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The ₹1,000 Crore Business Blueprint! | India's Leading VC on Building, Funding & Scaling Brands — Transcript

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0:10If you're an early stage founder in
0:11India who's competing with a thousand
0:12crore brand, this episode is for you. If
0:15you're an early stage founder and you
0:16don't want to get rejected by 20
0:18investors, this episode [music] is for
0:20you. And most importantly, if you're an
0:22early stage founder who wants to raise
0:23money with zero revenue, this episode is
0:26for you. People today, India is
0:27witnessing one of the greatest windows
0:29of opportunity, especially in the
0:31direct-to-consumer space.
0:32>> are in a new world and this new world is
0:34creating new brands, new products, new
0:36consumers.
0:37>> Zara, H&M, Uniqlo, the usual suspects.
0:39But, thousands of brands will be created
0:41over the next 10 years.
0:42>> Legacy categories are the ones that have
0:45the most amount [music]
0:46of disruption available today.
0:48>> There are three paradigm shifts in the
0:50market that could help you build a
0:51hundred crore brand today. Number one,
0:53our generation is experiencing something
0:54called generational baggage, where the
0:56[music] new generation does not want to
0:58consume anything of the previous
0:59generation. So, while our parents used a
1:01VIP, we use [music] a Mokobara. While
1:04they had Kisan, we have Vahdam. While
1:06they had Kurl-On mattress, we move to
1:08The Sleep Company. And [music] you know
1:09what this means? For every single
1:11category with a thousand crore brand,
1:13you can build a hundred crore new-age
1:16brand. And that too, a brand that does
1:18the exact same thing but better. Number
1:20two, as India's per capita income goes
1:23from $2,800 to $5,000 in the next five
1:26years, India's consumption is going to
1:27explode and we will see brands in
1:29categories that you've never seen
1:31before. A classic example of the same is
1:33Farmley, [music] which built a brand in
1:34the makhana category. And lastly, just
1:36like Amazon and Nykaa gave rise to giant
1:38brands like Boat, Mama Earth [music] and
1:40Dot & Key, now with quick commerce and
1:42social commerce, India is about to see
1:44an explosion of another generation of
1:46brands. But, the problem is today it is
1:49very easy to start a brand, but it is
1:51almost impossible to scale one. [music]
1:52Why? Because founders make the most
1:54basic mistakes in packaging, pricing,
1:57pitching, category selection and most
1:59importantly in understanding consumer
2:01behavior. So, we flew all the way to
2:03Singapore to meet Deepak Shah D'Souza,
2:05the legendary investor who backed Veba,
2:08Epigamia, Sula, and Go Zero. He is the
2:10managing director of DSG Consumer
2:12Partners. And in this episode, we went
2:14super deep to understand what are the
2:15biggest opportunities emerging in India,
2:18how does DSG choose founders to back,
2:20what separates a good founder from a
2:22great founder, and what are the most
2:23critical mistakes that [music] founders
2:25make while building a D2C brand. And
2:27just like last time, I am attaching a
2:28full-fledged workbook in the description
2:30so that you don't just listen, but
2:32actually apply the lessons that you
2:34learn from this podcast.
2:38Before we move on, I just want to take 1
2:40minute of your time to show you
2:41something amazing that Odoo has for
2:43entrepreneurs like you. If you're
2:44building a consumer brand today, one of
2:46the first things you need is a seamless
2:47way for customers to discover and buy
2:49our products online without getting
2:51buried in tech. That is exactly where
2:53Odoo comes in. Odoo e-commerce builder
2:55lets you launch your online store in no
2:57time. Their e-commerce configurator
2:59walks you through a few simple steps
3:01from defining your objective and color
3:02palette to setting up your store and
3:04product page structure. You need
3:06absolutely zero technical experience for
3:08all of
3:11and drop blocks, animations, font
3:13styles, background designs, and more.
3:15Once your store is live, adding products
3:17is super simple. All you have to do is
3:19enter the product name, price, and
3:21image, and it goes live. You can also
3:24add variants like size, colors, or
3:26styles. And as your catalog grows, Odoo
3:29helps organize everything with clean
3:31shop templates and easy filters. Odoo
3:33e-commerce also gives you upselling and
3:35cross-selling features, integrated AI
3:37for content writing, and SEO optimizer,
3:39and direct integration with social media
3:41and Google Merchant Center, all inside
3:43one platform. Odoo is more than just an
3:46e-commerce site. It's a suite of 70 plus
3:48applications to cover all your business
3:50needs. And the best part is you can get
3:52started with the first app for
3:53absolutely free. And as your business
3:55scales, you can access the full suite
3:57for just 580 rupees per user per month.
4:00So, if you're building a consumer brand,
4:01click the link in the description and
4:03get started with Odoo today.
4:05So, today I am very excited to talk to
4:07you because you have invested
4:10practically in all of the most
4:11fascinating consumer brands that I have
4:14experienced. Viba, GoZero, Bombay Sweet
4:17Shop, Epigamia.
4:19And the list is just amazing.
4:21>> You know, it's a pleasure to be here.
4:22Thank you for having me and it's nice
4:24that you're in Singapore
4:26and lets me do it in my sort of my home
4:28territory.
4:30I'm looking forward to this
4:30conversation.
4:31>> You have consistently said that the
4:34consumer brand revolution is the single
4:36biggest wealth creation opportunity in
4:38India. Why do you say so, sir?
4:39>> I think I said it's the single biggest
4:42wealth creation opportunity. What I said
4:43was there is a
4:46window over the next 20 years
4:49where a lot of new brands will be
4:50created because of the nature of
4:51consumer brands.
4:53Because of that nature,
4:56if brands are created, new businesses
4:57will start and therefore there's a
4:58wealth creating opportunity. So, they
5:00are the other way around. You know, I
5:01Are you a brand where people are willing
5:03to
5:04swap out, which means I need rice. If I
5:07don't get this brand, I'll buy another
5:09brand. Or are you a brand such that if I
5:11don't get it, I'll go somewhere else to
5:13buy it. There's a difference between a
5:14brand
5:16and a product. It changes with every
5:18generation and every era. And as media
5:21and distribution and awareness building
5:23becomes in many ways easier,
5:26it's much easier to launch a brand.
5:29And therefore you see more people try
5:31it, but it's still very hard to become
5:33relevant and stay relevant. So, not many
5:36brands will ever become a Coca-Cola or a
5:39Maggi or a Parachute. And I think that's
5:43where our job is, right? How do we
5:45create brands from scratch to take on
5:47the giants? That's challenge number one.
5:50If you survive, how do you scale? And if
5:52you scale, what do you need to do to
5:54continue to
5:56remain relevant? Knowing that
5:58every brand starts
6:01taking on the giants. In 20 years you'll
6:03become the giant if you're successful.
6:05Right? So, think of Sula. When I when
6:06when I invested in Sula, the wine
6:08industry did not exist. Sula today is
6:1160% of all wine consumed in India. It's
6:13public. It's ginormous. Everyone has
6:17seen the Sula sign. Everyone knows
6:18Rajeev Samant. But unfortunately, now
6:20Rajeev is
6:22the giant and there are many people
6:24nipping away. So, Rajeev's job compared
6:26to 27 years ago when I first met him,
6:29which was how do I create a brand, is
6:32how do I consistently keep my brand
6:35relevant. So, that's the typical
6:36journey. So, fortunately, I have Sula,
6:38which is sort of played out.
6:41Uh I often look at Sula as what went
6:43right, what went wrong.
6:45What we What can we still do to sort of
6:48keep it relevant? And then sort of that
6:50learning has transpired across the
6:51portfolio. We keep learning every day. I
6:54tell the DUSU team, the only thing that
6:56keeps us alive is constant change. Uh
7:00consumers are demanding.
7:02Um my kids, they do not buy any of the
7:05brands that I consume in general.
7:07I learn more from them because I I watch
7:10what they buy. I watch what they do of
7:14live shopping. You go to a TikTok or a
7:16Shopee and instead of browsing reels,
7:19you're browsing people sitting at home
7:21selling
7:22every product. And why a 17-year-old
7:25would want to buy hair clips online from
7:27someone sitting at home
7:30I've stopped asking why now because if
7:32you see a
7:33sort of a momentum and real numbers,
7:37you got to accept that consumers will
7:39evolve and how they behave will evolve.
7:41Because if you think about what you do
7:43and compare to what your parents did,
7:46uh it'll be very, very different on
7:47multiple dimensions.
7:49>> Sir, I think it's generational baggage.
7:51>> That's one aspect of it, right? One is
7:53generational. Secondly, is you cannot
7:54ignore the fact that technology is
7:56evolving.
7:56>> Yeah.
7:57>> Okay? And technology evolution has a
8:00large impact
8:01on what a consumer does or what a human
8:04does.
8:05Okay? I remember the first time I
8:06unboxed
8:08I just moved to in I moved to India in
8:102007.
8:11And a year later Apple launched the I
8:14the first ever iPhone, right? I was on a
8:16Blackberry or Nokia before that. And you
8:18open that box and you're like
8:20I couldn't use it for a week cuz I
8:22didn't know how to use it. This whole
8:23screen UI thing. And once you got used
8:26to it, it took me 4 weeks, you will
8:28never ever go back.
8:30Okay, and and that's what technology
8:32does. And then I think technology has
8:34been the single
8:36most important disruptor
8:38for consumer behavior and how brands
8:40interact because up till
8:43sort of recent times that technology
8:45made
8:46an audience of one possible, the only
8:48way a new brand
8:50could be created in I started in 2000 on
8:52the late 90s was
8:54newspaper, radio, print, billboards,
8:57pamphlets in a neighborhood. Otherwise,
8:59people won't know you exist, right? If
9:01you launch a brand
9:03how there was nothing else. Radio was a
9:05cheap, but not that cheap. TV was
9:07prohibitive. Newspapers were expensive,
9:09so you would pick a area. If you're in
9:11Bombay, you'd launch in Bombay. It's
9:12either word of mouth or literally
9:14pamphlets or sampling.
9:16Today, it's totally different.
9:18>> True. So, you're saying number one is
9:20it's getting easier to create awareness
9:22because of the new channels. Number two,
9:25because of the generational baggage,
9:26there's a huge scope to build new brands
9:28because this generation is not consuming
9:30what the previous generation consumed.
9:32>> Correct.
9:32>> And lastly, because of the emergence of
9:34highly accessible channels like TikTok,
9:36Instagram, and YouTube, it is becoming
9:38easier today to build a consumer brand.
9:40>> Yes.
9:40>> Mhm. Sir, is there a framework on how to
9:43build a brand? Because you know,
9:43yesterday you told me that in order to
9:46find great entrepreneurs, you must meet
9:48thousands, not hundreds.
9:50And since you've met so many
9:51entrepreneurs, who invested in so many
9:52entrepreneurs, and you invest at early
9:54stage,
9:55what exactly is the framework that
9:56they've all followed to build an iconic
9:59brand? For example, sir, Bombay Sweet
10:00Shop, it might not be like a 10,000
10:01crore company, but in Bombay, it's
10:03iconic. It's iconic. For example, today
10:06we got you TWG, but had you been in
10:07India, Bombay Sweet Shop would be the
10:09only only choice that we would make.
10:12>> I'm glad we are having the conversation.
10:13So, Yash and Sameer happened to be in
10:14Singapore. Bombay Sweet Shop was
10:16launched in on 1st February 2020. So,
10:21the brand is only
10:226 years old. And keep in mind, I the
10:25launch was at their first experiential
10:28outlet in Byculla.
10:3014 days before India shut down for
10:32COVID, huh? So, it was total chaos.
10:35Um and I happen to know Yash and Sameer
10:37for a decade before that. Uh they had
10:39just come back from New York. Uh they
10:41had gone to uh Cornell Hospitality
10:44School. Yash then worked at the Fairmont
10:46in Singapore.
10:47Uh Sameer worked with Danny Meyer
10:50at Eleven Madison, one of the most
10:51iconic restaurants in the world. And
10:53then when they came back to India, they
10:54said, "Let's build something which is
10:57modern but Indian.
10:59Uh
11:00They partnered with
11:01uh the late Chef Floyd Cardoz, who
11:04actually passed away sadly during COVID.
11:06And Floyd was working with Danny Meyer.
11:10And he said, "Let's go back to India and
11:11figure out what we do." Then they
11:12debated Western food, you know, hm let's
11:15bring something new to India. And Floyd
11:17said, "You know what we need to do? Take
11:18traditional Bombay recipes,
11:20reinterpret them to make them relevant
11:23to Indians today." So, that's the Bombay
11:25Canteen you see in in Lower Parel.
11:27>> Yeah.
11:28>> I think then they opened O Pedro.
11:30Uh then they opened Veronica. And
11:33Veronica was actually not planned,
11:34right? When when COVID happened, O Pedro
11:36had just opened. The kitchen was empty
11:39this Saturday.
11:40Sort of a delivery business making
11:41burgers. And they became so popular that
11:44COVID ended, the customers would walk in
11:46saying, "Where's my burger and where's
11:47my sandwich?" They said,
11:49So, then Veronica was started. And then
11:51they have Papa's, which is a very
11:53exclusive uh 12-seater restaurant which
11:55only opens 4 days a week. So, 48 people
11:58eat there a week. That's it.
11:59>> That's it.
12:00>> That's it. That is a restaurant.
12:02There's no menu. You sit down, the chef
12:04gives you what they want.
12:06Uh almost impossible to get a table. And
12:08I think over time they looked around
12:10saying, "How do we build a scalable
12:11business?" We They knew hospitality.
12:14Um the fact that Bombay Sweet Shop is 13
12:16years old is a testament to
12:19what they saw. And then they looked
12:20around and they said, "So, brands all
12:24opportunities to create a brand or a
12:25business comes from multiple
12:27opportunities." Let's set the framework,
12:29right? Of how a typical brand journey
12:31has never changed.
12:33Assuming you are launching a product,
12:35the first thing as a new brand is
12:37awareness. How does Ganesh even know I
12:40exist? In any category, doesn't matter.
12:43Awareness is number one.
12:45In the past, it was radio, TV, word of
12:47mouth, sampling. Today, you could be
12:49internet, you could be very
12:49hyper-specific cuz everyone's got a
12:51digital device. After awareness,
12:54Ganesh knows I exist. How does he try
12:56it?
12:57Does he have to go to a shop to buy it?
12:59Uh does he have to get into a car, take
13:01a bus?
13:02Uh then Amazon came, Flipkart came, you
13:04got it delivered.
13:06What hasn't changed is once Ganesh tries
13:08it,
13:10the real value of brand is if you keep
13:12repeats it. If he doesn't repeat,
13:14you're irrelevant.
13:16So, you need to get aware.
13:18You then need to be tried or that's a
13:20trial period. Then you have to have
13:22repeats.
13:23Once those three things work
13:26with the right unit economics,
13:28that's when you sit down and say, "I've
13:30got something.
13:31Can I make it scale?"
13:33It's very hard to get to number three.
13:35Number four is very, very hard. Most
13:37brands
13:38who launch will fail.
13:40And we can define what failure is. So,
13:42some people will say,
13:43"If I get to 100 crores is a failure."
13:45But to me, it's not. Okay, so
13:48uh but very few will get to 1,000 crores
13:51in the Indian context.
13:53>> Can you tell me what is the difference
13:54between a brand and just a collection of
13:57products with a label?
13:58>> A brand is a feeling. It's an
13:59association. It's intangible. It's very
14:03hard to identify what makes a brand a
14:06brand. I think the the way we test it is
14:08uh where they do a survey every year
14:11and they ask consumers,
14:14they give them a list of brands. You
14:16know, how many of these brands if it did
14:17not exist tomorrow,
14:20your life will change. You'll be very
14:21disappointed. And you'll say, you know,
14:23last report was 79% of the brands are
14:25irrelevant.
14:26Because and I don't know what's relevant
14:28to you because if you want to buy
14:30basmati rice and you go to Blinkit
14:33or buying atta, if Pillsbury is not
14:35there,
14:36you might buy Organic India, you might
14:39buy something else.
14:40>> Yeah.
14:41>> And many of the sort of quick commerce
14:42and e-commerce you guys are aware of
14:44that. That's why private label is
14:46becoming very important. If you look at
14:47the US market, which I would say is the
14:49most evolved and developed consumer
14:51goods market in the world,
14:53uh
14:54the barbell is becoming much more
14:55obvious.
14:57A lot of people are moving to private
14:58label. You trust the channel.
15:00You You trust Blinkit, you trust
15:02Flipkart. You know the products are
15:03good. The brand becomes less relevant.
15:06Or you're buying a brand because the
15:08brand stands for something.
15:12You need to be a brand that speaks to
15:14the consumer. You must stand for
15:15something. And we can go through
15:16examples. Like Sula
15:18stood for and still stands for a new
15:20India. When Rajeev launched Sula in
15:221998,
15:24Marathi boy,
15:25grew up in Bombay, got a full
15:27scholarship to go to Stanford,
15:30went to Stanford and worked at Oracle,
15:32uh then came back to India. His family's
15:34originally from Nashik.
15:36Um and he said, you know,
15:39"I really enjoyed my time in the US, but
15:41I think India's time has come.
15:42>> Yeah.
15:43>> I want to go back to India. I want to
15:44build Indian brands and make it very
15:47Indian." And for a long while, he was
15:50the poster child of what a new age
15:53Indian brand could look like in the
15:55non-tech world because his peer set,
15:57which was people who came back to India
15:59in the late '90s, early 2000s, almost
16:01everyone was building a tech company.
16:04And his background was engineering at
16:06Stanford. So, he was very much
16:10looked like a tech boy, but decided not
16:12to do tech. Um and he built Sula. And
16:15Sula was hard to build because it was a
16:18category at at which point in wine was
16:21not big in India.
16:23You cannot advertise alcohol.
16:26Okay, so Rajiv needed to build a
16:27community, a a a brand, a ethos, a
16:31And and he said, "Deepak, I'm going to
16:32play up to my strength. I'm very Indian.
16:34I've come back. I want to create a brand
16:38where the next generation of
16:40entrepreneurs can look up and say this
16:41is what India is capable of."
16:43It happened to be in the wine category
16:45and he stuck to that. But that's what he
16:47did, right? So when you speak to people
16:49over the last 20 years and when you ask
16:51them, "What does Sula mean to you?" You
16:52ask someone who's
16:54late 50s, early 60s, they said,
16:56"Revolutionary." Five or 10 years
16:57younger, they'll say, "The first glass
16:59of wine I ever had
17:01was Sula." You ask the younger kids
17:03today, "What is Sula?" Often before they
17:05say wine, "Amazing resort."
17:08Okay, so for them it's a hospitality
17:09angle, right? So he's he's managed to
17:12build a a brand that stands for new
17:14India. Okay, so
17:16that's what a brand is. It stands for
17:18more than people feel an attachment or a
17:20emotion to something.
17:22>> So you invest pre-revenue, sometimes
17:24even pre-product.
17:26What's your thesis? Like do you sense
17:29signals from the West and then see the
17:31emerging trends in India? What's your
17:33framework to assess the emergence of a
17:35category?
17:35>> We we look at the US, we look at Europe.
17:39Uh we look at what's playing out in
17:41Singapore.
17:42Uh we look at Japan, we look at China,
17:44we look at Korea. So we looked around
17:46the world. One could be
17:49there's nothing that in that category.
17:51Uh Epigamia, it was India's first Greek
17:54yogurt. That category did not exist. So
17:57Rohan said, "You know what?
17:59I think I don't understand why Greek
18:01yogurt is available everywhere else in
18:03the world, but it's not available in
18:04India. Many people thought we were
18:06crazy.
18:08You will not launch a yogurt brand in
18:09India when you have local giants like
18:12Mother Dairy and Amul and global giants
18:15like Danone and Nestle. So you have the
18:17big boys all over the place with crazy
18:19marketing dollars, how will you survive?
18:22Okay?
18:23So, we got to make tough calls like
18:25that. So, that's what we do. So, looking
18:26around does work.
18:28And with Yash and Sameer, they took the
18:30view that
18:31when around the world sort of sweets
18:34have become
18:35a premium and luxury product, why
18:37doesn't India have a very high-end
18:39premium? And that was the inception of
18:42Bombay Sweet Shop. And given how
18:44important sweets are both for
18:47self-consumption, religious festivals,
18:49and gifting, the question then became,
18:51why do all the shops from Kara, you
18:54know, from Delhi, Bangalore, Kolkata,
18:56Chennai, the sweets might be a little
18:58different, but they all look the same.
19:00>> Yeah.
19:01>> It's all fuddy-duddy. The packaging is
19:03fuddy-duddy. And going to Bridge Basi or
19:05Haldiram makes no difference. So, when
19:07they when they opened the first one in
19:092020, it was an experiment. Uh I don't
19:12know whether you've ever been to the
19:13first one in Byculla. It was a part
19:14cafe,
19:16sort of a open glass kitchen. You can
19:18see them making khoya and mithai. It was
19:20sort of a mini Willy Wonka sort of
19:22experience. Many people did not get to
19:24experience it in the early days because
19:27of COVID. And over the years, the
19:30products sort of have sort of matured.
19:33They now have sort of chikki bars,
19:36chocolate barks. Many of the products
19:38they do are signature dishes.
19:40Uh my favorite is they they do a
19:42chocolate kaju katli fresh product.
19:45Again, I I don't know what they call it
19:47exactly, but it's fantastic. And
19:50it's been
19:51accepted, right? It's a great product.
19:53They have six stores now. Uh
19:56So, last year Lighthouse Fund and DSGCP
19:59sort of invested $20 to roll out the
20:02brand, with the focus being on Bombay
20:04Sweet Shop.
20:05Let's try and build
20:08India's best
20:10premium, organized, branded
20:13sweet shop. So,
20:15taking Indian flavors, modernizing them,
20:18and making them more relevant to
20:20consumers today. Whether we succeed or
20:22not, we shall see. Early data is very
20:24exciting.
20:26But, you know, you you don't know till
20:27the end.
20:28>> So, as a consumer, I can say
20:30it will succeed for sure.
20:31>> What's your favorite product?
20:32>> My favorite product are the butter
20:34cookies.
20:35>> Butter cookies are very good.
20:36>> So, I have never tasted
20:38cookies better than Bombay Sweet Shop. I
20:40have had cookies in Paris, in US,
20:44everywhere.
20:45Everywhere I go, I first try cookies
20:47because they are my favorite products.
20:49>> Okay.
20:49>> Bombay Sweet Shop by far makes the best
20:52cookies, at least in the world, in my
20:54imagination.
20:55>> You you're talking about product, which
20:56is very important. So, product without
20:58product, there's no brand. So, it
21:00literally melts in your mouth. It's it's
21:01It's a quality product.
21:03That's why people complain it's
21:05relatively expensive.
21:06>> Yeah.
21:07>> And I always have debates with my
21:09friends, "Oh, Deepak, Bombay Sweet Shop
21:10is really expensive, or Suzette is very
21:12expensive, or Kitchen Garden is really
21:13expensive." I said, "You complain
21:15because it's in India."
21:17You're still buying you're you're you're
21:18you are walking into M&S in Lower Parel,
21:21buying a box butter cookies in a red
21:24box, made in Scotland,
21:26>> Yeah.
21:26>> at double the price, and that you're not
21:28complaining. So, it's imported. I'm
21:29like, "That is the worst excuse I've
21:31ever heard."
21:32>> Yeah.
21:32>> Okay. The good news is, over the last 20
21:35years, that's changed. When I started
21:36coming to India in 1998, and for a long
21:39period between '98 and I say what to say
21:412010,
21:43the perception still was that if
21:45anything is made abroad, whether it's
21:46Singapore or Paris or Tokyo or London or
21:49New York, it must be better.
21:50>> Mhm.
21:51>> I used to travel from London to Bombay
21:53every 6 weeks for work, and there hasn't
21:56been one trip where someone will not
21:57tell me,
21:58"Bring chocolates, bring diapers, bring
22:00tissue paper, bring
22:02ketchup, bring mayonnaise, because India
22:05may not be there, or if you get it, it's
22:07available at some
22:09shop through some parallel importer,
22:10it's expiring."
22:12Uh
22:13and I got really confused, right? As
22:14someone who is
22:17sort of ethnically Indian, but never
22:18grew up there, never went to school
22:20there.
22:21You have all India has
22:23almost every resource you need.
22:25Fantastic produce, great cocoa beans,
22:28great coffee beans. We have enough
22:30butter of the highest quality from the
22:32cows we have. It's just that
22:34India was going through a time where you
22:38had to feed 1.3 billion people. The you
22:40have sustenance is important. So most of
22:42the production was designed to keep
22:45price points low.
22:46>> Yeah.
22:47>> India is becoming wealthier now.
22:50So it's about time that India
22:52stepped up and sort of achieve its full
22:55potential.
22:56>> [clears throat]
22:57>> So coming back to brand building, you
22:58mentioned two things. A, if they address
23:00a white space that has not been
23:01addressed. B,
23:03they should be able to redefine a
23:05category like Bombay Sweet Shop. What
23:06are the other traits that you would
23:08define as brand building traits?
23:10>> We look at fast growth categories where
23:14there is yet to be a
23:16meaningful brand. For for Kiran, it was
23:21Indians love ice cream or love sweets.
23:24Uh he comes from a uh
23:26very successful ice cream family. Absurd
23:29is a when I when I when I lived in
23:30India, I used to go to Walkeshwar to get
23:32the sitafal ice cream. So I did not know
23:34Kiran then, but I used to go and wait in
23:35queue at that one outlet because it had
23:38the best sitafal ice cream.
23:39And he just said India is one of the
23:42largest diabetic capital countries in
23:44the world. Uh why can't we have a zero
23:48sugar
23:50given the science and technology and
23:51sugar sugar replacement that we see? So
23:53let's launch a range of products that is
23:56dedicated to being zero sugar. And he
23:58was very clear he wanted to do that. He
24:00hasn't deviated from that. So it wasn't
24:03the opportunity is big or the market
24:06size is this. That came later. Viraj
24:10again
24:11similar in many ways. I got to know
24:14Viraj's dad before I met Viraj. He they
24:16were running a business called FunFoods.
24:18I tried to invest in FunFoods in 2005.
24:22Uh
24:23senior Mr. Bell said no, no interest.
24:27Uh
24:27three or four years later he had he sold
24:29the business to Dr. Oetker.
24:31Uh, there was a three-year non-compete
24:33and I remember calling Viraj and saying,
24:35"I don't think your dad should have sold
24:37because I think India's time hasn't even
24:38come." He said, "Dad is selling, you
24:40know, he's retiring.
24:42It is what it is."
24:43So, I told him you know, "Once your
24:44non-compete is finished, what are you
24:45going to do?" He said, "I don't know." I
24:46said, "Fine, call me when you're We'll
24:48keep in touch."
24:49And I think towards the end of the
24:50non-compete, actually after the
24:52non-compete ended, he called me saying,
24:54"Deepak, I've started a restaurant
24:55business,
24:57but I'm not that excited by it. But,
24:59one thing you spoke to me about,
25:02I still remember, which is India's time
25:03has come.
25:04And my dad used to make sauces. In fact,
25:06his dad invented eggless mayonnaise. So,
25:09and all the eggless mayonnaise in India
25:11came after Funfoods. He said, "India
25:14makes ketchup and mayonnaise and
25:15mustard,
25:16but of very average quality. Not because
25:19we can't make good quality. It's just
25:20that we're trying to keep our price
25:21points low. Let's launch with a
25:23portfolio of products
25:25that Indians
25:26may be familiar with or should be
25:28familiar with,
25:29that is only available in India via
25:32imported products. So, it's so too
25:34expensive."
25:35And at that time Subway had become quite
25:38large.
25:39And Subway had introduced
25:41many Indians to Southwest Chipotle. Uh,
25:45it introduced sweet onion because you go
25:46into Subway they'll ask you what sauce
25:48do you want. So, anyone who's been to a
25:49Subway in quickly got used to Subway
25:51sauces. And that's the first seven
25:53products Viraj launched, better for you,
25:55uh, less sugar, no palm oil,
25:59and let's build a brand of premium
26:01sauces so that people who wanted to buy
26:03premium sauces, they not have to buy
26:05imported products. So, we were the most
26:06expensive made in India sauce company.
26:09Uh, but we were significantly cheaper
26:12than the imported products.
26:14And that worked.
26:15Right?
26:16>> So, it's hyper focus and standing for
26:17something.
26:18>> There are examples around the world
26:19where
26:21it's already a
26:22very competitive category, yet 20 good
26:25brands, and still some brands succeed.
26:28Because the founder has found a way
26:31to communicate with a tribe that loves
26:35what their brand stands for. When
26:36Lululemon first launched, it wasn't the
26:39first company doing these products. It
26:41was a let's go for the wellness
26:43community, then they micro focus on the
26:45yoga community because Nike had sort of
26:48taken the initially the running
26:50community, then the basketball
26:51community, Adidas had the football
26:52community. No one was focused on the
26:54yoga community.
26:55And you know, people want to be spoken
26:57to directly. And just think put put
26:58yourself in any position, right? If five
27:00people pitch something to you and
27:01someone was saying, "I'm doing it for
27:02Ganesh." Not a generic
27:05person like Ganesh.
27:07And they engage with you, they sort of
27:09sort of do events with you,
27:11it makes a difference. You want to be
27:13part of a movement.
27:15>> Did they do anything functionally
27:16different?
27:17>> No, they had they they actually had
27:18proprietary fabrics. Don't get me wrong.
27:21So, the product was good.
27:23Uh could someone else have copied the
27:24product?
27:26I would say they could and they have.
27:29But what they had was the community.
27:30>> So, white space, signature, hyper focus,
27:33and standing for something.
27:35>> And building a community. So, think of
27:36what we talked about when we first
27:38started the conversation, right? You got
27:39to build awareness.
27:41Then you got to build repeats.
27:43Right? After awareness, trial, then then
27:45repeat. Why would they repeat you?
27:47Because
27:48you stand for something.
27:51Okay, if you're the only brand in the
27:52category,
27:54uh
27:54then they have to buy you.
27:56But if you're the only brand in the
27:58category, it makes me If If Epigamia If
28:00there was no other Greek yogurt
28:036 months after we launched, I would have
28:04been very nervous.
28:06Because market mania.
28:07But Nestle launched within 3 months. And
28:10everyone else launched. Today India has
28:1215
28:1415 brands that I know of in Greek
28:16yogurt.
28:17Why? Because Epigamia was successful and
28:19everyone wanted to sort of try and
28:22get a piece of the action. There was
28:24enough traction where everyone else
28:26copied. And it's good for us. Most
28:28startup brands don't have a big
28:30marketing budget.
28:33My hope is that the copycat is a big
28:35company.
28:36You know, whether it's a Unilever or
28:38Danone or or a Nestle, it excites me
28:42because they spend a lot of money on the
28:45category. So, suddenly Greek yogurt
28:46full-page ads, not ours,
28:49were in Hindustan Times, Times of India.
28:51All our competitors started spending
28:53money on it.
28:54So, a lot of marketing dollars, not
28:56ours, were spent on the category.
28:57Fortunately, in the early days, our
29:00competitors spent money on advertising,
29:02but their product wasn't in the market.
29:03So,
29:04>> So, they marketed for you?
29:05>> They marketed it for us. If you see
29:07the SGCB brands, right? And this is
29:09another
29:10Some people criticize it, but we did it
29:12by design, is that we are investing in
29:16premium brands.
29:18We are not catering
29:20to 1.3 billion people. If you stretch
29:22the definition, most of our brands touch
29:25250 million people, if that. Probably
29:28much less.
29:29Why? Because every year a new cohort is
29:32entering the middle income or higher
29:34middle income.
29:36Uh and as a new brand, you need margins
29:38to build a brand and to scale. It's very
29:41hard on day one saying I'm going to
29:42launch a biscuit company
29:44and compete with Parle-G or I'm going to
29:47launch any category to compete with ITC
29:50or Unilever or Marico. So, we took a
29:52conscious call that we know over the
29:54next 20 years
29:56Indians are going to become wealthier.
29:58And think of any brand journey. A
29:59typical DJSGCP investment has been
30:01revenue is zero.
30:03Nowadays, we invest sometimes, like
30:05Bombay Sweets is a good example. Already
30:07have passed 100 crores. We came in
30:08later.
30:10But
30:11whether it's zero or 100,
30:13we are first focus on your first
30:14thousand customers.
30:16After the first thousand is 10,000.
30:18After 10,000 becomes 100,000.
30:20Then becomes a million, then becomes a
30:22crore. That journey itself is five to
30:24seven years.
30:25So, why are you trying to solve for a
30:271.4 billion people when most companies,
30:30as you see the data, don't even get to
30:32100 crores?
30:33You do not need all of India to get to
30:35100 crores. If you build a brand well,
30:38you can get there in one or two states.
30:39Forget about all of India. So, that's
30:42the that's the sort of
30:43playbook
30:45and the focus we had.
30:46And I think you you grew up in India.
30:49It's not one country. Flavors, taste
30:51profiles,
30:52north, east, south, west, it's very
30:54different. So, trying to solve for all
30:56parts of India is very, very hard. So,
30:59even our companies like Viba and
31:01Epigamia,
31:02who are national, what sells in Calcutta
31:06and what sells in Chennai and what sells
31:07in Bombay are fairly different.
31:09>> Mhm. Sir, is there a category that is
31:12growing very fast abroad,
31:15but it's not growing fast in India? And
31:17you saw a few brands over there and
31:18still decided not to invest because it
31:20it might not grow in India?
31:21>> The problem with being a fund is we have
31:24a fund life. We got to take We take
31:26investors' money.
31:27A typical fund is 10 years,
31:30but by year seven they want some money
31:31back.
31:33And if you go in too early sometimes,
31:36and the category doesn't grow,
31:39as someone who's a business owner, as
31:42the owner of DSGCP, if I do not give
31:44money back by the seventh or eighth
31:45year, it's very difficult for me to
31:47raise my next fund, no matter what I do.
31:49Cuz if the business becomes 10x in 20
31:51years, my investors really don't care
31:53cuz by the 10th year I need to sell.
31:55So, often we take a call on whether we
31:57believe will this category evolve in the
31:59right seven or 10 years. Sula took much
32:02longer than I thought.
32:03>> Mhm.
32:04>> It did really well, but it took a much
32:06longer than I thought.
32:08>> 17 years, but to be fair, by year seven
32:10I I sold a little bit, year 10 I sold a
32:12little bit, year 14 I sold a little bit.
32:15Uh because there's enough growth, and
32:16Rajiv
32:17outperformed, and he became the market
32:19leader.
32:20Once you're number one or number two in
32:21any category, there'll always be a
32:23buyer. We can debate the price, but
32:25you'll always be a buyer. But if you are
32:27number 10 in a category, it's hard. Or
32:29even if you're number one in a category
32:31that's not growing.
32:33So, I think the other way of looking at
32:34it is look at the We do a lot of sort of
32:36research at Bain.
32:38It's called the Insurgent Brands
32:39Playbook.
32:40Uh so it's it's it's in its third
32:41edition. The fourth edition comes out in
32:43June. Uh we publish it every summer.
32:45And if you look at every consumer
32:47category, whether it's apparel, food,
32:50beauty, personal care, electronic
32:53apparel,
32:54insurgent brands are growing
32:57almost
32:58two to six x faster than the category as
33:01a whole.
33:02So, for the incremental growth in the
33:03category, 30 to 50% is coming from brand
33:06new brands. So, Unilever might be
33:08growing 2 3% and they might be growing 4
33:095%
33:11and the younger brands are growing 50%.
33:13They're much smaller.
33:15So, in absolute terms, the giants are
33:16still growing.
33:18But this is going to catch up. My
33:20fundamental
33:21sort of playbook is we'll build the
33:23brands and we'll sell it to a Unilever
33:25or we'll sell it to an ITC or we'll sell
33:27it to a Nestle cuz most consumer brands
33:29do not go public.
33:30So, majority will fail.
33:33Of those who do not fail, majority will
33:35get acquired or stay a mid-size
33:38business.
33:39At some point, a mid-size business will
33:40want to be acquired because otherwise
33:42you won't monetize the value of the
33:43brand.
33:44Very rarely you'll get a Sula who'll go
33:47public. I think it'll happen more often,
33:49but it's not going to be common. So,
33:51therefore I have to spend a lot of my
33:52time speaking with
33:54sort of the global MNCs, regional MNCs,
33:57the Godrej's, the Dabur's, the Marico's
33:59in India saying, "What are you doing?
34:01How are you thinking about it? Uh
34:04you're playing in India, you've been at
34:06it for
34:0730 to 100 years depending on which brand
34:09you are at. And even in your category,
34:11you're growing
34:13We're growing 8% but your competitors
34:14are growing 30%. We know.
34:16And they said as a big company who is
34:18which is listed, what are your
34:20priorities? You need efficiency.
34:22You need to deliver shareholder value.
34:25Uh [snorts] you need to deliver margins.
34:27Innovation is hard if you got to also
34:30deliver this on a quarterly basis for
34:31quarterly results.
34:33And they also believed 10 years ago that
34:35young companies are not able to launch
34:37or get aware.
34:39Speak to them today and we speak them
34:41every quarter. They said, "Deepak,
34:43we are now totally aware of the fact
34:46that insurgent brands are coming
34:49and they're gaining meaningful market
34:51share. Epigamia is a great example. You
34:53know, Epigamia didn't exist 10 years
34:54ago. And we are number one in Greek
34:56yogurt, larger than
34:58Amul in Greek yogurt, larger than Nestle
35:00in Greek yogurt. It's a big business.
35:03Uh they said, "Even if we can innovate
35:05more quickly, mostly we can't because of
35:08the structure of the organization. We
35:10don't have the brand that talks to the
35:11younger generation.
35:13Right? We have invested our money in the
35:15brands we have.
35:16That's how our infrastructure is. We
35:18don't know how to
35:20launch a new brand, go to market. For
35:22many of our brands,
35:24there's a lot of piloting before we
35:25launch. Then even when we launch in
35:27market,
35:28and I'll give you a real example.
35:29Epigamia for some of our products, we
35:30only launched at 100 stores in
35:33uh Andheri.
35:34That's it. For 30 days, if it doesn't
35:36work in Andheri, we won't launch it.
35:37>> Okay.
35:38>> Because what they tell you in a pilot
35:40focus group, "Oh, we love it. We love
35:41it. Oh, we love the taste. Oh, price is
35:4240 rupees, great. Will you buy?" 100%.
35:45And you launch it, no one buys it. Or
35:46opposite. So, India has a that issue as
35:49well where the pilots don't give you
35:50real
35:52data that plays out in the market. And
35:53it's different for food and non-food cuz
35:55in food, if you like a drink or you like
35:57a chocolate or you like a mithai or you
35:59like a yogurt or or or protein shake,
36:02you are likely to order it again the
36:03following week
36:04or the following day.
36:06Skin is different, right? You got to use
36:07a cream for 60 days before the wrinkles
36:10disappear.
36:11So, depending on the category, we devise
36:14sort of a pilot launches in micro
36:16markets.
36:16>> Okay.
36:17>> Uh now with quick commerce, each quick
36:19commerce brands is do an exclusive. So,
36:21sometimes you do something with Blinkit,
36:23sometimes you do something with someone
36:24else, with Zepto. So, there's a lot of
36:26opportunity now to sort of partner with
36:28different partners to reach different
36:29TGs with different brands. But testing
36:31is never stopping. And I don't know how
36:34a large company can do that at scale. My
36:37brands are able to do
36:39a lot of this because of it's still
36:41primarily founder run. They're all
36:43private. There's no quarterly numbers to
36:45hit.
36:46Um the boards are very flexible in
36:48sort of building insurgent brands. And I
36:50think India has evolved in a very good
36:52way, you know,
36:53in 2012, DSGCP was the first ever
36:58venture fund dedicated to consumer
37:00brands. There was no one else. People
37:02were doing it on the side as part of a
37:04larger strategy, but we were the first
37:05dedicated. Uh the second one was when
37:08Kanwal started Fireside.
37:10Today, there are many good funds
37:12dedicated to consumer, and there are
37:14more generalist funds also investing in
37:16consumer.
37:18And we're all there building a sort of a
37:19a platform
37:22to allow entrepreneurs to succeed. And I
37:24think that
37:26is going to be very hard for a big
37:28company to replicate. So, you get you
37:30And many of them have seen it. Like
37:31Marico has acquired six or seven brands
37:32in the last 5 years. They've acquired
37:34three brands in the last 12 months.
37:36>> Yeah.
37:36>> Tata Consumer has acquired four.
37:39Uh HUL just acquired Minimalist. It's
37:43not about distribution.
37:44It's about having a brand that talks to
37:47a new audience, which is very hard for
37:49an existing company to do. It's very
37:51very very hard.
37:52>> So, what are the five attributes
37:55which you find common in all these
37:56brands that you call them an insurgent
37:58brand?
37:58>> Insurgent brand is any brand
38:01that's taking on an incumbent. Internal
38:04terminology is called a basket breaker.
38:07So, there are people who go to
38:09any quick commerce or e-commerce, and
38:11they'll type Greek yogurt,
38:13three or four will show up. They might
38:14pick anyone.
38:16Or they might pick Epigamia.
38:18But a lot of people will search by
38:20Epigamia.
38:21And if Epigamia is not there, let's say
38:23it's sold out, and something is there,
38:24they swipe they shut the app, and they
38:26go something somewhere else. Go It's
38:27called a basket breaker. In every
38:29category,
38:30there will be a cohort of customers who
38:32are who will not accept a replacement.
38:35If you want Häagen-Dazs, you want
38:36Häagen-Dazs. If you want Go Zero, you
38:38want Go Zero.
38:39And our job is to build brands that have
38:41that ability
38:43to be a
38:45basket breaker.
38:47>> Okay.
38:47>> So, any brand who says who uh if I say
38:49who's your competition, my competition
38:51is Amul or my competition is
38:53pick anything you want. You're
38:55insurgent. You you you David versus
38:57Goliath. Why are you taking them on? Oh,
38:59because the product the product is not
39:01tasty. Or the product has a formulation
39:03that is it uses palm oil. It could be
39:05anything, right? They believe they have
39:07something in their product that answers
39:10a real consumer need. So, my question
39:11always gets flipped. So,
39:13when I meet any founder,
39:15first question is
39:16probably half an hour is who are you,
39:18where did you grow up, who's your mom,
39:19who's your dad, are you married, kids? I
39:20want to know the person cuz we don't we
39:22don't back businesses, we back people.
39:25Then we ask why are you starting this
39:28business?
39:30So, Kiran, why ice cream? Or Viraj, why
39:32sauces? Or Kapil, why Easy Diner?
39:35Ajay, why coffee?
39:38And we spend a lot of time on that. Why?
39:40Okay, if it's because I did PowerPoint
39:42and the time is big, unlikely we'll
39:44invest. Okay, we want to figure out why
39:46you're doing it and it's got to be a
39:47reason other than the market is big.
39:49>> So, you back only missionaries, not
39:51mercenaries.
39:51>> Mission- Missionary has to be a part of
39:53it. You can be a mercenary as well, but
39:55you you must have a a authentic reason
39:59uh
40:00to want to build that brand. If you're
40:02launching a product
40:04or you must see a gap
40:07that I don't see.
40:08Maybe I've also seen it, I don't know.
40:11Okay? And often that is [clears throat]
40:13seen by someone who experienced a
40:15problem themselves.
40:18And often many of the brands I invested
40:20in, whether it's Epigamia or Sleepy Owl,
40:22was because I was a large consumer of
40:25Greek yogurt living in London. I came to
40:26India, I could not believe there was no
40:28Greek yogurt.
40:29I've been drinking cold brew coffee for
40:31two decades. I came to India, there was
40:33no such thing as cold brew coffee. I was
40:35at a meeting
40:36I think at the Amazon office and they
40:38had brought a cardboard carton of
40:40coffee. I drank it, I had one sip and I
40:42went, "Man, this is cold brew."
40:43He said, "Yeah, there's a guy in in
40:44Delhi who makes it." They brought the
40:46carton I took I took a picture of the
40:48and I called up the phone number. I just
40:50picked up the phone and I said, "Who are
40:51you?" I said, "Oh, this is Deepak. I had
40:53your coffee. Can I come and see you?"
40:55Right? Because those two examples happen
40:58to be categories where I was a user. I
41:00did not see it in India. So, it
41:02resonated with me.
41:04So, that's what we look for
41:06in a typical entrepreneur.
41:07>> Beautiful.
41:08>> Okay, and that's how a typical
41:09conversation goes when they come to a
41:11meeting and they get surprised, right?
41:12Because they have a 20-page deck. I'm
41:14like, "The deck we talk about later.
41:16Tell me why."
41:17It's slightly different when you have a
41:18company's is if your company's already
41:21at 100 crores,
41:23it often means a product there's a
41:24demand. Then, the conversation is
41:26slightly different.
41:28But, always starts with why. Why this
41:31product? Why you as a founder?
41:34And where do you see this going?
41:36And then the question becomes, are we
41:37the right partner? Because assuming the
41:39founder is good,
41:41genuine reason, and therefore the market
41:44opportunity is real,
41:46then we debate the sizing. How big
41:48today? How big tomorrow? And then, if we
41:50like all of it, the hard conversation
41:52is, are we the right partner for you?
41:54>> Mhm. How do you decide that, sir?
41:55>> It's like getting married. Whoever you
41:57partner with, you're going to be with
41:58them for 7 or 10 years. You can't get
42:00divorced. And the chemistry's with a
42:02particular person. So, sometimes it's
42:04not with me, it could be with Hurry. It
42:06could be with Pooja in in the team.
42:08>> [snorts]
42:08>> Or sometimes
42:09they're culturally different or our
42:11outlooks are different or different
42:13style of DNA. And we say, "You know
42:15what? Great company. We think you'll do
42:17really well, but you know, go and speak
42:18to another fund." And we'll introduce
42:20them.
42:21Because it's just not our DNA.
42:24So,
42:25we want to work with people we believe
42:27we'll enjoy working with because we know
42:30it's going to be a hard journey.
42:31>> Sir, you've also invested in Lahooji
42:32right?
42:33>> I did not.
42:34>> Okay.
42:35>> Uh Well, Invested. Fantastic team huh?
42:38And fantastic product. And as an
42:39example, it's a 10 rupee product. I DHCP
42:42doesn't have a DNA
42:44and wherewithal to think about how we
42:46distribute a 10 rupee product because
42:47the margin in that is in the mass volume
42:49game.
42:50>> Yeah. And Saurabh is an amazing
42:51entrepreneur, sir.
42:52>> He's a fantastic entrepreneur.
42:54>> Sir, I think I know your type. I think
42:56you invest in people who are extremely
42:58warm, extremely giving, because these
42:59are the traits that I find common in
43:01Kiran, Hari, Viraj. People who are
43:03extremely giving, people who are
43:05extremely noble, and they really and
43:07like you said, missionaries over
43:08mercenaries. And you know, sir, Viraj is
43:10so passionate about sauces.
43:12>> Yeah.
43:12>> He was so passionate about the sauces.
43:14In fact, after Viraj's episode, I just
43:16bought all other SKUs that I did not
43:18have. I tried all of them. You know, I
43:20was just delighted to see I mean, not
43:22all of them suited my taste, but I was
43:23like, "How is this guy so passionate
43:25about sauces?" And I was just telling
43:26Teju about it, that this is the kind of
43:28passion that we should feel for a
43:29particular category to be able to go
43:31through the ups and downs.
43:33>> I think you have identified
43:36the most critical thing. And I mean,
43:38most people don't even know that about
43:40Viraj. If you go to the development
43:41center,
43:42which is where
43:43they have 500 products that they will
43:45launch. All they are product people.
43:47They innovate. They keep on top of the
43:49science. They keep evolving.
43:51Uh
43:52you never know when India will will be
43:54ready for a new product. So, you know,
43:56we launched noodles a year ago, but it
43:58was developed 4 or 5 years ago. Right
44:01time, right place.
44:03But he's passionate. Kiran is
44:05passionate. So, most of our founders are
44:06more than passionate. They're obsessive.
44:08>> Yeah. And they're so giving, sir.
44:10Like, they don't
44:12they don't hold back on any information
44:14or wisdom.
44:15>> It's all about execution. Ideas are a
44:16dime a dozen, yeah.
44:17>> Yeah.
44:18>> Ideas are a dime a dozen. Anyone can
44:20start an ice cream company. Anyone can
44:22start a sauce company. Anyone can start
44:24a mithai company tomorrow. Not not like
44:25Bombay Sweet Shop owns
44:26it's a startup. So, you can start a
44:28mithai company tomorrow and I go for it.
44:30With all of that, I think the other
44:32thing that is we haven't spoken about,
44:34but was sort of
44:35inferred, is all the brands
44:38that I that we have,
44:40the storytelling needs to be fantastic.
44:42A a large part of what we do
44:45is find founders with the story,
44:49or help founders tell the story better.
44:52Okay, because Bombay Sweet Shop will
44:53tell you how
44:55uh the chef visited so many cities, went
44:58to great great grandmothers, got the old
45:00recipes, tried the recipes,
45:03uh tried to figure out how to modernize
45:05the recipes to make it relevant, write
45:07cookbooks about it. There's a lot of
45:10history and research that goes into
45:13to making it, but more importantly,
45:14consumers want a story.
45:16>> Yeah.
45:16>> When you have a choice of 10 things,
45:19you either like the founder, I like
45:21Viraj or I like Rajiv,
45:22I'll buy it. Or or you read the
45:25packaging, you know, it's grown by,
45:27you know, Mr. Prasad in this farm and
45:29the cow's name is Different people get
45:31attracted by different things.
45:34But we want to build a brand where they
45:36look for true love. It's NPS. We do a
45:39lot of NPS surveys. Okay?
45:42NPS is done quarterly, half-yearly,
45:45annually on how do you rate the brand?
45:48Okay? And NPS is unforgiving. Anything
45:50below eight is not counted. Okay? So,
45:52it's, you know, you got to be really
45:53highly scoring.
45:55And and then and we ask ourselves, what
45:56do we need to do? It's all about
45:57customer
45:58customer love, right? It could be you
46:01made a mistake, did the founder call
46:03that person up, apologize, send samples,
46:06and follow up or not? Okay? It could be
46:08simple things. So, you will make
46:10mistakes.
46:11But that ability to win the trust, it's
46:14very hard to get the trust of anyone.
46:16Bombay Sweetshop, there's an issue,
46:18Yash, or Sameer, or someone is going to
46:19call you up saying, "What's the problem?
46:21Where did you buy it? What time did you
46:23buy it?" You'll get another box in half
46:25an hour because they are obsessed. No
46:26consumer should ever feel like we
46:29cheated them or had a bad experience.
46:31And bad experiences will happen.
46:33>> Beautiful. So, you speak a lot about
46:36capital efficiency. And you know,
46:37there's this one line that Kiran asked
46:39me to talk to you about. You die with
46:40the cross margins that you're born with.
46:42What does that mean, sir?
46:43>> Net realizable price, net sales or
46:45profit.
46:47How much you have How much Ganesh is
46:48paying?
46:49Uh less the cost of us producing the
46:51product. So, happy gummy we sell at 50
46:53rupees.
46:54It cost us 30 rupees to make it, all in
46:57packaging.
46:58Our gross margin is 40%, right? This
47:00motor motor. Many first-time founders
47:03believe that because of scale, the gross
47:05margin as you become bigger will improve
47:08tremendously.
47:09All the data out there shows you the
47:11gross margin will go up and down a few
47:13percentage points. So, if on day one,
47:15you don't have enough gross margin,
47:16don't start the business. Efficiencies
47:18come in
47:19at other places, rarely at gross margin.
47:22So, you live and die by the gross margin
47:24you start with. Uh
47:26what is the right gross margin
47:29is very dependent on the category. In
47:31beauty and personal care, we also have a
47:33something called InsurJax. So, these are
47:35companies that are uh capital efficient,
47:38means it's capital efficiency of at
47:39least 1.5x. Most are more than that.
47:42Uh they've crossed 75 crores in revenue.
47:45Why 75 crores? It's because when we
47:46started the exercise 4 years ago, rupee
47:49was at 75. So, we we had 10 million
47:51dollars as a threshold, but we left it
47:53at 75.
47:54And so, that they have a 3-year CAGR of
47:5630%.
47:58And we said 3 years because every
47:59company, even the most successful, have
48:01gone through years with less than 30%.
48:03It is never a straight line.
48:05And the companies who get into and do
48:08pass all that thing,
48:10we call them InsurJax.
48:11>> Can you repeat that again, sir? 1.5x of
48:14>> Capital efficiency. Capital efficiency
48:16is defined as total capital put to use
48:20to date to get to your revenue run rate.
48:22If you're a 100 crore company today and
48:24you've only ever raised 50 crores, means
48:26your capital efficiency is 2x.
48:29If your revenue run rate is 100 crores
48:31and you raised 200 crores to date and
48:34use all of it, means your capital
48:35efficiency is 0.5x. Okay, question is
48:37for each rupee of money, how has your
48:40revenue grown? How efficient are you
48:41with the use of of your capital? Again,
48:44heavy capex businesses are slightly
48:45different.
48:46Across businesses, there's enough data
48:48to tell you below 1.5x is not a healthy
48:52capital efficient cuz it means you're
48:53buying revenue.
48:55That's number one. Number two is
48:57can you consistently grow
49:00at 30% year on year?
49:03And then we also wanted to have
49:04companies that above 75 crores. Just to
49:06get a sense of where they are.
49:09And there are thousands of companies in
49:10that analysis.
49:12Uh only 46 companies have got into the
49:14InsurJex because very hard to get there.
49:16Uh but it's getting better over time.
49:19So gross margins in beauty and personal
49:20care for companies from InsurJex is
49:23about 72 73%.
49:25There's some as high as 85 90%.
49:28In food and beverage is about 48 50%.
49:31Right?
49:32And the reason there's a big difference
49:34is on average beauty and personal care
49:36companies spend about 25 to 30% on
49:38marketing.
49:39It's more in beauty and personal care
49:41there's a lot more storytelling.
49:43>> Yeah.
49:43>> Okay, food and beverage is less.
49:46So that's why
49:47we say gross margins on day one are
49:50critical. And gross margins are not
49:52difficult to achieve, right? Because you
49:54know what it costs to make your product.
49:56If you want to have that gross margins,
49:58make sure you price your product
50:00appropriately
50:02so that you get the gross margins. It's
50:03all in the price. If you did your job
50:05well and sourced all the ingredients,
50:08either you manufacture yourself or went
50:09to a co-packer, and you know you got the
50:11best price possible, the only way to
50:13achieve the margins is have a MRP
50:17that gives you the margins you want. Do
50:19not ever sacrifice that.
50:21Okay? Then there's a whole debate
50:23internally whether a brand should be
50:25discounting or not cuz India has a bad
50:26habit of you you are always going to
50:28sell it at 100 100 rupees cuz you know
50:30that's the right price. But the MRP is
50:32150 and you put 1/3 off.
50:35Right? And you become permanently a
50:37discount product.
50:38Many people in India have been led to
50:41believe that India is a value society.
50:43Unless you're discounting it, people
50:45won't buy. I have a very different view.
50:48A brand is something people want and
50:50they're buying it because of the brand.
50:51If you are only going to sell it at 100
50:53sell it at 100. You don't have to
50:55discount it from 150 to sell to 100.
50:57Many of my founders will disagree with
50:59me cuz they'll say, "Oh, Flipkart won't
51:01stock won't list us if I'm not at a
51:02discount. And there's some truth to
51:04that, but you got to stand you got to
51:06believe in what you believe in.
51:08So, discounting as a strategy there
51:11there times to discount
51:13because you're launching one off, but to
51:15be on discount 12 months of the year to
51:16me is
51:18nonsensical.
51:19So, on day one when you launch, make
51:22sure you have enough gross margins
51:25for that category and you can learn what
51:27the category average is because of the
51:28lot of data.
51:29And then be smart about what you spend
51:31on marketing, when you discount, don't
51:34get obsessed with P&L, look at balance
51:36sheet because in consumer goods, which
51:38is the bulk of what we do, working
51:40capital is
51:41most founders forget there's something
51:43called a balance sheet. Cuz when sales
51:45go up you need to keep inventory.
51:48Depending on which channel you're
51:49selling in, you might receive payment in
51:517 to 45 days.
51:54As a new company, you may not get
51:55payment terms with your manufacturers or
51:56suppliers.
51:57>> Yeah.
51:57>> So, just because there's demand doesn't
52:00mean you go crazy because the balance
52:02sheet will get
52:04Once your balance sheet is in a bad
52:05state, it's very hard to come out of it.
52:07You're a founder, things look like
52:08they're going well, a big order comes
52:10in.
52:11Okay, you say yes, sir.
52:12>> Yeah.
52:13>> You start manufacturing.
52:15Okay, which means you got to tell the
52:17supplier double So
52:19and then you got to send then guy might
52:21pay you late.
52:23Typical example, right? So, then you
52:25learn you learn to say no to big orders,
52:27you learn to say give me some advance.
52:29Uh
52:30you learn to manage growth. I think the
52:31biggest lesson for I've learned from
52:33Sula and Viba and Epigamia, who are the
52:37bigger companies, is saying no to
52:39business.
52:39>> Saying no to business?
52:40>> Because there's a there's a cadence of a
52:43pace of growth.
52:44Companies are designed you have a
52:46factory. This is not like you're not
52:48selling digital products. It's not like
52:49unlimited downloads, right?
52:51Factories have a capacity.
52:53Supply chains have a capacity.
52:54Warehouses have capacity.
52:56If you're designed and you build your
52:57factory and your processes to grow 30
52:5940% a year, you cannot grow 100% a year.
53:02>> Yeah.
53:02>> Okay. And and saying no to business is a
53:06very hard thing to do.
53:09Okay? And I think the master class in
53:11that is Epigamia, Viba, and Sula because
53:14there was all there was a time where
53:16they said yes to that,
53:17got into trouble, either called us for
53:19more funding, went to the banks, managed
53:22it, and learned it the hard way.
53:24So, now at the at the every annual
53:27business plan meeting, we have a budget.
53:30And we are very disciplined about base
53:31case, high case.
53:33Uh and that question always comes up,
53:34"What if we get a very large order?" I
53:36said, "Don't say no.
53:37We are not set up
53:39at the factory to handle it. But there
53:42are always exceptions. If they pay you
53:43in advance and you can get more
53:45capacity, we'll think about it. But from
53:48the current type of business you have,
53:51don't take it up because you're not
53:52ready for it. Even if your balance sheet
53:54was strong, because that's the other
53:55problem. Some of my companies have done
53:57so well
53:58that they have more capital, more cash
54:00in the bank than they ever raised.
54:02And we were is one good example. Okay?
54:04And so is so is Kiran.
54:06And because you have so much cash,
54:07you're always tempted with
54:09"Let me launch another product. Let me
54:10launch another geography." So,
54:14that's when I say the best founders are
54:15the ones who learn to say no.
54:18Because it's very tempting to say yes.
54:20And then have a proper cadence of I know
54:23I can only grow 50% year on year in the
54:24first 3 years. I want to grow from When
54:26you're small, you can grow 100%. But at
54:28some point maybe when you get to when
54:29you become a 500 crore company, jumping
54:31to 1,000
54:32is very scary.
54:34Jumping to 750 is very scary.
54:37So, you go We we actually spend a lot of
54:38time measuring the pace of growth.
54:41Because I'd rather you take 4 years to
54:44get there as opposed to 3
54:47and take more risks.
54:48Because at the end of the day, there's
54:49no upside in taking too much risk.
54:52>> Sir, are there emerging white spaces in
54:54India that you're seeing right now which
54:55are just left unaddressed?
54:57>> Take dried fruits. Okay, I don't even
54:59know the number today because it's a
55:00very, very large dried fruits and nuts
55:03in India is huge. Majority is
55:04unorganized. It's not branded. Uh you
55:08buy it loose by by the kilo. You might
55:11have a preferred should you might go to
55:12American dry fruits in
55:14in Fort, you might go to uh Vadilal.
55:17Everyone's got their favorite
55:19supplier. But you're buying a it's it's
55:21in a glass Bernie. He'll say this is
55:23from Iran and this is from California,
55:25which which are this is 2,000 rupees a
55:27kilo, this is 7,000 rupees a kilo,
55:28whatever you want.
55:30And he'll put it in his box.
55:32But it's not a
55:33ready-to-eat, ready-to- back on-the-go
55:36product. Our hypothesis was and
55:38continues to be that most categories in
55:40India over the next 20 years,
55:43leaving aside the top 5%,
55:45most of it will become packaged, even in
55:47rural India. It's already happening.
55:49Okay, the days of loose products are
55:51limited.
55:53So we look at and and and where there is
55:56where there are fewer brands, it excites
55:58us.
55:59So Farmley, which is our dry fruit and
56:01nut brand, was basically saying a large
56:04part of these
56:06unorganized markets will move to branded
56:08organized.
56:08>> Okay.
56:09>> Because it's because it's very hard,
56:11right? When you go to Amazon or Flipkart
56:13and say 1 kilo of almonds,
56:15I'm talking about 15 years ago,
56:17you won't recognize any of the brands.
56:18It's either house brands or
56:20there were one or two.
56:22Uh and then you said how how do you
56:23innovate? So packaging innovation is one
56:25thing.
56:26Uh flavors have become important. You
56:28know, so flavored nuts and dry fruits
56:30versus loose
56:32dry fruits.
56:33They want to carry two or three sachets
56:34in your bag when you're traveling. You
56:36can't carry loose.
56:38So there are multiple use cases where
56:40you want innovation in simple things
56:42like packaging.
56:44So that's another area we look at,
56:45right? If you look at
56:47thematically, one is the white spaces.
56:50One is unorganized to organized.
56:53Uh the third is what are consumers
56:55talking about? I'll give you a
56:57because we do this so regularly, I'll
56:59talk about things that have changed
57:01materially. In consumer surveys 10 years
57:03ago, no one talked about longevity.
57:06Okay? Interview the same consumer today,
57:09they're talking about longevity, cold
57:11plunges, VO2 max,
57:14everyone will tell you my VO2 max is I
57:15got a whoop. What's your resting heart
57:17rate?
57:18>> Yeah.
57:18>> Okay, GLP-1 drugs went off patent in
57:22India on the 20th of March. It's $25 a
57:24month.
57:26Um there are a lot of other positive
57:28benefits of GLP-1 drugs other than
57:30losing weight.
57:31>> Now creatine?
57:32>> Now creatine,
57:34whether you have 3 and 1/2 g, 5 g, 10 g,
57:36they'll ask you
57:38is it creatine monohydrate or
57:39non-monohydrate? Where are you buying it
57:40from? Are you sure it's bioavailable?
57:42>> Yeah.
57:43>> Okay, it's a whole thing about
57:45So we keep our job as an investor to
57:48keep track of what consumers are talking
57:50about.
57:51And trying to understand how that's
57:53changing the consumer behavior.
57:55Okay, 15 years ago when I was living in
57:56India,
57:57everyone was signing up for the Bombay
57:59Marathon. Okay, January, including me. I
58:02would train 6 months of the year. I
58:03would train with my buddies.
58:05Uh now it's all about Hyrox. You know,
58:08marathon's not a cool thing anymore.
58:12And life cycles have changed, right? You
58:13know, when I was 18, all I wanted to do
58:15was go out, party, go to a club, drink
58:17some alcohol, and come home, right? Now
58:18these guys are drinking much less,
58:21training much harder,
58:23willing to spend money on
58:26>> wellness
58:27>> a lot of money on wellness.
58:28>> Red light therapy.
58:29>> Correct.
58:30So we got to keep on track top of this,
58:32and many of these have second and third
58:34order impacts, right? Because the guy
58:35who is longevity focused taking GLP-1,
58:38maybe not to lose weight, but because of
58:40the other positive benefits on blood
58:41sugar and everything else,
58:43uh it impacts your body. Elasticity of
58:45your skin changes, hydration levels
58:46change, and you know, L'Oréal is one of
58:49my LPs. They'll share data with you in
58:52markets where GLP-1 has already been
58:54available for a couple of years, and how
58:56that's changed beauty and skin care
58:58needs.
59:00Your tongue flavor profile changes. So
59:02food companies now have to think about
59:04sugar levels, salt levels, because your
59:06flavor you you don't like what you used
59:08to like. Okay, I'm not saying it's a
59:09good or bad thing, but it's an impact of
59:11GLP-1.
59:13If we believe GLP-1 drugs will become
59:16widely available in India, which we do,
59:18and therefore there'll be second order
59:20effects on
59:22how your body works.
59:24We got to start thinking about many
59:25other categories or impact on existing
59:28businesses of GLP-1 drugs. That's
59:30another example of we we did not have
59:32this discussion 5 years ago.
59:33>> Yeah.
59:34>> The younger consumers read up more
59:37because there's a lot more available on
59:39YouTube and Insta and and and and chat
59:41and sort of AI. They want solutions.
59:44Right? So,
59:46a sun cream or a sun screen
59:48under penetrated in India, sun screen
59:49for example, or serums are growing like
59:51crazy.
59:52But they want hyper specific, you know,
59:54pigmentation,
59:56uh dark spots. So, I think a lot of the
59:59products
1:00:01now may already be there, but how
1:00:03they're positioned in terms of problem
1:00:05solving versus a generic product is
1:00:06changing. But there'll always be white
1:00:08spaces cuz consumers keep evolving and
1:00:10consumer needs keep evolving. Another
1:00:12good example is pets. Pets. So, we had
1:00:14seen pet parenting or adopting pets or
1:00:17having pets as a huge huge boom in the
1:00:21west, even pre-COVID. There was a huge
1:00:23spike during COVID.
1:00:25But as the family unit evolves, people
1:00:27are having fewer kids.
1:00:29Uh people are having pets because they
1:00:31have a kid.
1:00:32They were having a pet because they
1:00:33chose not to have a kid and wanted the
1:00:35companionship.
1:00:36And they were having pets
1:00:39when the kids were going to college. So,
1:00:41the three times you get a pet are
1:00:43normally when you're when you often you
1:00:44have one or two kids, but you want a pet
1:00:47with the child. Second is
1:00:50you choose not to have children. So, the
1:00:53pet becomes a companion. And what we've
1:00:55seen in the in in the west now is the
1:00:57the the third occasion at which you are
1:00:59likely to get a pet is when your child
1:01:01leaves home.
1:01:02So, you you're a parent, you got three
1:01:04kids.
1:01:06They've all the youngest is now 21.
1:01:07They've all gone off. They all live
1:01:09around the world or in India, and you
1:01:11become lonely. And you get a a cat or a
1:01:13dog.
1:01:14So, we've seen that happen globally and
1:01:16we're seeing that happen in India. So,
1:01:17our investment in Supertails, our
1:01:19investment in Smilo,
1:01:21we've been tracking it for 14 years,
1:01:22right? But sometimes you don't find the
1:01:23opportunity.
1:01:25And Supertails was an example where
1:01:27we tried very hard, we met the existing
1:01:30pet startups for many reasons we didn't
1:01:33feel it was the right one for us.
1:01:35And and we got together
1:01:38with the founders who are who then
1:01:40started Supertails. It was pre-launch,
1:01:43pre-product.
1:01:45Uh they had become pet parents when they
1:01:46were working at Licious.
1:01:47>> Okay.
1:01:48>> They saw the change in themselves.
1:01:51They were they're like, "Crazy, we can't
1:01:53get the right vet, no services, the
1:01:55products are not clear." And they were
1:01:57solving a problem for themselves, which
1:01:59often is one of the best
1:02:01sort of indicators in our portfolio.
1:02:03We've backed over 100 brands now.
1:02:05The founders who were building for a
1:02:07problem they themselves experienced have
1:02:09outperformed the founders who sort of
1:02:13did research and found a large TAM.
1:02:15We've done both, don't get me wrong.
1:02:17But the ones that are passionate and
1:02:20solving for themselves
1:02:23tend to be the ones who are able to go
1:02:25through a very bumpy ride, and every
1:02:27startup will go through a very bumpy
1:02:29ride. There's no founder that I know has
1:02:31who's had a smooth ride ever.
1:02:33Uh so, unless you're doing it because
1:02:35you're all in,
1:02:36it's unlikely you're going to spend the
1:02:3810 years it it it needs or more
1:02:42sort of to build a brand that's relevant
1:02:4410, 20, 30, 40 years from today. I'm not
1:02:46saying you can't look at a TAM and say,
1:02:48"Go for it."
1:02:49But our experience of
1:02:51in the pet space, we spent many years
1:02:54trying to find a founder to build a pet
1:02:55brand.
1:02:56Failed for 7 years.
1:02:58Only when the founders we finally found
1:03:01were willing to do it. Why did they do
1:03:03it? Because they all became pet parents.
1:03:05Not because we convinced them of the
1:03:06opportunity. After becoming pet parents,
1:03:08they realized
1:03:10there's a gap here, there's a gap here,
1:03:12there's a gap here.
1:03:13>> Beautiful. So, and you know, I've heard
1:03:15from Kiran that DSG works with you to
1:03:18help you build a sustainable business.
1:03:21What does DSG do so special that people
1:03:24talk about you like this?
1:03:25>> I think Kiran is being overly generous.
1:03:27I think um
1:03:29our job at DSGCP is to
1:03:32provide as much support as a founder
1:03:34needs. But we are not here to run a
1:03:37business.
1:03:39We are not an accelerator. We are not an
1:03:40incubator. I think what we have uh 20
1:03:43people who are very curious.
1:03:4520 people who've dedicated their
1:03:47professional careers
1:03:49to building brands.
1:03:51Uh
1:03:52what we have more than anyone else in
1:03:54India is
1:03:56the We were the first so we are the
1:03:57oldest.
1:03:58Okay, [clears throat] we've got the
1:03:59largest portfolio. Which by default
1:04:02means we've made the largest number of
1:04:03mistakes. And I have I personally made a
1:04:05lot of mistakes that I regret.
1:04:07Uh hope
1:04:09Thankfully, most are small mistakes,
1:04:11didn't wipe me out. But I made three or
1:04:12four huge mistakes. My My second fund is
1:04:14struggling. I'll be honest because I had
1:04:16portfolio construction errors. I bet too
1:04:18heavily on some categories or some
1:04:20founders I shouldn't have, right? And
1:04:22and that's changed how I invest in fund
1:04:23three and fund four.
1:04:24So, I think what the founders like in
1:04:26what we do is
1:04:29all our founders are like Kiran and
1:04:31Viraj. They're very open about don't do
1:04:33this. Why? I did it. I screwed up. So,
1:04:36we have a lot of info Our WhatsApp group
1:04:38is like
1:04:4020 to 100 messages a day.
1:04:42Of all our founders saying, "I'm about
1:04:44to launch.
1:04:45I'm using this packaging. How is this
1:04:47vent?" Simple things
1:04:49for the group as a whole, but for the
1:04:51founder doing it for the first time very
1:04:53complex.
1:04:54The second thing I'll give you an
1:04:55example of is AI actually is disrupting
1:04:57everything.
1:04:58And we have um monthly AI sessions
1:05:02on
1:05:03how that's impacting consumer behavior.
1:05:05The more recent one was yesterday.
1:05:08Uh where
1:05:10many people are now start starting their
1:05:12search not on Instagram, not on Google,
1:05:15but in ChatGPT or Gemini
1:05:18or Claude.
1:05:20And they say sunscreen or better for you
1:05:22ice cream
1:05:23to appear in many of these
1:05:27sort of
1:05:28AI agents or on AI,
1:05:31the AI algorithm actually looks at
1:05:34different sources of data.
1:05:36And for example, what we done in India,
1:05:38if you don't have a large trusted
1:05:39community on Reddit,
1:05:42you're unlikely to be showing up on
1:05:44Claude, Gemini, or ChatGPT. So,
1:05:47yesterday we had the CEO of Reddit India
1:05:50on a podcast. Uh we publish all it's all
1:05:53this for our founders. We publish it it
1:05:55should be out in a in in a week or 10
1:05:57days after editing. The whole world can
1:05:58see. The first seven are already
1:06:00published. You can log on to anyone.
1:06:02It's very specific for marketing,
1:06:04for distribution, for payments.
1:06:06This one is on how do you appear how do
1:06:08you make how do you as a brand and a
1:06:10founder make sure that when when Ganesh
1:06:13only searches on Claude, my brand shows
1:06:15up.
1:06:16It doesn't happen automatically.
1:06:18Okay, it's a lot of work. The same way
1:06:20performance marketing was not automatic.
1:06:22You needed to have
1:06:23So, again, well, did this problem exist
1:06:26a year ago? No, cuz no one would start a
1:06:28search on
1:06:30on on on AI.
1:06:31So, I think because they're so
1:06:32proactive, our founders are very sort of
1:06:35receptive. And I think Kiran is a great
1:06:37example of a founder who is
1:06:40willing to try everything. And he said,
1:06:41"Deepak, you said this, we tried it, it
1:06:42doesn't work for us. In our category,
1:06:44because it's frozen
1:06:46and all because we do too much quick
1:06:47commerce, we're not in retail,
1:06:49this is how you should modify it."
1:06:51And I think that's what we want from our
1:06:53founder community.
1:06:54This is what we can see. This is what
1:06:55we're telling you we have learned.
1:06:57Please test it and come back and tell us
1:06:59what's working and what's not working,
1:07:01especially what's not working, so that
1:07:02the other 99 founders can not
1:07:05make the same mistake.
1:07:06>> So, what exactly makes you different
1:07:08from Sauce VC and Fireside?
1:07:10>> Not much. I think they are
1:07:12good friends, you know, Kanwal and I
1:07:14have known each other for a decade
1:07:16before I started DSGCP and before he
1:07:18started
1:07:19uh Fireside, right? And we had both been
1:07:22speaking about cuz we were He was with
1:07:24Helion, I was with Beacon, and we had
1:07:26both been talking about why are we doing
1:07:28a bit of consumer when India deserves a
1:07:31consumer dedicated fund. I just happened
1:07:32to have started it first. We've
1:07:34co-invested, we do compete.
1:07:36He's got a very strong and larger
1:07:37portfolio in Bangalore.
1:07:39And I think proximity
1:07:41has always been and will continue to be
1:07:43a key element of
1:07:44any investment firm because you want to
1:07:46be close to your founders.
1:07:47You want to be when Kiran calls us in
1:07:49Bombay, we're there in half an hour.
1:07:51Same as Bombay Sweet Shop, right? So,
1:07:52proximity does matter. Each of us have a
1:07:55slightly different strategy, but we're
1:07:57more similar than
1:07:58we are different.
1:08:01Manu at Sauce is a very, very good
1:08:03friend.
1:08:04We discuss a lot of deals together.
1:08:06We've done quite a few deals together.
1:08:09Kanwal and I are on the board of
1:08:10Supertails together. Me and Manu are on
1:08:12the on the board of Epigamia together.
1:08:14So, there'll be a lot a lot of learnings
1:08:16we share. I think
1:08:18we honestly believe the next 20 years
1:08:21will see so much more opportunity
1:08:24that we need another five funds
1:08:26to do justice to the top of funnel of
1:08:29the entrepreneurs because
1:08:30amongst the three of us, I think I DSGCP
1:08:33does about eight deals a year. Manu does
1:08:35about similar. Fireside, I think is the
1:08:36same.
1:08:38It's 30 deals a year.
1:08:40It's nothing.
1:08:42>> So, [snorts] and let's say you get a
1:08:43founder who's extremely passionate.
1:08:45>> Yeah.
1:08:45>> What are the red flags that makes you
1:08:46not invest in that founder?
1:08:48>> One is chemistry, right? So, if the
1:08:50chemistry is different, outlook in life
1:08:51is different.
1:08:53If he's not solving a problem for
1:08:54himself,
1:08:56>> [snorts]
1:08:58>> it's then not our sort of guy.
1:09:01Secondly, which is harder to test, is
1:09:04we know we don't know everything.
1:09:08But we know that there are lots more
1:09:09people who are smarter than us.
1:09:11And I listen a lot.
1:09:13And I try a lot of things. And I want
1:09:16people to listen. I don't expect them to
1:09:18do what I say.
1:09:20So, we test for whether this is a sort
1:09:22of founder who's willing to learn and
1:09:24listen.
1:09:25It's okay and fantastic that he listens,
1:09:28looks at it at his business and says it
1:09:30doesn't apply to me.
1:09:31Or have So, that's been an area where
1:09:35where we've got it early, we have
1:09:37avoided some big mistakes. And where
1:09:39we've missed it and we've missed it in
1:09:40some,
1:09:42uh it's caused a major train wreck.
1:09:44Okay, so it's I don't want to name
1:09:46names. Um but that's a very important
1:09:50element. That's why when I say when the
1:09:52business plan comes, I spend a lot more
1:09:54on what have you done? Where have you
1:09:57gone to school? Talk tell me about your
1:09:58parents. Do you play a sport? It tells
1:10:01me a lot about the type of person you
1:10:03are. What do you do outside school?
1:10:04What's
1:10:05nothing. I get really scared.
1:10:08You must have some passion.
1:10:09>> Yeah.
1:10:10>> Could be a sport. Could be a hobby.
1:10:13You know, how did you meet your wife or
1:10:14your partner? You know, what do you Just
1:10:16what gets you excited in life?
1:10:18And do you go to cinema or do you not go
1:10:20to cinema? What do you Do you go to
1:10:21music festivals? I like people who done
1:10:23something where which involves teams. It
1:10:25could be a debating team. It could be a
1:10:27cricket team. Good teamwork is hard.
1:10:30Right? I I think I I I I I think people
1:10:34who worked with teams are more likely to
1:10:36succeed with us as opposed to people who
1:10:38have never worked in a team. Okay? So,
1:10:40we try and look for these traits. We do
1:10:43I don't know how many of the funds do
1:10:44it. We do a
1:10:46sort of a We administer a personality
1:10:47personality test. Every founder
1:10:50at DSGCP goes through a personality
1:10:52test. It's It's It's sort of a
1:10:54science-based
1:10:55test on
1:10:57how agreeable you are. Are you a team
1:10:59player? Are you a loner?
1:11:01It's not
1:11:03binary. It's not good or bad. It just
1:11:05gives you attributes to what sort of
1:11:08person it is. It helps us decide whether
1:11:10the sort of people he should hire around
1:11:12him. It flags what his weaknesses are
1:11:15so that we as a team at DSGCP can sort
1:11:17of support him in areas where some
1:11:19people Some people are really smart,
1:11:20right? But just do not like make They
1:11:22know the decision. They don't like
1:11:24making hard decisions.
1:11:26To because they don't want to look bad
1:11:28in front of the team or co-
1:11:30So, we help them make that so I said,
1:11:31"You know what? You can't fire the guy.
1:11:33I'll do it." I'll be the bad cop, right?
1:11:36So, knowing the trait of a person is
1:11:37very, very important. Okay, so and we
1:11:40want them to be honest with us.
1:11:41Sometimes they they themselves don't
1:11:43know it. So, when we get the personality
1:11:44test
1:11:45or sometimes we I said, "No, this is
1:11:46what the test says. Do you agree or
1:11:47disagree?" Some says, "I totally agree."
1:11:49Some says, "Really? I've never done one
1:11:51before."
1:11:52I didn't realize this is what how I am.
1:11:54At least you start thinking about it.
1:11:56What I don't like is I tell them this is
1:11:58like, "Oh, irrelevant." So, it's very
1:12:00hard, not a science.
1:12:03Um
1:12:03>> [snorts]
1:12:03>> And I think the other thing we do a lot
1:12:05of and really helps us
1:12:07we know the founders we shouldn't have
1:12:09backed
1:12:10and we know the founders we are happy to
1:12:12have backed
1:12:14irrespective of the final outcome. Some
1:12:15of the founders we regret backing and
1:12:17then get and may has made us money. Some
1:12:19of the founders we've not regretted
1:12:21backing and will back again have not
1:12:22made us money. Okay?
1:12:25Um
1:12:26And now there's almost no occasion we
1:12:28make a new investment
1:12:30without three to 10 founders meeting a
1:12:33potential new founder. It could be in a
1:12:35formal environment, it could be in an
1:12:37informal environment, could be at a
1:12:38lunch, could be at a dinner.
1:12:40Uh so, once it's going to IC we'll
1:12:43somehow find an excuse to invite
1:12:45someone to an event
1:12:48where there are five or six or seven or
1:12:49eight founders there and that gives us a
1:12:51very good sense. If all eight says,
1:12:53"Don't touch him." I said, "Why?" And
1:12:55sometimes they can't articulate it. They
1:12:57say, "Deepak, kuch hai." It just
1:13:00>> [clears throat]
1:13:00>> If eight people say it
1:13:01>> There must be something.
1:13:02>> There must be something. Okay? If all
1:13:04say so, it say super. Normally it's
1:13:07never so that binary. But there've been
1:13:09cases when someone says it doesn't smell
1:13:10right. Or they say, "This guy, I don't
1:13:12know nothing about the business, but I
1:13:14would want him to be my co-founder."
1:13:16Because he's just
1:13:18got this aura. He's smart. We had the
1:13:21best conversation on packaging.
1:13:24Okay, so we now do it as a
1:13:27You you can't invest unless you go
1:13:29through the process. And we don't even
1:13:30tell them. What would you tell a founder
1:13:32who has not made you money?
1:13:34Okay. And walk me through that
1:13:36decision-making. For example, you said
1:13:38there are some founders
1:13:40that you shouldn't have backed
1:13:42and who have not made you money. So,
1:13:44obviously, you won't touch them.
1:13:45>> That you won't touch them.
1:13:46>> But how would you qualify a founder
1:13:48who's done his best
1:13:49>> Yeah.
1:13:50>> but has not made you money and you would
1:13:52still invest if they start another
1:13:53company?
1:13:53>> So, very simple. And we we work quite a
1:13:55lot of those, right? So, these are guys
1:13:56who are very good founders, identify an
1:13:58opportunity.
1:14:00We agree that the opportunity exists.
1:14:02Again, when you go in that early,
1:14:05it's a judgment call.
1:14:07Sometimes it goes wrong because actually
1:14:09the opportunity does not exist.
1:14:11Then did that founder realize it yes
1:14:13early enough and come back to you and
1:14:15say, "You know what, Deepak? This was
1:14:16the hypothesis. We did the pilot. Pilot
1:14:18was not bad.
1:14:19We launched.
1:14:21Demand is so small.
1:14:23I can't I can't I can't I can't even
1:14:24build a 25 crore business. I'll be
1:14:26profitable.
1:14:28I'm wasting my time. I'd rather be pivot
1:14:31or we shut down and get the money back."
1:14:32That's a good example of someone who's
1:14:34like
1:14:35pragmatic.
1:14:36Was it someone who's not working and
1:14:37say, "I'll keep trying. I'll keep
1:14:38trying. I'll keep trying. Give me
1:14:39another 5 crores. Give me 5 crores." One
1:14:41example. Second one is where
1:14:44uh we launch.
1:14:45Uh coincidentally, other people saw the
1:14:48opportunity. Some people executed
1:14:49better. Then we sit down with the
1:14:51founder saying, "What did you do wrong?
1:14:53How did I outmaneuver you?"
1:14:55Uh and we are honest with the guy. And
1:14:57internally, Hurun me and Sumit take
1:14:59calls on, "You know what? This guy
1:15:01there's no fundamental flaw. It's just
1:15:02that businesses are hard.
1:15:06We are very happy to back them again.
1:15:07Again, the firm is only 14 years old.
1:15:10>> Only? It's funny how you say only, sir.
1:15:12>> It it's just it's young. It's young. Uh
1:15:15many of our found Even Rajiv Samant
1:15:1727 years later, he's still running the
1:15:19business.
1:15:19>> Yeah.
1:15:20>> Okay. The The He said no second business
1:15:21he's going to start. Viraj is still
1:15:23running Viva.
1:15:24Okay. A In my world, and it's different
1:15:26in the tech world where
1:15:28So, I think in the next 10 years, you'll
1:15:29see more founders sell their business
1:15:31because as I look at the fund three and
1:15:33fund four cohort
1:15:35I'm seeing founders who are saying
1:15:37Deepak if you're passionate about it, we
1:15:38love building. Once it gets to 2 to 500
1:15:41crores we're selling.
1:15:42Because now that I build this, I see
1:15:43another opportunity and I don't like
1:15:45scaling because scaling is a very
1:15:47different skill set.
1:15:47>> And that's okay.
1:15:48>> That's absolutely okay. So those are the
1:15:50founders who will then come back and
1:15:51start a second business or a third
1:15:53business
1:15:54as opposed to someone like Rajiv Samant
1:15:57saying, "I'm dedicating my life to Sula.
1:15:59I have no interest in building anything
1:16:00else because I got lots more to do
1:16:03at Sula." And we don't force a founder
1:16:05to do one or the other.
1:16:06>> So my last question to you is, if you
1:16:08were to send a message to a 25-year-old
1:16:09kid, "Dude, take these three categories
1:16:11and build it." Massive pressure.
1:16:13>> That's where I struggle. I think unless
1:16:15that person feels and sees it himself
1:16:18I've been talking about pets and babies
1:16:19forever.
1:16:21I moved to India in '07.
1:16:22My son
1:16:24Rohan was uh 8 months old.
1:16:27Uh we came to India, there was no
1:16:28packaged baby food. Didn't exist. Not
1:16:30even one brand, forget about two.
1:16:32Nothing. So we'd come from UK where you
1:16:34go to M&S or Waitrose, there are five
1:16:36brands of jar may baby food, pouch may
1:16:39baby food.
1:16:40You just name it baby
1:16:42India nothing because in in in the UK no
1:16:44one has help or maid. In India
1:16:46everyone's got a cook, everyone's got
1:16:48two maids, everything is made fresh.
1:16:51But when you're traveling you can't
1:16:52carry fresh. So
1:16:54that to me was a white spot. Same with
1:16:56Mallika's baby products, right? So we
1:16:57looked around, there was no one doing
1:16:59baby food. To be fair, Slurrp Farms have
1:17:01done a very good job from the Fireside
1:17:03portfolio. So
1:17:05the reason I'm saying
1:17:07the reason for this story is unless you
1:17:09see that first hand and experience it is
1:17:11very hard. That's why when you say
1:17:13Deepak, "What are the white spots?" I'm
1:17:1457. So I'm seeing white spots for people
1:17:16of my age.
1:17:17>> You know, senior living sir in India.
1:17:19>> Senior living in India. Longevity. In
1:17:21Singapore, which is a aging society,
1:17:23we've invested in a company called Air,
1:17:25A I R E, which is adult incontinence
1:17:28diapers. So
1:17:30at 65 many women start having
1:17:32incontinence. Not knowing when you need
1:17:34the toilet means you don't want to go
1:17:35out.
1:17:36And it was taboo for an active adult to
1:17:38wear a
1:17:40So, we launched a product for the active
1:17:4265-year-old.
1:17:44And our advertisements are you're you're
1:17:45you're you're parachuting, you're
1:17:47hiking, you're very active, you're fully
1:17:48mobile, and you should not be ashamed of
1:17:51being incontinent.
1:17:52Right? And I'll be 60 in 3 years.
1:17:56Uh science is changing. You know, you
1:17:58would read David Sinclair, you would
1:17:59listen to Huberman. You know, there's so
1:18:02many supplements that could change
1:18:04everything. I spend a lot of money on
1:18:06time on that. So, I think each
1:18:0825-year-old need to figure out where he
1:18:10sees his cohort of consumers. Unless you
1:18:13see it, live it, breathe it, it's very
1:18:15hard to build a real business.
1:18:17>> Thank you so much, sir. I've completed
1:18:19all my questions.
1:18:20>> Thank you very much. Thank you for
1:18:21having me here, sir.
1:18:24>> [music]
1:18:30[music]

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Use the transcript to take notes, quote the speaker, build a study guide, generate a summary with ChatGPT or Claude via the YouTube Summary tool, or export it as a timed subtitle file with YouTube to SRT. You can also re-open it in the transcriber to choose a caption track available on the video.

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YouTube2Text is a free YouTube transcript generator — no signup, no daily limit. Paste any YouTube link and get the full transcript instantly, with timestamps, click-to-jump, caption language selection, AI prompts for ChatGPT, Claude, and Gemini, and exports to TXT, SRT, VTT, or Markdown.