Met”— before that most people didn’t know even Bathinda.

 

Siddhartha Ahluwalia 02:17

And your town has a shorter name, Malout. That’s why people can recall it, right? But you mentioned to me, it has a population of less than 100,000.

 

Rohit Bansal 02:27

Correct.

 

Siddhartha Ahluwalia 02:27

Less than one lakh people. So what are your memories that shaped you today, from that place?

 

Rohit Bansal 02:32

So it’s good to go down the memory lane sometimes. So as you rightly mentioned, I grew up in Malout, which is, before Google Maps, it was very hard to find that place also. Now, thanks to technology, if someone asks me, where is Malout, I’m able to show them on Google maps that it is here. But you know, I grew up in a business family as in small towns, there is not much of a corporate sector, right. So most people are small business people. So similarly, my dad used to run a fertilizer store. And that’s the sort of family setup I grew up in and everyone in the extended family was also— so someone will have a clothes shop. Someone will have some other shop, etc, etc. And the school I went to was an English medium school. But all the kids were from similar backgrounds. Half of them were farmers’ kids. Half of them were sort of doing some sort of agri, agri based business. In that environment, you know, the thing that was considered very normal thing to do for most of the people – which is how all my classmates and sort of friends were also from school – is to continue doing what their parents are doing because that was the safest thing to do. This is again, more than two decades back. And people didn’t know what opportunities exist. This was before internet existed. And that was the standard thing that if you’re studying in school, you eventually finish your education or whatever you have to do. Eventually, you will basically go and sit in your father’s store. If your father is a doctor, you will become a doctor, etc, etc. Thanks to my parents. I feel they were extremely progressive in their mindset and from very early age they told me that this store is the absolute last backup option. You should assume it doesn’t exist for you. So you figure out what you want to do and we’ll help you in doing that. The only thing that people knew about future education in our town was that— by the way, I hadn’t even heard of IIT back then which is where I eventually ended up being.

Rohit Bansal 04:33

The only thing that people knew about for future education was that whoever’s numbers are good enough, that person shows up in DPS, R.K. Puram. Somehow or the other, DPS, R.K. Puram as a brand name had become popular in our town—

 

Siddhartha Ahluwalia 04:59

And from your town, many folks had gone before you to DPS, R.K. Puram?

 

Rohit Bansal 05:03

Maybe three to four. I mean, at best, the person who would be the topper of class 10th in our school. In one out of two, three years, that person will have enough marks that they can probably get admitted into DPS R.K. Puram, but that was all that people knew about the future of education. I was fortunate enough to get decent marks in class 10, and that’s how I showed up at DPS, R.K. Puram. It is after coming here that I realized what is IIT. Then I realized to go to an IIT, most people go to a coaching class. Then I asked around in DPS, found a coaching class which you’re supposed to go to, try to get admitted into one.

 

Siddhartha Ahluwalia 05:45

Vidyamandir right?

 

Rohit Bansal 05:46

Vidyamandir—

 

Siddhartha Ahluwalia 05:46

Which is one of the most tough coaching classes to get into—

 

Rohit Bansal 05:48

So I didn’t know that right. So, I had never heard of a coaching class. I came to Delhi and I remember it was the second day in the hostel. And everyone seemed to be filling some sort of form. I was like, you know, what form are we all filling? They said it’s the Vidaymandir form and I said, what is that? [chuckles] They said it’s a coaching class. I thought to take IIT coaching classes also you need to give an exam! [chuckles] They said yes, it’s very hard to get into and then I thought, well, let me also fill it up. And that’s how I eventually got admitted into Vidyamandir classes. I think that’s how the journey began, honestly, you know, I feel in some ways fortunate also that I landed up in DPS, R.K. Puram, because that just opened my perspective quite a bit more. Because, you know, the focus on future education, at least back in our days, in our town where I grew up was very, very limited.

 

Siddhartha Ahluwalia 06:43

And you move out of your town to DPS R.K. Puram in 1999?

 

Rohit Bansal 06:46

1999, very early.

 

Siddhartha Ahluwalia 06:48

Almost 25 years.

Rohit Bansal 06:49

24-25 years. Correct. We started one year after college, Kunal (Bahl) and, you know, both me and Kunal had been discussing for some time. Finally, Kunal’s visa got rejected. So he called me and said, ‘Look, I’m coming back anyways.’ We’ve been discussing this, but it was still very tentative. And once I get this call from Kunall that ‘Look, I’m anyways coming back now. So my visa is rejected. So I’m going to be back in India.’ Ironically, I had also got a job in the US and my visa had gotten approved. But when Kunal called me and said, I’m also coming, you know, we’ve been talking about doing this. Should we do it now? And finally, when it came, the time came to take the final decision that okay, both of us have discussed it enough, we’ve decided. Let’s send that resignation email and get started on a business. At that point of time, there has to be one strong reason which pushes you over the edge and makes you send that email and make that sort of jump or commitment. For us, that was very clear. I still even though it’s been many years and still very vividly remember. I think in those days, I read somewhere that between between security and opportunity, always choose opportunity. And to us that was very important. Both of us had this candid discussion that look, given the kind of education we’ve been through, etc., we had enough confidence in our ability that God forbid, everything we do fails and keeps failing for many, many years. Even then, we have enough skills and enough confidence that we will not die homeless and hungry. We will be able to at least earn enough to put food on the table. If that is protected, then at the age of 70— and secondly, we really wanted to be entrepreneurs. We really wanted to give it a shot. We didn’t know whether we will succeed or fail. But we really at least wanted to give it a shot. At the age of 70, we didn’t want to carry the regret that if we really wanted to do something and yet we did and I think that just feeling of not carrying these regrets and trying to be the best version of ourselves or having the most contribution that we feel we can have is what finally made us take the plunge.

 

Siddhartha Ahluwalia 09:16

By the time— do you remember the date you put your resignation?

 

Rohit Bansal 09:20

I remember we started September 2007. So it must have been a month or two before that is my sense.

 

Siddhartha Ahluwalia 09:30

And you joined IIT in 2001?

 

Rohit Bansal 09:32

I joined IIT in 2001. I came to Delhi in ’99 to DPS where I went to 11th and 12th which is also where Kumal and I met by the way. We were classmates in the same section in DPS and then two years at DPS. Then I went to IIT in 2001. I was in this five year program, sort of dual degree which I completed by 2006. 2006 to 2007— and Kunal graduated at the same time from UPenn and Wharton. 2006-07, both of us respectively worked, he at Microsoft and I at Capital One, which is the US card company. And then in 2007 is when we quit and started our business.

Siddhartha Ahluwalia 10:13

I think I can give two anecdotes and then I would like to jump in certain parts of how you build an e-commerce railroad for India. If you see right, one of the poorest and the most educated or aspirant region has been Bihar from India. So, earlier the aspiration of every parent for their kids in Bihar was: Go to IIT or go to a higher education then aim for UPSC. Now, parents are completely okay in that region of Bihar, right and even the hinterlands of— Patna is a main city but larger suburbs, villages that a kid from IIT, which I have seen, where the parents might be farmers, going for entrepreneurship and this is a very large change that Indian society is seeing, right, because that region used to represent what actually a large part of India aspires for. Earlier it was going for civil services exam, UPSC exam, and now slowly and steadily. entrepreneurship is becoming okay.

 

Rohit Bansal 11:14

Yeah, absolutely. I mean, there are so many examples of that, which I’ve seen, you know, I mean one of the beauties of being an investor is that you get to meet extremely smart and very, very driven entrepreneurs, who come by definition from all different walks of life. Different regions, different education, backgrounds, all of them having very strong aspirations. And I think you get to hear all these stories on a regular basis. Like, you know, in my own family, I’ve seen my nephew. He studied really well, got into a good engineering college, became an engineer, but then later realized that his passion lies in being a chef. So then he, after his engineering degree, went and became a trained chef, and opened a restaurant of his own, which— and in a tier two city in India. Not even in like Delhi, Bombay, etc. I can’t imagine that having happened 20-30 years back, because, you know, the instinctive reaction of the society and the parents would probably be ‘Oh you studied to be an engineer. Who even opens up a restaurant? You’re an engineer so you follow the skills that you’ve learned.’ but that is changing. That is changing very fast. And that’s a very good thing. That’s how the country will go forward.

Siddhartha Ahluwalia 12:32

And coming to you know, since you talked about investment, right? If you have to recall, like, I believe Ola, Urban Company, and Mamaearth are some of the— top three of your investments. Right? Yours and Kunal’s. So if you can recall the stories behind how you met these, and what are the sparks that you saw in these entrepreneurs.

 

Rohit Bansal 12:49

It’s very interesting. I think our first investment was probably Ola, one of the earliest. This is back in 2011 or so. Very interestingly, Kunal was speaking at a panel and you know, he comes off the panel and one of these young people who’s Bhavish (Aggarwal) met Kunal there, and said, ‘Hey, I’ve started this interesting business in the ride hailing space, because I feel the experience of finding a cab, booking a cab is broken in India, and I want to change that.’ And they had like a 10 minute conversation post which they set up a phone call. Again, this is not this is not the time when you used to have video calls. You used to have phone calls. So Kunal and Bhavish had a call. Kunal was absolutely sort of awestruck by the level of clarity at such a young age and the sort of level of ambition he had. And then he comes in— and we were not even regularly investing back then. This is just sort of something that we were open minded about, but we hadn’t really done anything. Then he comes in tells me, ‘I met this really smart person, why don’t you meet meet him too.’ And then I spoke to Bhavish on the phone as well. And in a one hour call, I was also like, you know, this person is going to do something. And that’s how we ended up investing in Ola which eventually I think Bhavish has obviously done exceptionally well for everyone.

 

Siddhartha Ahluwalia 14:14

And how about Mamaearth?

 

Rohit Bansal 14:15

Mamaearth was a very interesting story. So I remember, I mean, both myself and Kunal, both of us have young kids. And back in the day, Kunal’s wife Yashna… They just had a kid at that time. And then she was looking for a good quality mosquito repellent, which is slightly more natural for their kids. And then she started asking some people like mothers do, right? There are these mom groups, etc. So she asked a few people. And very interestingly on that forum, more than half the forum came back with this unheard of unknown company suggestion that Mamaearth is a very good mosquito repellent. She bought it and then one fine day Kunal sees that at home that, ‘What is this new bottle?’ It looks like something interesting. Then he comes and shows me. I also thought it’s interesting. So then, we said okay, this seems— they seem to be on to something if in a small mother group… A mother choosing something for their child is I feel the highest level of trust that you need to earn. And if even in a small group such a large percentage of mothers are choosing then they must be doing something right. So we actually called up their customer care, because we didn’t know who the founders were. So we just called up the customer and introduce ourselves and said we want to meet. Interestingly enough, like is the case with most young companies, Varun (Alagh) himself picked up the phone [laughs]. I remember back in our day also, we used to answer all the customer care calls. He picked up the phone. Then we met Varun. And just you know, in one hour meeting again, we just felt that this person is going to do something. Obviously what they had created already… It was still a very small business. They were doing like seven lakhs a month in sales. That’s it. So but we found it very, very interesting and very impressive. We were absolutely stunned by our meeting with Varun. And pretty much he had not even left the office. And we pretty much had to call him back to invest in the company. That’s how we invested in Mamaearth.

 

Rohit Bansal 14:20

Yeah. And then we stayed invested. We still are investors.

 

Siddhartha Ahluwalia 16:22

This is 2016?

 

Siddhartha Ahluwalia 16:23

And what about Urban Company?

 

Rohit Bansal 16:28

Urban Company was a very interesting story. So one of our classmates in DPS. He later went to IIT Kanpur and then he was working with BCG in New York. And he emails me out of the blue one fine day that my colleague and a few of his friends are moving back from here, from BCG to India to start a new business. And they just want to meet you to sort of explore some ideas and soundboard certain things. That’s how we got introduced to Varun (Khaitan) and Abhiraj (Singh Bhal) and Raghav (Chandra) So then introduced me, obviously, I knew him very well. So we met Urban Company – UrbanClap in those days – team. Again, the team was exceptionally smart. And when we met them, they had not even decided the idea of what they want to do. They decided they want to be entrepreneurs. They had left their jobs and come back to India. And they were exploring options. So when we met them, we heard two ideas that we are thinking of doing either A or B. And I think A was… I’m happy that they didn’t go down that path [laughs]. So our recommendation, at least in that meeting also was very clear, which obviously it’s their company so they have to choose. But we felt that just B seems, which eventually became UrbanClap and then now Urban Company is what they should pursue, which is coincidentally what they ended up pursuing. But again, in the meeting we were really, really impressed with these three founders. Exceptionally smart, very clear thought process, very committed to being entrepreneurs, to the point that they were willing to take the risk even when they had not decided and shortlisted the idea. So eventually we ended up investing in Urban Company. And till date they are they are some of the smartest entrepreneurs we know.

Siddhartha Ahluwalia 16:48

All of these three stories, right, you mentioned after the first meeting, you said and Kunal said unanimously that these guys will do something. What was that? [laughing]

 

Rohit Bansal 18:35

Very interesting, right? So we’ve we’ve tried to distill over the years. Tried to distill what we look for in a founding team or founders over the years and I think, while it is not complete in any way, but we do have some semblance of a thesis, in terms of what to look for. Number one is obviously this everyone will say, but to us is extremely, extremely important is exceptional quality of founders. That’s so important because especially at the stage at which we invest in the business, sometimes you’ve seen even the business changes.

 

Siddhartha Ahluwalia 19:10

And how do you define exceptional?

 

Rohit Bansal 19:11

Exceptional founders means extremely high conviction. Founders who’ve, you know, shown sort of some spike in their lives in the past. It doesn’t need to be academic, but you can tell that they have excelled at something in the past. That usually is a sign that they have enough perseverance and grit to go through the grind and succeeded something in their entire journey till now, right? Whether it’s college, education, sports, whatever it be. That’s number one. Number two is, you know, their ability to learn, because that’s what we’ve seen becomes extremely, extremely important. Many of the organizations which we invest in, sometimes even change their business after we invested in the company. As a result, we value, you know, the ability to learn and become smarter, as a lot more important than raw skill, because raw skill you can have you can learn etcetera. But this ability to learn and progress is a very rare but very important aspect. And that automatically means two things. That the founding team has to be rigorous enough to put in the work to learn, sort of to learn a certain skill, but at the same time— and should have the confidence to obviously become entrepreneurs, which is what they’ve already done. But at the same time, have the humility and the groundedness, that when the facts… They start with a business idea, they put something out in the market, but when they go talk to 50 customers, if they hear a completely different thing from customers, will they have the humility to be able to learn from that and evolve their business accordingly or not? That becomes an equally important aspect of becoming a good entrepreneur machine. And then some cases, the business hasn’t even been set up, in which case, this is all we have to assess. In cases where the business has been set up, you know, we actually prefer investing in businesses, where the market may seem extremely small right now. But what they are doing is an absolute, you know, quote — unquote, 10x experience. That what they’ve built is absolutely super relative, even though it’s a very tiny market, very small, seemingly very niche, but what they have built has absolute and immense love for, for the brand itself. We’ve seen it is a lot easier to replicate that love over a period of time, to a larger and larger TAM and keep expanding the TAM of your business while maintaining that sort of absolute loving place, versus playing in a very large TAM with a product that people sort of love. You know what I mean? So I think it’s much more important, even if the market seems smaller, but the product love has to be absolutely superlative. Having that little extra love doesn’t really cut it even if the market is very large.

Siddhartha Ahluwalia 22:30

And I believe right, if I have to go back in IIT Delhi in 2007 or ’06 timeframe, right, there are two batches, right? 2006 and 2007 created companies in India worth more than $50 billion combined.

 

Rohit Bansal 22:49

Probably.

 

Siddhartha Ahluwalia 22:50

And founders combined worth more than $10 billion, which is exceptional. All these founders you, Kunal, Deepinder (Goyal) Sachin& Binny (Bansal), come from middle class background, right, and shown an example. What was so special and why was that timing so important that you think… One is luck. It brought you together in those two batches and other is, what happened after that timing wise?

 

Rohit Bansal 23:19

This is actually a very interesting question. I’ve never really thought about it that way. Look back in the day, if I go back in time, entrepreneurship was honestly the absolute last option on people’s mind. Most people—

 

Siddhartha Ahluwalia 23:34

Even at IIT Delhi?

 

Rohit Bansal 23:35

Even at IIT Delhi. Very few people —

 

Siddhartha Ahluwalia 23:36

It was a secure institution that you go out of IIT Delhi, you can land a job worth—

 

Rohit Bansal 23:41

You could, but look, the number of people who used to become entrepreneurs was still very, very small, as compared to today.

 

Siddhartha Ahluwalia 23:48

Because there were no examples.

 

Rohit Bansal 23:49

There was no examples. People had never seen it happen. Their parents had never seen it happen. Today, sometimes— I’ll come to that also. Even parents have seen it happen, etc. So there was relatively very limited precedent or role models, per se. There were some companies but relatively very few. And as a result, most people used to think that ‘Oh he’s bnot able to find a job so he’s starting a business.’ That’s how people used to view entrepreneurship—

 

Siddhartha Ahluwalia 24:13

The batch who used to be that then even—

 

Rohit Bansal 24:15

Even till that time. I think it started changing over a period of time. But things have very materially improved now. Like I was talking to the first year batch of IIT Delhi students only one or two years back. I was giving a talk. And they were telling me something very interesting that in first year of college, they ran a poll of what students want to do when they graduate from IIT Delhi. Of all the career options, the number one was becoming an entrepreneur. I just couldn’t have imagined that happening in the time we were graduating. So I think it is fantastic to see how much India has progressed. How much the psyche and the risk taking ability has progressed and as you rightly said, this is IIT Delhi, which is considered to be one of the top institutes in India. And if people graduating from there don’t feel secure enough to take their chances, then I don’t know who will. It’s very important to the country that they do. Very important to our society that they do. But that said, I think over the years, entrepreneurship, rightly so, has become a lot more mainstream, a lot more celebrated as compared to what it used to be. The best example of this, I remember very clearly, when I was graduating, I told my parents, I got this dollar salary, which again, no one had from our town had ever been to the U.S. to work on a dollar salary. And I tell my parents that I want to quit, and I want to start a business. Again, really blessed to have such understanding parents who didn’t really come in the way and they were more than happy to encourage me to do that. But the society around them, and the neighbor relatives, etc. were just… I mean, they made life miserable for them. ‘What is your son doing? He’s gone mad. He’s got such a good education. Why is he wasting on starting a business? Why is he leaving the U.S. salary, etc, etc.’ To the point where a few years back, one of my relatives calls me out of the blue. And by that time, we had become entrepreneurs. We had invested in some company so in the extended family, this was like the guy who understands entrepreneurship to some extent. So one fine day, I get a call from one of my relatives, and very traditional family, but he calls and says ‘Rohit, yaar, we’re looking for a groom for our daughter. Do you know any good entrepreneur?’ [laughs].

 

Siddhartha Ahluwalia 26:45

And this is somewhere I believe near Bathinda.

 

Rohit Bansal 26:49

And I think to me, that was a watershed moment. That’s what told me entrepreneurship has arrived in the country. When a father is looking for a groom for the daughter, and thinks that they want to look for an entrepreneur, that means this is the— in a father’s mind many times that is the place where they seek the most amount of security. That my daughter should get married in the right place. If there in small town India, people are starting to think of entrepreneurs being a good option, then that means as a society, we’ve made a tremendous degree of progress.

Siddhartha Ahluwalia 27:24

Coming back to the 2005, ’06, & ’07 batches of IIT Delhi. These batches set up the the infrastructure for e-commerce in India, whether it be you know, the Flipkart and Snapdeal building up the logistics, cash on delivery, warehousing model, or be it Zomato building the quick commerce. Why was that timing so special? If you go back—

 

Rohit Bansal 27:51

I mean in some ways, it also seems serendipitous, in many ways. I think India was just starting to become an economy which mattered. The consumer economy started becoming slightly bigger. Internet had arrived, which again, this was big, obviously a big, big factor for all of us. We were all fortunately, I would say graduating at the right time, in some ways. And I think some early examples of companies that got set up… Entrepreneurial companies that got setup and succeeded had started becoming visible. Like I think there was the example of MakeMyTrip is also—

 

Siddhartha Ahluwalia 28:31

MakeMyTrip was there. Naukri was there. I think—

 

Rohit Bansal 28:31

So some— Info Edge, MakeMyTrip, etc, some early examples that started to emerge. So as a result, I think it was a confluence of all these things that made entrepreneurship an acceptable career choice for some of us. And I think that’s where things started, in some ways. Post that, as I mentioned, the number of people taking that option has become many, many more in a good way. And I’m pretty sure as time progresses, we will look back and see that a lot, many more even larger companies got created by people coming out of these colleges, even after we graduate.

 

Siddhartha Ahluwalia 29:17

I think one of the monumental moments in e-commerce was that cash on delivery became common. The logistics network became common. What happened in those 10 years between 2011-2020 where in this decade consumers don’t think when they shop online?

 

Rohit Bansal 29:36

Correct. So you know, I remember back in 2010, ’11, ’12 when e-commerce was just starting in India. I think the only e-commerce that really existed till then was flight tickets. And I feel you know, e-commerce also follows a certain curve, which is kind of what followed, You know, what it followed in India that people understandably, consumers want to buy the most— First, it actually starts with digital goods, which is what… Flight was a digital good and probably the most tangible and simple to understand good that it’s a named flight from point A to point B at a certain point of time. And e-commerce is making the discovery of fairs easier. Access to those flights better. That is the easiest thing that people started with. And then it follows a certain curve where the more tangible and known the thing is, the easier it becomes to trust. Then I think the next thing that came online was electronics and books because again, you know the author. You know the book. Kind of know the price if you go to a shop, or if you don’t have a shop, you don’t have access. It is an easy decision to make, because there is very limited subjectivity involved. Similarly, electronics also, you know, the kind of thing that you want to buy and the specifications, the brands, etc, and it becomes a relatively easier switch. So those are the things that started coming online first. But people still, for the longest time didn’t believe that fashion can be bought online, because fashion is so subjective. You know, when you buy an Apple iPhone, you know, it is an Apple iPhone. I mean, you know what to expect. But when you buy a t shirt, or a sari online, you can look at the pictures, but you don’t know really what will come. And whether the quality, there are so many different aspects right? Quality, fit, returnability, etc. and as a result, there used to be a lot more inhibition in people’s mind of trying something like this. I think that’s where a lot of the railroads that got built for e-commerce, in that decade, come in very handy where things like cash on delivery, which didn’t used to exist before got introduced, which made it easier for people to get confidence that okay, I will be paying only when I receive something in my hands. I don’t have to pay right now and then trust the company enough to receive it at a later point in time. Easy return policies where, again, it is one thing to read that there is a return policy. It is completely another to actually experience it. That I ordered something, I didn’t like it, or it didn’t fit me or I didn’t like the material and I was able to return it. And my money did come back. I think it was some of those really infrastructural things that got introduced and built for e-commerce, which is what enabled e-commerce. And then obviously, over the last five years, there has been an absolute internet revolution in India that has happened. Before that mobile internet used to be still not as deeply penetrated. In the last five years, everyone has mobile internet. This is something that we don’t even ask a question whether it will someone will have mobile internet or not, which wasn’t the case still five years back. I think it’s all these things that eventually led to a point where people now feel extremely comfortable with e-commerce, which is also giving rise to a lot more newer types of businesses based on e-commerce, whether it’s consumer brands, new age brands, quick commerce, etc. And I’m sure we’ll keep seeing more and more innovation happening as we go along.

Siddhartha Ahluwalia 33:20

And I think one monumental shift that happened in the journey of Snapdeal was you and Kunal going to China in 2012.

 

Rohit Bansal 33:30

That is true.

 

Siddhartha Ahluwalia 33:31

Right and, and seeing millions of orders a day happening on Chinese e-commerce. Tell us about that.

 

Rohit Bansal 33:39

So it was very interesting. We were in the coupons business. So Snapdeal started as a coupons website, where, you know, we would get coupons from restaurants, bars, etc put them online, and people would come and buy them. The business was doing quite well, but you know, I think as entrepreneurs we always keep, you know, keep aspiring into what more can we do? And I think it’s in that period where we ended up in China because many people used to — many investors used to tell us the Chinese economy is doing very well. China is many years ahead of India. You should go and see yourself. Many had not been themselves but [laughing] anyways, one fine day we said, okay we will land up in China and see what what everyone talks about. And what was very interesting… In India, e-commerce is still so new that maybe the largest businesses will be doing 10 to 15,000 orders a day. Not more than that for sure. And we land up in China and we visit one of the companies and I still remember we were standing in the warehouse of that business and they were doing two and a half lakh orders that particular day when we were standing in the warehouse, and that just blew our mind away. That this is possible. It’s a matter of time it’s going to happen because sitting in India, you could just not imagine that to be a possibility. And then we met a couple of investors there also who asked us, ‘Okay, e-commerce in China is doing exceptionally well. What is the state of e-commerce in India?’ And we told them, you know that this, this is the status. This is the number of orders companies are doing. He said, ‘Why are you spending all your time building a coupon business. Go and build an e-commerce business if it doesn’t exist.’ And that’s how we thought that this sounds so obvious in hindsight, but at that point of time seemed so— somebody needed to tell us, for us to realize in some ways. That’s how we came back. We started the e-commerce part of our… Product e-commerce. And then it did so well that we very quickly shut down the coupons business to focus exclusively on e-commerce.

Siddhartha Ahluwalia 35:41

Dive down into a two by three matrix that I have prepared, right? And you can answer part by part in this matrix, right? Solving hard problem versus solving easy problem, solving large problems versus solving small problems, and solving crowded space versus solving for new spaces. So let’s start with solving hard problem versus solving easy problems. How do you look at it?

 

Rohit Bansal 36:05

Look, I think, understandably, solving hard problems is much harder. But I do feel in the journey of businesses, that is what many times builds enduring value in the business. Because look, if it’s very easy, then it’s very easy for everyone else to solve. And as a result, as a business, one can get off the ground very quickly but very quickly also realize that there are 1000 other people doing the same thing. And as a result, building competitive differentiation still requires you to solve a hard problem at some point. You may postpone it to a later point by solving an easy one. But eventually to become a large and successful business, I do feel you will need to solve a hard problem at some point of time. If the business was very easy to start, then 1000 companies will start. Then you will have to solve the hard problem of building differentiation in a market where there are 1000 companies. If the business is very hard to start in itself, then by definition, very few companies will be able to solve it, and you will have differentiation from very early on. So eventually, as a business I feel you have to solve some hard problem. You may not begin with it but to become successful somewhere in your journey, you will have to solve.

 

Siddhartha Ahluwalia 37:23

And solving hard problems for the sake of it it’s required or because then people will will try to attach to that also—

 

Rohit Bansal 37:31

No I don’t think it’s required for the sake of the hard problem. I feel it’s required… I mean, look, at the end of the day the only thing that matters eventually for any business, who’s your customer? What do they want from you? And can you give it to them better and more cost efficiently than anyone else. That is by definition the business. So as entrepreneurs, sometimes this happens to us, which by the way, happened to us firsthand. And as a result I speak from experience is that you can start solving the problem with yourself first, and get too attached to the problem, not to the solution that customers are looking for, which will be completely different. And hence we actually very strongly encourage entrepreneurs to start talking to their customers as early as they can. Even before setting up the company sometimes. Just to get a feel for what they should be doing. Again, why I said we learned it the hard ways… When we started our business actually, we didn’t even start as a e-commerce company. We started as a physical coupon booklet. Back when me and Kunal left our jobs. You know, and this physical coupon booklet would have many, many coupons. Buy one, Get one free. 40/50% off at many of the top brands, restaurants, etc in the city. So, me and Kunal, we thought it’s a great idea. We were 23 years old, so we thought this is the best idea that could happen. We spent the next one year because it was just the two of us, collecting all these coupons sitting outside restaurants to convince the restaurant managers to give us an offer or outside brands offices to convince the brand to give us an offer. And over the next one year, we built what we thought was a great product. We had not spoken to a single customer, but we thought we had built a great product. So much so to the point that we had raised a very small amount of funding. We spent more than half of it in just printing booklets so that we don’t run out of booklets to sell because we were so convinced that this is the greatest idea that the day we start selling there is going to be a queue outside our office of people who want to buy these booklets. So we printed 50,000 copies of our booklet which had a shelf life of six months because all those coupons were expiring in six months. The day we launched, in the next six weeks, we sold 10 copies, or some single digit number, like literally 10— seven, something like that. And that’s how we realized the hard way, how important it is to talk to your customer before you build something. We had not spoken to a single customer and because it was so hard to do, somehow we had convinced ourselves that this is a great product. But when we put it in front of consumers, they didn’t see it the same way as we saw. And they had a completely different point of view. They didn’t like the product at all. And all this one year that we spent in building the product, and the amount of money we spent in printing those booklets could have easily got saved, had we sort of done the smart thing of going and talking to our customers and seeing how they react to it.

 

Siddhartha Ahluwalia 40:55

But you saw it as a hard problem?

 

Rohit Bansal 40:57

We saw it is a hard problem. But which is why I’m glad that you asked the question that just solving the hard problem is not enough. Solving a problem which is relevant for consumers is extremely important. Eventually, I feel as a successful business, at some point, the problem will become hard also, because if it’s too easy, then everyone else will solve it too. Just solving hard problems in itself does—

 

Siddhartha Ahluwalia 41:25

Is not a necessary condition for success.

 

Rohit Bansal 41:27

Absolutely.

 

Siddhartha Ahluwalia 41:27

And what about solving for large problem versus solving for small problems?

 

Rohit Bansal 41:31

See there have a different view eventually, obviously, for business to become large, your market has to be very large. But we are strongly of the view that it is extremely important that whatever you provide your customers has to be absolutely super relative. Even if that is the case for a small audience, so actually as a result, our point of view, even when we invest in companies and look at companies is almost contrarian in nature. That we look for a very small TAM but a product which is absolutely superlative, that at least within that small time, whatever you build, has the ability to dominate the market. Even if it’s as small a TAM as toxin-free mosquito repellents for kids, which is exactly what Mamaearth was when invested in the company.

 

Siddhartha Ahluwalia 42:26

There was just one product.

 

Rohit Bansal 42:27

There was this only one product, which is doing really well. But because they were so superlative, I feel it was relatively more doable, to expand the scope of sort of that brand love to other products and categories, then that fun launches, versus trying to go after a market which is extremely large in nature. But your solution is not good enough, or just marginally better than the rest, then I feel even the large market will always make it a struggle for you to gain market share, it will always seem like a mirage that we are playing in a very large market. But that Mirage will never come true because gaining market share or gaining customer Love is so hard because your product is only marginally better at best. So at least we have a sort of very clearly defined view that it doesn’t matter what the TAM is, and effectively in fact, it’s better if it’s smaller, but on the axis of superlative nature of the product, that has to be absolute 10x.

 

Siddhartha Ahluwalia 43:31

And what about solving for crowded spaces versus solving for spaces which are not discovered yet?

 

Rohit Bansal 43:36

Look, there also I feel it is better to solve for relatively undiscovered spaces. It seems non obvious at that point.

 

Siddhartha Ahluwalia 43:48

Can you give two, three examples of companies that you invested in?

 

Rohit Bansal 43:50

Mamaearth in itself. You know, I remember when we invested in Mamaearth. This is not that many years back. Seven, eight years back. But the company was selling you know, mosquite repellent— toxin-free mosquito repellant for kids. More importantly, at that time, the phrase D2C didn’t even exist. It came up after that. And when we invested in the company, after that, many of the investor friends who we know also called us and said, ‘Look, guys, we’re supposed to be investing in tech businesses. What are you guys doing investing in a quote — unquote, soap oil type business? How’s that investor friendly business?’ We had a very different point of view that look it is a large market. These guys have a fantastic product. People need alternates and if they do a good job, they will be able to expand the market. Honestly, they did far better than we would have expected them to do. All the credit to Varun, Ghazal and their team for having pulled it off. I don’t think we could have imagined them doing so exceptionally well as they have done, but at least it was visible to us. But then It was a contrarian bet at that point of time, because very few new companies used to start in this industry. People used to only go with the existing traditional brands. And that way it was a contrarian bet. Now after that, seeing the success of some of the early companies in that space, the space has become crowded. Now, would I recommend to anyone to start a beauty and personal care business today? Only they have an idea which is extremely differentiated, because now it is much harder, because the market is a lot more crowded, the space is a lot more discovered, which means on day one, you have a lot more competition to deal with. And as a result, extremely strong differentiation from very early on, is even more important today, because you’re playing in a crowded market. And as a result, although it seems harder, but we actually feel it’s easier to build a business in an undiscovered space, because that allows the team the time, bandwidth and just sort of free space required to keep building their business. It will — many investors will not be able to understand it for the first few years, but I feel that’s a smaller problem as compared to playing in a space which investors can understand but which is so crowded that building differentiation and standing out is hard.

Siddhartha Ahluwalia 46:23

Which leads to my next thought that I want to share that, why are copycats so common in India, or maybe globally? If one company starts in food delivery space, we’ll see 50 companies start in Indian food delivery—

 

Rohit Bansal 46:37

See I mean look, that is just I feel human nature, right? In some ways, all of us sometimes feel that if a business has done well, then all similar businesses will do well. And I think—

 

Siddhartha Ahluwalia 46:50

Do we want a shorter path to validation? Is that—

 

Rohit Bansal 46:53

Shorter path to validation also, sometimes we just don’t put in enough hard work to see and we just go instinctively that you know, okay this business seems to be doing well let me start a business. I remember very fun incident. A very interesting anecdote that happened with me. And this is again, many years back when WhatsApp was bought for $19 billion by Facebook. And you know, one of my relatives who was in the manufacturing business. He used to manufacture carpets or like one of those things. He calls me and says, ‘Rohit yaar, WhatsApp got sold for $19 billion. I’m thinking that even I should start something similar!’.

 

Siddhartha Ahluwalia 48:43

Create a messaging app! [chuckles]

 

Rohit Bansal 47:30

I said, uncle how is this a good idea? Everybody is already using WhatsApp. Even if you wanted to do it, we should have done it when no one else was… There was this need but it had not been addressed yet. After it has been addressed it’s not such a great idea to start one more of such unless you have a very interesting insight, which is still relatively more undiscovered. But instinctively, I sometimes feel we don’t do enough sort of hard work or research and just sort of go a little bit with the flow, which is not always the best of ideas to start a new business. Which is why, when we invest in companies, we look and many times when we invest in companies, those spaces, they look very sort of contrarian nature, when you say it will seem obvious, yeah, that there should be a demand for this. But at the time when we invest, many of them seem very left field. I remember we invested in Beardo back in the day when people had just started— this is even before Mamaearth. When people had just started growing beards .Again, similar thing that, you know, why is there a company needed for only beard products? Who starts a New Age company in the “soap-oil industry”, et cetera, et cetera? I mean, just to us, it made very logical sense that a lot more people seem to be growing beards. They didn’t seem to be any products in the market. E-commerce had made distribution a little bit easier as compared to earlier and as a result, a new good quality product, as long as it’s done well, it should have should have market acceptability. But it didn’t seem obvious back then.

 

 

Siddhartha Ahluwalia 49:15

And you know, you have been meeting various investors since you’ve started right? Back then 2007 when you started right, American VCs used to visit India. Then in 2011-12, Chinese VCs used to visit India. And now it’s a mix of American, European and everybody. So—

 

Rohit Bansal 49:31

And a lot of Indian investors.

 

Siddhartha Ahluwalia 49:33

Yes. How would you if you have to give an anecdote to these investors who are coming out from outside India that how was India come along? Or how is India changed? How will you say—

 

Rohit Bansal 49:42

So, India has changed very dramatically, I think sometimes when you live in “a particular place”, it is not always as easy to perceive the change because it’s happening very gradually. But I think for me, the most stark example of it comes when I go back to my hometown, which I left 20 plus years back. And as a result, my memories of that town are in some ways still in that capsule of what it used to be 20 years back. And whenever I go back now, it’s almost a refresher of what it has become now, as compared to when I was growing up. It’s changed in many, many different ways, right? So few things, few examples that come to mind. One, as I was mentioning earlier, there used to be almost no focus on education from parents, or many times from children as well. I see a remarkable focus on education now, because it is becoming increasingly socially accepted, that good education can change orbits, and have life changing experiences for families put together not just individuals. So there’s a lot more focus on education, which I see now. You know, back in time, when we were growing up, this was, again, pre-internet, pre-social media, pre-commerce, etc. Our aspirations used to be really restricted, because the whole world of what we knew when we were growing up was our small town and maybe a few towns nearby. And we rarely used to get a glimpse into what is going on in bigger cities or people outside India, etc. I think that information asymmetry has got really, really broken down through internet and social media. And as a result, aspirations have become a lot more democratized. Today, you know, young people, people in smaller towns aspire to buy similar clothes as people in big cities, because they’re consuming the same media. It is accessible to them at the same time as it’s accessible in big cities. And as a result, their aspirations are starting to become a lot more similar and homogeneous in nature as compared to what they were, where there was a huge asymmetry between aspirations of small town Indians, versus large city Indians. So that’s a big change. I remember very funny incident, I was telling you that I used to play badminton when I was growing up. I had never seen a Yonex racket. In my town, I didn’t even know they existed, because I didn’t know because I only used to have a steel racket. Yeah, I didn’t even know racket could be made out of graphite. It is only after coming to Delhi, that I bought a first Yonex racket for 800 rupees. And if you think of the India today, that is not the case. A person sitting in the small town knows exactly which are the good racket, what are they made of, and how to buy their right racket and will have access to that racket using internet as well. So that’s very materially changed. And the third… again there are many, but one more example that comes to mind is, you know…. Women entrepreneurship, at like, the real grassroots level, in even small towns and cities is very visible. Again, you know, India, for the longest period of time historically has been a society which has assumed that men will work and women will not work. I think that is starting to change very clearly, like when I go back to my hometown. Close enough to 100% of the businesses were run by men. If I go today and in the street, where I used to live, there are three boutiques which are run by women started by women operated by women out of their houses or out of sort of nearby store, etc. I mean that’s remarkable change. You know, back then, I sometimes joke that even women sailors used to be all men [Chuckles]. At least now, there are a lot more women entrepreneurship happening. A lot more women are working now. A lot more women are getting professionally educated, which is a great trend to see. So I mean in the last few decades, these are just small snippets of the ways in which India has changed, but India is changing very, very rapidly.

Siddhartha Ahluwalia 54:10

And what are the future things that you never expected or people never expected that, hey, startups could be started or businesses could be started in these sectors also.

 

Rohit Bansal 54:20

So that’s, another thing, which is very interesting. And that will be more specific and focused on the way startups have evolved. You know, again, 10-15 years back in the early this was still early days of entrepreneurship in India. It was not as mainstream still very few people used to become entrepreneurs. I think startups used to be a sector back then, in itself. And the scope of startups used to be very limited to technology, internet, some form of SaaS, etc, etc. And that’s it. Cut to today. I feel there is a startup in every sector. It’s no longer a sector itself. There is a new age company in every sector, even sectors, which we would consider as traditional as possible. Things like agriculture, healthcare, manufacturing, logistics, these are considered may not even decades, centuries old industries. And I think today there are new age companies starting in all of these sectors because the underlying landscape has completely transformed over the last 10-20 years, with the advent of just things like internet, mobile internet in everyone’s hands. The way a farmer is taking care of his crops today is very different from how they were taking care of 20 years back. The decision of what to grow is very differently made as compared to how it was made 20 years back. There is a lot more focus on health amongst Indians. Now, as Indians are becoming more affluent, some of the basic needs are getting met, life expectancy is increasing. People want better health care solutions over a period of time. You know, the GDP of India is regularly growing, people’s disposable incomes are growing. And as a result, I think that sort of, in some ways happens in orbits as well that every year, a very large number of families in India, cross the orbit of having met their basic needs, and have some money to spare. Tthat small amount of money to spare incremental small amount of money to spare creates new businesses, because now that they have the money, they aspire for better things, better education for their kids, they want to look better, dress better, take care of themselves better have access to better health care, each of these spaces are so large, which creates so many opportunities in small niches and that’s the beauty of India, that each small niche is still millions of people. And hence very large businesses can get created in those. So, I think that way, we are seeing a lot more penetration of startups into very wide sort of variety of sectors. Many times which are considered very, very traditional also happening now.

Siddhartha Ahluwalia 57:20

And coming you know, since we are talking about the new, different kinds of startups that are getting built, right? There is a requirement for investors and more as early as possible. So can people do Angel Investing full time? And coming back to some of the anecdotes right, if you can share right, your first Angel Investor Ken Glass right, what was the exit for him at Snapdeal and what are some of your own 100x exits?

 

Rohit Bansal 57:47

No. We’ve been very fortunate as an investor, we’ve had some companies which is out there in the media, which have done a great sort of— as they say 100x Plus returns, whether it’s an Ola or an Urban Company or a Credgenics, OfBusiness, Mamaearth, and hopefully a few more in the pipeline. But I think it’s great that you know, many Indians are starting to invest in companies. I think it’s a great thing to do. We also started because in some small shape or form, we wanted to do whatever we could to catalyze entrepreneurship in the country because both myself and Kunal are really passionate about entrepreneurship. We feel everyone who wants to should give themselves that shot. And entrepreneurship is the thing that will sort of take our country forward. In terms of creating more opportunities, it says so many other things. So as a result, we just wanted to be participants in catalyzing it in any way we could, which is how we started investing in companies, which then much later got institutionalized into Titan capital, where we now have really sort of decently sized portfolio we invest in over 10-15 companies a year and sort of stay with them for a long period of time and we invest in absolutely early stage businesses. Almost by definition, we are usually the first check into a company. That said, while it’s great to be an angel investor for people, I feel getting access to deals as long as you choose to stay an Angel investors… See it depends on how you’re doing it. If you’re doing it more systematically, versus you just want to do it sort of really sporadically that if a deal comes or a company comes I will invest in that otherwise I will let it go. I feel if you want to do it systematically, then it is better for an angel investor to become attached with some other outfit or some fund etc, so that they have continuous access to deals. Or else what can tend to happen is that because, you know, many times people are good in a certain industry, then they become angel investors, I feel for founders to proactively reach out to a certain angel investor can over a period of time start becoming very restricted to only people from that industry. Because if you are from that industry, and you’ve made investments in some companies in that industry, people will perceive you not as an institution, but more as a individual who has expertise in a certain thing. And as a result, you may or may not get to meet a wide spectrum of entrepreneurs from different sectors, which is also one of the big reasons we chose to institutionalize Titan capital, where, as a result, it’s not only a particular domain. We are actually meeting companies across multiple domains. And that is what gives us access to sort of different types of companies from different sectors, etc, etc. And sort of broadens the scope. And also invest both in terms of time, resources, and just sort of the absolute amount of capital, slightly more meaningful amounts of money that it’s productive for founders.

Siddhartha Ahluwalia 1:01:18

And today, Titan would be the most successful pre-seed, if I have to term fund in India. So if you have to attribute the success of Titan, what would you attribute it to? What are the practices that you and Kunal and the team follow?

 

Rohit Bansal 1:01:34

A few things that we do is, we are very clear on who we are, and who we are not. And—

 

Siddhartha Ahluwalia 1:01:41

Which means?

 

Rohit Bansal 1:01:42

— which means that we are very clear that we are seed investors. As a result, we don’t go looking at companies which are raising a series B, Series E, Series F, etc. That’s not our expertise. We are not looking at public companies. There are so many things we can do because investor is a very loosely defined term. You can be investing anywhere. And trust me, there are enough deals that come to us, which are so much later stage, but it’s having the discipline to focus on what we what we know to be our sort of position, so that we can then build expertise in that of how to evaluate early stage businesses. You know, what kind of due diligence to carry out. How to evaluate an idea. So that’s one thing which works really well for us. Secondly, you know, we invest in companies where we see a huge, tremendous amount of upside, not because everyone else is investing in it. Again, by the same definition I was saying about companies. If 100 people have already identified it’s a great opportunity, and I’m being the 101st investor to sort of participate in a company in that sector, that insight is potentially not very valuable, unless I know something else, which the other companies don’t do. And as a result, we stay fairly— try to stay as original in our thought process as possible, and extremely have a strong aversion to FOMO. That, okay, we’ve missed out on something. Now we need to need to invest in it. So we have, and that, by the way has taken time to build that skill. But we have no fear of missing out at all. If we like something we will invest. If we don’t like something we will not invest out of fear. That’s the other thing, which we do. And number three, I think which is maybe to do with our selection methodology of companies. We look for teams which are exceptionally smart and have a great learning ability. And if they already have an idea or a product, us feeling that, can they deliver a 10x experience to maybe even a very small market? I think those are some of the tenets that we follow as an investor. I’m sure there are many more things which we do.

Siddhartha Ahluwalia 1:04:09

And because you can be… You are super disciplined but you can be super undisciplined, also because it’s your own capital, you’re not accountable.

 

Rohit Bansal 1:04:16

No, I think that’s one of the common misconceptions. I would like to clarify that, you know, from the outside in sometimes it can seem very easy to be an investor. It is not. I feel to be really good at anything over a sustained period of time everything requires hard work. Nothing happens without hardwork, even if you’re an investor because to be a good investor, you know, for each of the companies that did really well, there are many companies that don’t end up doing well. For every company that you invested in that didn’t do well you probably have met 100 more companies that you could have invested in. For every company that you did invest in irrespective of whether it worked or didn’t work, as a good investor, we consider it our responsibility to spend time and effort and energy and give all the resources that we can to those companies, which means meeting them very frequently to make sure we listen to what they’re doing. Sometimes we agree with that. Sometimes we don’t agree with that. Obviously, it is the founders’ decision what they want to do, but sharing our point of view as a sounding board. All of this requires countless hours. What is visible, again, is like the iceberg right? What is visible is the few exits that have happened. But to be a good investor over a long period of time, it is very important to put in the hard work and put in the work to be able to realize that. No one… I think it’s only outside in that one can see only lucky ones. But that can happen once. I think we are very clear that which is why we still even though I feel as an investor, we’ve done well in sort of picking a great set of founders and companies to back. We still work very, very hard. For ourselves. For the new investments we make as well as for the companies that we have invested in. Because we are very cognizant of the fact and we’re also proud of the fact that our success and relevance is 100% dependent on the investments we make today. Not on what has already happened. Because what has happened in the past is done. I mean, we have no part to play in that anymore.

Siddhartha Ahluwalia 1:06:33

Well thank you so much Rohit. It’s been such a phenomenal conversation. I learned a lot.

 

Rohit Bansal 1:06:38

Thank you so much. Thank you for having me. It was really a pleasure for me to be to be on this.

 

Siddhartha Ahluwalia 1:06:43

Thank you so much again!