Normally for the most of us our buying focus is around products like –

# Which smartphone to buy?

# Which laptop to buy?

# Which car to buy? And so on.

But have you ever thought for a bit about which mattress should I buy? Probably No, right.

This is the reason why, in almost the last 10-15 years, prior to 2015-16, we’ve barely seen any innovation in mattresses or competitive pricing amongst brands?

But a lot of that has changed in the last 3-4 years, with companies like Sleepyhead, The Sleep Company, Wakefit and a few other D2C mattress brands coming up.

In today’s episode we’ve brought Ankit Garg, Director and Co-founder of Wakefit, to talk about the journey of the brand and how he and his Co-founder, Chaitanya Ramalingegowda, won the hearts of several customers in this segment.

Founded in 2016, in current financial year, Wakefit recorded 2X growth, clocking Rs 410 crore revenue. The year earlier, it registered a turnover of Rs 197 crore.

They manufacture all their products in-house across nine factories in Bengaluru, Jodhpur, and Delhi.

While they only sell online and drive most of their sales from Amazon (i.e. mostly by new customers) and their own website (i.e. mostly by returning customers), they also have over 22 experience centres — six in metros and nine in smaller towns.

During the episode, Ankit talks about focusing on making their customers happy, understanding simple yet viral strategies to continue driving up their revenue and much more.

Notes –

02:58 – Getting a taste of failure early-on

09:05 – Working on your idea part-time during the early phase

12:25 – Building a D2C vs B2B company

15:17 – Initial pricing experiment of selling mattresses on Amazon

18:16 – Core habit of talking to customers

22:10 – Focus on NPS & customer happiness

25:23 – Removing inefficiencies in the product to offer better prices

26:17 – Revenue growth over the years

32:09 – Approach while reaching out to investors

36:13 – Wakefit’s 100 Nights Trial campaign

48:01 – Wakefit’s sleep campaign

50:30 – Advice for D2C founders

 

Read the full transcript here:

 

Siddhartha Ahluwalia 00:09

Hi, this is Siddhartha Ahluwalia, welcome to the 100x entrepreneur podcast. Today we have with us Ankit Garg, co-founder of wakefit. Sleep in-home solution startup wakefit is one of the fastest-growing d2c brands in India. Wakefit has been a trendsetter for customer-centric practices, and creative marketing strategies, gaining attention for campaigns like the viral sleep internship program. Welcome to the podcast.

 

Ankit Garg 02:20

Thank you. Thank you. Nice to be here. Thank you.

 

Siddhartha Ahluwalia 02:30

Ankit, before we delve into the success of Wakefit, right, because everybody talks about success, right? I want to start the podcast with a common theme called failure. And you highlighted in offline conversations that you know, how you went through a tough phase. Can you share your journey before wakefit? And what was that tough phase that you shared it took you into a very lonely state?

 

Ankit Garg 02:56

Yeah, I think to See, I was I before I was talking to you, I was having a word with some of some cii industry Federations is they’re based out of Metropolis. I was having a word with a bunch of entrepreneurs in Madhya Pradesh. And they happen to ask me, you know, what are the few learnings that you would share, I think I can probably share a bigger platform like this. So, one of the things that you know, the learning came in is that it’s better to fail early stage in life, probably you know, worst would be that you fail after five years of starting, starting a startup, I can’t imagine failing now. It would probably be a devastation in the whole thing. But it’s always best if you can fail earlier, if possible. And I think one of the benefits, that as an entrepreneur, you get an I what I face in life is, is it you when you start to entrepreneurship, or you start working on creating some company, the one thing that you’re blessed with, is that you don’t know you’re going to fail, right? So, the fear of failure is almost zero. Like everybody in your house, in your home, your parents, your friends, everyone say, please don’t do that you got the nice job blah, blah, blah. But you are so convinced by that, that nobody in the world can actually fail with a very nice idea. And I know how to cook it. Right. So, I think that’s what I shared with them. And they were saying, you know, this is so important that you know, we now have 40 years or 50 years of experience. And you know, we’re veterans in our industry. And this gives you a very biased view on how you should look at building new businesses now because you’ve come with your experience, and you probably don’t want to, you know, fail something, but I think in my case, exactly the same thing happened. I was working for an MNC as a salesman, selling chemicals for four and a half years to multiple industries like footwear to automotive, to furniture. I spent four years being a salesman later in that life. You know, I wanted to create something on my own and then I started one manufacturing facility with a little bit of innovation on technology on how to manufacture and I was so biased you know that you know where I wanted to start, I locked myself in my room it was really a story that we used we were two friends we were really living in a two BHK apartment in Noida and I happen to be in one of the rooms I locked the room and created a laboratory in that. I think I almost cook for three to four months the recipe than how to make a foam a very differentiated of it and finally came up with insurance to the product to the market and that you know the market accepted so nicely that within my first meeting, I got a check for crore rupees from the investor and said hey let’s just put up this into a factory then start running. Then I happen to buy the machine very quickly set up the whole manufacturing thing, launched the product in fact my first early customers was so quick to you know just accept the product that accommodate price was reduced by 20% examine it you think like it was getting sold at 200 rupees per kg, I was capable of selling it at 160 per kg with profits like this was just a great idea to kind of work and then do a lot of appreciation, first month at 10 lakh and then 20 lakhs 25 years, suddenly a big MNC came in and sort of they were cooking the same almost same strategies that I was cooking but they were cooking at a very large scale and they happen to come with this strategy in India and disrupt me so I got disrupted Of course and I couldn’t you know sale myself and then apparently losses sold the company and within six months of starting that company I had to kind of wind it off and that came the worst phase of my life. I think the biggest failure of my life imagine a guy from IIT earning a very decent salary at MNC you have five days working just enjoying nine to five job and everything like your father and mother looking for a wife to come into your life and then you suddenly you lost everything that you save you took loans from your father that then the bank also you took loan and that is often now you’re looking at your father to for 100 rupees note right there was a point in time that there was literally had to when you were 23 I was I think 24 or 25 that time and then that moment when he look up to a father for a Papa Can you give me 100 bucks like it felt so shameful and it like how can you probably do this so that kind of face came I went into depression at that point of time because it was a very devastating experience like first time in my life I could not I tasted the you know the defeat but you know it took me two three months to come out of the depression and then I happen to go to Mumbai to a friend, I stayed at the hostel that he was you know studying in. somehow survived by selling pastas on the roads, I literally cooked pasta and sold them for two months three months then again I was looking for a job, happen to work at a startup sometime after selling passes so this is this was the way you know one of the biggest failures but I get it I said you know if I couldn’t do it that day I would have probably never done it because I didn’t know I would feel like. So I think that was one of the biggest lessons that I had

 

Siddhartha Ahluwalia 08:20

and then how did you identified that the next problem you want to solve is wakefit When did you start working on wakefit and when you do came come full time into it.

 

Ankit Garg 08:30

Yep. So this was December 2014 I think my first startup failed in July 2014 and then for six months it took me to wind up the company and you know said sell all the machines and the stuff but in and I was literally free, I was out of depression and I was now thinking what to do in my life I started giving interviews where people will often me three lakh rupees salaries literally people were sort of finding a way and the guy is available from an IIT, sharp mind let’s use it but nobody was actually giving me a value because I was a salesman first of all and second as a chemical salesman like there are very few companies sell chemicals in India right most of the people are selling goods are goods that can be consumed by Consumer. This was b2b chemical, like very difficult to find the job and I happen to you know buy mattresses for myself that point of time. And I happen to buy for my friend or i used go and visit a good D2C brand showroom. Imagine a time in your life when you exactly know because you’re selling chemicals to this company. You know, the cost of this mattress is 2000 and you have to ask this salesman in this room and say hey, how much is it for and the moment he mentioned the price and you’re wide open with the mouth. Like I was really surprised when I got to know his 10,000 rupees mattress and then literally asked him, I think this is 2000 rupees, how can you sell 10,000. He said Well this is a price; how can you know say 2000. I couldn’t argue with him. But that was a moment I realized that the industry is very inefficient like if something broke in the whole supply chain or the technology, I don’t know what is broken but the market is fully broken that was a time I decided to work on mattresses as a piece. But with my previous experience of failing one time, I think I learned very hard we have you know; how do you find innovation in the product and how do you first test it in the market and then only look further like so you might have heard a lot of phrases in the market where people say you should 100% work on a startup, you can’t be working and you know, working on a startup also. And I think I think very differently from that I feel there’s no shame in working in a company as an employee and probably over the weekend you’re spending your time building your ideas as to provide so I literally did that from December 2014 when I had just put up an idea of selling mattresses, I set up a very small thing at. I did not set up manufacturing but I knew a lot of manufacturers in the ecosystem who were manufacturing mattresses trying to them they were you trying to kind of say okay, you want to buy one mattress two mattresses it’ll give you whatever you do, please go ahead and build your career. So, I kind of getting that support. But it was very experimental at that point time because I knew something was broken and I had to just start December 14 and start it took me about a year to finally decided that hey, this is working because in the last 12 months, I had learned a lot in fact, when I got a job after selling and saved some money also for myself, and I saved about eight-nine lakhs. I raised some seed fund over five lakhs and I took some money from the bank for portfolio. So, 80 lakhs put together, I decided to invest in this business. And it was December 2015, when I decided to start this as a professional thing, I left my job. And then 15 onwards I am running this setting, almost one year of experimentation, and, you know, finding the right PMF and the validation. And I think when I was sort of capable of paying the factory expenses, rent of labor, and probably taking out a little bit of time that for the point in time when I decided to start this by myself fully.

 

Siddhartha Ahluwalia 12:17

And your earliest startup which failed was building foam for mattresses, which you were selling to the B2B.

 

Ankit Garg 12:25

This was not for mattresses, it was for the automotive industry, basically bus seats, car seats, bike seats. Sometimes the furniture seats also, the chairs that we’re using these days, and the seats used, that is what I was doing

 

Siddhartha Ahluwalia 12:39

got. But that insight gave you the actual insight of what the cost involved in building in the mattresses look looks like?

 

Ankit Garg 12:50

I think no. So, the lesson that I learned by doing that b2b business, was very, very different. Of course, I understood how the foam is manufactured and understood. The capital required to build the factory; the number of people required to build a product. That little bit of calculation, I understand, but I think the major learning from me that from the first field startup of was that if you know if you’re selling in b2b market, either you have to be so innovative, that you know, people are asking for you to kind of buy your technology or whatever you’re building. Like for example, you build a SaaS product, right? So, either your SAAS has to be something just solving the real-time problem who this man has he or she is engaged to, you know, buy the product from you, you can sell it. Or you should be contending in yourself saying, Hey, I’m perfectly fine. If somebody is asking you to make foam from them, and I’m perfectly fine. It is perfect reasoning, I’m able to run my unit I am able to earn enough and all that. But if you really want to scale, either you should have a very differentiated technology that you build for b2b purpose. Or another discovery I had is that you can actually create a b2c brand. Can you create a b2c business I think that was a reflection like that I decided for the first failed startup that I am never going to build a b2b business in my life because it restricts you from having a very high technological differential capability? Otherwise, you’re probably running a cash flow business where you’re taking the cash from the bank, you converting this cash into another cash, and probably the cycle is making money for you, which is what it was not so, you know, a great thing for me because I always wanted to do something very, very different, have a very different name in the world, like, do something very amazing. Making Money was not my passion. I think building something, which is tangible was my passion. So that’s why a lot of the biggest learning was, I didn’t want to do b2b because I did not have any technological superiority in my product was me. I was making that point of time. I think in d2c. What I learned is that without having so much differentiation in technology or something that you can destroy disrupt the market by having good products. There are different value systems that you can offer. For example, you can offer varieties to customers, you can offer qualities to customers you can offer the right pricing to the customer you can offer, right, you can have different distribution systems to these systems. So, the learning for very different than you know, when b2b business, you’re just probably restricted to either running a cash flow business, or a very technologically differentiated business versus a b2c where there are 10, or 15, or 20 things that you can do to create anything anywhere. So, I know this was a learning for me that B2C is a space where there’s a lot of discovery that can be done, you can build very differentiated services or products without being very technologically different.

 

Siddhartha Ahluwalia 15:44

I read an article that to understand the pricing system, you bought in a few 100 mattresses and put them up for sale on Amazon. And also, you made a profit of 60 lakhs on it. Tell us about that incident?

 

Ankit Garg 15:59

So, so this was an accident, it was not a well-thought strategy. So, what happened is that, you know, I knew that you know, the big brands in the market were selling mattresses, they were selling memory for matters at that point of time at a price of 40,000-50,000. And I think the king-size matter is a prize of 50,000. Like I was amazed how, how is it possible that in I’m selling the chemicals to them? I know it’s it’s 5000 rupees 8000-piece product there, how can you blow to 50.000 product, I was just amazed, right? So, I thought what let me do one thing, since I know the whole value chain is disrupted, and there’s enough gap for me to build a 50% efficiency in pricing. So, price my product 50% of what they’re selling. And then I happen to buy at the manufacturer because I knew the chemical price, he was you know, very open-ended up really open costing, a chemical versus a fabric call is the state involved with the factory, blah, blah, blah, here’s my 10% margin. Even after doing those mathematics, what I discovered is, if let’s say a good brand is selling 100 rupees, I am selling it 50 rupees, I’m still paying 10 rupees. So, there was just so much available in the room that I could make money that I think happened to kind of utilize a system in Amazon or Flipkart. That one time we’re trying to get into the financial market. So that was also a benefit that worked in my favor that they were investing money in creating this category. So, I happen to be the first one probably, who started mattresses on Amazon.

 

Siddhartha Ahluwalia 17:27

that was under Wakefit brand, the experiment?

 

Ankit Garg 17:31

Yes, this was all under the Wakefit brand.

 

Siddhartha Ahluwalia 17:34

And when did you start manufacturing your own mattresses?

 

Ankit Garg 17:41

in December 2015. When I quit the job, when I had saved those 16-18 lakh rupees, is the time when I had put up my first factory because I knew the guy who was applying to me is also making them 20 to 30% margins, I know there was enough juice, then you know if I just make the mattresses of myself, I guess to save another money and pass on to the benefits so now when a brand is selling 100 bucks I was selling it 50 because of putting up a factory I was able to sell it for 40 bucks is to save 10 bucks. That’s how it was.

 

Siddhartha Ahluwalia 18:17

And tell us about the journey of wakefit from 2015 December to 2018 What were the revenues right? What were the challenges because you know how to make a product you know, now how to do the pricing system? How did you learn distribution, like marketing was not your core strength and I understand that point in time?

 

Ankit Garg 18:41

So going back to December 15, I think that was the time I was leaving the job, the business was running as you’ll ever selling 30 mattresses a month, or 30 mattresses a day or something like that. I was like, what I learned to see I have this very core habit of talking to customers I don’t know where did I get it from? I still think I don’t know how this is coming to me that I just want to talk to customers. And as a core belief, I in fact went to a level that I used to meet customers after delivery of mattresses that they’ve used for 30 days I would give them a call on a Sunday. Hey, are you available I would like to have a chat I am sold this brand; I am the CEO of this company would you be willing to give five minutes, people were so humble and gentlemen they said oh you please come with us to offer me tea coffee, you know make them make me sit for half an hour and they will tell you the story of how it went in an hour because they were also excited. A 26–27-year-old guy is building something like they bought a product and they want to share their learnings and experiences. So, you know. So, what happened is because of this habit of continuously talking to customers, I got so much learnings that how customers are thinking around when it comes to the decision-making process of buying a mattress. Now, some of the interesting facts I think you will also be surprised to know when I am so I used to deliver my matters in white bags, you will have seen those white bags. So, I used to pack them and deliver them to customers. The customer said I received the matters in a white bag, I think some third-class Indian manufacturer has manufactured mattresses before you were able to use it, I just want to throw it away. Right? So, this was so fundamental way of learning, you realize that how packaging is important. I mean, they can’t be so stupid way of learning the packaging is so critical in a d2c business. I learned like packaging has to be really different than what I’m doing. One customer said you gave me a mattress, but I don’t know how to use a mattress. And I was like, I scratched my head said boss, what are you saying? Does he speak? I don’t know how to use a mattress. So, then I went deeper and asked him, what do you mean when you say you don’t know how to use a mattress? Like, how do I like, shall I? Shall I be the mattress cover? Shall I do? I mean dry it in the sun? Shall I? You know, how will it can I increase the life of the mattress right here very tactical versions. So, I ended up explaining and then under the second learning was that many people actually don’t know how to use this mattress. So, I created a process where every product once is delivered to a customer. Till today we call customers on telling them how to use a mattress and how to take care of them. So, this became a fundamental learning. Some customers said, hey, my kid has peed on the mattress, or I have spilled over coffee on the mattress. Now there’s a lot of unhygienic matters, you can take care of this, then I created a concept of the outer cover. And like when is the removal curb when is a fixed floor. So, removal curve just like bedsheets, you can remove, wash it and put it again just to maintain it. So, these are so many small learnings I kept on getting. And this led to a continuous pipeline of innovations. Every time I kept on doing it on a mattress. I think that’s what completely lead to the growth of this business. And you know, every time I delivered a mattress were a better product than last time. So, every two months or three months will be a new iteration with all the learnings that I’ve added last two, three years. On top of that, from coming from the marketing side, I learned one more peculiar thing. Which is very, very common are like when you read in the books you think it was so common. What I learned is that beyond the point I started seeing, when I used to ask them questions like why did you buy this mattress? Like how, what made you decide to buy this mattress? They said, hey, my friend bought it, he said, you know, buy the nice mattress. And that was a eureka moment, like, if your customers happy is definitely going to recommend 2-3-4-5 people down the line. And that’s how you build the pipeline. but many of them say yes, we received the mattress very intact. After that first call, we call them again after 30 days. Now this time, we’ll ask, hey, you use his mattress for with now, hope you’re sleeping comfortably. And that was a time you built a relationship with the customer. The customer was like wow, I have never had this, I never expected somebody to know to call me and ask me if I’m comfortable using the product. And next what we will be built a year long. After a year also, this we are going to call you and say it’s a year, I hope you’re still very happy. I mean, this time, we really kind of broke ranks so many belts in the customers here that you know, we care for you, we care for you. And that that has led to an exponential word of mouth journey for us. And we found a formula to kind of how do you exponentially grow this, this has worked in our favor. We saw we saw that you know. And over a period of time, we realized that this formula of growth which is word of mouth might not scale beyond a point because you will remain small like how fast you would grow because of this right? It will all depend on how many customers you have. So, what we learned is, can we create a virtual trust system? Basically, it’s a trust system, right? When your customer is saying Hey, why don’t you buy this when a friend is saying if you have brought this mattress, why don’t you check it out someday. So, we started creating this virtual confidence-building exercise of the trust exercise, we started shooting videos in fact, in the first year I myself is gone with a video camera and all that, you know is more chatri umbrella white lights, went to the customer and did a video shoot. And we asked those customers in a very natural tone. There was no script there was no theory at that point. I didn’t know how to script in all right. So, I just made a video live camera was on and I said just share your journey just share, people make videos and it was so nice and nice. You wouldn’t believe that today. I think some of the videos have 50 lakh views, right? So that kind of just multiplied for us, hey now it’s not necessary that a friend has to recommend. we realize that anybody in the online media can recommend and it’s just adding to somebody has to just make an effort to kind of figure out whether we are the right choice for them. So, I think we found these little hexes every time we kept on correcting pricing, it’s a cycle if you can add it, I am sure you will be able to appreciate this. see what happens is you selling let’s say at 100 rupees and the costs are let’s say 50 rupees and let’s say 50 rupees is all the employee cost, logistics cost, this cost, that cost like there are so many costs. now what you do is either you can remove reduce that 50 to let’s say 45 because of you finding new vendors or kind of doing some long-term arrangement with vendors and stuff like that. So, I did the 50 to 45 whenever I reduced it five rupees in the cost, I ended up passing 10 rupees to my customer, so my cost will become 90 now because it’s 90 I am always grown 100% like when I reduced so this is a funny story at wakefit, we say that the moment we reduce the price we become profitable so it has always worked as we grow we become profitable, so it’s a cycle. you become more and more efficient as you keep on getting more and more customers. I think that’s the cycle which we learn and we kept on making all our conscious efforts in the factories in the distribution systems in the packaging all the innovations kept on happening that hey, how can I remove inefficiencies in building my product or deliver my product to the customer so that customer doesn’t end up paying for mine efficiency, which basically the was the original idea of starting with it right? So, I mean these all four five things put together have been really working very nice first.

 

Siddhartha Ahluwalia 26:43

can you share till before you raise money from sequoia in 2018? What were your yearly revenues from 2015 to 2018?

 

Ankit Garg 26:56

I think in 2015 we did close to 70 lakhs. 16 we did close to seven cr and 18 we did 23 cr. I think that was the time when sequoia came in. In 19, we did the 81 or 83 then we did the 200, and then we did 420 last year.

 

Siddhartha Ahluwalia 27:20

and this year, you are on the path to doing 700 crores in annual revenue.

 

Ankit Garg 27:27

we expected to hit about 700 crores

 

Siddhartha Ahluwalia 27:31

what would mattress constitute in percentages

 

Ankit Garg 27:37

a mattress would be close to close to 70% of the business.

 

Siddhartha Ahluwalia 27:44

And that’s the reason for you to innovate into other product lines to expand your market.

 

Ankit Garg 27:49

Yes, I think when we had grown last year to about four pretty close, we realized that you know put together the market size of the mattress. And you know the total addressable market for wakefit kind of a customer. The right tag we quickly realized that even the growth in wakefit or the mattress as a segment would not be a triple-digit number is going to be under 100% so we thought you know the company as entrepreneurs, we are generally very aggressive. You know, we thought you know, how can we continue to grow this company every year more than 150% 200%. So, we like to kind of an organic extension from just selling mattress to sleep solution which is pillows, bed sheet protectors’ comforters, and then from then, we went into furniture market last year. So, we lost a lot of products in punch including bags, sofas, tables, coffee tables, study tables, dining tables lots of stuff we have launched, I think sooner or later you’re going to see a lot of variety coming in a lot of new categories like cribs are going to come dressing units are going to come, all over them. So, I think we have taken up a target that we want to in the next by the next March. Coming March, we will be having an entire range of home furnishing needs for a customer like beyond a wall everything probably will represent from wakefit.

 

Siddhartha Ahluwalia 29:09

By 2018, you know you had shared somewhere online that you had pitched to 31 investors and everybody said no, Sequoia was maybe the 32nd. investor. What made Sequoia took a bet on you as a founder. And if you could go back in time, what could you change in your pitch?

 

Ankit Garg 29:32

Yep, I think the first question that you know what sequoia believed, I think, first of all, Sequoia had this large portfolio of companies under the umbrella and there were many learnings at that point of time that you know consumer brands are really picking up so they want to do some decent consumer business and one of the good choices that came up to them was wakefit, consumer d2c brand. Second, I think they’re I think what I learned about Sequoia compared to all those 31 investors that we are a metaphor in Starbucks to from CCD to from their offices, right? what we saw the way that people do the assessment of a business, the way that they look at the start off where they will be capable of delivering the ROI that they’re expecting is very different than what Sequoia probably looked at. I think Sequoia was had a lot of discussions on business that you know what i what is this brand for what is inspiring what is the value you’re offering? Why do you think there is a validation of the value what is it that we are going to do how you’re going to discover a new set of customers how blah blah blah, like there was a lot of business talks, but until then 31 customers This was mostly like, how big is the market? Can you become a billion-dollar unicorn? Can you do this like it was all superficial numbers like everybody was looking at can this become a billion-dollar company or not right? But I think Sequoia was definitely looking at whether the business has a right fundamental or not, that the word Time will tell you the units I think that that they appreciated and kind of it bought off in favor of both of us.

 

Siddhartha Ahluwalia 31:04

And you know, what, could you change in your pitch? If you could go back to 2018 for everybody?

 

Ankit Garg 31:25

I’m not sure about the pitch that I would have been able to do I would think I would be changing legacy as a natural entrepreneur, you always tend to be what you are generally you know you’re not able to do an at least in a Series A or B are very natural you tone your presentation and stuff but what would actually I would actually change I will also probably assess the funds that I’m chasing a probably given to them to condition them I think we now appreciate very deeply that you know the people who are going to be sitting on your board you know the minds that you’re getting other than you know is probably like a virtual founder and then getting an invest in early-stage right there helping you much more than what you’re spending on an investor right so choosing the investor is what I did not do I mean I we kept on going to everybody almost we knock the door, so I think that is what I would probably change

 

Siddhartha Ahluwalia 32:24

and you had that fixed 10 million raised in mind or you were flexible that whatever you could not get above a certain number you were okay with it

 

Ankit Garg 32:33

No, we at that point of time did not actually want to raise 10 million because we did not know what are we going to do with that much money we were profitable by the end we were growing already automatically we were growing 3x move extra points coming in business as you know full cashflow positive. So, in I think we knew that you know, we have to raise money that we’re putting up some large-scale factory for the mattress and we required that we would require close to one and a half million dollars to show for setting a factory another one half million we knew that we’re going to hire a lot of people will probably do a lot of brand marketing and marketing branding of new for that. So, we thought we’ll probably experiment with this 10 – 15 cr rupee over a period of time that we require a minimum of 30 crore rupees as a package. For the next one year visibility are difficult. I was keen on kind of getting decent ownership in the company and we were a little bit fixed supply. Okay, that’s okay. Because we knew that, you know, business is built on fundamental I think you’re not going to pay the company, every year raise funds. So, we thought okay, if you’re getting extra capital, we’ll probably be able to live for another one more year. So, we don’t need to raise funds after every year. So, we were a little bit flexible. But yes, if we were given an option today again, you go back and say you just give us 30 years, not 60.

 

Siddhartha Ahluwalia 33:55

you always mentioned in a conversation that your first priority was to raise money to build factories. Can you go back in time and pointers when you did your first paid marketing campaign?

 

Ankit Garg 34:09

I think we did our first paid marketing campaign in the year 2018. So, until this is also a very good thing, I just forgot the good that you reminded me till we were doing these 21 crores of business we had to spend zero marketing. Like there was no money nor no Facebook. No Google no amazon, nothing. it was autopilot. I think in 18 we started spending money in the late 80s. And after raising money I think one of the reasons that we either if they said we raised from Sequoia was to actually experiment on the marketing money. It was 2019 where we literally went on Google-created campaigns on Facebook figured out how to measure ROI and stuff like very basic stuff we didn’t make. That was time.

 

Siddhartha Ahluwalia 34:51

So, one thing is word of mouth but I clearly understand like word of mouth. And you also mentioned during a podcast that is difficult to scale word of mouth. But for imagining like 21 crores of revenue completely by organic, and I assume it’s all through your website, right, people ordering through the entire 21?

 

Ankit Garg 35:11

it was 50% from Amazon and 50% from our website, because mix here, fresh new sort of customers are actually coming from Amazon. It was actually a point of trust was I think a lot of people trusted Amazon compared to wakefit because it was no brand by then nobody knew whether a mattress will come or not. Those points in time I think if you remember from Snapdeal and all those stories that people will send stones instead of phones. Anybody that paying 15-20,000 up for a mattress with an unknown brand, unknown website. It was very difficult And I think Amazon came in very handy that

 

Siddhartha Ahluwalia 35:48

currently, you own roughly as per the public estimate, 40% of the market share in online mattresses? Do you plan to expand like you have offline stores, but for experience, the customer has to order online only? But do you plan to open a store where I can just purchase the mattress from the store and not from the Wakefit website?

 

Ankit Garg 36:14

So, I think we’re very hard believers in how do we remove inefficiencies in the system. So, I think we every time so if any investment to be done on any business direction to be done, what we look at is, is it going to improve efficiency or not? For example, we are right now piloting with the store like we have opened a store in Bangalore. Like there are 15 stores in Gurgaon, Jaipur Lucknow, like lots of stores, will be opened. Now, what we are constantly doing this doing through the stores is if my cost of acquisition of a customer or the marketing budgets that I have are more than the rental budgets I have and the people who are going to be paying the salaries in I’m going to be paying the salaries to those people in those stores. If it is less than the retail is going to scale because I would have found another way to pass on benefits to my customer. For example, if 10% of the money is my marketing money, but to renters and all, I can acquire customers to 5%. I’ll go ahead and do this 5% plus 5%, I’ll end up passing it to my customers as savings. So, we always look at it from this angle that whether with this move, am I saving money and passing it on to customers or not? If not, then we strictly say no to it.

 

Siddhartha Ahluwalia 37:33

And if you could share what is the current margins right between the cost of making the mattress and your margins after that?

 

Ankit Garg 37:42

we work at about 40 to 45% gross margins. I think raw material costs about 60%. So, 40% of the money is what is used for logistics, returns, marketing, employees, everything. And GST.

 

Siddhartha Ahluwalia 38:00

There’s also one very interesting campaign, which you did. Right. And I think it still continues the 100 days, no question asked, complete money return guarantee. Right. And the story is that you were very afraid to launch it. Can you share that story? And there were some hiccups also that there were 3% return and the 3% returns were by people who were newlywed were trying out various mattresses.

 

Ankit Garg 38:28

Yeah, so I think I think we, we are a very hard believer in not using marketing as a tool to get to customers, right? All of the examples that are given in data are getting organics ways of getting more and more and more and more and very lesson because we know it that we can increase the prices because we don’t want to bring any inefficiency. Right. Now, this can be a nice trend. The idea behind this campaign. And I used to be the salesman at the beginning like all my phone number was available on the website on Amazon, like people used to call me literally for the first two years of the business. And when I used to listen to the calls. As a founder, you always have a habit to figure out Now, why are they calling me? Like there’s something hidden? Like they ask you a question that you have to buy a mattress. Is it the right price? Can they get more discount? Hey, do you think you will deliver the mattress? No, you will not take the money and leave like these kinds of customers. They will be hundreds and hundreds of calls. Every day I was analyzing what is happening, what is happening, what is happening, right. And one of the theories that I could articulate from all those sales calls was that people were really afraid that they’re not touching the product and buying the product, and God knows how the product would be right. All I’m believing is somebody who’s on YouTube has gone on and said, hey, there’s a good product. Somebody’s gone to Google reviews the check reviews on Amazon do check reviews and rating, but you’re really unsure whether this product is good or not because if somebody’s sitting in imagine Agra as a city ordering from Bangalore, you can’t really imagine who would I go and catch up and say, Hey, return my mattress, you know, give me my money back and stop by then what we realized and an outcome of this was this 100 days trial policy, we said, Hey, if we know we have made the right product to our customers, can it come out as a commitment to customer saying, hey, use my product 100 nights, if you’re not comfortable, we’re going to return 100% money-back and take care of the return on assets? It’s a no-question class policy, I think this was another tool to build trust, that we have created a world-class product, just don’t worry. In fact, we started getting a lot of opposite calls now. He said, how can the matters so cheap, and so good also, they are not able to believe. So, when the point in time we had to literally think like, shall we really have increased by two? Because they said no, but it is not that they’re not going to do that. That was a story.

 

Siddhartha Ahluwalia 40:49

And, you know, coming on co-founder, Chaitanya joined us co-founder in 2019. Am I correct?

 

Ankit Garg 40:57

He joined me in 2018.

 

Siddhartha Ahluwalia 41:00

In 2018, he came in full time 2018 or 2018. In that kind of timeframe. how do you make sure that in such cases because like 1000s of entrepreneurs are listening to the podcast? How do you split co-founder equity in such cases? Like how do you make understanding both people are happy?

 

Ankit Garg 41:19

So, I think there’s no formula to be very frank, a couple of people have already called me on this subject am joining this company, I’m getting this guy, what do you do either, right? You know, equity does offer in this case, what I think there are two frameworks I used only when I tell you, one is equity is in proportion to the risk you have taken. Right. And it just kind of basis that this guy got a lot of skills, this guy got a lot of commitment. He’s very smart, he’s blah, blah, blah, blah, blah, right? equity just can’t be related to anything other than risk-taking for the business. So, imagine if let’s say somebody’s joining within a year and companies very early the risk is almost same as it as when you started the company probably give 30-40% less than what you have, almost I would say equal to what you have. But let’s say run the company for three years and you know, the company’s product-market fit has happened, you’re making it profitable, these two companies are growing so the risk value has probably dropped and you arrive at that number using some mathematical calculation, some very basic factual calculation, you realize that you know, now the risk is reduced from 100% to 10%. So that’s the equity I would like to offer. So, this is how I went with Chaitanya also, and I think this is how I think it just fits the right way to look at equity. equity is just risk. And if you’re coming at a point where the business is very, very risky, you should be probably equal and lesser than the founder but if you have lived the life for a decent amount of time and you know that working, I think you’ll end up with that calculation figuring out how much risk has been reduced and that’s how you end up

 

Siddhartha Ahluwalia 43:07

and Chaitanya was the only angel investor that you had to file a rupee check from

 

Ankit Garg 43:11

no, we had 2 actually, Chaitanya had a friend so they both gave us 2.5-2.5 lakh. Okay, I still talk to her. when she invested 2.5 lakhs, she’s also a good friend now. She invested 2.5 lakhs I was just teasing her the other day I said was nothing like this could happen in my life. I have spent six years, 10 years not sleeping so much of stress when you 2.5 lakhs have become 75 crores focus on the business

 

Siddhartha Ahluwalia 43:46

They have exited the business yet?

 

Ankit Garg 43:47

yet no she’s just hanging dressing I see she’s a very good friend of mine but she has a very hard to believe in both of us she says well you know both of them I believe nothing’s going to happen probably keep on hitting it and she doesn’t look for exits. Well,

 

Siddhartha Ahluwalia 44:05

this should be like the exit of the century, I think.

 

Ankit Garg 44:10

It’s all karma like you see,

 

Siddhartha Ahluwalia 44:20

I get up. You make 31 investors. Everybody said no, even when you had 23 crores of revenue like I can’t believe somebody today with 23 crores of revenue will be rejected by 31 investors. Why do you think suddenly D2C has become so hot in the second part of 2020 or the fall of 2020? And is it going to be so hot going forward that there are new funds are getting created for D2C?

 

Ankit Garg 44:48

See, I think some of it goes to you know, the number of companies that have come up or down companies like Wakefit, Mama earth, Oziva, there’s just so many companies in d2c brands that is a proven method? Right? And there are some of the companies who have actually gone public, for example, come like indigo paints. a company like stork craft. I think some of the companies have gone ever returned huge multipliers compared to normal businesses. So, I think that convictions come in there are D2c who can be built without Rob marketing budgets. Without a lot of low Capex in factories, I think people do believe that companies like PNG and HUL can be created from scratch, I thought, I think nobody kind of believed that. So that conviction has come. And I think, a multiplier that people are getting when the IPOs are happening is also very, very equal and or even better than SAAS or in tech businesses. So, people have got this multiplier understanding also this, I think that’s why there are very clear focal points. And of course, it also goes to, to the majority of the set of investors that exists in the ecosystem, I believe, you know, some of them are the believers of d2c brands, and they show initial conviction and then they try to convince the whole you know, the fraternity around people around them, I think it also takes its own sweet time that you normally believe as you start to keep on pumping and then you’re constantly thinking about d2c space, and then some exits happen. And then you realize something new is coming up, then you start really getting, you know, strong vibes and this is a very important evolution. And to be very frank, I think Amazon Flipkart are the two VCs I would say they have created hundreds of entrepreneurs like Boat, look at mama earth so many brands out there. Amazon has created so many d2c brands, right? So, I think when you speak to those category managers Amazon like I’m sure investor has those relations with them. So, they’re talking to them in hindsight and asking them whether the decisions are right or wrong, and then when they tell them the numbers, they believe is very different like when they look at the figures are 100% like all the d2c brands cutting the brand 100% because of some new startup coming up and disrupting. So, the belief kind of multiplies every year and you reach a point where everybody’s conviction because you’ve seen the exit now so I believe it’s a very slow state but it was always in people’s mind and kind of you know, we will explore the space and I think it’s a cycle also I’m not sure you see you come from this background so it’s a cyclical thing that sometimes something is or something not.

 

Siddhartha Ahluwalia 47:39

One of my you know, memories of wakefit is your sleep campaign, right where you’re giving interns 50,000 rupees a month to sleep for eight hours a day on wakefit matters. Tell us about your thought of that campaign and how you marketed it and how you bought a very popular TVF star in it.

 

Ankit Garg 47:57

I think it was not me it was not I said we could I think it was our agency. So, we got this marketing agency and they’re a bunch of entrepreneurs I think there are three people who founded this company, some really brilliant guys. And when they startup I think wakefit was the first or the second project for them. So, they personally had invested a lot of time in thinking about what to do with this brand and that’s because of the sheer focus and the energy that they put up in this I think they came up with this very strong idea of creating something like this. So thanks to them but this idea we did not think it would scale to this level like we were literally not prepared to kind of you know imagine something like this would happen you will be surprised to know when we had gone live with this we got about two lakh applications like literally people came and filled the form my traffic on the website went for 4x, I got a call from radio stations in Mumbai in Indore in Bhopal, like so many radio stations, Called me to figure out my phone number call me randomly. We are live right now like they randomly called us when they were live. So, I don’t think we anticipated that the campaign would go so strong. But all the things and all the best wishes to the spring capital team. I think they were very, very handy in creating that I think it’s again about the entrepreneur’s spirit. You give any work to an entrepreneur; I think they can create. So, when you see those entrepreneurs’ spreads and founders’ attitudes, you kind of end up creating something which is remarkable.

 

Siddhartha Ahluwalia 49:36

My last question to you on wakefit is what would be your three advice to a founder starting in D2C to finding the right product, finding the right distribution channel, and scaling with a minimum capital to let’s say one CR off monthly revenues.

 

Ankit Garg 49:53

So, I think the first thing I would like to very strongly speak about is his consumer insights, I think the d2c space is highly competitive. By the same time, when you go deeper into understanding the consumer needs, you find the strong niches which are not available. So, you pick any category, and you speak to 100 customers, how they’re using the product in that category, you will figure out that, you know, 50 of them are being sold by some company, 50 are still there, you know, nobody’s thinking. So, to go to the depth as much as possible, and figure out those pain points or expectations or aspirations of a customer category, I think that will give you an answer of how do you create a niche? And then from niche, how do you scale it to become a regular business? That is one piece of advice. Second, on distribution, for instance, you mentioned a core business, I don’t think this is the right time to worry about distribution at all. I think online platforms, Facebook ads, Google ads, Amazon, Flipkart, are more than capable to take you a crore rupee a month also, without actually thinking about distribution. I think they’re very, very strong.

 

Siddhartha Ahluwalia 51:05

How do you think of establishing yourself for a unique brand? Because so many 1000s of products are available on Amazon and Flipkart? I can try something new. But how do you create that personal experience that memory that I come back to you again, talk about you?

 

Ankit Garg 51:22

So, as I said until you’re actually solving problems, somebody, nobody’s going to appreciate it. So, what would be best is, if you can actually talk to customers and figure out the problems. And trust me on this if you are able to solve the problem for customers, they are the first ones who are going to speak out so vocally about your product, there are a lot of word of mouth will come, but specifically, from the context of Amazon, how do you differentiate product? How do you do marketing and branding, let’s say, I think branding should be left until you hit a certain skin, I don’t think branding comes in very handy when they’re very, very small. All you should be solving is about the right product, the right price is the right value that you will offer in that product, not the brand, or the branding is a bigger problem when you will scale this business to more than 10-15-20-100. But with Amazon, in terms of distinguishing yourself from 1000s of products available on Amazon, I think what really, really works is getting those first few sets of customers on Amazon which anyways, Amazon algorithms are built-in, and with any new, any new seller comes with definitely get at least some orders in the beginning to test. I mean, they’ll build the algo that everybody gets at least a chance to sell something. So, you’ll end up selling something. Just make sure that you know those people, those who bought a product, first of all, should be very happy with it. And try them getting to YouTube, or to Google, right ask them to write a blog. Go yourself, tell them to do whatever I think what we’ll have to do is you’ll have to go the extra mile to get those customers to write things about your speed things about it can be in terms of Google review, or Amazon review, or YouTube video or some blog or something. I don’t know what, but you get that special feedback from them. And trust me on this, this engine works like this. Then, you know, until unless your customers are speaking about you, I don’t know which format you want them to speak and even work for you. You have to somehow get them to speak and that that definitely works.

 

Siddhartha Ahluwalia 53:25

Thank you so much. I get this this was one of the most insightful conversations and very honest conversations which I wish I had. Right, you spoke from the heart of how you like poured your heart into it. Really enjoyed our conversation.

 

Ankit Garg 53:44

Thanks. Thanks

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