A decryption of the DealShare journey

In today's episode, we have Sourjyendu Medda and Vineet Rao, the co-founders of DealShare in conversationwith Tarun Davda, Managing Director at Matrix Partners India. We talk aboutwhat makes them unique and also coverhighlights from their growth journey.

Salonie:

Hi this is Salonie and on today's episode, we have Sourjyendu Medda and Vineet Rao, the co-founders of DealShare in conversationwith Tarun Davda, Managing Director at Matrix Partners India. DealShare is India's fastest growing social e-commerce start-up, knowing for pioneering the community group buying CGB model in India. The company recently raised144M $ round led by Tiger Global along with participation from existing investors. DealShare has experiencedexponential growth over the past one year and are on path to transform the social commerce landscape in India. We cover highlights from their growth journey, what makes them unique, how the grocery tech space is evolving, and much more. Tune - in.

Tarun:

Welcome everyone to Matrix Moments. I have very, very special guests on the show today. I’ve been really looking forward to doing this one for a long time. So thank you, Vineet, thank you, Medda. I know it’s a busy time for you guys so really appreciate both of you all taking out time to do this with us.

Vineet:

Thanks, Tarun. And thanks for the opportunity, we’re always looking forward to these things.

Medda:

Thanks man, this is really exciting. I think always these times which we spend with you guys are wonderful and we look forward to these.

Tarun:

Excellent. So firstly I’m going to congratulate you on the fundraise, it’s been a roller coaster of a year for you and I guess for everybody in the ecosystem but more so for you guys. I remember March 2020 and I think we all were doing a conversation around what does the pandemic mean for us, what does the pandemic mean for e-commerce, for grocery in particular. We went through a tough few months with strict lockdowns and on the other side of the year you are out and you have $150 Million more in the bank. So describe the year from your perspective, what went through your minds.

I’m sure it was a roller coaster in terms of emotions, in terms of team building, in terms of operations. So just maybe you know, lot of people wonder what is happening in the ecosystem today, right, with all the capital coming in and what’s driving that? As an entrepreneur who is in the thick of things talk a little bit about just your experience both through the tough times and I guess all the positive sentiment around what’s happening in grocery-tech and also with your capital raise.

Vineet:

Absolutely. So I think you coined it really well, right, I think last 15 months were certainly a roller coaster, right, so as you remember right before the pandemic we were sort of scaling well and we were expanding and we were densifying the geographies that we were in and we were building a solid team and so on. But as soon as that lockdown came in in end of March, right, like we did not know what really it means for us. And both me and Medda like took the last flight to Jaipur and at that time it was supposed to be only for a week.

Tarun:

I remember that time, I mean I was amazed when everybody -- I mean I do want to call this out to all the listeners and whoever tunes into this podcast. I remember you guys calling me and this was a time when all of us were hunkering down, all of us were trying to get back to be close to our families and everybody was avoiding any movement and really, really feel grateful to you guys and also where it was very humbling to see both of you basically just took a one-way ticket from Bangalore to Jaipur and said my family is safe at home and obviously I would love to be with them but it’s more important for me to be on the ground with my team right now.

I mean I just think these are the things that entrepreneurs do that lot of people don’t read about and you don’t hear about, we only hear all the big sort of funding news and all that in the media today but I do want to call that out, that was something really, really unique that I saw you all do.

Vineet:

Definitely. And obviously there was some resistance from the family but we’re extremely fortunate that we got tremendous support from our family especially our wives in terms of continually sort of supporting us on this journey. And as soon as we got there, right, I mean we took -- it was total disruption and we sat down and said like how do we make an opportunity out of it. So I think it was fantastic, the first month actually was fantastic for us.

First day itself we were -- and we had built very good sort of reputation in the state, right, so first day itself we were in the collector’s office, in the police commissioner’s office, in the Chief Minister’s office. I mean we were talking to them and it was really great because how else otherwise you connect with them. They also really wanted to talk to us and sort of see how we could help out and they gave us tremendous support in all the states the governments gave us tremendous support.

In fact we got permission in the state of Rajasthan to issue permissions to others, we are the only ones, everybody else had to like put the long application to get permissions to go on the road. So I think that really helped us and boosted our morale also that we were getting actually so much of support from everybody that we did not even expect. And basically we had to work step by step unlocking all the problems, tremendous amount of problems on the supply side, all the factories were shut down. We had to work with them and the government to get the factories opened quickly, you know, all the manpower was just going to their villages so we had to literally figure out how to stop them and get them to continue working with us.

And from the customer’s side there was tremendous love, I mean for them nobody else was giving them the service that we were so we had to really figure out how to basically meet the promise. And we had to also contain the business on the promise that we could deliver, so we had to take a lot of decisions, cut down our SKU count from 1200 to 250 that we’ll operate on those which are most essential and also focus on the geographies where we can provide the best service. So I think since then again ups and downs, lots of ups and downs, while the lockdowns opened up and then we started sort of getting back on track and then again the second wave coming in.

Tarun:

Which one was harder, given that you had experienced very severe lockdowns and sort of learnt to kind of navigate through it what was different about obviously wave 2 was personally very, very tragic for a lot of us and our families and I know you guys and your entire team was down as well. But from the business perspective how was like second wave of lockdowns different for you all versus the first, did you feel more prepared or you can’t really prepare for these?

Vineet:

We thought actually we were fully prepared, so if the wave 2 was like wave 1 we would have just blazed through it. But wave 2 definitely hit us a lot harder because wave 2 the disruption actually went very deep into the team and into us and everywhere and I don’t think we were prepared at that level. If it was anything like wave 1 we would have like flourished heavily, right, that’s what I feel. Medda, what do you think?

Medda:

I think basically if you look at the two waves and for the company now wave 1 if you remember, Tarun, we were basically before wave 1 we were thinking of a fundraise and we were looking at series C and the company was going on a good trajectory. And then this wave happened and the entire capital market also dried up. Everybody was very worried as to what will happen. I think the rigor that we had during wave 1 on both execution and basically navigating through Covid across cities and then getting the series C done while we were very short on a runway was basically a huge learning for us.

So what we did during this period of March to let’s say June-July when we signed up our term sheet for series C and then basically also the next three months when we went through the whole process also because of Covid the process was slow. So the whole journey of 6-7months was so rigorous that our learnings we have now taken forward in a manner that we’re able to generally navigate through huge problems.

Now wave 2 I think the big problem was the personal health issues that came to us and the whole team, otherwise as a business we were well prepared. Also I think we knew exactly what to do, whom to meet and where to take permissions and those were done just that we were not physically available because of Covid and in our families and somebody or the other would basically go through that. However if I have to rate I think the wave 1 was really hard for the business though in every business like --

Tarun:

You just didn’t know what to expect.

Medda:

Which come and then you have to pick yourself up. So our learning was huge, immense, on all fronts. And if you look at the outcome also our business has grow 10x from pre wave 1 till today. Because that gave us the confidence to just boost the business, we learnt so much that we could boost our business very fast.

Vineet:

I think there are lot of additional benefits also, what I really see is the team overall coming in lot stronger. Leadership development has happened very rapidly and everybody in the team has sort of signed up for going ahead, going deeper and solving the problems on the site. So I think that has also resulted in building a very strong bond and my people are coming in digging and finding problems and coming with solutions and discussing with us which probably would have happened much later I think has resulted in coming out very, very strongly is what I believe.

Medda:

Yes.

Tarun:

You know, one thought that is going through you mind, guys, is there’s been multiple starts and stops in the last 12 months, multiple disruptions to business, individual health, lockdowns, delivery boys not being available, logistics and supply chains getting disrupted. And you said you still grew 10x in the year, right? There is a narrative outside that grocery-tech has exploded on Covid tailwinds and these may not sustain and things will slow down again.

And obviously very recently you guys announced your latest series D round by Tiger Global which was a 100 million round. How much, I mean, what is your narrative, how much of this 10x growth in your mind is the Covid tailwind versus say something more structural and something which is going to sustain much more. In your mind what is the defining reason why this was a very pivotal year for DealShare in terms of growth and then maybe talk a little bit about the fundraise and how did that happen?

Medda:

Yeah. I think Covid definitely had positive impact on the e-grocery business and a lot of adoption which was waiting for quite some time Covid just spurred that adoption because people had no choices during lockdown and they had to basically adopt delivery models. Let’s say they were just wanting delivery models not e-commerce but e-commerce happened to be the choice of delivery. So that way they realized that if they come on to the e-commerce models they get good high quality products at low prices, then there is this guarantee of all the service, there is no mixing of product quality and all of these.

So a lot of people during these times realized that this is a real model that they can adopt and they have been shying away. Now add to it a model like DealShare which was basically built for the mass consumption or mass consumers of the country it got even better basically acceleration because the mass population of India was still not on e-commerce and then when they had to do that, had to basically adopt e-commerce during lockdown they realized that, hey, this is the model where we can basically buy better than our kiranas and the service levels and quality of products are really good.

So I think post that first adoption that happened due to Covid it has been an hyperbolic acceleration only, so people adoption is only increasing because see this is again a social model that we’re building. So one guy is happy he brings ten more people and so on. So I think while Covid definitely played a role in changing that adoption journey, the residual impact is much more than what we could have ever thought. We’re seeing that every day, I mean the customer base just to give you some figures the customer base this month would be close to 70-80 percent higher than last month.

So that is the kind of adoption that every month this growth spur is happening on the adoption. So I think this is going to stay and not just stay it is going to exponentially grow because people are realizing the benefits.

Vineet:

I’ll give you some examples also over here, right, we were seeing rapid growth and right from the beginning we were always capacity blocked, we always have more orders to service than what we can actually service. So we had to put blocks at some point in terms of how many pending orders we can really have in the system. This has been true before Covid and this has been true in the Covid timeframe as well. But what has really changed and if you remember in April we were really sort of running around in terms of finding somebody who could give us their spare warehouse space.

We had talked to all the biggies also including Flipkart, Amazon who had empty warehouses but unfortunately we could not get access to them and then we had to really figure out in terms of how do we structurally build capacity. But what has really changed, you know, Medda made a very good point, I’ll give you an example. Like my mom, right, she is very savvy that way, I mean she’s an artist, she’s been a dancer, she used to work for Railways, she was a teacher also but she was probably the last one to adopt like a smart phone and Whatsapp. It’s very hard for her to change from what she was before but now she’s always -- there are two apps on her phone, one is Whatsapp, one is Dailyhunt. She really loves to read the news and also sometimes in Kannada.

But DealShare is probably the third one and there is like a nearby store app also that she has and now she’s ordering online and she’s very intrigued and interested. I never thought she would ever sort of order online but now she’s like calling me if she’s facing any problem and will talk to me for 15 minutes in terms of how to figure out, how to order, or she’ll get me to order.

But I think that is fundamentally changing the things, now we have stores nearby and she can call and get the stuff but she finds it now a lot more convenient to see all the products, see their prices. If you call the store they’re not going to tell you all the details, right, they’ll only take your order and, ke thik hai adha kilo daal bhej do, right. She can check all the options and order, it’s a learning curve, it’s a very difficult and steep learning curve. I don’t think if Covid was not there she would have ever, ever tried it.

Tarun:

So you’re saying Covid is the trigger for trial but once the customer is hooked at experiencing that and as long as obviously you all are giving them a good experience when they’re coming to your app you’re saying the retention now is much more natural and here to stay.

Medda:

Not just the retention, I think the retention is leading to now virality where people are bringing more people and we don’t have to really spend a lot on market.

Tarun:

On that note, Medda, for the people who are listening in who don’t know what DealShare is and different people describe DealShare in a slightly different way. Some people call it the Pinduoduo or PDD of India, some people call it a social commerce company, somebody calls you a grocery-tech company focused on tier1, tier2 or tier 2 tier3, somebody calls you a Costco on mobile, there’s all sorts of definitions that people use to describe exactly what DealShare is.

For those who haven’t experienced DealShare, for those who don’t know what DealShare does it would be good if you all can describe the model as you envisioned it when you started, how it has evolved into what it is today and what is the real core sort of vectors of differentiation and we’ve obviously had a lot of discussions internally amongst us between this but it would be good maybe if you can share a little bit like what makes DealShare so unique?

Vineet:

So now I remember the first discussion we had that was I think in June-July of 2018 and I’ll talk about lot of things that we’ve learnt in the market and built up in terms of the experience and virality and gamification and everything. But the core that we had discussed at that time was that consumers are paying a very high price as compared to what is the source or manufacturing price.

I think that is the core of DealShare in terms of how do we get factory direct or farmer direct products to consumers and at a substantially lower price than what they’re paying today and still benefit from that particular transaction. So how do we really optimize the supplychain and what is it that we need to really build across the supplychain, across the demand to really make it happen. How do we increase the affordability of the mass market.

Medda:

I think the mission is very clear like Vineet said it is increasing affordability of mass market and factory direct and is very important to the consumers. So now why would people call us a e-grocery or a social commerce and all of that, so let’s clarify all of these things. I think to basically satisfy that mission and to be on that mission what we also realized that the mass consumption of India is essentially in this grocery and essential space. So that is the first use case we have taken for ourselves. So today solving for that use case like a 70-80 percent of middle-income households consumption.

Now we believe that if we don’t resolve for that then we don’t have a chance of doing the other parts so getting into let’s say one-time purchases or then services or content or education all of that would happen but first we have to solve for the grocery needs. That is why the use case is grocery and essentials today and the other bit what we realized when we basically did a lot of research is that these people are not consuming classical mediums like your television ads and all of that. Even if they’re consuming it doesn’t impact their usage.

Tarun:

Purchase behavior.

Medda:

So it was only social which basically would bring these up because they generally listen to their friends, family members, peers. So it is the influence that basically their group creates in their mind which results into an adoption. So that is why it is social commerce, so that mission is basically service wealth who are use case of grocery and then social becomes the mode because social is necessary for mass population adoption. So that is why people call us in these three things.

Tarun:

So you’re focusing on a customer segment that has traditionally been ignored by larger sort of or earlier sort of wave of e-commerce companies. You’re focusing on -- you mentioned about local supply and factory direct and farmer direct. You spoke about social and sort of virality as a customer acquisition channel and we’ll cover more in detail. But I think there’s also something very unique on the logistic side, right, what has traditionally been the bane of Indian e-commerce one is it’s very hard to serve this consumer profitably at the price point at which they typically transact.

Touch upon that a little bit as to what is it that you all have solved and what is unique about that. And the second is that there are multiple ways in which that customer is today getting served, right, why is your model more uniquely placed to serve the needs of this customer over the long term. So maybe talk a little bit about both of these, I think that will be really helpful to understand what is the real disruption that DealShare is causing.

Vineet:

Yes, absolutely. So let’s talk about the models that have been working really well in the West and you know, all the other sort of model retail in India has also been focused on that, right, that model is really based on whether you look at Walmart or Amazon, right, it’s really based on selection. You give them everything, right, and different people will have different needs and if you carry all of the products then you’re serving a much larger population, right, and you give them at a good price and give them a really good service and then they’ll become sticky.

All of modern retail whether it is offline stores, right, or whether it is online has been really focused on that. Unfortunately the demand for that particular service is very small in India and that actually makes it very difficult for anybody offline or online retailer to become profitable until the demand really substantially increases and they get the density. It’s very hard because you have to carry a large selection that comes at a very high price in terms of operations and that’s why all the modern retail especially in the grocery sector apart from D-Mart, right, and we can talk about D-Mart separately in terms of what they’ve done unique.

But everybody else runs their operations cost anywhere between 18 percent and 40 percent on the order. And that is just not viable if you have to become a horizontal player, if you have to become a mass market player you can be a super niche player, right, but you cannot become a horizontal or mass market player. If you look at Costco or look at Walmart or Amazon what they do in US is a fraction of this cost. Now you go to the other end of the spectrum which is the middle income or lower middle income population it’s very interesting, it’s a very different TG, right, I mean they -- you know, 90 percent of what they spend on or consume is like hardly 500 products.

So that actually brings and they’re not really brand sensitive, they’re not somebody who would say even for the most important kinds of consumption like toothpaste they would not have an affinity. If you give them one brand cheaper than the other they’ll go for it let alone all the other sort of products where the affinity is almost zero. So this is where you can really optimize and this is where DealShare has focused from day 1 to focus on this TG, keep the assortment really sharp.

When you have a very small set of assortment and you are catering to a much bigger density and Medda can give some numbers behind it then you can run your operations overall right from procuring to getting it in warehouses, managing warehouses to picking and shipping and do deliveries a lot more efficient. And that actually, you know, today itself at a smaller scale we run all of our operations including warehousing and delivery at less than 7 percent, nobody in the world does that and it is only going to get better with more and more density and more and more scale.

Medda:

Yeah. I think some very important points which are core differentiators here, one, like Vineet said it’s a very, very sharp assortment. So about 1000-1500 SKUs covering 90 percent plus of middle India’s consumption resulting into less warehouse space, less warehouse manpower, lower assets so it’s an asset like model so both OpEx and CapEx on the warehousing side is extremely low.

And then we create this whole network of community leaders in India, so these community leaders are very conversant with their locality and they’re also they know the people extremely well. Now that reduces the last mile cost dramatically, so now if you look at the whole gamut so we do warehousing in 2-3 percent and then last mile at 5 percent odd. So that’s the kind of unit economics we’re running on operations side. Now the added part to it is that our KOPs are half of classical e-commerce deliveries. So that percentage at lower AOV is given a bigger distinction, we can still have a lower percentage.

Now we always knew that the mass population would not give higher AOV, so that’s very important and last part which Vineet also touched upon is the densification part. Now if you look at our oldest city Jaipur today we do 12,000 deliveries in the city of Jaipur every day. If you compare it with the next best e-commerce player in the grocery side or maybe I’ll not take names here but then we’re doing 10x deliveries. Now that densification would basically lead to further cost saving and community leader would also take this work as one of the primary earnings for them. So that is the big differentiator that we’ve done across the length and breadth of these five states that we’re present now.

Tarun:

So what has that resulted in and I’ll tell you what I’m trying to get to, right, one of the things that I know you guys I remember the first time you all came in pitched the Matrix team this was I think before you had raised your first seed round that we closed, right, you had said the issue with e-commerce is a dollar of investment has resulted in a dollar of GMV maybe NMV and in the best case. And you all had said our aspiration is to take a dollar of capital and create a ten dollar of NMV on that. Where are you in that journey, what have been some of the learnings in that and are you happy with where you are, do you think you can push even harder and sort of get to now that the flywheel is turning what do the next 2-3 years look like for DealShare on that front?

Vineet:

I think that was basically a goal or a dream that we had set, right, because I remember discussing with you and I think you had the most deep insights on this that the global average is 10 dollar on a dollar and profitable whereas in India it’s anywhere between 1-1.2. So we said we should definitely beat the global average and we thought eventually we’ll get there when we build a very big business, you know, get to a $5 billion we should not require more than $500 million. But I’m very happy to announce that we’ve already crossed that, you know, Medda can share, and eventually when we get to a $5 billion I think we’ll be at a 20x or 30x in terms of capital efficiency.

Medda:

Yeah. So 10x we crossed a couple of months back and we’re on the journey to cross 20x by the end of this year itself and by the time we become a $5 billion GMV I think definitely 30x if not more. So the capital efficiency factor is extremely important in the way we build our business because unfortunately I think -- so I would not say unfortunately, I think the first ten years people have built a lot of infrastructure, they’ve generated awareness for e-commerce but nobody looked at capital as a very big asset.

Now what happens is that when investors would put capital they would obviously, one they would look at ROC and if the ROC is not visible to the investors then basically the tap stops. So that is what we have solved for from day 1, we in the first year itself reached a 5x and now we’re at 10x and I think the journey from here is anybody’s guess. The only thing that we’ll now want to add is an EBITDA positive business, we’re already very close to now touching single digit negative EBITDA and I think in the next 12 months anywhere in the next 12 months we would basically become EBITDA positive as well.

Vineet:

And just to tell you that every incremental dollar that we look at in terms of investment now is easily giving us 20-30 dollars of growth and that incremental dollar is totally going into building assets, right, whether it is expanding our operational capacity or investing into technology. Majority of the incremental investment is going into that and that is why the returns are really high for us because operationally or marketing wise we don’t lose much money.

Tarun:

So on the topic of marketing I think one of the key things that has allowed you all to scale and if I just look at again the -- we alluded to Pinduoduo and how that worked in China a lot of what drove their growth was demand aggregation using WeChat and using the power of WeChat. Lot of the other aspects also have some overlap in terms of local brands and a bunch of other stuff that you guys also focus on. Obviously there is no equivalent in the true sense of the word of WeChat in India, yes, there is Whatsapp but Whatsapp obviously has a lot of limitations in India in terms of allowing companies like DealShare to build on top of Whatsapp.

How was your customer acquisition strategy different in the early days, I remember being part of some of your groups when we were diligencing DealShare before we invested and I was amazed to see the kind of virality because every day I was in those groups dozens of members would join, dozens of members would leave, invite their friends, there was a lot of activity happening. So, a, what did you do with Whatsapp and is the strategy still the same today or how has it evolved and how is the demand side flywheel working for you?

Vineet:

Absolutely. When we did lot of research before starting up and we realized that one of the biggest mistakes that majority of the startups do and continue to do even today I look at TV ads of very small startups or, you know, brands and I just wonder, I mean what’s going on over there. So we decided right in the beginning that if you have to really build a huge horizontal story you cannot really depend on traditional forms of marketing which is all those TV ads and paper ads and Facebook, Google and all kinds of other activities. It’s very, very expensive and you’ll never really recover that cost that you’re spending on whether it is stack or branding, you’ll never make that much amount of money in your LTT.

So I think it is intentional decision on our part to keep it as part of our vision and strategy that we have to figure out how to get to the mass population for free or for very, very limited cost and also build a scalable model. The other problem is unfortunately your acquisition cost if you depend on traditional forms of marketing it keeps on going up. For the first million if you spend 100 rupees for the next million you’ll have to spend 200 and it will just keep going up. And at some point you’ll hit a wall, right, because after that you just cannot spend more per incremental user.

So we said that is just not going to work out if you have to cater to a million people you have to have a scalable way of getting everybody at a very low cost. And then rest I think there are lots of families, if you as a founder decide that that is what you’re going to do and you’re not going to do the other thing no matter what, right, no matter whether you have money. Lot of people also tell me founders that we have the money so why won’t we bring in Amitabh Bachchan. So and it’s good, right, I would also like to work with Amitabh Bachchan, right, but maybe much, much later. But I think you have to be very, very careful on this stage and there are lots of avenues now, I think everybody is digitally connected, you have to really figure out how to sort of navigate those connections whether it is Whatsapp or whether it is just purely word of mouth in terms of how people are interacting lots of other apps are going to keep coming to really help you over there.

Right in the beginning we just focused on Whatsapp, right, everybody was on Whatsapp so we started building our community over there and we started giving those people extra benefits that if you stay in our community and become our influencer then you will have exclusive access to deals and you’ll be the first ones to know about the stuff and you’ll also start getting some micro incentives if you drive virality and so on. And it worked really well for us, I mean today we’ve close to 50,000 of these influencers across our communities who are really driving the viability and the traffic for us. All of the million plus sessions that we get on the app are basically free, we don’t have to spend a lot of money on external forms of marketing. And that makes us extremely unique, I don’t know of any other player in India and very few players across the world which are able to really do that.

Medda:

I think if you have to draw a parallel with what PDD did with WeChat and what we could do with the likes of WhatsApp and now we’re also exploiting Telegram channel I think obviously the transaction closure doesn’t happen but it is a completely free marketing medium for us. So we don’t need to spend anything, we get free traffic, free publishing of all our deals and all of that and the way we have done this from day 1 this is something which was core in our strategy from day 1 and you would remember that like you already said that you were part of those groups.

Now this has basically allowed us to grow our customer base at almost zero cost. Our CAT and just to give you an example, our CAT including all channels is at $1 compared to let’s say a $10 in the e-commerce industry. Now this obviously WhatsApp has its own limitations unlike WeChat and we have faced those limitations and those challenges as well. But now we’re at a stage where we know how to handle that whole beast in a manner that it basically --

Vineet:

And I think WhatsApp also tremendously benefits from this, right, you know, we have talked to all our users in terms of. you know, we’re giving you this benefit and you’re pushing all these offers and so on and you’re telling all your friends and family and all of them really like it. Ultimately for a social platform it’s important that when two people are connecting and they’re sharing something it is useful and it is relevant and meaningful.

Now WhatsApp had already become sort of place where there was lot of sort of junk also coming in which was not very relevant people sending in all kinds of messages. Over here I think platforms like WhatsApp really benefit if it is something that all the users are saying that it is good, this is relevant for me, it is helping me access good products at low prices and all the gamified stuff clearly builds the engagement. I mean it’s not just a routine that we’re selling low priced product.

Tarun:

Talk a little bit about that, Vineet, I know we’ve had a lot of discussions on this and initially there was this thing whether will group buying work in India the way it worked in China, will people be incentivized to share these deals with their friends and family. Now I know again what you guys have done is very different from what actually played out with PDD in group buying.

So any insights you can share with the group and what -- I mean lot of companies try to run these offers on WhatsApp but they don’t get the same level of virality that you guys have been able to get. And clearly aren’t able to acquire customers at the kind of CAT that you guys are able to do. So what’s the insight there, what has worked for you to the extent you’d like to share and also talk a little bit about this frontend gamification.

Vineet:

Yes. So again it is conceptually it was part of our strategy to focus on engagement and not only on conversion and purchases. Typically, an e-commerce player would get their monthly active user will come only 2-3 times and if they get 5-10 percent conversion then that’s really good for them. But we really focused on engagement that this 2-3 times a month is not good enough for us, right, we need to be a lot higher and right from when we launched our app, we already had users use our app at least 5-10 times a month and today they use it more than 40 times a month.

So that is the metric that we tried to optimize in terms of continually bringing extremely interesting engaging and gamified features, you know, features like flat sales, right, you know, it is very timely sort of discount. Features like we have a concept of bhagti hui deal, that the price will keep increasing over time, we’ve share and unlock kind of deal, we have bargain, you know, you can name your own price like price-line, dozens of these other features and now we have a very powerful technology team that is sort of building the machine learning part behind this in terms of both personalizing all these assets and also targeting a lot better in terms of all these offers. So that will I think take the engagement to the next level altogether.

So I think but most importantly I think it is the focus on that engagement piece and group buying and gamification and everything is just you have to just keep on iterating and keep on improving that metric and that is what I’m really proud that we have been successfully been able to do. Transaction will naturally result when your engagement is really high especially if you’ve relevant articles. Our transaction conversion is super high, our transaction conversion on daily basis is like 20-25 percent of the user that comes in on the app along with very high engagement. So that is very difficult to crack generally that you have very high engagement and still your conversion rate is also very high.

Medda:

I think it also show the mission of the company like we said that one big mission is to increase the affordability, the other one that we carry with us is basically to fill fun into people’s lives because generally if you look at mass India there is little fun that they have, always there’s a boring routine jobs that they’re doing. So this fun element is something which they really like and that adds to the whole mission.

Vineet:

Very important point. In fact we just had a strategic offsite and these are the two things in terms of affordability and fun if you ask anybody in the leadership that’s what they will call that DealShare is about and that’s what we focus on and that defines our culture and values.

Tarun:

Excellent. So, guys, I know you all have publicly as part of your recent announcement very few companies actually go out there and share their sort of BHAG goal publicly and I think you guys have said you want to hit a billion dollars in sort of topline by the end of this year. What gives you the confidence to put it out there, it would be good to understand a little bit and I think the more the bigger question over there is 3-5 years from today when DealShare hopefully is a much, much larger company.

And I know you guys are well on your way to making that happen, what would make you truly satisfied, like both on the harder aspects in terms of numbers but also on the softer aspects because every entrepreneur at some level there is a mission that is driving, right, yes we talk about numbers, yes, we talk about metrics, yes, you talk about fundings and valuations and all that but I know both of you also started this company, both of you were in very high paying jobs, gave up a lot of comfort and easy life when you started. But and I remember the meeting where we met the first time and you had actually -- this line really struck with me, where you said failure is not an option for us.

And that really struck with me because for a lot of the young founders, yeah, they start, it works, it doesn’t work, they move on to the next thing and you guys obviously came from a much more experienced. You have families, you have kids and I remember this line Medda you said and I think Vineet had also said it which is failure is just not an option for us, we have to make this work. We have too much at stake to risk our careers on this and so we’d love to understand a little bit about obviously hopefully failure is not something that you all worry about every day as much now as you maybe a year ago or two years ago but what does the next five years look like for DealShare and what will truly make you all feel that the mission with which you started DealShare is something that you were able to fulfill?

Vineet:

Cool. So let’s go one by one. So just between you and me, right, I think --

Tarun:

But this is not between you and me, this will be public.

Vineet:

But I think it’s actually conservative, right, I think we’ll likely do a lot better than hitting a billion dollars by end of the year. And the most important thing is that we know and we have a very solid team now, that is what gives me a lot of confidence. When I see the progress that is happening in technology or in sourcing or in operations, you know, everybody is busy, we have 20 warehouses now and the team is all aligned to build 200 more warehouses this quarter.

And we know that the demand is there, right, and majority of these 80 percent will be the existing cities that we’re in. We’re still densfying significantly Jaipur, we still only scratch the surface over there, there’s lot more that we can and we would do in all the cities. So I think now we have the capital also, I think we could not grow this faster in the beginning because we wanted to be very conservative on the longitivity. But you’ve seen that like we’ve been aggressive enough but not foolish in terms of burning all the money.

But this is the right time for us to be very aggressive in making the right kinds of investment to really -- and I think the consumers are only going to get happier so we’ve also set a goal that we’ll take our NPS or customer satisfaction very high and when we build the right kind of operational infrastructure it automatically results in much higher customer satisfaction, they get much better guarantees on deliveries, much better quality, much better everything. So that is where this quarter’s full focus will be and I’m very confident that we’ll in terms of growth what I’ve already seen in July and what will happen once we have this operational but I’ve got tremendous support from her.

But most importantly what we really decided right in the beginning, forget about DealShare, but we want to make a difference, we want to take on a hard problem and solve and if five years later one thing that I want to be really proud of is how much of a difference we’ve really created. That’s the only thing, that’s the only thing that really matters to us whether we become 100 or become zero I think it is most important that we’ve done something that or built something that we’re really proud of.

Medda:

Yeah, I think this last part I would touch upon that failure is not an option is still the thought on our mind. Now essentially we have scaled really well, we have gone and all of that but like Vineet said we have taken on some personal objectives to create a difference in the ecosystem, in the Indian economy as such. So like some of the early things that we discussed is that we will create a consumer internet giant which is profitable for the first time in the country.

Now obviously that is on top of our mind that it is still not profitable and nobody has been able to do it and can we be the ones who will basically make a profitable consumer internet company in the country and still a giant and not a small one, not a niche one. So similarly the other thing that we keep on discussing is that will the mass consumer think of DealShare as the messiah because that is what is solving their problem and basically their affordability and their accessibility to different good things of life are there.

So we want to improve their living standards, now these are things which really bother us because when we leave some cushiony jobs or our career path in the corporate world or we give our family and us hardships these are for bigger causes, not for just scale from becoming one to one billion dollar and then billion dollar TLBs I think that will any course happen but our goals are much bigger than just increasing the TLB.

Vineet:

So we also talk to a lot of startup founders and you’ll actually find much higher quality startup founders in smaller cities also. You know, in Jaipur I met with founders working with the incubators, unfortunately they did not have access to capital. But they’re really going deep and trying to identify problem solve and I just tell them that India is full of problems and there are big problems.

You just go talk to people, you go visit villages, you go visit smaller towns and meet all the mass population you’ll find like dozens of problems that are very, very important that you can build technology and solve. Unfortunately what we’re continuing to see, what we also had the thesis that the first 10-12 years was everything about I want to build Amazon of India, I want to build Uber of India and everything. And that still continues, right, massive amounts of money is being poured in now that I want to build whatever is now latest popular in China, right, you know, before it was reseller, now it is the CGB part and I don’t really understand the thesis behind either from the founders or the investors perspective to be very frank.

Why does anybody think even now that somebody will become successful in US or China will really work out in India. So I think we’ve really stayed away from that, you know, while there are all the elements of Costco, D-Mart or Pinduoduo you need to really research and learn but then you have to reach your customers day in and day out, talk to them, even today we talked to dozens of our customers on a daily basis. We’re admins on our Whatsapp groups, customers really call us directly and like that is the best part of my day, basically talking to them and learning about new challenges and problems.

I don’t know how many startup founders really do that and that is what I tell everybody that if you’re really connected highly with your TG, with your people on a daily basis and understand the problem and focus on solving success will automatically come. I don’t see why not, right, India is like hungry for, you know, people are hungry for somebody to come in and solve their problems rather than another global model on them.

Tarun:

I remember when -- again this is going back I think for over 2017-18 when we had visited you all in Jaipur for the first time, I remember every few minutes Vineet you used to keep getting a call and I used to keep asking you who and you’re like I’m the admin of this Whatsapp group so the customer keeps calling me and that’s how I sort of keep a pulse of what customers are asking for. I also remember you guys were fairly active and also actually doing door to door deliveries in the early days and going and meeting your customers and we’ve even been fortunate to accompany you all on some of those delivery hours and actually meet your customers.

So it’s actually very good to see how you guys have stayed grounded, stayed in touch with the customer, never lost sight of what they want and actually solving for their day to dayneed, which is giving them affordable products and creating some fun experience along the way.

Vineet:

Yes, I mean right now all of our leadership now is doing that, that was the biggest theme that came out of our leadership sync up also that x hours every month people are going to spend doing deliveries, talking, meeting with customers, being the call center agent and so on. So I think and I really appreciate how people are really excited about doing that and they come back and they’re really excited about sharing their experiences and it’s just beautiful.

Tarun:

One last question I think then we can maybe we’ll move to the next segment of this. So you spoke about Jaipur, Vineet, and a lot of -- obviously Jaipur continues to be a big market for you all but you’re now in several other dozen cities as well. Just in terms of penetration within Jaipur, right, and if you just take that as an example to kind of highlight the depth of the market and sort of where you all are today in terms of penetration. How many households would be ordering groceries every month in Jaipur, what percentage of those households would have transacted ever with DealShare, how many of them are transacting regularly with DealShare now. Just so give me a sense of penetration in some of these smaller cities of these e-commerce services.

Medda:

I’ll give some big numbers and that will explain what our penetration is. So I think the app is already installed with more than 50 percent of households, more than 50 percent of Jaipur households will have DealShare app installed. And if I even have to look at a monthly ordering base so all our estimates show that around 25 percent of households order once in a month at least in the city of Jaipur. So Jaipur has like 10 lakh households and we get around 2.5 lakh unique consumers now from the city of Jaipur. Now that is the kind of penetration this model can reach. No other e-commerce player till date has spoken about that kind of densification.

Vineet:

But this is still getting better month on month, right, I think in a year from now I expect us to reach with the more operational work that we’re doing and setting up more spokes and warehouses we want to target like getting to 50 percent and people ordering 5-6 maybe more times a month from us across these households, across this TG. We want to be very deep and we want to be the biggest consumer brand for them, I think that is really our goal that how can we become the biggest consumer brand for the mass market population?

Medda:

Just one last thing on this, so the latest research I think for this round the research happened in Jaipur and this was on an external base, not on our own base and people were asked as to which are the e-commerce models that they know. So DealShare was like here and then there were the rest which are somewhere down the line maybe one fifth, one tenth and so on. Some of the big names that you hear today they did not even feature on consumers’ voices.

Tarun:

Minds.

Medda:

So that’s how it is.

Tarun:

Outstanding, man. On that note I think we might be out of time but I think it’s probably the right place to stop because I think at the end of the day both as an investor who backed you all early and more importantly as founders that’s the one thing that really, really sort of is gratifying which is the consumer segment that you decided to focus on if they’re saying that top of mind recall in terms of e-commerce apps and DealShare ranks on top of that list for them that’s probably the most important take away from this whole thing.

So on that note thank you so much guys, really, really grateful. I know there’s a lot going on. If you’re adding 200 warehouses this month then or this quarter then I really, really appreciate you guys taking out the time and sharing the story. So thank you so much for doing this and I know you guys are just getting started. So goodluck, for the next several years as you continue to build this out into a large profitable consumer internet company which I know is your dream.

Vineet:

Thank you so much and I just want to call out one thing, right, it has been a extreme pleasure to work with you and Avnish and the whole Matrix team. I remember right from the beginning in terms of really focusing on building the business that came from the Matrix team and also Avnish and not really go after like just round to round and increase valuation and get more funding and somehow show numbers which I still see many other early-stage funds really go after. I don’t want to take any names, but I think it has been really like truly exciting and we’re very happy to sort of work on that. If it was some other fund just pushing us to show numbers and grow without any focus on unit economics, I don’t think we would have made it.

Medda:

Yeah. I think you guys have complimented.

Vineet:

I think the early-stage partner plays a very vital role, I feel plays very vital role in terms of whether you will be able to build a business or not and where the focus really is. So thank you, thank you so much for that and also convey my thanks to Avnish.

Tarun:

Absolutely. Guys, I think you are being kind. The reality is the reason we backed you is because you guys were already thinking about all these things the right way. We from our side share this with everybody, there are few people who take that advice and stay true to it so I think full credit to you. I don’t think we deserve too much credit for that, it’s honestly you guys and I know it wasn’t always tempting and easy to sort of do some of the short-term things but you guys have always stayed true to building something long term. So, congratulations again and thank you so much. Very grateful for the partnership.

Vineet:

Thanks.

Medda:

Thanks a lot.

Tarun:

Great. Okay, guys, very quickly -- so we’ll quickly move to -- this will barely take another 2-3 minutes. So we’re trying to also create this smaller segment which is fast five questions where this will go out as separate things on social media or whatever where we just want to -- I’ll ask you quick pointed five questions and either one or both of you maybe in just quick 15-20 seconds or maybe 30 seconds whatever it is share your answer to it. It won’t be part of the core episode but we’ll release this, you know, maybe one question at a time on social media just to drive more awareness about DealShare.

So I’ll start with the first question, here goes, it’s a little bit like rapid fire round so keep the answers crisp. If you weren’t currently building DealShare what would you be pursuing and why?

Medda:

Yeah. I think I would be still pursuing what I’m doing today because this is the goal that I have made as I’ve made this as the goal for my life. So I think this is the one thing that we’ll keep on doing.

Vineet:

If I was not building DealShare I would have gone much deeper into the AI space, right, I mean that is one area and maybe especially for education, right, that’s one place that I really feel there’s a lot of potential in terms of really changing the way things are currently and how things especially for kids be a lot better.

Tarun:

Great. Your biggest learning while maneuvering a crisis or any experience maybe in the last year or two or even before that that has truly left an impression on you and shaped you into what you are today?

Medda:

I think the phase 1 Covid was the biggest crisis that we basically maneuvered through and what we learnt is to keep cool, so the peace of mind is extremely important, your mind needs to be extremely cool, you need to be thinking as to what is the next step rather than getting panicked because there were many situations where we could have panicked but then we did not do that and I think that was the biggest learning.

Vineet:

I think from the business standpoint definitely but on a personal front I think the second wave was I think there was just too much that we realized about ourselves and also the families, right, in terms of how -- so I think the second wave was definitely a life-changing event for me.

Tarun:

As founders you always have way more to do than you have hours in the day. What’s the personal productivity hack that you use to stay on top of everything?

Medda:

I think very important is to prioritize because you will have thousands of things to do so every minute in my mind I’m just prioritizing what would give the biggest benefit and that helps in driving extreme productivity.

Tarun:

What about you, Vineet?

Vineet:

So I try to keep my calendar as free as possible so unlike others I try to not block it and only if something is really important and have weekly and monthly rhythm and daily rhythm also. But I try to spend a lot more time really on the problem solving either with people or by myself. So and that really is a lot of fun for me in this business. And you have to make the calculated bets over here, what are the risks you’re willing to take and what is it that you feel you’re going to deliver the biggest impact on.

Tarun:

So I think for me the biggest takeaway, Medda, for you is constant reprioritization which a lot of people don’t keep doing and I think if you’re doing it in every moment you’re constantly forcing yourself to focus on the 20 percent tasks that will give you the 80 percent outcome. And for you, Vineet, you’re saying is try and say no to more meetings than accepting everything the comes upon your calendar so that you are creating bandwidths for yourself to focus on the most important things.

Vineet:

Yes. Absolutely.

Tarun:

How do you make a decision, maybe I’m sure there are very tough calls you had to take along the way in the last three years. What’s the framework you use when there is a tough decision that needs to be made?

Medda:

For me it has always been the end goal which drives which decision to take, there are many tough situations that we faced on the professional front, on the personal front when you are on this kind of a journey. So ultimately the end goal and with the bigger outcomes. So the bigger outcome is always my end goal and how to reach there, that basically is the right factor for the decision.

Vineet:

I think for me there are two parts, right, so one is where there is sufficient data or you can pull in sufficient data to build conviction behind the decision you want to take across the options. Right, so wherever that is possible I push really hard to get that data. But it is unfortunately not possible all the time and sometimes you have to just go by the gut. I still go by the gut and take a firm decision so that everybody can be aligned and there is no confusion. And, yes, a few times you will not be right and you’ll learn from it and you’ll get better and better over a period of time. But what I’ve realized is it’s very important to take quick and firm decision rather than spend too much time and be indecisive.

Tarun:

When you hire and both of you spoke a lot about the team that you’ve built especially in the last 12 maybe 18 months. What’s the one trait you look for?

Vineet:

So the one trait that I look for and whether it is at any levels, right, whether it is a co founder level or whether it is a CXO or whether it is a very juniormost executive I think I really look for trust and bond, right, whether this is the person that I can really work for long and whether we can build a very strong bond and trust. You know, obviously people are really smart, they’ve got very good profiles, you know, they will learn to do things but that trust and bond has to be there right from the beginning.

Medda:

Now I think added to that what I look at is basically deep passion in what he or she is trying to do because I believe that if there is passion the person would definitely be successful because success is driven by passion, there is nothing else that I have seen apart from obviously this trust and bond that is very important because without trust nothing can work out. So these are the two things that we look at primarily.

Tarun:

Okay, last question, and this is something which I just thought of so if you need a minute or two to think about it that’s fine. I’m borrowing this from another podcast that I recently heard where the interviewer asks his audience you’re driving on a highway, there’s a billboard and you’ve a choice to write any four, five, six words on that billboard which is your mantra, your advice, something that you live by, what would you want to put on that billboard for you to tell the world?

Vineet:

Now I would just say that come join DealShare, right.

Tarun:

Well done. Well done.

Vineet:

We need everybody and we need lot of support from people and I think it is a really exciting rocketship journey, right, so I can really promise that people will have a lot of fun over here.

Tarun:

I love founders who don’t leave any opportunity to plug their -- especially with all the talent wars that are going on.

Medda:

Correct. I think I would just say what came top of my mind, so I would say that stay true stay happy and that is the biggest and most important thing that I would like to say to the world.

Tarun:

Excellent. Great. This is lovely, guys. Thank you so much.

Salonie:

Thanks for tuning in. For more Matrix Moments episodes, you can head to www.matrixpartners.in/blog. You can also follow us on Twitter, LinkedIn, and YouTube for more updates.