As per Statista, Market size of the cosmetics industry across India which was at $3 Bn in 2010 is expected to grow to atleast $20 Bn by 2025.

In today’s episode, we talk with Manish Taneja, Co-founder and CEO, Purplle, which was started back in 2012.

During the podcast Manish talks in detail about –

• How he along with his Cofounders have always thought for the long-term?
• Problems they faced back in 2012 in Vertical Ecommerce.
• How MOATs against competitors are mostly in the minds of the founders? rather than being actually relevant to Indian customers, who are most price and value sensitive.
• What’s unique about their culture that has helped them retain as well as hire new talent?
• And more…

 

Lastly before we dive deeper into the podcast, something that Manish mentioned during the episode – “Our 2nd part of the journey has been about, believing in yourself, doing things that are contradictory to the world but at the same time, we think could create massive value in the future.”

 

Notes –

03:19 – Intro to Manish & Purplle

04:57 – Being from a Finance background what got him to start his 2nd venture in Online Beauty space?

10:32 – Challenges in Vertical Ecommerce back in 2012

12:29 – Challenges in delivery, cash flow and more in the first 5-6 years

17:30 – Two defining characteristics in their fund raising journey

21:52 – Zoho Sponsored – Prashant Ganti on Where do founders struggle with Payroll and how can they fix it?

22:55 – Learnings while his exit from Avendus Capital

24:18 – Major changes in the 2nd part of their journey from 2016-17 onwards

28:34 – Launching their own brands with 65%+ Gross Margin

31:08 – How has he evolved as a founder during Purplle’s journey?

33:21 – Shaping Purplle’s culture over the years

38:34 – “MOATs aren’t as relevant for consumers, as they are for founders against competition.”

42:23 – Opportunity to build a $20-30 Bn FMCG company from India

45:26 – Not succumbing to external pressures around Growth


Read the full transcript here:

Manish 0:00

As I said, we have a softer side to our heart, which we sort of believe in. And I’ll give you an example, in COVID, what happened was, everybody was cutting down salaries and so on and so forth. Everybody was taking pay cuts, we told our employees that there won’t be any retrenchments. And we also told our employees that there won’t be any pay cut. People didn’t believe us. So we had to do a town hall every week to tell people that our stance hasn’t changed. We also did a town hall with our investors every two weeks just to appraise them on the situation on the ground. At the same time, I heard about this restaurant in Mumbai, which was potentially shutting down. It’s an iconic restaurant in Mumbai, it’s called Mirchi & Mime. Basically it employs speech and hearing impaired people who serve you at that restaurant. And given that restaurants were short for a long period of time, it was probably hard for the founders to sustain it.

 

So I reached out to the founder, and I said, Can you help me recruit speech and hearing impaired people for our warehouse and our offices? To be honest with you, I wanted to start a small experiment of seeing how we could be good to the community, and at the same time, be a win-win situation for Purplle. And so I asked him, can I recruit like three or four or five people and see how it plays out. What he advised me was, Manish at least recruit 25 people so that these people are not a big minority in your office or warehouse. And they have a community of their own. And the day we recruited them, it was pretty surreal. We had a trainer who came to train us on how to deal with people who are speech and hearing impaired, but they have a special language called sign language , that’s their special asset. And so we learned sign language , and how to operate with these people.

 

What we saw on that day was that their parents came to drop them at our fulfillment center. And this has never happened, when you recruit employees, your parents don’t show up to sort of, make sure that the kid joins at the right place. I think maybe they were just surprised by the Fair salaries that these people were getting. And they were a little worried as to whether we were doing the right things or not. And so I think these are the fundamental pieces of Purplle’s culture, I think it’ll be transparency, it will be ownership. And I would say it’s the heart of gold. I think we’ve just ensured that we don’t act in the short term, we act in the long term. I think those are valuable principles in Purplle that we continue today.

 

Nansi 2:47

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, SaaS healthcare and education, such as Markit Quizzes, Planet Spark, Bolt and Glip to know more about Prime visit https://primevp.in/

 

Siddhartha 3:18

Hi, this is Siddhartha Ahluwalia, Welcome to 100x Entrepreneur Podcast. Today I have with me Manish Taneja, co-founder and CEO of Purplle. Purplle is India’s second largest beauty destination. In today’s podcast we’ll discuss how you create a company for a decade and then continue to offer it after a decade. Manish’s journey and his co-founder’s journey has been nothing short of inspiring. They have almost run like back to bone in terms of cash many times in their journey, but they kept on going. Manish shared as in our conversations that the comradery between the co founders kept it going right they respected each other a lot. And they couldn’t see each other fail. But I believe that is one factor that kept the pub bubble going and made it what it is: a Purplle forest initially five, six years of his journey was almost not known.

And today is the second largest beauty destination after Nyka.

 

Purplle has a very unique market where it serves middle India in terms of beauty needs. It covers almost each and every zip code including the likes of Leh Ladakh, northeast of India. And today Purplle is a 1200 Crore revenue company valued at $1.1 billion. Manish’s journey has been through many rocks and bottoms. But today what Purplle is today is an institution in itself which we all could learn from. So Manish welcome to the podcast.

 

Manish 4:51

Thanks Siddhartha and happy to be here.

 

Siddhartha 4:55

Manish would love to learn from you your journey before Purplle because you’ve started another venture and it couldn’t work out for what made you start venture in the Beauty Segment when online beauty was not a known market. How did you do math on this market since you had a finance background, so it was an emotion that you wanted to pursue.

 

Manish 5:25

Sure. So as far as I can remember, I always wanted to be an entrepreneur, whether this was in college, I went to college at IIT Delhi, I studied electrical engineering, parts of microwave technology. And there weren’t too many microwave companies in India to intern at. So I one day thought , maybe I’ll set up a microwave company for students at IIT could intern at. I think I was naive in those days. I graduated from IIT Delhi in 2007, and joined the financial services world. I used to work at a vendor’s capital and continue to have great friends there. I also worked briefly at Fidelity’s private equity, it was called Fidelity Growth Partners India in those days.

 

So I think, between awareness and fidelity, I tried to start a company with a couple of co-founders. It was called Mindxcompany.com, which continues to be my Twitter handle. But I think, post a couple of months, some people had cold feet, and they had other pressures. And so I moved back to Bombay, and joined fidelity, private equity. Again, at Fidelity, I learned the art of investing, especially, I would say, being very sane, calm about investments and not being driven by today’s trends. I think fidelity is a great institution that taught me a lot. It has great HR practices, which I learned from. And so before we started Purplle, we were actually just for introduction. We are three co-founders, Rahul, Suyash and I. Rahul Suyah and I all met serendipitously. We were introduced through some common people. Rahul and I decided to stay together in Mumbai in the same flat.

 

And so post typically coming back from office, we will discuss what next to do with our lives. And luckily, entrepreneurship was high on Agenda for both of us. And so it kind of worked really well. And so I’ll tell you, how did we decide on beauty as a space, we were very clear that we wanted to do something in the internet space, given the internet was exploding in 2010-11-12. And so and so forth.

 

I have two hostel mates of mine from IIT, who have turned out to be brilliant entrepreneurs in the internet space. One of them is Binny Bansal. He was one year senior to me from the same hostel and absolutely an inspiration for all of us. The second one who also turned entrepreneur much earlier than I did was one of Zomatos ex co-founders, Pankaj Chadha, he used to be my junior at the same hostel. And so when I used to talk to these people, I used to feel like wow , there’s some growth happening month on month, which I wasn’t used to seeing in other industries. And I used to feel like something fundamentally is shifting here. And I didn’t want to miss the bus.

 

And so doing something with the internet was very clear, we had two categories that we had in mind, which we thought we could go after which had less competition. One of them was furniture. The other one was beauty. We chose beauty. It was a process of rejection in my view, I think furniture needed a lot of initial capital to start with so we didn’t end up starting furniture. Later we realized that Pepper fry and Urban ladder entered that category in two very different ways. And so we decided to get into the beauty space because we realized there were lots of unmet needs of consumers. It’s a large category that will become an even larger category as our per capita GDP goes up. It has got exceptionally high gross margins and therefore unit economics is easy to make work in this category. And then third it has good repeat business so once you acquire a customer you keep getting the customer for over and over again.

 

And in order to do our diligence, we did a proper private equity style, primary diligence. Rahul and I used to visit stores in and around Mumbai. We visited all kinds of stores. We visited wholesale stores that sold beauty in Crawford Market in Mumbai. It’s similar to what sadar bazaars are in Delhi. We used to visit single brand stores like, body shops of the world, we used to visit multi brand stores like department stores and other stores. And we also visited the chudi, bindi kind of store, these are general stores that sell all kinds of stuff. We were 27 then, we used to appear like students and visit the stores and do our surveys before we decided to jump in. But I’m glad we did this primary diligence before jumping in. So that’s sort of the story behind Purplle.

 

Siddhartha 10:29

Got it, what were the initial challenges, because nobody believed in vertical e-commerce as a market in 2011, everybody was going after horizontal e-commerce.

 

Manish 10:41

Yes. So I think the primary challenges were, one, to convince others that there is a market to be made here. And when I say others, it means telling future employees that vertical commerce could be a good place to be. It also meant telling suppliers like brands, like FMCG companies, telling them that they should create a specific sales team that focuses on e-commerce as a channel. And at the same time convincing investors to invest in this space, because we believe this will do well. And I think a second piece of convincing was needed for our own self, I mean, the three of us were not any different from anybody else, we had to convince ourselves that , this, there is something to be built here. And because we were putting our lives into it.

 

And so I think these were broadly the two challenges, I think one is convincing other stakeholders. And second is convincing ourselves, I would also tell you that 2011 was a very different world, from the world we live in today, there was no UPI. Getting payment gateway integrated, used to be a 30 day process, it was not plug and play that you can do today, you had to get documents signed with every bank whose net banking you needed to accept. So it was a very different world. I mean, I don’t think we even remember that world anymore. People using the internet for shopping was very low. And I think those were the early challenges of sort of setting up Purplle.

 

Siddhartha 12:27

And can you describe the initial, first five to six years of Purplle, how the team grew? What kind of business was it? And I think in the first five to six years, you ran out of cash, multiple times. So how did you keep on going during those times?

 

Manish 12:51

So I would say, I think the first three years, we were just learning the ropes of the business, just learning to be a better retailer, an online retailer of beauty. We were also learning how to build technology for scale, we were also learning how to run warehousing at scale without messing up on our consumers orders. And delivery experience in those days also used to not be very good. And we were always dependent on third party courier companies to come to deliver our orders. I think it was just learning the ropes of the business, I think those were very fundamental years of building Purplle, given that we did not have access to a lot of cash from the start, we chose to, and I think this is also true because of our backgrounds, I worked at Fidelity, we are a very value investor.

 

We’re also very, I would say, an under the radar kind of company, we don’t talk to him or accomplishments very, very often. Fidelity is run out of Boston in the US not out of New York. And there’s a reason for this. And likewise, Rahul used to work at Tata Group. And again, a very value centric company, a company that will build value over decades, not necessarily over years. So the fundamental thing that all three of us agreed on was, we will build for growth, but we will also build it profitably. And that was always the essence of the sort of way we ran our company. And so we’ve never made huge losses. I mean, I think compared to the capital in the bank, we’ve always been very close to profitability, if at all. I think that was the first fundamental way of building the business. What still did happen was that sometimes capital was very late to come. And so we were running out of capital. We’ve had our instances of term sheets being pulled out because maybe a competitor got funded at the same time and so on and so forth.

 

So This happened in 2014, second half, what happened was we had a term sheet that was withdrawn and our competitor got funded. And I think those six months are very unforgettable. Rahul and I would typically wake up every morning and see our negative cash balance in the bank account. And , either one of us will put some money into the company that morning so that all our checks could get encashed. I think I’m also very grateful to our employees who stayed with us during that period, because many times their salaries got delayed, and some of them had EMI to pay for and so on and so forth. And I think that gave us a very loyal group of employees who couldn’t continue to be with the firm even now.

 

And third, I would say I’m very grateful to some of our investors who helped us out in that time, sometimes putting money into the firm in a very drip feeding manner. Whenever I needed it, I would get money in like one or two days, this was small money, and it was 20-30 lakhs. But every 20-30 lakhs mattered at that point in time. And sometimes I would borrow money personally and sort of take care of the payables. But that’s how we carried on the company till the end of 2014. January 2015, is when we raised our series A, from IvyCap ventures, out of a 15 Crore round, they put 10 crores in jan, there was a trancing of the thing. And I think we had a very similar thing in 2017, post Demonetization, I think we had about 50 lakhs in the bank account. 50 lakhs is a very small amount of money when you’re running an E-commerce company, because you also have intra-month fluctuations of cash flows.

 

I think a funny question to ask is what kept us going. And in my view, I think there is extremely high camaraderie between the founders, if one of us is feeling low, the other two are on the high, and they feel something nice is going to happen tomorrow. And so we show up to work. As I said, some of our investors have been outstanding, they’ve helped us out whenever we needed their help. And I think I’m grateful to our employees and our families who have sort of stayed put with us in those years, when we didn’t make much money, or when we couldn’t raise capital, or when we couldn’t grow, and so on and so forth.

 

Siddhartha 17:28

So, can you share your fundraising journey from the beginning till now?

 

Manish 17:37

I think our fundraising journey has been of, I would say there are, two characteristics that define it. The first one is building relationships with people when you don’t need them, and so I think my first set of capital came from people who I had worked with. And when I was deciding to start on my own, these people chipped in with their own personal money. Bloom came in in 2013, and I’d known bloom when bloom was raising its first round when I used to work at Fidelity they had pitched to us as to be their LPs. And so I knew Sanjay and Karthik from those days. Mumbai angels, Chennai angels they chipped in with some money in 2013. Then we raised our first series A institutional round in 2015, from IvyCap ventures. Luckily, IvyCap also exited that round in 2021 for about 330 crores, so they made about 22x of their investment. IvyCap fund one was about 240 Odd crores. So we returned much more than the fund size itself, although we got only 15 crores from that fund.

Then in 2016, we raised a million dollars from JSW ventures. It’s kind of different because these were not large rounds, I think they kept the company going. But this was not enough capital to deploy a lot of money into long term projects. And so as I said, we had to balance Short Term versus long term really well, because we never had access to a lot of capital. Our first round of large institutional funding happened in late 2020, which is when Goldman Sachs invested in us, there was about $35 million and then last year we raised about $110 million, about 800 Odd crores from Premji invest and Kedaara Capital and got our capital. So that’s been our fundraising journey so far. But I would say almost 95% of the capital has been raised in the last two years.

 

Siddhartha 20:08

Wow, so that’s real compounding at work. You just kept on going and going. And if some of these investors would have taken out their money, like two years before, they would have been seriously regretting it.

 

Manish 20:25

I think the IRR on investors has been like the earlier investors, including IvyCap has been closer to 75- 80%. Which I think is very good. I think if we can deliver a 35- 40% IRR to our later stage investors, I think it will be wonderful, given the amount of capital they deploy. So I think we’re looking at growing the firm at closer to 35 to 40%, over the next five to 10 years and potentially going public in like three to four years from now. And obviously, this will do. I think one of the other things because of my background in financial services I’ve understood this really well is, raising capital is a founders responsibility and also arranging exit as a founders responsibility to because people who are putting money into our companies, they also raise money from other LPs. And they also have back to back arrangements with those LPs.

 

So it’s really important that we understand this and we plan for this maybe two years in advance whenever somebody needs to exit. So I have very open conversations with our investors and ask them, when do they need to exit? Don’t come to me, when you need it in three months, but tell me one two year in advance so that you no one can plan for it and it’s just easier to execute it that way versus doing it in the short term.

 

Siddhartha 21:51

Dear listeners, before we dive further into the podcast, I would like to welcome Prashant Kunti, Head of Product Management at Zoho payroll as Zoho books Prashant, what does Zoho payroll do? And what is the story behind it?

 

Prashant 22:05

Zoho Payroll is a Payroll solution from the Zoho suite of products designed from the ground up to completely abstract the payroll complexity and put your payroll compliance on autopilot. So what do I mean by this? So when we talk about abstracting payroll complexity, we mean that a business needs to know just who their employees are What they work and how much they get paid. And on putting your payroll compliance on autopilot mode. What we mean is that our ever changing rules and regulations that affect your payroll, and Zoho payroll, takes care of all those things business need not worry about all those things.

 

Siddhartha 22:43

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

One more thing that kept you going, you shared an offline conversation that one gentleman, Gaurav Deepak shared with you that India is growing 8% year on year.

 

Manish 23:07

Yes this was Kaushal at Avendus. So look, I think, lots of good learnings from people I’ve worked with over the years and, when I was leaving Avendus capital in one of those exit conversations with Kaushal. He mentioned to me that Manish whatever happens to your startup, just make sure that you survive. Because in this country which is going to grow at 8%, if you’re just better than average, you probably will grow at 20%. And 20%, compounded over 20 years will mean huge sums of value created. So just make sure that you never sort of run out of cash fully. And you never have to shut down the company. I did see that in them when we went through the financial crisis in 2008-9 and deals were very few and far to come by. I think a vendor survived and obviously not just survived, but thrived after that. So it was something to learn from Kaushal that I’m really thankful to him for having taught me that lesson.

 

Siddhartha 24:17

What changed in the second half of the company from 2017 to 2021. That you are today?

 

Manish 24:25

I think 2016-17 were very formative years for the firm. Although we had very little cash, I think we kept investing in our technology stack. And that technology stack is what I call our beauty Intelligence Suite. Think of it like how the human brain processes information around beauty. Likewise, using machine learning the computer understands everything in the world of beauty from a supply and demand side point of view. This essentially tells us what products to launch which can potentially become successful in India. And so when we were almost about to run out of cash in 2017, we tried to monetize this data. One of our investors had always worked at a data company all his life. And so he sort of inspired us to say, data is monetizable. And you should do it. We tried to monetize it. But we were running out of time. And it was hard to convince large FMCG companies to use our data, when they had the likes of Nielsen’s and many other large data companies to use their data from.

 

We also realized that we weren’t very confident in selling our own data, because we didn’t know whether it would work for people or not. And so the fruit of the pudding is in the eating of it, so we decided to use that data to create our own brands. So in 2017, October, November timeframe, we decided to sort of use our data to create our own products. It was actually a product first approach more than a brand first approach, because our data used to suggest products that we should make. And ever since then, our own brands started doing really well, we’ve never looked back. So that’s the second part of our journey, where we use data to create our own brands, we can spot very, very early outset trends in keywords that we think might do really well in future and we can invest in those products very early on. And basically create products that do really well.

 

So one of the earliest trends we identified in India, way back in early 2018, was toners, we invested in toners, as a category, and today we do exceptionally well at. We were noticing that serums were starting to become, they were starting to show that uptick in Google search volume, also on Purplle search volume. And so we invested in serums. Today, we did really well there. And so likewise I think the second half of the journey has been believing in yourself, doing things that are contradictory to the world. But at the same time, we think it could create massive value in the future. And that’s something that we’ve been doing, ever since 2017. One of the other things that has happened in our second half of journey has been, we’ve been very selectively, but opportunistically acquisitive.

 

So in 2017, we acquired and we actually hired an entrepreneur who ended up building our entire private brands business, he ended up creating a lot of value for the firm and also for himself. In 2020, we decided to venture into the feminine hygiene space, we acquired a brand called karmizi. They have done exceptionally well and continue to work with us. Both these were still smaller sorts of acquisitions. Then in December 2021, early Jan 2022, we acquired Faces Canada, it’s probably India’s top four or five makeup brands, north of 300 crores of revenue, about 11-1200 people. And so that was a big acquisition for us, but we had to really navigate the people issues there. But I think we’ve done an exceptionally well, job there. No jobs have been lost. And today we’ve integrated the entire company with Purplle. Yeah, so look, that’s been the second part of our story.

 

Siddhartha 28:33

And the other part is that you launched your own brand, with 65 gross margins. I think that also the narrative of the company, where just being from the marketplace, you became comparable to the likes of p&g, and Unilever, this is a beauty segment.

 

Manish 28:54

Yes, you’re right. So I think there are three benefits of doing our own brands. I think the first benefit is if actually your products have a massive value prop, then it helps you acquire customers at a much cheaper CAC. Because if you are selling what everybody else is selling, then your CAC can be too cheap. Yeah. And so we were able to acquire a lot more customers when we launched our own brands, then, when we were able to acquire if we didn’t have anything exclusive to the platform. The second thing it does is because these products are exclusively available in Purplle. They also lend to more repetition for the platform. And third, of course, because these are your own brands, you end up making much higher gross margins on them than you make on third party brands. But I would say the third point will only happen if the first and second happen. If not too many people want to buy it then you won’t be able to realize that gross margins if not too many people are repeating for your products and again, you would then that CAC won’t matter because if that CAC is just one time purchase by a customer then that also wouldn’t happen.

 

I think as builders, we are very focused on product quality. We’re just exceptionally focused on service levels and product quality. I think that’s the DNA of the firm. I’ll give you an example. Today our delivery NPS is north of 75. I’ve heard many other founders tell me that there are two companies which have exceptionally high quality delivery service in India. One of them is Amazon. The second one they name is us. And I don’t know why because we don’t own our own logistics arm. I mean, we’ve been able to manage this with storing inventory at the right places, having the right practices and taking some calls, which helps us deliver really fast. So, most metros are delivered in a few hours. In all other cities, we deliver as fast as we can. So, service levels have been a high focus area for the firm. And likewise, product quality has been a very high focus area for the firm, we would never shortchange any customer for poor product quality.

 

Siddhartha 31:06

Manish one other interesting question that I have is how have you evolved as a founder during the journey?

 

Manish 31:15

Yeah, I think that’s a very good question. And it’s a hard one to answer also. But I think, I would say, I would say, one of the biggest changes in me has been, I’m a lot more calm now than I was earlier. I used to lose patience much earlier. In the early years of Purplle, I used to feel like everyone should be as quick at doing things as I am. And I think that’s an unfair expectation to have. I also used to think that everybody should work as hard as entrepreneurs do. And I think that’s also an unfair expectation to have. I think I am now much calmer. And I’m also, I think, the second way I’m different today, versus what I was maybe a few years ago is today, we plan for two, three years in advance. Today, we don’t plan for this month, and next month, and so on and so forth.

 

So I think long term thinking is a big moat. And I think if people are able to do this, and if people are able to operationalize their long term thinking, I think that’s a big advantage to people. And in third way, I would say, the way sort of, I’m different today, versus the way I was probably six, seven years ago is, from a doer, and a solo performer, today we are in charge of leading a 2500 people sort of team, and aligning with everyone, making sure that everybody is aligned, making sure that everybody will get their part of the job done is actually very important. Versus in our early days, when the three of us could just do things and alignment was much easier. I think, today, the alignment is much harder. And so we’ve taken use of tools, we use the OKR tool for managing alignment within the firm. But yeah, I think those are the three big changes in myself that I have noticed over a period of time.

 

Siddhartha 33:20

And how has the culture of Purplle shaped over the years?

 

Manish 33:26

Yeah, I think what’s unique about Purplle’s culture, and look, I’m not very privy to many other cultures, so it’s hard for me to comment on how we are different, but I do think our culture is of high transparency. We do try and tell everyone, what’s the real value of being here. We share ESOPs in a very open and transparent manner. So even if you never asked for it, as part of your document, you will get certain ESOPs on top of your salary. We believe wealth creation is a very important element of any startup, and therefore as many people can benefit should benefit from this. And therefore there is generally high ownership in the people around their work, because, I would say, out of maybe 600 People who work in our offices, about 200, maybe 150 of them actually have ESOPs, and these are significant value ESOPs.

 

There are also people, I would mention, who have been at the firm, who are blue collared workers, they help clean the office, the janitors, and so on and so forth. All of them actually have ESOPs within the firm. They don’t know what they’re sitting on. They’ve signed a document, but hopefully, they will have some windfall gains at some point in time in the next three or four years, which will dramatically change the trajectory of their family. While today they are not in a position to, I think we also have maybe a softer heart than most companies have. So we have never let go of people. There have never been any retrenchment side people, we never, even if we closed down a business unit, we absorbed those people in our other businesses, we have never asked anybody to go just because we were shutting some part of the business and so on and so forth. That sort of has probably helped us in recruiting talent, because people know, it’s a much safer place to be, than probably some of the other companies are. I think two big inspirations in those areas have been Unilever in Tata Group, which we are very deeply inspired by.

 

As I said, we have a softer side to our heart, which we sort of believe in. And I’ll give you an example, in COVID, what happened was, everybody was cutting down salaries and so on and so forth. Everybody was taking pay cuts, we told our employees that there won’t be any retrenchments. And we also told our employees that there won’t be any pay cut. People didn’t believe us. So we had to do a town hall every week to tell people that our stance hasn’t changed. We also did a town hall with our investors every two weeks just to appraise them on the situation on the ground. At the same time, I heard about this restaurant in Mumbai, which was potentially shutting down. It’s an iconic restaurant in Mumbai, it’s called Mirchi & Mime. Basically it employs speech and hearing impaired people who serve you at that restaurant. And given that restaurants were short for a long period of time, it was probably hard for the founders to sustain it.

 

So I reached out to the founder, and I said, Can you help me recruit speech and hearing impaired people for our warehouse and our offices? To be honest with you, I wanted to start a small experiment of seeing how we could be good to the community, and at the same time, be a win-win situation for Purplle. And so I asked him, can I recruit like three or four or five people and see how it plays out. What he advised me was, Manish at least recruit 25 people so that these people are not a big minority in your office or warehouse. And they have a community of their own. And the day we recruited them, it was pretty surreal. We had a trainer who came to train us on how to deal with people who are speech and hearing impaired, but they have a special language called sign language , that’s their special asset. And so we learned sign language , and how to operate with these people.

 

What we saw on that day was that their parents came to drop them at our fulfillment center. And this has never happened, when you recruit employees, your parents don’t show up to sort of, make sure that the kid joins at the right place. I think maybe they were just surprised by the Fair salaries that these people were getting. And they were a little worried as to whether we were doing the right things or not. And so I think these are the fundamental pieces of Purplle’s culture, I think it’ll be transparency, it will be ownership. And I would say it’s the heart of gold. I think we’ve just ensured that we don’t act in the short term, we act in the long term. I think those are valuable principles in Purplle that we continue today from the consumer point of view.

 

Siddhartha 38:31

Got it. And Nyka today is 3.5 times that of Purplle they are at 4000 crores revenue. You are at 1200 yearly revenue. So almost during the last part of your journey, you would have been compared to Nyka, but in your customers eyes, and similarly in the ecosystem, what helped you establish a moat and what was that moat?

 

Manish 39:00

Honestly, I think a lot of this plays in our own heads. This doesn’t play in the heads of a consumer. So I’ll give you an example. Every week in August, I was actually meeting consumers at their homes. Some of them were Purplle consumers, some of them were non-Purplle consumers. I don’t think competition amongst platforms plays as much a role in their lives. They don’t care where they shop from. As long as they get the right service, and as long as they get the right product that they want. This is what they play for. Some consumers who are ardent followers of Purplle would love Purplle to open a store in their area also. But I think competition plays more in our heads as founders and management teams, then it plays in the heads of consumers. Consumers are not as wedded to this category like probably we are.

 

I think to your second part of the question, so the way we differentiated in the eyes of consumers was we focused on a dramatically different consumer, we focused on the middle class of India, somebody who could probably spend seven 800 rupees every time she shopped for her beauty needs somebody who wanted to look really nice, but couldn’t afford to pay a bomb for it. And I’ll give you an example. This was way back, I think three years ago when we had launched our serums in our own brand, and I went and met this person who used to live in Bandra east. When we met her, she started crying. And this was a little awkward, but we asked her what happened. She said, Because of you guys, now I’m able to use products that otherwise I thought only very, very rich people could afford. And I thought that was a brilliant move on part of the firm to make products more and more affordable, by reducing our cost of manufacturing.

 

So I think we focus fundamentally on a very different consumer, we focused on middle India, and that’s been our forte. It also comes from the fact that all the three founders have lived our lives, we come from tier two cities, we understand these consumers much better than we understand the creme de la creme top end consumer. I think the second part of our differentiation has been, instead of just selling what everybody else sells, we have created our own products and brands on the back of data. And every time we have skipped this process, we have failed a little bit. Every time we followed this process, we’ve done really well.

 

So I think just believing in your own process and building your own products for differentiation has really helped us attract investors’ capital. And that’s a clear moat within the firm. So I think there are three pieces of moat, two of them are less visible, but I think are important. First one is our service levels, we are exceptionally high on service levels. Second one is building a technology stack, which powers our third moat, which is our own brand’s business. So those are the three sorts of moats that we have built over a period of time.

 

Siddhartha 42:22

And once you had built these moats, it was very clear in the investor’s eyes that this is like an infinite sort of category. So for you to become a multibillion dollar company, which would create a very large outcome for them. That was quite much the possibility.

 

Manish 42:41

Yes, yes. Although we still had to execute on our promise. I think the job is not done yet. I think there is an opportunity to build a $20-30 billion company out of India in terms of value. Unilever is valued at probably $70 billion in India. So I think there is definitely an opportunity to build a $20-30 billion enterprise over the next 10-15 years.

 

Siddhartha 43:09

And by that you mean like a company will make four to $5 billion in annual revenue?

 

Manish 43:16

Yes.

 

Siddhartha 43:21

Like almost today, you are at 100.

 

Manish 43:26

We are at about $150 million. But large brand companies with high gross margins and high EBITDA margins, typically trade at around 10 times revenue. And I wouldn’t call it 10 times revenue, I would say they just traded 50-60 times profits. So if you’re able to demonstrate like 15-17% Pat, then I think you will be valued at like 10 Next of revenue, which is what happens with Unilever. So I think their revenues would be closer to 50,000 crores and their market cap would be closer to five lakh crores. I think mostly good FMCG companies in India trade at about 10x. So, yeah if you have to get to like $20 billion of market cap, you have to be a great company with about two and a half billion dollars of revenue. And I think that’s quite possible.

 

Siddhartha 44:16

And that’s what your true mission statement to yourself is.

 

Manish 44:24

Yeah, look, that’s what we’re building for. I think we are here for another 20-25 years also. All of us are 37-38 years old. And we would like to have a great management team whenever we leave the firm from active capacity. We have great internal talent. We focus a lot on moving people internally and training them so that they can be groomed into multiple roles within the firm. The first port of action whenever we want to recruit anybody is can we do this internally versus externally? If we can’t do it internally only then do we go out externally, we are very patient, we train people for three months, six months on that role before we actually move them into roles. So that’s sort of the good practice of building a large, enduring firm is something we are sort of now starting to imbibe. And if you’re able to execute on this, well I think this should be a good company, no value creating one for a lot of people.

 

Siddhartha 45:25

One thing which came clearly from our conversation is that you and your co founders think, really long term, And that shows how you have grown the company. It took like, initial good five, six years, seven years to build just the base of the company, when the world never knew of it, and then the compounding really started happening in the last two years. And you also said, like, 95% of the money you raise happened in the last two years. How did you not succumb to external pressures of growth?

 

Manish 46:01

That’s a good point. I think there are some fundamental beliefs that we as founders have, which we have sort of lived up to, I think, first seven, eight years of our life, we never spoke to media, we don’t think we should come out and say something that we will not be able to honor after many years, saying that thing. It’s very, very attractive to sort of speak to the media and make sure that there is PR around the firm, I think we just wanted to stay away from it. Second, none of us consume media. So we’ve had a, I think the media induces a lot of competition and envy. I think envy is a very bad feeling for anybody to have, not just founders. And so, it’s a feeling which doesn’t benefit anyone. At the end of the day, you are envious of someone, but you can’t achieve what they have achieved. And you are no better even if you feel envious of someone because you are in the same state as where you were probably worse off today.

 

So I think the way to avoid external pressure is, just reduce the amount of distractions these things have in your life. For us that’s been avoiding the media for a long period of time. We, I don’t read newspapers, I’ve not read newspapers for like 10 years now. We hardly consume any content online, unless they’re a really good podcast where founders share a lot of learnings. And I think being away from mainstream media has been very helpful. And I think it was a call, I don’t think it came naturally to us. It was a call we took at that point of time, very early on in our life, saying we will not be there consuming media or be in the media, because we just didn’t think we had done really well in our lives. And we just didn’t think we would be able to honor our words, if we said something today. So we were just scared of being in the media. I mean, I’m just being very honest to you.

 

And so we continue to be there in the media very sparsely even today. Not too many people know about us. I think the investor community knows about us. I think our consumers know about us, this is broadly what matters. Everybody else who doesn’t know about us it’s okay , we don’t need to be a household name in everybody’s eyes. Maybe when we go IPO, not a lot more people will know about us, but yeah, look, that’s been the journey. We’ve been regular , middle class boys building a company. Given that we didn’t know how to handle a lot of these things, we just stayed away from it.

 

Siddhartha 48:48

And share some things that you would have done sooner in Purpple’s journey.

 

Manish 48:54

I think one of the fundamental things that a b2c company typically misses is that b2b companies are better at it. Because every customer is important. And the founder actually spends time with those customers, what ends up happening in a b2c company and that to online is that you never meet your customers. And I wish we had done this a lot more earlier than what we do. Then when we started doing it, to give you an example, sitting out sort of glass buildings, we have a very different perception of our customers, what is what and what our customers really need.

 

And I think meeting them, reading between the lines is something that I would really change about my own past. I wish I had done that more in 2013-14-15. I have done it, but I’ve done it sparsely. I do it now very rigorously. But I wish I had done that a lot earlier. And I would have probably gained a lot more insights into what kind of services or products to offer to our customers that could be valuable to them and could make money for us. I think that’s what One thing that I would change about our past, especially this is 2013-14-15-16 years. This is what I would sort of change after that. I’ve done this pretty regularly.

 

Siddhartha 50:13

Thank you so much. Manish has been very insightful talking to you. Thank you for my question.

 

Manish 50:20

One more thing, I would say, as a company that somebody should focus on from a, I mean an advice I would give to a younger myself would be focus on differentiation much more than being slightly better than others, I think slightly better than others doesn’t work, consumers won’t shift to you, you have to be fundamentally very different from other sort of avenues where consumers can shop at, I mean, that’s the only thing that moves consumers to your platform. I think just being incrementally better than others doesn’t work, consumers have inertia and they won’t shift. So that’s another piece of advice I would give to a younger man.

 

Siddhartha 50:57

Can you share an example for that from Purplle?

 

Manish 51:00

Look at this thing as an example. When everybody else was selling similar products, we ended up building our own brands, but that happened very late in our journey in 2017. I mean, we shouldn’t have waited for six years to do it. We should have done this in the first two, three years, had we spoken to our consumers, Sometimes the timing is not right. Sometimes there are other things that are beyond your control. But I would say just fundamentally do things differently, rather than doing better than others. I think better than others is not a very successful way of building business, I think fundamentally, being very different to a set of audiences, potentially creating a monopoly in their eyes is probably more important than being incrementally better than others.

 

Siddhartha 51:46

But building your own brand. Recently, everybody has been starting to do it. Delivery early in that. Like, how did you say that we don’t want to compare ourselves to that. But do you want to be different?

 

Manish 52:04

Yeah, I think the second one was very simple one, if you look at it, today all of us are, I would say, upper middle class, but not building for this consumer was a very conscious choice that we took, we started building for middle India, because we realized that nobody was building for them. And no point competing with someone when there are open spaces everywhere else to make money. So that’s what I’m saying, I think don’t fall into your comfort zone, build things that people are not building, build things for consumers that others are not building for. It’s hard sometimes to build it that way. But at least there’s a chance of success at the end. If you’re getting into a very competitive space in a very competitive consumer mind. I think you’ll find it hard to succeed. So I think those are two examples that I can think of.

 

Siddhartha 52:53

Thanks a lot Manish. I really enjoyed our conversation. I learned a lot from our conversation.

 

Manish 52:59

Hopefully if this is useful to some people, I would also consider this wonderful. So thank you so much for having me. It’s a pleasure talking to you.

 

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