Stanza Living: transforming the student housing sector

Salonie: Hi, and welcome to Matrix Moments. This is Salonie. And today’s episode features Anindya Dutta and Sandeep Dalmia, Co-Founders of Stanza Living.

Stanza Living is one of India’s largest student housing networks and is essentially a tech-enabled co-living concept, which re-imagines high quality accommodation for students in India. Stanza’s presence currently spans across to tier I and II cities, and goes beyond the traditional offerings and provide students with additional services such as Stanza Springboard which focuses on providing career enhancement opportunities, and Stanza Social, a yearlong community engagement for events as well as exclusive discounted access to a curated list of restaurants, brands, and experiences for students.

In conversation with them today is Gourav Bhattacharya, Director at Matrix Partners India, and also the investment lead for Stanza Living. Gourav looks over multiple sectors for Matrix among which real estate tech is one.

Gourav: Hi, guys, welcome to Matrix Moments. My name is Gourav. I work at Matrix. And today with I am with Anindya and Sandeep founders of Stanza Living. Stanza is going after a massive market which is student housing and disrupting it using technology. Anindya and Sandeep, thank you so much for being with us today.

To get started, I think it would be fantastic if you can tell us a little bit about your personal backgrounds. How that helped you start Stanza? And if there is anything else that you guys wish you would have done before you started Stanza that could have prepared you for this journey?

Sandeep: Thank you, Gourav. Pleasure being here. So I am Sandeep. I did majority of my professional life before Stanza in a consulting company called Boston Consulting Group. Spent six years there. So I believe that that experience was actually quite helpful in what I have done over the last two years at Stanza and building Stanza with Anindya here. So I think that the first and foremost that comes to my mind is actually working with people. So, BCG gave me an opportunity to actually work with a variety of people across different continents and learn from those experiences.

So I think I have been able to actually figure out how to drive people at different point of time while collocated, not collocated with them, which was actually quite fundamental given the physical nature of our business people are quite diverse and we are now in around 10 cities, so that was quite core to my role at Stanza right now.

And I think the second thing I would say has actually been problem solving. So, rather than being very skill set specific, I think what I have learnt at BCG is to break down problems into pieces, which has again helped in this business because I don’t come from a background where I have done housing or real estate in the past. So, learning a new sector very very fast, understanding different parts of the puzzle, and then breaking them down into pieces which can actually be solved. Getting to the root cause is something which has been quite I think helpful, both across various sectors and various regions in my past life that was something which I think was – which I was able to translate and bring here.

What I think I could have done more before Stanza, probably worked at another startup or a place where I would had to take a lot of decisions on my own. And then, live with those decisions whether they worked or not worked which is something that did not get an opportunity at consulting. There you help large companies make fundamental changes, but you don’t take decisions which are with and you don’t own the outcome of those decisions per se.

Gourav: Got it. Okay. Super helpful. Anindya, what about you?

Anindya: Great. Thanks Sandeep. Thanks Gourav for having us here today. So Sandeep and I met at business school in IIM, Ahmedabad. And Gourav, you were our senior back in the day as well. Post IIM, I went to Goldman for three years and then spent some time with Oaktree Capital in real estate private equity. And both Goldman and Oaktree traditionally have been large owners of student housing businesses. So I think that’s the context where I personally got kind of a firsthand look into this space and sector particularly in the way it’s setup in the Western world. And I think that’s where the idea came from. And that’s when Sandeep and I started talking about student housing has potential in India. It’s a massive market as we mentioned. And it’s an exciting space to be in because the consumer set is super exciting and gives an opportunity do multiple things.

I think obviously having had experience in the sector was help. I had seen that space very closely and analyzed it from multiple angles. And that kind of learning we brought on to Stanza. And I think one of our key differentiators has been to be able to use this learning as a company to kind of help grow this business here today.

I think one of the big things which both investment banking first I think private equity taught me, was ability to think through risk and risk management. And I think that’s been one of the key things which I think I always approached every decision from a risk lens. And I think that’s been super helpful at least for me to think through scale our profitability and all the sort of key decisions which every founder grapples with.

The other thing I would say is that I think private equity particularly taught me to be very efficient; 80:20, get the 80 right, the 20 will fall in place. And so, I have been very able to focus on the most important things at a point of time and take calls on that. And then I will not probably spend as much time thinking about the remaining pieces of the puzzle. So, yes, I think those are things which I think definitely helped in terms of the way we thought about or when you think about Stanza here today.

Honestly, unlike Sandeep, I have always planned my life very diligently. So, I wouldn’t say I would have done something differently before starting Stanza. I think the time was right. The partner selection didn’t have to happen because organically when both of us felt this was the right time, I wouldn’t do business with anyone but Sandeep. Once that clicked, I think it was important that we take the plunge and here we are here today.

Gourav: Fantastic. So one question that I had is that student housing is a real sector. It’s real money. It’s an existing spend. And this is unlike some of the other early stage tech companies that we see that are incremental spend. What made you pick this sector?

Anindya: Yes, so I just said obviously we had a lot of context going into the space. But more importantly and I touched upon it earlier, we realized it is a very exciting consumer segment we are going after the students. And we have learnt from other startups which had kind of had early successes in this country. Students had to be their most successful cohort. And the ability to create a sticky business like housing where consumer stickiness is almost a given and use that to then think about what else can we do to this consumer base almost a platform like Play sounded super exciting to us.

So I think it straddles both worlds. There is a real traditional economy lens to what we do which is it’s backed by fundamental brick and mortar. But at the end of the day, the consumer base is exciting. It is very digitally savvy, very social media – engaged in social media, multi other - adoption of technology is super super high. And so, we felt that was an exciting lens as well.

So combine the two straddling both worlds was exciting. Now as I said Sandeep had done a ton of work in technology space. I had done a ton of work in real estate space. It does seem the right kind of marrying of both skill sets and knowledge in this space. I think that's what made sense.

Sandeep: And also I remember – I mean while Anindya was talking, I was thinking. When we started, we both were debating a lot about this sector. And one of things that always came was that there was a real problem which we had seen, which we had ourselves faced, our families had faced. And there was just discussion once where Anindya narrated a story about how his sister faced a lot of issues almost 20 years back. And then someone in my family was facing a similar issue just when we were starting. So, it almost looked like that the sector had not changed. So there was definite a real problem which existed.

And then, obviously given we love analysis et cetera, figuring out, we saw that there was definite opportunity to make real money in this business. And the problem was large enough to become an extremely exciting business. So, after this I think it was more about getting into it and then solving it. And there was no debate in our minds on doing this.

Gourav: So, I will takeoff on technology and I know it’s very close to your heart, Sandeep. How important is technology to your business?

Sandeep: I feel that this is something which is very core to what we are doing. Our focus - and from day one,Anindya and I have talked about it, we think we are trying to solve the core issues of the business through technology than the front facing at all points of time. I mean there are three lens through which we look at technology in this business. So it has to ideally be in efficiency, customer experience or scalability. And these three things we believe will define how big and how large this business will become.

Now I will give you an example. So, basically this business has a large operational angle to it, and food cost is one of the largest costs that we have on our plate. Now making it more and more efficient through technology is something which we focus on. And food wastage which is typical - food wastage industry is pretty large. And for us, it is less than 10 to 5% in the business. And purely that comes from using technology at every layer, tracking everything, and figuring out where are we losing more and more.

Similarly at the customer experience front, student attendance is big part of what we do. Student safety is core of student housing. And we’ve been able to solve this problem where every student can mark attendance sitting on their bed and we know who the person is. So that’s the way we think about how we want to solve this business through technology. It allows us to consistently deliver experience at scale across cities, across regions.

Sandeep: Anindya, if you want to add something?

Anindya: Yes. So I think Sandeep hit the nail on the head when we said that for us technology is not necessarily about having consumer facing tech solution. I mean that’s a part of a solution we have. But for us, it was always about are we solving real problems of the business which was around its operation intensity, about our breakfast scale because that’s kind of key differentiators. No one else can then solve those problems if you solve right.

And as Sandeep said there is a big difference between what we do and let’s say adjacent business like hospitality is that it’s the same consumer being served the same set of services they do. So there is some degree of algorithmization which is possible. So that’s when – it is a first principle based kind of conservation which we had. Let’s figure out what are the things we need to solve for. How many of this is actually replicable and can we then use some technology to drive that.

So I think it was very -we had none of what we do from a tech perspective is off the shelf or can be off the shelf. It’s problem solving from first principles basis and then bringing it out internally.

Gourav: Got it, okay. And Anindya I want to go back to you speaking about this being a real economy company or the real business which obviously meant there were existing people and incumbents, right?

Anindya: Yes.

Gourav: How do you guys think about creating your edge?

Anindya: Yes. So I think this follows on from the previous question. So I think the ability, as Sandeep said, to be scaled to have high quality consumer experience and to be kind of operationally profitable is this impossible trifacta which everyone is going for. And we think technology is the Holy Grail which answers that. So there is a lot of tech we have adopted to help us in our business to be able solve for supply acquisition and predicting demand to be able to kind of make sure that the sales team is able to kind of onboard 20, 30, 40, 50,000 students in a month if required to then supply millions of meals on a daily basis to all the consumers and not lose money because of inventory leakages, pilferage et cetera et cetera.

So all of that when we think about the value chain right from a building being on boarded to the consumer being on boarded, till the consumer leaves us, you solve every part of that action through technology has been a key differentiator for us versus everybody else who is doing this at this point of time.

I think a lot of people who are our competitors are solving parts of the puzzle, but they are generally taken kind of strategic approach to using technology instead let’s understand what the value chain here is and let’s see which parts of the value chain we can actually technology in. So tech has been a key differentiator for us or at least we are able to use tech and think through tech-led solutions has been kind of the key differentiator for us.

I think that’s why I said this is a real economy business, but if you can bring in the right tech-led disruption, every real economy business can become suddenly incrementally valuable. And I think that’s where we are focusing on.

Gourav: Sandeep, anything to add on that?

Sandeep: The only thing I would say is we have a cluster driven approach which allows us to then scale up pretty fast. And in this business, the more you scale, the better it is in terms of your ability to deliver that experience and services to the consumer.

If you spread too thin yourself, it becomes very difficult to give the kind of services we aspire to. And I think from day one onwards, we had this cluster driven approach which we have been able to carry forward for now almost two years. And each of those clusters are so large that it allows us to then give end-to-end services to our consumers. So I think the combination of cluster driven approach which has allowed us to scale fast and technology is something which has been our focus in our ability to fight against the incumbents in this space.

Gourav: Guys we know it’s very hard to build a company around people. So, would love to hear little bit about your recruitment philosophy and what do you look for?

Anindya: Yes, it’s an interesting question because both Sandeep and I have very divergent views on hiring. But I think that brings the best of the both worlds as well.

Sandeep: I think we as people are diverse itself

Anindya: We are chalk and cheese in many ways. Look, at the end of the day, the fact that we are solving a real economy problem and there are real world issues to kind of take care of and you want to build scale means that you are almost trying to achieving the impossible. Very often it seems to be achieving impossible. But there is always a way out. And I think that’s why we like people who are problem solver. We like the people who have the ability to kind of given an ambiguity, given a challenge find a way around it and solve for it at any point of time. So whether it is the use of people, system, processes, technology whatever. But people who have the innate ability to never say – take no for an answer and give no for an answer is very important. So people who I think who are problem solver, agree to deal with ambiguity. First principles driven kind of thinking to every problem are the kind of people we are looking for.

In many ways we use this more internally looking for alphas. And the more alphas we bring into the ecosystem, the more robust the internally system becomes. And I think that’s what is key to the way we think about every hiring decision, every person we bring on board. Yes, I that’s it from my side.

Sandeep: Yes, I think persistence has been the key focus. People having tried extremely challenging in their past life and coming out of it successful and successful doesn’t matter per se, but having come out of it, learnt something which they are now ready to take on other challenge, ready to say what we aspire to do what we plan to do is not going to easy, something which we acknowledge and we are very upfront about in our discussions with people. And people who get excited about the challenge and excited about what we want to build and they are as aspirational about building something as much is something what is very important for us as a company.

Also, I think we care if people are collaborative in nature because ours is a business where no function in isolation. I think most businesses cannot operate in isolation, but still in our business, I think the consumer experience is a true outcome of coordination between many functions whether it is real estate, whether it is transformation, sales and then operations that’s how our company works. So I think it is something fundamental where people are open to working with different sets of people. And as a company, we have people who are 20 – 25 years of experienced to people who are freshers from college. So having that respect for each other is very critical given the diverse experience nature that we have here. So this is something another thing which we - I mean not a hard metric but something which we try and evaluate in our discussion with people.

Anindya: Just to add to that, I think the one point which is important is that we think about this space as it stands today. It’s a massive market, Gourav, as you mentioned earlier on. I think we have been lucky enough to be able to attract forms of capital, the right pockets of capital including Matrix. So we feel like two of the three key pillars to building great business is solved for, which is capital and market size. The third one is execution. And ideally, we are looking people who are strong at execution on a regular basis. And very often that does not necessarily come from pedigree. It does come from pedigree to some extent, but not necessarily come very from where you went to school at or who are your friends et cetera et cetera, but comes from stories of failure or stories of success in your personal life. So we are looking for people who are kind of able to kind of reach into that top point of their life and kind of bring something to the table and help solve because there is a very real path this company is on and a very clearly evident endpoint which we can get to. It’s only for us to keep executing on a daily basis. You are not dependent any market level kind of forces to guide us in one way of the other. So this comes out of people are able to execute and that’s important.

Gourav: Fantastic. Anindya, you spoke about path. And I have been lucky to have known you for a while. I know the ambition is not restricted to India. So, what is the ambition and when do you guys go global?

Anindya: Yes. So, obviously, I think at this point the opportunity in India is massive. And we continue to kind of work towards solving for that. We are in 10 cities, but the Indian education market is a story of at least 25 large education hubs, so there are 15 more markets to go into. But yes, we will look at going international. I think the cultural context from consumer perspective is very relevant not just in India but also another parts of Asia including China where there is a massive opportunity. And in fact, the opportunity to create a consumer-led student living business actually doesn’t exist at this point of time in China. So in many ways, we could take this product to other markets and in Asia definitely. And more and more we are talking to meeting people from the west, who are saying that even real estate led kind of vanilla school housing business is becoming very consumer led slowly and steadily. So the need for an operator who is able to kind of think about the consumer and consumer is becoming more and more relevant in the western world. So, this definitely is global problem. And globally this is at last round - $200 billion market size which is a significantly large size.

So we would definitely go international. That is no doubt on the radar. I think the immediate short-term need is to continue to kind of scale up our India business. But in the next 12 months, I am sure we will be making some announcements going into some additional geographies for sure.

Gourav: Last question. If you were to give some advice to the Sandeep and Anindya of 2 or 3 years ago, someone just looking to start a company, trying to disrupt real economy sector, what advice would you give them?

Sandeep: For me, I would say figure out the right partner. I think that is one of the most important things and that has been fundamental for me. I hope it is for Anindya too. And, I think that is important because there will be not just times when people will doubt what you are doing, there will be challenges that you face in the business itself. And no matter how strong your family, friend support ecosystem is I think the partner is the only the person who you can discuss everything, who understands what you are going through and actually help you solve through it. And so I think that is the most important thing.

And the second advice I would have is don’t try to solve everything before you start. You will not be able to solve. And the reason you are getting into it is to solve. So if the larger picture - and I would say Anindya talked about 80:20. If you have 50, 60% answer or a vision towards the solution, I think that’s more than enough for you to get into it as long as you have the right partner and you broadly know the path forward, you will keep tweaking the answer to get to the right path.

So I would say for me these are just the two things that you should think about and then take the plunge into it. It’s a very exciting journey. For anything, I wouldn’t change I have done over two years. I would just continue to do what I am doing today.

Gourav: Anindya, anything from you?

Anindya: Yes, I think the one thing which I would tell the Anindya of 2017 - obviously I think the point just Sandeep made a very very relevant what is learning empathy. Empathy I think is a skill which I struggled with and still I am coming to terms with. I expect everyone to or I used to expect everyone to perform at the same level at which Sandeep and I are doing at this point of time, but you got to realize that everyone have their own needs, wants, limitations, which don’t necessarily align at every point of time with you. But they still align with the overall vision of where we are going. So important to be emphatic to people around you. And that’s how you build a very strong loyal ecosystem of people who then align with you in the business. I think for me that’s one of the big change in terms of the importance of empathy which I have never understood historically. I am not able to understand. I think that’s one thing which I would say for any founder who is scaling up today that at least - I know all the founders who are in the Matrix portfolio and other portfolios are all alphas by themselves, but the ability to be emphatic just makes you a better founder, better leader. And I think that’s very important as the journey matures and gets better.

Gourav: Fantastic guys. Thank you so much for doing this and thank you so much for your time today.

Anindya: Thank you, Gourav. We appreciate it.

Sandeep: Thanks, Gourav. Thanks Matrix for being a partner.

Anindya: Yes.

Gourav: Thanks guys.

Salonie:Thank you for listening. And you can find the transcribed version of this podcast on matrixpartners.in. You can also follow us onTwitterandLinkedInfor more updates.