Building a ₹1000 Cr Brand: What Every Startup Must Know | Shiv Shivakumar | FO463 Raj Shamani

36:08Okay. We are figuring out. You are a public figure in this building where your office is. If for example there is a fire in your office tomorrow the whole building will be aware of it. Remember that. So what we call license to operate. Agar aap surat mein hai, agar aap trichi mein hai, agar aap gaohati mein hai. That society looks up to you. Agar aap kuch kharaab kareenge, toh society will look at you differently. So the license to operate and society's approval is a very important thing. Can a startup exploit this fear? anything can be exploited but you need to exploit it in a positive manner in a positive manner let's say if i'm in a if i'm in in an industry where a large company is operating and their fear is every day that oh something might wrong should not happen can startup look at those areas and actually go for those businesses to win?

37:10Absolutely. 100%. And the way to do that is look at every industry and see who are the companies who are innovating and not innovating. If an innovation from a big company is taking two, three years because of this fear and reputation, etc. Then that's an industry to step in. That's exactly what's happened in the D2C business, which you are very familiar with. The large companies like the Hindustan Leva, like the Proctors, like the Maricos have not innovated the way they should suddenly you have 100, 1000 D2C companies picking niches why is that Raj and you go go back to the question you asked me about large companies in a large company when you present let's take a niche idea sugar free ice cream idea present in that boardroom it will be killed how many are you going to how many 20 crore leave it but for a D2C company they see 20 crores as fabulous and I'll go to 100 crores yeah that's the difference yeah how do large companies kill innovative ideas everyday by being very rational by being very very rational if we say what will happen that's one second thing and I've had this furious debates with my CEOs also when I've been a marketing director brand manager etc.

38:38I gave it to my wife. She didn't like it. Okay. My friends didn't like it. So what? Once a CEO told me I shift this packaging. I showed it to my wife. She didn't like it. I said, your wife is not my target audience. Okay. So personal biases against our foreign idea. Okay. Too rational at one level. Personal biases at another level. They are the two reasons why we kill ideas in boardrooms let's go deeper on both first is how can people not be rational i'm a big believer of being delusional in the beginning when you start business because you need to actually have an inside outside view like from an in inside you you need to believe certain things based on what you have observed and insights that you have and actually go out and try it in the market or else if you're too rational you won't start a business but how do you think how can somebody watching this who's a young entrepreneur actually not be rational and still be able to build a pretty good business because completely dreamish can also kill you.

39:46The first thing is suspend judgment. Okay. If you're in a meeting, you're the entrepreneur. Don't talk about it. Keep quiet. Let the others talk. Okay. Ask people, why do you think this is a good idea? Okay. This side of the room. This side of the room, ask them, why do you think this is a bad idea? Okay, let them debate it. Okay, let it play out. And finally, you come on a consensus base to say, this is not possible or this is not possible. Quite often what happens is, the leader in the room expresses his opinion first. Then everybody keeps quiet. That is the easiest way to kill an idea. True.

40:32Okay. the other thing you could also do since you asked this question Raj is to say somebody has an idea somebody says okay this is not a good idea then what you can say is okay build on the idea what do you think is wrong about it what can make it better involve the whole group tell me what can we how can we make this idea better okay somebody comes with an idea somebody will say it's already been done by competition and they failed they fail for other reasons you have every right to succeed if you do it differently so because somebody else failed is not a reason for you to kill an idea so diversity of thinking you have to promote it don't be the only person in the room who talks fair but what about Reliance of the world?

41:34That's a great question. To be fair I would say Reliance and Adani are investing a lot more than the traditional legacy companies. They are saying we'll take the bull by the horns. A lot of people say they have government support which is true but despite government support for them to invest is fantastic. Not easy. Because they do certain things which will dream like 20 years later 25 years later that they're trying to build something. I'll give you a simple stat for you to think about. Tata has been in this country for more than 100 years. Their market cap is 400 billion plus. The same as Pakistan GDP.

42:09Reliance market cap is about 250 today. And they've come 50 years ago. Now Tata's could have done digitally. They had TCS everything. They messed up Tata New York. They don't have the capability for it. They're not a consumer facing organization. That's the point. Would you give me an example difference between a Tata and a Reliance? They're living on past legacy. See, all their new consumer investments have failed. Big Basket has failed. Tata 1 MG has failed. Tata New has failed. Big failures. Not ordinary failures. But I must have the gumption to introspect and say, look, I'm going to get very high capable professionals to guide me.

42:49He doesn't want to do that. And on the other hand, Reliance, what are they doing right? Reliance, the biggest advantage Reliance has is the Ambanis, especially Mukesh Bhai. Two things he does very well, which are actually contradictory. Very few leaders do it. One is think, scale and execute brilliantly. See, meetings with Mukesh Bhai can go on till 3 in the morning. He is a machine on execution. No two ways of art. We want to build the FMC G business 1000 crores. What do we need to do? We will buy a camper for 22 crores. Do this. Do this. Machine. there are no excuses in reliance in Tata's as long as you are financially clean you can give any excuse so if you look at companies which are very good at risk taking Raj South Korean companies are very good at risk taking you have to give it to them, you know why?

43:45once they decide they execute brilliantly go back to what I said about Mukesh Ambani they are ruthless in execution a Samsung is like ruthless in execution look at the LG market cap what an IPO absolutely right they're ruthless in execution okay the other companies who are pretty good in strategy plus execution are the Chinese companies look let's look at Vivo look at all these people they've built huge businesses in India great products relentless execution they've taken more risk on the India market than anybody else why that's in their nature you know they evaluate the risk well they're two separate entities South Korea is a small country they have no choice but to go abroad and they see India is a huge market China is a huge country it has developed a fantastic ecosystem in electronics they want to dominate the world they're saying what good is this if we don't take it across the world so two completely different reasons but both very valid reasons so for example since you asked this question.

44:57When people come to India, do they see this as a land of opportunity or a land of challenge? Companies who see it as a land of opportunities are taking a risk. Companies which see it as a land of challenge are not taking the risk. There are enough reasons to invest in India. There are enough reasons not to invest in India. Remember that. But this also ties back to the capital, right? Samsung has insane amount of capital and backing Chinese companies like Vivo have an insane amount of capital backing Indian companies didn't have that see tell me an Indian phone maker who came with even one tenth of the pocket which these guys have so they didn't have any other choice but to trade I disagree there okay in fact I have had this conversation if you go back to 2009-10 there were at least 50 to 75 Indian brands which came in phones what were they doing they bought an Android phone brand name and sold I met one of the Indian big brands at that point of time I had told the owner, he spent 2 hours with me I had just left Nokia and I was moving to PepsiCo I told him whatever you do invest in R &D you will not have this access to cheap R &D from China they will come with their own phones into the market it's a matter of time I said don't do R &D I said forget all that focus on phones focus on form factor focus on innovation focus on services he listened to me today that company doesn't exist Micromax think about it Micromax could have been the Samsung of India they lost it because they were not focused but aren't they really big now in terms of the so they are not big in consumer market but they are in industrial businesses thriving they are not in mobile phones full stop as simple as that see in mobile phones if you do not hit 10 share Raj no chance no chance they are not mobile phones but then part manufacturing they have done well right but you had you had the market rooting for you consumers rooting for you you had a consumer brand and you had customer love as well you had customer trust why should you lose it much like Nokia we had all the trust we went and chose Windows instead of Android that's why we lost the market not for any other reason wrong decision why do you think because the board and the CEO decided that because people who are in the room told me that our people didn't feel that Google gave us enough BHA for being a 32 share handset brand so say it was a matter of egos so since they didn't get enough BHA they said we'll go and do Windows Microsoft eventually Microsoft acquired also acquired and sold it also

48:17Nokia has gone through all hell ever since 2013 okay but that's okay but Microsoft acquired after the Windows or did they no Microsoft acquired at that point of time Nokia had Symbian Series 40, Series 30 then Nokia did Windows phones didn't work Nokia went and did Android then Microsoft said we are Microsoft why are you doing Android okay then they sold the business so it's a lot of confusion nowhere I still use a Nokia I'm still loyal to it nowhere I don't if they catch the next wave for example if they're done fold they had a chance that chance at 5 % share not more or maybe the AI world must have will they ever be in the phone a 32-38 share brand they were the answer is no not possible at all.

49:13Because they don't have, this business requires huge amount of R &D. When Nokia was a 40-50 billion dollar corporation, we are one of the top five spenders in R &D. Five, six billion dollars. Not small money. You need to invest that. So you asked me an earlier question. Where do companies have deep pockets investing in R &D? Pharmaceutical companies have deep investment. Mobile phone companies have deep investment. Technology companies like chick providers have deep investment. There you need deep pockets. So, that's okay. They will be another average company. There were two companies which were really killing BlackBerry and Nokia and both vanished.

49:53Very good example. Thank you for raising that. Let's take, you were talking earlier about how do you know consumer this thing, etc. Well, Nokia made a mistake of choosing Windows against Android. It was a strategic mistake. Okay. Wrong decision by the CEO and the board. They suffered. Okay. But BlackBerry was really blind. Why were they blind? Let me explain. Your biggest use on the phone today is your WhatsApp. BlackBerry had that as BBM. They did nothing with it. Think about it. They were the first WhatsApp. They were actually the first to have the WhatsApp. They were blind. They had the product.

50:35They couldn't see the market. Nokia chose the wrong operating system. But BlackBerry had a product they couldn't scale up. That was a mistake. So BlackBerry, again, going back, you asked me about big companies. BlackBerry started with email. Because especially for lawyers and stockbrokers in New York, every minute mattered. So getting push mail and knowing what was happening was very important for them to take decisions. So BlackBerry had mastered it. but in about 3-4 years the Nokias of this world the Apples of this world had as good as an email so Blackberry thought its reasons for success was only email it is not that was the mistake they made and they could never come back after that BBM was a fantastic product but did they fail because of the keypad and the display the touch revolution because Apple came up with that touch and then they also did touch they also did touch plus you know keypad agreed but for for example let's say Samsung coming with fold is a great example of counter attack you have to do something they thought email was it they thought Barack Obama had you know Blackberry and that 50 million coverage we got was enough you will be very happy

52:08All the wrong things. Not the consumer-led things. That's what I'm trying to point out. The consumer-led jewel they had was BBM. And they lost it. And people loved BBM at one point. 100 percent. I cannot tell you in Saudi Arabia, etc. Girls would put BBM, you know, code on their hand and show it to boys going by. Really? Absolutely. I've seen this with my own eyes. You know? it was that popular because it was a great way to connect yeah and it was a one-to-one connection so it was the first sort of private social absolutely right segment first kind of WhatsApp absolutely but imagine if they had thought about how big can the social media idea be what could we do behind it tell me one thing because you were talking about large companies and you used an example of another large company right I have a very curious question why do large companies keep hiring a lot of consultants but rarely act fast rarely they're fast they get like these heavy sheets and consultants with working for years and years and then they keep doing on the boards yeah so the reason large companies employ consultants is they believe that if they need to look at the future the current bunch of people are not able to do that if it was a large company I'd tell them take 10 of your best people out put them on a project for the next one or two years and ask them to give you what you should be doing.

53:35That's the best. Okay. They employ consultants because sometimes some of the tough decisions you can park saying the consultant recommended it. Suppose you need suppose you have 5 ,000 people. Yeah. You want to trim that down to 3 ,000 people. So you say this consultant recommended that we need to cut so much in order to be competitive. Nobody can argue against that. So sometimes taking the uncomfortable calls. It's a guilt minimizing process. Absolutely right. That's why. But many times I worked a lot with consultants. They're also very bright people. They see the world very differently. They have connections across the whole world and they're able to bring for you many different angles which you might not be able to see.

54:22Especially Raj as technology collides every industry. See today there is nothing called a traditional competitor. Anybody can be your competitor. Whoever thought that Uber Eats would compete with a Zomato or somebody, think about it. A ride share fellow. But Uber Eats is pretty big in many markets that they do. Now, how do they see it? Our asset is we can move things from point A to point B at the earliest possible time. You need food. What do you need early? Food. We'll do that for you. We'll source from the... We're not saying we'll make the food. But we'll source it for you. So, competition can come from left field today.

54:59so one of the advantages of using consultant is because technology is impinging every industry they can give you a different view of the future than you are able to think fair tell me if you were a 25 year old founder with 100th capital of a large giant in any category how would you beat that giant number one I would focus on the niches pick the niche where the large company is not focusing. Okay. Pick that niche. Be merciless on the large company. Ask yourself how big can I make this niche? Okay. Sugar-free across the range as an example. Okay. What can I do? Or what Mama Earth did with that onion shampoo.

55:48Incredible. Absolutely. Pick a niche and go after it. Help follow that and make life miserable. The one thing I should not do is try and replicate what a large company does. That's a big mistake that I would never do. Number three, I would build a solid team of very good people because my success depends on how the bunch of capable people I have. Whatever you do, don't sacrifice. Okay? And have a culture which is an open, challenging culture. Why should we do this? Why should we not do this? If you're two founders, your question was one founder, if you're two founders or three founders, have clarity on how will you resolve your differences if you have one.

56:27Let's take tomorrow you and I were partners in figuring out. We must write down to say if the two of us disagree we will go to this person for clarification and final decision. Many families suffer because of that Raj. The reason family businesses suffer is exactly this because nobody wants to tell the elder brother or the Tao Ji or the Nana if they have a disagreement in the family they don't know how to surface it. If they surface it they would be better off. That is the reason. This is what I would say. You said niches. Give me three niches which you have seen in recent times which can be exploited or where you can build a large business and nobody is building.

57:15Maybe some people are building it still there is room for it. I think anything to do with healthy food is a big business. It's a big niche. Anything to do with healthy food high protein, millets, etc. Big business. Anything to do with time saving as a device is big business. Today Raj, 25%, 25 % people don't eat breakfast because they're in a hurry. Imagine if you give them a liquid on the go, a breakfast with 20 grams of protein in it or something they could eat on the way. That's a big niche business. Nobody's talking about it. I believe the future business of food or ready to cook food is something you can cook in five minutes which is healthy.

57:57That's all people have. On the go, even better. I think anything to do with health is big business. So on the go, high protein meal is one. Anything to go with health is big business. Okay. Keeping me fitter, keeping me healthier, keeping my heart rate, this thing, growing my hair, looking attractive is a very big niche. in any which way you define it. Physical health and fitness is a big niche. Give me an example. For example, one of the challenges of busy executives is the ability to find time to exercise. Imagine if you had a studio, a physical studio, which was open from 6 in the night, 6 in the evening to 3 in the morning.

58:49Many state governments are giving 24 by 7 licenses for liquor, for everything. Why not this? Because go back to what I said about time. Look at time as different time parts to say, look, traditionally most people go to sleep from 9 to 6 in the morning. Is there any business I can do at that point of time? It's available. Now, the guys who are doing it brilliantly are the delivery boys. the Blinkit the Zepto the Zomato they're available 24 by 7 they're doing it brilliantly are there other industries who can exploit it okay Knight College Knight Education if you look at the American CEOs of the 60s and 70s most of them went to Knight College we don't have Knight Colleges in India our Knight College is close at 9 can you build an ecosystem around that that's what I mean by niches very niche absolutely but very profitable because you're serving a great need so look at time as a dimension look at health as a dimension look at fitness as a dimension okay these are all big opportunities to grow niches then specific target groups I think looking at it in terms of saying what can I elevate some of the problems of women in this country what can I do around that is a big one what can I do with children we tend to invest a lot in children What can you do around that?

1:00:18Because the ability to pay a premium for a child product is much more than paying for yourself. True. So there are so many things. India is such a big market. I believe, Raj, one of the mistakes young founders are making is, I would say search for ideas. Don't search for capital. If you have good ideas, capital will follow. But what do you think is better for a small company? they can get to a let's say if they are focused on one niche they are able to do 50 crore, 60 crore revenue is that more lucrative for a large company or they try to do something something like 10, 10, 20, 20 % of every category and reach like 100, 150 crore of revenue you know I always say this Raj thanks for asking this if you have 6 categories it's better for 1 category to jump 10 feet than 6 categories to jump 2 feet each That's the mistake all entrepreneurs in India make.

1:01:16Try and dominate one properly. That will carry you through. If you are doing everything in bits and pieces, you'll never succeed. You need to be known for something. What are you known for if six of your categories are jumping two feet each? Have one jump ten feet. That's your spearhead. But how difficult that is to choose. It is not difficult to choose. Because then if you're doing just one category, sometimes you feel the ceiling has come too soon. So ask yourself where all can I take this? How can I take this? That's what it is. Like go back to your own example. You're doing this podcast etc.

1:01:53You didn't stick to one category of podcast. You didn't stick to one genre. You spread it. But you chose it on sensible basis. One is your gut feel and two is what the market is telling you. Three is what the team is telling you. It's the same with business. you have to choose all strategy is a matter of sacrifice Raj and why does it happen when you expand there are some categories that trust lingers but the other categories trust doesn't so there was a study I was reading if you are trusted in front of customers for making a great tea people will buy your biscuits as well but if you are trusted for becoming a great soap people won't buy your tea Yeah.

1:02:38So few products are few companies are able to keep building products after products and people keep trusting them again and again. And there are a few companies who just can't do it. Yeah. So that's very true. There is what we call there is an association of a brand and what it can do or cannot do. For example, if you look at all the big conglomerates today and we've done enough work on this. a lot of people don't believe that the big conglomerate has the necessary credentials to be in health. They might be in health, but they don't have the necessary credentials or the trust to be in health. Okay?

1:03:19Let's take a simple example. You look at hair care brands. Globally, very rarely, have hair care brands been successful in skin care. On the other hand, if you take skin care brands, they're very successful in hair care. Give me an example. Pantene is an example. Sunsilk is an example. But their hair care runs with it. Dove is an example. Dove came the other way around. From skin to hair. So, going from skin to hair like Neutrogena etc. is far easier than going from hair to skin. Some of the consumers don't give it to you. Let me give you a more tangible example in India. Ponds. Ponds was huge as a talc.

1:04:05It still is. So when Ponds launched their strategy to grow, they went into soaps and they became a 10 share brand in soaps. What did they do? Dreamflower soap. Cold cream soap for the winter. Fantastic. Because they were selling those products. Great cashing. Then they did a cardinal mistake. Then they launched toothpaste and toothbrushes. And the next was sanitary napkins and batteries on the line. under the Pond's brand name okay they launched toothpaste and toothbrushes I was a toothpaste brand manager then and everybody was under pressure to say we have to do something about it so I said let's go to consumers and I believe this so we asked ourselves the question where is Pond's the strongest in this country and we figured out it was Mailapur in Chennai okay where the household would swear by fonts we went there for a focus group okay a girl called Revati did the focus group and she asked them what do you think of pawns etc she passed the packet round motifs fantastic what a great product everybody was going gaga about it and my heart was sinking because people wanted more money in order to fight them so I said okay after the whole discussion of two hours Revati then said okay will each of you summarize what you think about so there were eight people in the group discussion seven of them said gaga things the last lady I still remember she was wearing a green sari in her spectacles she said you know what I know all you guys are gaga but one thing in my book does not sit right she said Ponds is about smell Ponds is not about taste toothpaste is about taste I said that's the answer so I went back and said we do nothing guys Ponds died Ponds toothpaste and toothpaste died in three months so many times the core of the brand you need to understand so if Ponds strength was fragrance then they could do anything in categories which had fragrance connotation not in taste connotation.

1:06:09Like Colgate many years ago introduced ready to cook meals under Colgate. Why would you even do it? Why would you even do it? I think Harley Davidson introduced lasagna or something. Think about it. Why would you even try it? So history is replete with brands and categories doing the wrong things give me i'm interested in these stories now give me because unilever is one company i study a lot i love unilever you spent 19 years in that company tell me a few great stories which has which changed india or which changed the way people look at product or which has just helped you dominate that category and tell me stories where they failed miserably.

1:07:00I think the whole concept of sashes, sashization of a category was something I think Unilever mastered very well in India. Chick started it, right? No, no. Doesn't matter who starts it. See, that's the mistake we make. You know, anything, oh no, somebody said, so what? So what? Where? You took it and actually the place where low unit price pack started was Thailand. It started with Colgate because in the financial crisis of the 90s, prices went through the roof. And so Colgate checked two concepts. They said, this is a small pack. You are poor, so you should buy this. And they said, this is a small pack.

1:07:39This is a fun way to consume the category. And consumers chose the second. So they were one of the first companies to do it. And so sachets require a very different thinking, which is, in a sachet, the price point is fixed. You have to work your supply chain and raw material and everything backwards. To meet that price point. Before Sashayas came in, everything was add-on. So Sashayas started the fixed price point concept. Today, I think 40 % of FMCG is for price point concept. Okay. 1 rupee, 5 rupee, 10 rupee. That's a fixed point and then you back work. Absolutely right. Okay. So I think Sashayas, that required a lot of distribution also.

1:08:20So if you look at the early companies who did distribution very well in India, and Hindustan was one of them. One was the ITC. One was Hindustan Lever, one was Union Carbide. Okay, for different reasons why they chose it. Okay, Hindustan Lever because they sold daily products, went to the rural market. Batteries because the battery, the metal jacket was very heavy. So people could not carry the case of the batteries from the wholesale market to their homes. Very heavy. So they couldn't carry it. Cigarettes and BDs were bulky. They couldn't carry it. If you bought 100 rupees of BDs, it's three cartons.

1:08:57you can't carry it. So by definition ITC and Union Carbide had to employ their own vans to go rule. Hindustan Lever to develop the categories. I think Hindustan Lever's grip on strategy around distribution was very good. The other thing Hindustan Lever did exceedingly well over time was to get to negative working capital. Okay? Exceedingly well. So those are the reasons why Hindustan Lever succeeded. But it's the same reasons why they're failing now. And I'm honestly saying they're failing right now because they've not launched a single decent innovation of value in the last 5-6 years. They've kept talking about digital to consumer.

1:09:40They've done pretty little about it. They will say the usual rubbish that they need to say in a meeting but that's not true. The proof of the pudding is in the seeing and the eating. They've missed the digital revolution completely. Let me give you a sense of it. HDFC Bank has 300 to 350 digital marketeers. The top 10 FMCG companies combined together don't have 300. Why? That goes back to the point. The bank saw the digital capability was crucial. It's no longer physical. You will win or lose because everything is digital. Insurance is digital. Payment is digital. Okay. Borrowing is digital. Okay.

1:10:22Lending is digital. Investing is digital. Everything is digital. so they said hey we don't need branches each branch takes one to two crores to run they said we don't need any more branches we don't need any more ATMs as long as we get the digital act right they over indexed on digital so one of the things that companies have not done successfully in India FMCG companies and specifically Hindustan Lever is they have not over indexed on digital you worked with ID Fresh I really like that company yeah what what made what worked for them it's taken 15-20 years the ability to see that the housewife was no longer willing to sit in the kitchen and make something okay let's look two categories one is batter so the housewife orders it makes it in five minutes the idli or the dosa is ready for her kids take another category which the housewife just loves digitally D2C okay biryani yeah India has two biryani sold every second.

1:11:26Okay. Horrible statistic. Okay. Lots. Okay. Why is that so? It takes a housewife one hour to make the masalas for the biryani if she stood in the kitchen. Now, her love for her kids or the family is not going to go away if she orders a biryani from outside. Who aggregated all this? So, that's why the housewife is saying, I'm a smart housewife now. I know how to use my resources. okay that's the key so what is this link to go back to what I said about businesses time you're saving them time you're giving them back time that one hour of the housewife in the kitchen to make a biryani she now has to do what she wants with it either with her family or for herself or whatever else now India love convenience absolutely right how do you make trust in a low trust society because by standing out by by standing out by being a different person.

1:12:24Like you said, I don't want to do anything to associate with sin categories. Fantastic. Sachin Trendlooker said, I will never advertise liquor because I promised my dad I will never advertise liquor. Okay, so by standing by what you believe.

1:12:41Just that's it. Always. Because there are brands who have been standing on for certain values for decades. And there are guys like us who are standing on certain things for just two, three, five years. We've just started. and why are customers able to trust somebody new versus somebody who's been there for 30 years so one of the things is one I mentioned by standing for something which you believe in the second thing I would add to it Raj is by being relevant to the newer audience if you're not relevant to the newer audience so let's take what you're doing right now any of the anchors could have done fair any of the news anchors of the last 10 years could have done.

1:13:24Fair. Why haven't they done it? They were not relevant. They didn't see it as relevant. But your audience sees this as relevant. The audience does not see news reading and news anchors as relevant. So each of these big guys, the news anchors, could have pivoted here. So they would have carried the trust of differentiation from the past and they would have been relevant for the future. They didn't do it. Just because we are relevant in a newer format. Absolutely right. That helps you trust? Huge. Not ordinary. Huge. Because then people say, what is trust? It's authenticity. Trust is at the end of the day, I say this many times, you will not hurt me when I'm vulnerable.

1:14:11So when I come to listen to Raj Chhamani, I know that I will get a distilled view of the truth. It will not be hype. I trust you to do that for me. In the past, I trusted the editors to do it for me. That's why I read the editorial column first. In every newspaper, the editor was a very big guy.

1:14:39Fair. I have two last questions. Yeah. One is, what are the differences between Indian customers, Chinese customers, and American customers? Very different. See, Indian customers finally want value in whatever price they pay. Indian customers will haggle like mad. Okay, even if they're buying a 1 lakh bag, they want a 10 % discount. They need to feel good. And they need to go home and say, look, it was actually 1 lakh, but I got it for 80 ,000 bucks. So whatever they do, they want to bargain. Okay. It's ingrained into, you know, people. I can't tell you the number of friends I have. They'll go buy something else.

1:15:19Why did you buy it? 50 % off. So Indian customers are that. The American customers have a very unique thing that they can return anything if they don't like it with full price. No questions asked. The return behavior in American consumers is very, very different. In India, 80 % of the companies offer good service. In America, only 20 % of the companies offer good service. But they write about service. service industry in America is actually broken. You look at the airlines. You look at the hotels. I was staying at one of the top hotels in New York. Believe it or not, they didn't have tea and coffee sashes in the room, which I take for granted in any Indian hotel.

1:16:07Simple example. Okay. So service in US sucks. In India, in good places, service is very, very good. Yeah, top-notch. The top-notch service is actually Thailand. If you look at Thai hotels, for the price value, they're outstanding. You check into a Thai hotel, you have the best food platter on the table, everything. Damn good. Okay, so India's service levels are very, very... 80 % of the time, we get good service, though Indians crib a lot. Indians tend to complain a lot if they don't get what they want. So, for example, in Nokia, People would write to my global CEO. Straight. If Indians don't like something, they will put it on social media.

1:16:52They'll write to anybody and everybody under the world. True. Anybody and everybody. They think, you know, the global CEO is just waiting for this mail. And if he doesn't reply, again he'll get hammered. True. So Indians are extremely demanding of the brands and the companies that they work with. They expect a lot and they do a lot. You know, they juice out a lot. Chinese consumers are very, very different in the sense that Chinese consumers value innovation, much like Japanese consumers. But Chinese consumers are a unique combination of innovation and value. Unique combination. I think we tend to be a little more on the value side than innovation.

1:17:36I just read a recent book on globalization and what's happening. The German minister said something very interesting. he said it's very tough to compete with China because they are both low price and high innovation that is the Chinese consumer so those are the three I would say which one is the toughest to serve after thinking of all the challenges I think India is very tough to serve having served all three markets I can say that why? the variables and the complexity are very very different Or the tolerance is super low? No, too much distribution, too much choice. We are a very hyper-comparative market.

1:18:23What's the way to win here? The way to win here is always to provide the best value and to systematically build your brand. Finally, brands matter. And I say this many a time in a brand session, Raj. Rich people buy brands for vanity. Poor people buy brands for security. we are still a country with a lot of people earning less than$2 a day to them security matters how do you convince in Nokia how do you convince people poor people who are fighting for security how do you convince them to buy a phone great question because for them the trade off is a choice paradox it's like my 10 days of food is equals to great question absolutely right very well put that's the exact way the consumers think so when we went trying to sell mobile phones into the rural hinterland you know what the rural consumers told us if anything happens wrong where is your service center so Sudhir Kohli and gang first built the service centers so that then they had the confidence that if something goes wrong I can go there exactly the point you made at that point of time in 2006 7 the cheapest phone was some 2000 bucks now 2000 bucks is a hell of a lot of money at that point of time.

1:19:41So they said that was$45 or whatever it is. So they said, if this goes wrong, what's my guarantee? Okay, that's why we have to put service centers and give them confidence that service is very good. But how do you convince them at this point? Putting the service center up there. But what do you tell them? Like, why do you need a phone? Why do you? Why do you even need to buy this phone at the first place? That's a great question again. So one of the first successful campaigns with Devinder Kishore, Shafali, Chachi, etc. did a brilliant campaign. It was on security. We showed a house, lightning and thunder in a rural market.

1:20:18Okay. A house is waiting for the main breadwinner to come home from the main city on his mobile. Okay. Now, they don't have a phone. The neighbor has a phone. Okay. So this man stops in a place from a PCO, calls up the neighbor's mobile phone and says just tell them that I'm on the way I might be half an hour late and so this neighbor goes to them and says you know your man is safe he's just coming he'll take half an hour after the conversation the young girl listening to the conversation with the mother turns to the mother and says maybe we also need to get a phone security so a phone is a personality statement a phone is a security statement a phone is a productivity statement, a number of roles which a phone plays.

1:21:07So security was a very big thing when we drove it. So that was first. And then the second layer was? Second layer. For example, we launched phones for women. We had Priyanka Chopra doing our ad. It was fantastic. Her mother said this is the best ad shiv that Priyanka has ever done. And she said a very simple thing. It's not a phone. It's who we are. Going back to what I said about personality. We had color phones. We had all kinds of fold phones and fantastic stuff. One of the most celebrated commercials ever you know so you have to just keep thinking about how the market is evolving see you you must be studying a lot of stats and countries income as well now as our country's income rises this happened in us before this happened in china and now it's happening to our country overall income is rising people are getting richer when the country's income rises which Which are the sectors which will see the maximum growth?

1:22:02So that somebody should be active in that sector and start thinking about some business ideas in that sector. Okay. It is not true for all countries across all sectors. Okay. But let me give you a slice from India. As India grows richer. As India grows richer, we'll place a higher emphasis on education. As India grows richer, we'll place a higher emphasis on health. As India grows richer, we'll place a higher emphasis on personality and grooming. These are all categories that happen. Now, why do I say it's not true in all countries? Thailand is multiple times richer than us, but they don't have the education infrastructure that we have.

1:22:40Same thing in Indonesia. Okay. But America is there. UK is there. So you can't generalize to say, if India becomes a$5 ,000 per capita income, automatically these things will happen. It's very cultural. Okay. The other thing which will happen as we go up, and this is true in all countries, as you go up the income curve, you tend to take a lot more processed food than normal. The chips, etc. The center of the plate might not change, but the pickles, the chips, the salt will all be branded. As you get richer, which is exactly what's happening in India. Okay. As you get richer, and in India is actually, I can't say richer.

1:23:26The definition of richer is a little difficult in India about the category I'm talking about. Okay. Which is travel. People borrow to travel. They're taking loans to travel. In the past, income minus expenditure was savings. Today, income minus expenditure plus borrowing minus investment equals savings or loss in investment. So, today, something like 50 to 60 % of the holidays of millennials or more is hawked. Okay, so travel pixel. Why do we love traveling? I think we're a very vast country and it's also the stage. We've got exposed far more thanks to digital and social media than ever before.

1:24:16Far more, you know, Look at Indians and what they post on Facebook or LinkedIn. LinkedIn has become a newspaper. What do you post? I went on a holiday to Bali. Why are people doing it? To make their friend circle jealous. Okay. You don't see that same degree anywhere else in the world. Indians tend to do a lot more of this bragging on social media. That is driven society. Absolutely. We brag a lot more about it. It doesn't have, for example, Europe, they're very, very private about it. even if they were to go to Windsor Castle they won't talk about it we like that it's our status it's our market you know one of the internal features we use every time we we're sitting with a FMCG company or a D2C company or we're sitting with young founders thinking about it I always ask them one question what is a USP what is a USP that client will get to know and they're like why are you asking us i'm like i'm not talking about unique selling preposition i'm talking about what your product provides which is a unique show-off preposition because indians care a lot about unique show-off preposition and it makes a lot of difference whether it's a simple restaurant or a party or a travel people love showing off where they have gone and if it's not show-off worthy it won't survive a long time if you're charging premium for it.

1:25:43So a good example of that, what you say is absolutely right. A very good example of that is the shirt category. Every shirt has a monogram on it. When Arrow introduced the shirts many moons ago when Shashi Modgal used to be the CEO they did a lot of research and people said yeah if I wear a shirt and the Arrow symbol is not there then why am I wearing it? So there's a premiumness to it. Yeah. We need a show of representation. Absolutely. Well perfect. Thank you so much. It was a pleasure talking to you and it was absolutely amazing. I would look forward to many more conversations. We should keep doing it and we should make it more specific next time like specific on things and I'd love to have it.

1:26:23Thank you so much for doing this. Thank you so much for watching this episode until the end. Now you have to do three things. Number one, subscribe to this channel so that we can bring you more valuable guests and we can ask them the questions that you want. Number two, tell me in the comments in the comments this is that you are and which guests you want to see on our podcast so that we take them and ask them the questions you want and number 3 this episode should be shared with anyone which will change a positive change in life because one conversation is enough for someone's life change I'll see you next time until then keep figuring out

1:27:10Thank you.