Ep #23 | WTF are Consumer Electronics? | Nikhil ft. Carl Pei, Rahul Sharma & Amit Khatri

28:50Visual Basic, yeah. I wrote a program in three days. Hello World, this, that. I said, okay, I know programming now. My friend came, he saw the book, he said, you've done this? I said, yeah, I made a program. He said, can I take this? I said, yeah, take it. So he took that book away. The guy later became my partner. So the story, and he's a core techie guy, coding only. So I tell him, you become a coder because of me. So by virtue of that, buying that computer, that decision, we started working on, so I started looking for opportunities in software. That what can I do in software? 2000 was like the software bust time, yeah the dot com so this is like 99 or so you started Micromax in 2000 no 90 actually 1998 1998 with the three friends four friends four friends started with three fourth came from US and then joined yeah then started you know working on softwares worked on a lot of SAP that that went down then started working on e-commerce that Y2K problems and also at that time I was in US so I was the BD guy doing marketing and sales and rest of the other guys were doing the coding and everything so at that time we wrote a lot of B2B engines for e-commerce and and doing all that so it you know that was time when Sun Microsystem was there and it was like we had the dot in dot com and then that market went down and then then we realized that it is a very fast moving market and you have to you know constantly change yourself very quickly to be relevant.

30:29We moved on to embedded technology, start working with University of Irvine, California. They had an R &D center on embedded. We started working together. And at that time, Nokia in India was looking for a machine-to-machine partner, M2M. HCL was their partner for their mobile phones. And they were looking for someone for a machine-to-machine. They said, we got introduced. used. And they said, would you like to do something? We used to write device drivers, doing work on a lot of different architectures, ARM, PowerPC and all that. I said, okay, started doing that. And then one fine day, I was just sitting with one of the guys from Nokia, Finland.

31:21And he showed me a product. I said, what is this? He said, this is one of the products where if you put a SIM card in this, you can connect a telephone along with this, and it will replace the landline. So I said, good. So why did you make this product? He said, in Finland, you know, because there are snow and everything, you can't lay the copper wire, the telephone. So you can put a SIM card in this and connect a phone, and then you have a landline because this phone is going to be fixed here. Nobody's going to take it. He said, can you do something with this? I said, India, how much worth is we don't have market for something like this?

32:04So I took that product from him. I said, OK, let me just play. And we found an opportunity. And I went back to him next day and said, we would like to power the payphone machines. this. So we went to Airtel and all those guys. And all the GSM players said, we can power payphones with one SIM card. At that time, payphone in India was only MTNL and BSNL, government companies laying down the wire now. You mean the STD center? The STD center. STD boots. So they said, okay, how can you do that? We said, this is, you know, with that phone because we were writing device drivers and everything. We took that machine, changed the code and everything, put our software, attached the landline, and say you put a SIM card and you can work.

32:58They said good. And then it was also a solution, good solution for corporates because corporates, if they want to have a connection straight away, you can just integrate it with the EPBX systems and all. So, it worked for them. And from a small Delhi based company we started growing to all the states and started supporting all the carriers until that time it was Huch and Idea and all and started supplying to them. The business was started doing reasonably okay from 3-4 crore rupees annually we started doing around 100 crore rupees in you know very quickly we scaled up. What year was this? I think 2003 so 100 crore then is like 1000 crore now.

33:47Correct. More. More. So we were happy. We thought that we have arrived, something is happening. So that business was doing well. So one day I got a call from this Finnish guy. I remember his name Henry. So Henry said, Rahul, can we meet? I said, absolutely. He said, why? He said, I have good news and bad news for you. I said, tell me over phone. He said, no, come over to my home. Okay. I went to his home. He said, what do you like to listen? I said, tell me the bad news first. He said, the bad news is that as Nokia, we have sold the whole machine to machine business. What year was this? It's 2003.

34:292003, 2004. Back then, they were killing it, right? Nokia was the market leader. Number one to number 10 was Nokia. Yeah. Then started 11, 12, 13. Yeah. So, I said, what is good news? He said, good news is that as Nokia now, we're coming into car accessories business. We want you to distribute our car accessories.

34:49So those car accessories, you know, they had speakers. You could put in those, that lighter socket. And connect the wire with your Nokia phone. And then while you're driving, the speaker, you know, you can talk. And pretty interesting solution. They had speaker you can put in your seat and the mic and, you know, the speakers will come like this. So all those were. So I said, no, we're not interested in the accessories business. So the technology was there with us completely because we developed so we made our own box, our fixed wireless terminal, stamped Micromax on top of it and went back to Airtel.

35:31We said, no case, no more. This is Micromax. Would you like to use it? It's the same terminal. But all of those guys, Airtel and Vodafone, they used to know me from Nokia. In their phone also, my phone number was saved as Rahul Nokia. So, they said, okay,

35:54up in north, there is a shrine, Vaishnav Devi. They said, you install it there because it works 24 hours. The payphone, you know, it works 24 hours. Vaishnavodivi. Vaishnavodivi. Yeah. I've been there. That walk where you're climbing the hill and there are STD boats on that path, right? Yes.

36:15So, we installed our machines there. First machines in Vaishno Devi. Yes. How come? Because that's what Etel said, that, you know, if you install there, because the traffic is so high that if it works there, it can take the load, then it will work anywhere. We said, okay, we install it there 20 days. The revenue from, because see, for the operators, it was a killer product because their ARPU from one SIM card, multiple people are using one SIM card. The ARPU is massive. Thousands of rupees from one SIM card. Based on an individual, it's… Versus what did they have before that? Nothing. There were STD booths before that, right?

36:51MTNL, powered by MTNL and BSNL. To install an STD booth where there was no MTNL-BSN line, if there was a GSM signal coming in, you can power that. So then they gave us a contract. This is pre-people having cell phones, right? Significantly pre. Cell phones were there at that time. In 2005, they were pretty much… Yeah, the cell phones were there. No smartphones, all the feature phones were there. So you're saying the difference was it got cheaper? Yeah, it was difficult to get. So you have to apply to MTNL, get a license, and then install. Painful that time. Right. And the government. And the government thing.

37:30And then they will come. If there was no line… Imagine if it is a village, they have to lay down the whole line. It was a costly affair and time taking. And for us, if there's a signal is coming, we will say about five minutes, say we'll install it. So that business started doing quite well. And then we became a de facto number one on GSM fixed wireless terminal phones in India. And started operating offices, Pan India, became a Pan India player, service network and everything. So we learned a lot there. Applying, you know, sale tax numbers and everything. You know, like the whole, how the business works.

38:08This is till 2006. 2000, yeah. 2006, 7. One fine day, I got a call from a senior guy from Italy. He said, oh, there's a problem in a machine. Can you go and check it? By that time, you know, our business grew to like 400 crores for random. So we were doing, we like. Did you have liquidity? Did you take out money from the business? No, we were just keeping the money. But I still, I just remember at that time, BMW came to India. I bought a BMW 3 Series. And thought, this is it. In 2006. So that time, then my, that was the first time when my parents realized that our son is doing something. Because otherwise, they used to ask me, what are you doing?

38:49I said, fixed wireless terminals and all. And yeah, so coming back to the story. And so that guy called me. So I said, he said, it's in Bengal somewhere. Why don't you go and check? I said, I'll send some engineer. And she said, on a senior level escalation, can you go yourself? I said, okay. Took a plane, land in Kolkata, took a cab, five hours drive near Bangladesh border. Saw, this is all Krishna Nagar Nadia and all. Just saw the problem, fixed it. And then the evening coming back to catch a flight in late night in Kolkata. I saw a village where there was no electricity. But there was an Airtel ISD PCO.

39:30booth. So I asked my cab driver, I said, can you stop the car? I went inside the booth and because I knew that if it is an airtel, it must be using our equipment. So I said, there's no electricity in the village. How are you running this booth? He showed me a big truck battery there. He said, we drop power from here. I said, fine. We were not making phones those days. I I was having a Nokia phone. There was no signal in my phone. I said, there's no signal in my phone. How are you drawing the signals? He showed me a big 20 dB gain antenna, mounted on a pole on his terrace. Typical Indian Jugaad.

40:13He said, there's a signal from here. I got more intrigued. I said, fine. There's no electricity. How do you charge the battery? He said, 11 kilometers away, there is a village. There is electricity. In the night, when I shut down, my shutter. I go there, charge in the night and then come back in the morning. I said, how much money do you make? He said, let's say, 4000 rupees a month. Now, 4000 rupees a month in a village, there is no electricity, no entertainment, no TV, it's big. Then I was traveling in interiors of Bihar and I saw people charging, you know, asking 25 rupees or 40 rupees to charge your phone.

40:52Because at those days, there were different pins for different phones. I remember, yeah. Different for Motorola, different for Nokia. Those round pins and all. Before everything standardized. I said, why is this? He said, because there's no electricity at home. People come, pay and charge. It's very expensive, right? For a charge. Yeah. That time it is very cheap. But see, those days mobile phones were not common like this. Because the call was not free. Today, probably you're paying for data. That time, the call was expensive. I went back, sat with our guys, worked a lot on the GSM technology.

41:30I said, guys, why don't we make mobile phones? What year was this? This is 2007. So the first reaction from everyone internally was, are you crazy? Who's going to fight these Nokias and Samsungs and Motorolas in the world? And I said, why do you want to do that? We are doing so well. You're driving a BMW 3 Series. So, you know, why do you want to disturb the apple cart? Why? I said, no, I think, you know, the food is being cooked in different countries. We need a flavor in India. You know, it's somewhere in Finland or in Korea, but we need Indian flavor. Anyway, so fought a lot internally. And then they said…

42:17Fought with your co-founders. Yes, yes. They said, okay, 10 ,000 phones you make. If it works, it's fine. Otherwise, our business is doing well. So, it's like casino money they gave me. He said, you go and play. If it works, it's okay. Otherwise, you play. How much money was it? 10 ,000 phones. Even if a phone was 2 ,000 rupees, you multiply was what? 20 crores? Yeah, around that. Yeah. I said, okay. So, he sat with teams and said, guys, let's make a phone with long battery life, one month of battery backup because of all these experiences.

42:54And that's how the first Micromax phone came. And the tagline for the phone was Mobile Kebab. Because the standby time was 30 days. Since we worked a lot, see that. Now here in my, you know, my philosophy is that whatever you're doing in life, nothing goes waste. Whatever we was, you know, I'm just, you know, scrambling my whole story here. But in between, we worked a lot on SIM card, Vishal Amberger and all those guys for one, two years. Nothing came out of it. Nothing came out of all those things. but all those things we implemented when we were making phones. So normal phones take 7 to 8 milliampere per second as power.

43:32We worked on embedded 2 to 3 milliampere per second and that's how we created the same form factor. At that time, the battery was 700, 600 mAh. We put some 1800 mAh, 2000 mAh that time. Same form factor. made a phone and then went to the distributors. Now the real problem started from there. Because all the distributors were like all big distributors. Like even the Delhi distributor of Nokia was bigger than us. We were doing Pan-India business fixed wireless and all. Because Nokia was so successful. So we said, now we make mobile phones. Why don't you distribute? And globally it was only, you know, all those four or five international brand names.

44:18there was no local brand doing anything in the world at that time or even if it was there they were not like very very successful brands so they just offered us a cup of coffee I said good friends but sorry we were not able to find a distributor after making the phone in 2000 7 8 8 now this is 8 and so we went back to after a lot of there's no distributor how do we So we went back to our fixed wireless… Did you already make the inventory? Huh? Did you already pay for the inventory? Yeah, already it was with us. And we went back to our distributors of fixed wireless terminals, payphone guys, who were selling payphones.

45:03They said, now we have this, would you like to sell this? They said, Saab, let us know, if it sells, we will see. Because they were not the mobile phone guys.

45:13We gave the phones to them. 10 days the phones were sold off why because of the differences there was nothing like that in the market battery was the difference which you learned from travelling to remote places yes so and the form factor was nice it was not bulky or so we didn't try to change much on the form factor and all the the repeat order started coming in that's the signal and then everything went crazy things blew up right I remember seeing Micromax everywhere. Yeah, then things became crazy. And you started marketing like mad at this point, right? No, Sophie. Then we sat and said, okay, what is it that we want to do?

45:56And how we want to do? Because there could be a lot of distractions. So, and we were still learning at that stage. It's not that we perfected. We were still learning. So, one day I saw my cook using three SIM cards. this is the time when all the new operators got licensed and everybody was selling new schemes every day UniNor and other new guys came in so I said why are you using three SIM cards he said one for local calling I said fine I said second SIM card he said to call my native village I said third SIM card he said incoming is free so I am not throwing it away I went back to our guys and said guys why don't we make a phone with a dual SIM card he said no two phones only rich people can afford I said that's not the consumer truth these are the guys who are using two phones so can we make in a single phone you know simultaneously talking on the GSM signal so with one single baseband we created the dual SIM phone that time and I still remember I showcased it to one distributor meet and everybody stood and clapped that was the time when we realized that we have to find the gaps in the market.

47:14It's very interesting. You're finding your gaps from your driver, your maid, from going to villages. Everyday life. It's like you're learning that you're just observing and then, you know, finding those gaps. Do you see any gaps today? Multiple. Name one, top of the list. I can go on and on. But these are all different, different ideas. I went crazy I will tell you in terms of finding gaps so we said okay we want to make so that's how we made first phone for girls with Swarovski at that time the phones for girls in India was only by Dolce and Gabbana by Motorola now how many people can afford a Dolce and Gabbana in this country so we made a phone you know with Swarovski now again these very interesting consumer stories here we launched that phone because our team insisted no this is Swarovski it has to be expensive and And after a lot of India, I said, no, just make it in the reach of, let's say, common people.

48:15We priced at 5 ,000 rupees at that time. Is that the way in India? I remember watching an interview of yours when I was researching for today. When you were talking about the form factor on your phone, you said, what was his name? Jesper? Yeah. He said that whenever you look at a product for two seconds and look away and you have to draw it, you should have that one distinctive design element. That's a very different school of thought from the more utilitarian school of thought here, right? Is this what works for India and that works for the affluent? No, see, this is a time when there were only feature phones.

48:57There were no smartphones. Right. So how do you differentiate feature phones? Right. I think we're at a stage in the industry where it's hyper competitive. Yes. Every user need has been fully explored. Now it is all evolved. Like in laptops. It's already at the ceiling. You know, how will you… You can't reinvent. Right. This was the time when everything was evolving. Right. We're at a different maturity stage of the industry, I think. Right. That phone was also a dream when you came in. Nobody had phones that time. 2008, by then, a lot of people had phones. Yeah, but the penetration was not high because, you know, the GSM rates and everything was quite expensive.

49:36How big did it get in terms of numbers? From selling 10 ,000 phones a month, we were selling 3 million phones a month. How big was the overall market at that time? Total market less than 100 million in India. Together, less than that. So you were selling 3 % of the total market a month. No, no, no. There were 20. No, no, no, no. A third. No, no, no. So when we were doing 3 million, at that time our market share was around 25%. That's crazy. You were sponsoring cricket. You were sponsoring everything back then, right? Yes. So our big bet was on cricket and music. Because that's what the youth was into.

50:22And it was a blanket on, you know, whatever it is. yeah so and that worked also and this stayed for a while yeah for a couple of years this crazy growth trajectory yes interestingly we come back to our tariff questions the tariff conversation we were having earlier because that kind of was the problem right the Chinese competition which came into India post yes so so that was a time and again I will answer a couple of other questions which you were asking about you know why you wanted to and all. So there were a lot of learnings also in between. So for example, you know, when Meizu was raising the round with Alibaba, we were deep down with Alibaba that time.

51:06Yeah, raising the round and… So our paths have been intertwined. Yes. And a pretty big one. At that time, we were raising what, around$800 million round at that time. This is in 2000? 14. And secondary, most of it. Wow. Because the age was… So it was… Because the business was throwing so much of cash. Right. Yeah. So we said, we don't need money. But, you know, at that time, everybody wanted to connect it. You know, I remember. You could buy a few more BMWs. Few more than a few more. A few more. So this was going well. And then we realized that, so we didn't take that money. We said, okay, no, we are doing quite well.

51:46And we were, we said, we already have so much of. Bad decision in hindsight. So we thought that, you know, if we have taken care of the Finnish and the Koreans and that time, at that time, later on, because that time we never knew, but in 2016, 70, you know, that was the time when the, you know, the Chinese brand started coming in. So we thought, anyway, we have taken care of them. So we can, you know, we'll take care of this also. So, okay, let's, we'll go head on. But, you know, that was a very different game. Because, you know, when the Chinese came, they came up with so much of gunpowder. And you never know where the gunpowder is coming from.

52:29And whether there is an end to it or not. Do you think the government subsidized them to come in that manner? Their government? Yes. So, as I said, you never know. Because, you know, there were so many schemes which were running there. And not only the central level scheme, but also the state level scheme. the companies were funded by the states also. So we said, okay, we'll see. And then we started fighting. It was a prize, you know, prize battle started going on. You know, when the Xiaomi's of the world started coming in and then the... So before that, we were fighting, let's say, with the Samsungs and the Motos or the Sony Ericsons of the world or doing pretty well.

53:10And then you started, suddenly you start having a competition wherein if you're selling, let's say at 100 rupees, somebody comes and say, hey, I'm 90. And if you say 80, they'll say 70. They'll say 70. So that's how it's, so it's raised to the bottom. And then certainly there's, they were burning a lot of money. But can I ask a structural question? Yes. While it seems like a race to the bottom, because of the scale of manufacturing they have, is the cost of production in China inherently so much lower that at 80 rupees you can't make money but at 70 rupees they can. So that's yeah that's true because it's it's the whole supply chain which is you know which is established there.

53:55So probably what we were discussing there. If their bomb is 100 your bomb is 120. But you would also be importing that type of manufacturing. No. So see we established our first plant in India in 2010. So you started earlier. Way before Make It India started. So, but the components was coming from there. Right? And at that time, all these brands what we see right now, they were not there. So they started coming. And for example, all the brands were there in DVD players or MP3 players. And then they started coming out of that. And then the price war started. And so, and we also went into it. But somehow with the whole, supply chain and everything, then slowly your access to all the things started getting restricted.

54:46So for example, why Micromax became successful? Because in the industry where we are in, you're already looking for a differentiation. For example, if I was designing a phone, my question to myself was, why will I buy or somebody will buy this phone? What is different in this phone? Why somebody will not buy another phone? So that's how the differentiators were coming in. And differentiated was not only on the feature, but also on who's going to come up with the latest chipset first. Who's going to come up with, there is a 50 megapixel camera, who's the first guy coming up with the 50 megapixel camera?

55:18If there was a fast charging coming, who's the first guy to come up with fast charging? And the distributors used to look at, you know, look at us that, okay, they will come up with something new every quarter. And so when that access started getting stopped, when you're having to stop that. No, no, it's not the government, you know, because the scale shifted somewhere else. Right. And they preferred supplying to their own companies than to you? Right. And so the numbers and everything because their numbers started growing up because China itself became a very big market and the scale was you know became big because you know there are a lot of theories about micromax in the market.

55:57This happened, that happened. Everybody can come up with their own. Yeah. What is the theory the most popular? No, I keep on hearing different ones. Oh, they went tower into luxury segment or there was no R &D, you know, all this. But I don't know how many people know, when Nokia got sold, we took all the top Nokia, they had the gold division. We got all gold guys from Nokia and doing the R &D at that time. But whatever this was happening, all this, you know, coming from China, it was a global phenomenon. So it was not only that we were affected. All the other, let's say, there were other brands in Turkey or in Malaysia, other places, you know, everybody got affected.

56:40And I think in 2019, odd or so, we realized that, you know, you can burn money, but you can burn money till the point you know that I'm going to win the game. Right. But if the other person is having unlimited supplies, like a bottomless pit. A bit like today, no? All the loss-making startups in India, all competing downwards. Yeah. And see, and we built Micromax, I say, from day one, making money and doing that, you know, never raised any capital. Slowly, slowly, you know, build it and whatever, you know, we raised it. Said no to$800 million in 2014. So if you ask me in hindsight that… You should have taken it.

57:26Yeah, because see, that time we never knew that you had to create a war chest. Yeah. you create a watch and say okay now let's you know the biggest bull run in Indian equity markets imagine you put that in equity 2014 to today yeah so you know with 800 million dollars you sit on the casino table and you say okay now play yeah yeah so and then after yeah in 2009 then we realized that you know either we'll you know if we keep on burning with this space we will get finished we'll get completely burned out we will not have any capital left so we said okay let's stop burning money and wait for your turn and start focusing on manufacturing.

58:07And that's how we started building more factories in 19, 20, 21, and now. And that's how we pivoted on the manufacturing game. And the whole idea is that unless and until you have access to supply chain, for example, if today I have to make A triple screen fold. I don't have access to the screen. So how do you come up with the latest? When you say access to supply chain, Yes. You're talking about the company in China that gives you… That makes the screen. Okay. That makes a display. But the other bigger company there, for example, let's say, Huawei has a triple screen. Huawei has already blocked that.

58:50He said, okay, for one year, you can't give to anybody else. Because I'm promising you this much of volume. So, Nikhil, how it happens is all partners like supply chain partners, screen, battery or processor, they work with bigger brands and everybody has an alpha customer on their list. Let's say Huawei would be the alpha customer on their list. So every first technology would go to Huawei. He will block their capacity and when it is over, it will come to us. New technology means all resources they will depute to Huawei. And then it will come to the market and Huawei will take the first leg of new product which is launching, which goes for chipsets, screens, sensor across.

59:27But we'll never be able to make that on our own. For anybody wanting to start a consumer electronic company, you can't make that triple-fold screen that this supply chain vendor is making for your wife. No, if you're like a startup startup, it is too hard to make. It requires a lot of money. He might be making it. It's at a later stage. So if you look at Apple's strategy now, they feel like they're bleeding too much margin to their suppliers. They're doing vertical integration. So they're developing their own technology, their own screen, their own whatever. I thought there's outsourcing more to Foxconn.

1:00:05For manufacturing. It's only for EMS. Assembling. Just for assembling? Really? Yes. So Apple used to be a consumer-focused company, right? So in the start, they were very small. They were competing against IBM and big PC companies. So they targeted a niche consumer. the creative consumer, and they positioned the personal computer as a bicycle for the mind. So if you have an idea, you can use your Apple computer to manifest that idea. In the 90s, they started acquiring software companies to then create their own suite of content creation tools like iMovie, GarageBand. It's all to cater to the creator, right?

1:00:42Beautiful industrial design, great software that helps you take your ideas into reality. So after some time, they really captured the creatives. They had a partnership with Adobe. Adobe worked better on Apple computers. So once they got the creatives, the brand became really cool. So normal people, they also wanted to feel creative. So therefore I buy Apple because I'm a creative. So they won the consumer battle. And then to keep growing the share price, they needed to take the value back from their suppliers because they had outsourced a lot of the components. So in the recent 10 years, it's been a vertical integration strategy.

1:01:21now they do their own processors actually what we talked about before they get the TSMC latest there you need allocation they get the first batch before everybody else they get the latest technology from TSMC for Apple Silicon now they're doing a mini LED or micro LED they have their own display technology it's deployed on the Apple Watch already the mini LED so it's very hard for anyone to compete right it's a very tough industry And everybody who is an incumbent today has been around for 30, 40, 50, 100 years. Apple is like 50, I think, 50-ish. Samsung is older. Yeah, Samsung smartphone business should be similar, maybe 25 years.

1:02:07The Chinese brand, maybe 15 years. So every 10 years, the cards will flip. Yeah, so I think this is a very interesting thing. you're talking about competing or nobody can come up. We came up at that time. Yeah. Defying the odds. You know, globally there was, you know, no brand like a local brand who came and became like we were top 10 in the world. And that's how it was going. I still feel that can happen. Right? But we never realized that governments have to play a role in it. Because that time we never thought about the governments and the countries and all. Now we realize about countries, governments and everything.

1:02:50What should the government do? Yeah. So for example, you take our automobile industry in India. I think we have done a great job there. All the Hondas and Suzukis came initially, did joint ventures with the Indian companies. created a lot of ecosystem of supply chain. You see all the component players. Yeah. Right. And now if you see our automobile industry, we are supplying to the world now. We are a very mature industry in automobile. And if the same thing were true for mobile phones, what happened to Micromax would not have happened. Maybe, you know, the world order would have been different in terms of the brands.

1:03:29Right. Yeah. So any industry, you need to see that you want to make local champions. So for example, today in the worldly order, imagine if there are two, three local champions coming out of India who can make a global impact. I think it would be great for the country. But if we, there's a flip side to that argument that if we become protectionist of local industry, do we continue to get foreign money into the country? So I'm not saying that you stop. I'm saying you do, you allow collaborations. Collaborations where you need to learn. For example, collaborations with technology absolutely IP transfer yes work on IP transfer and then you learn so in 4-5 years you will learn right same as I said auto happened you know at that time now today you have all the local companies ruling the roost similarly you learn here 5 years 6 years so a lot of people ask me okay can you do this can you make a you know a very complex phone we said yes we can make a very complex phone but maybe it will take 5 years 6 years in India to do that but with collaboration I can start learning right away and then can do it, you know, very, very quickly.

1:04:36And how much did this 3 million phones and number fall to when things went bad at Micromax? No, no. It's totally started coming. Every year, it started coming up. We start losing. At that time, all the Indian brands were more than 50 % of the Indian market share. Right. Which completely got decimated. Right. What was the low for Micromax as a company? Which year was the low? I think that time in 2019, 2020, you know, in terms of the brand, Just before COVID. Yeah, we said, okay, no more. And then COVID could not have been fun. No more. Right? Yeah. When you go from a peak to a low, what is the one lesson that we can learn from your experience that you have learned already?

1:05:20Today, our manufacturing is bigger than, you know, the revenue is way more bigger than what we used to do in our brand, which probably not most of the people will know. Yeah. But we are doing way more better than what we used to do earlier. No, I know the Micromax comebacks. No, I know. I'm going to come to that next. I'm coming. So, in between, you know, you're trying multiple things. I think what has worked for us, you know, which we later realized that stick to your core. What did you realize is your core? So, my core was to remain with tech. So, for example, not start a real estate company.

1:05:49Oh, real estate is doing good, go there. Or something else is doing good, go there. Or something. So, this thing was already there. The whole manufacturing, the factories, what we created, you know, for Micromax was already there. So, why don't we build on that? and start doing for others. That helped and that's how we, so at Micromax time, we were having probably one or two factories. Now we have four large factories, fifth coming up and then... You just acquired a new factory as well. Yeah. And now you're scaling. Do you feel like you're stronger the second time around than you were in the beginning?

1:06:27Less oblivious, more aware? like I feel like once somebody is card the next time they're a little bit more differentiated in their approach this weekend I was thinking that believe me in Goa yeah I was thinking about that about something I used to do earlier and then I again thought I'm still doing the same thing which is taking big beds going risky and all like you know once we start doing, I said, okay, no, no, no more, no more. Stick, stick to your, you know, but… Risk is intoxicating, no? It is. While you're taking it. Yeah. It gives you a high. Yeah. And believe that, okay, no, no, no, this is something I think you can do, you can crack it.

1:07:18And then you go for it. And because it has worked earlier, then you start thinking, then you know, every time, you know, every time it's going to, which is not the case. So yes, while we are doing this, I am more aware. But the core is that. So once your core is that, you will want to take bigger bets. Thinking that something didn't happen before. You came out of it. So I think that's the DNA. As long as the bets don't go wrong, they always get bigger. Organically. If you had to bet money on some entrepreneur today, wouldn't you pick somebody who has screwed up a couple of times versus somebody who's doing it for the first time?

1:08:04Screwed up a couple of times, but eventually made it. Yeah. That is important. Yeah. Yeah. If eventually made it, then yeah, that's fine. I feel like this prophecy is true for all life. I like people who are a little bit screwed up in all domains. When I meet a man and I don't know what his vice is, I assume the worst. I'd rather know, okay, this is my friend. He's f***ed up like this. I'm aware. I'm f***ed up like that. He's aware. This friendship is good. When somebody comes to me and projects the idealistic mask, then I worry. Because we're all the same at the core of it. We're all inherently flawed as people.

1:08:45100%. Yeah.

1:08:48But thank you for that. Alright, Mr. Amit, you're next. Tell us. I think… I'm very interested in your story because both of their stories, him I know firsthand and his, I've read a bit. But your story is not so much out there. So I come from a small town, Bikana, Rajasthan. Typical middle class family. Father used to work with bank. Which bank? State bank of Bikana in Jeppure, if you would have heard of. SBBJ. Later on, they got merged with SBI. And grandfather was an advocate. So typical middle class. And when you're in a small town, the only dream is you become a doctor or an engineer. But I think I was not geared up for that.

1:09:35I was a very mischievous kid. Academically not very strong. I mean 60-70 % scorer at that time. Where people were I think 80-85 or… I was the eldest one in the family. You look like a studious type. No, no. No, he's fit. and he went to NIFT. NIFT is a little weird. No, right? The NIFT ones are the cool ones. I have some colleagues who are from there. Sometimes over smart. What's NIFT? What is that? Fashion college. Yeah, it's like where all the cool kids go. So anyways, see his shirt has a very differentiated color. It's not white, right? What color is it? Somewhere off I eat bejesh. So I went.

1:10:24People were, my parents wanted me to become a doctor. And actually I was pushed towards that career because in small towns, I think those are the two choice. And apparently went to Kota also for PMT preparation. Medical test at that time for crash course. But eventually realized that I think I can't do that. And fortunately what happened that my father was very, you know, bold. that he would get out of Bikaner, move to a bigger city and he moved to Kanpur actually. He got posted there. And when he moved there, I realized that it's just not, this is a career, there are people who are securing 80%, 85 % marks and going to Delhi for BCom.

1:11:04So I realized that Masscom is a course, BCom is a course, arts people are doing because of passion and well-familied, good educated kids. Then I realized that medical, I don't want to do. I enjoyed maths, physics, those kind of subjects where I don't need to mug up. And definitely a small town kids going to a bigger city. So you get a little bit buoyed away by what's happening there. I realized that then parents said do an IIT. Then I realized it's too late for me to do an IIT now. Otherwise you'll ask me to bunk for three years. And I think it's 98, 99. And eventually after graduation, started preparing for competitive exams and formally landed into NIFT.

1:11:45So I think NIFT Hyderabad was a real life learning for me. First time hostel, getting out of home. And I was into fashion management, not design. But maybe all the peers were design guys. And again, dad took a loan for me to go to college. So I had always limitation that I should not be spending more. And when my friends had higher pocket money. So I think my entrepreneurship still started from there. Tell me things about yourself that I can't Google. Or watch in another interview of yours. Because that's boring. I don't want to know. I mean, notorious kid, definitely. And I mean, I always had hunger to do something different.

1:12:32And in college, like I said, I used to look for alternate sources. I was again, let's say there was, high tech city was all call centers. If you look into it, Hyderabad that time. Converges and all. So I thought of maybe doing a job at a call center. Maybe picked some project at Converges. Not Converges, maybe Infosys was there. Went to ISB to pitch something. And maybe just started picking up, you know, some projects at our college only where, you know, there was a fest happening. Could you wonder the t-shirt? So I think my first entrepreneurship time happened from there on where I started making a little bit of pocket money from there.

1:13:06But I was always insecure in life that I'll not get the job. Otherwise, I was like… So you finished college and what did you do first? Yeah. When did you finish college? I finished college in 2004. And I got placed in the manufacturing setup, Orientcraft, if you would know, based out of Gdogan. So there's one of the largest exporthouse out of India. I thought I would not get a better job than this. So I stayed there. And I worked for three and a half years there. It was typically merchandising. And two years I did merchandising, I found it very boring. and I thought of leaving the job that time because if you would know merchandising is buyers say you something and then you copy paste do it I used to work for Ann Taylor Gap all those brands and then I started giving interviews actually everywhere outside I went to Barista can I do a job in marketing coffee day was big there was a back I went to Air Deacon for an interview to apply for marketing because I was fed up of my career at that time ironically three people who have proficiency in marketing are running consumer electronics companies we could catch the market pulse well actually and maybe i didn't get a job anywhere outside and i started taking on all special projects at the company what all the pain problems of the company i could take that and and you work with your brother no no no so my brother is 10 years younger to me.

1:14:30So he came in maybe 10 years ago. 25. 15-16 he came in. So I was… So he's 28. So we are talking about 2005 to 2008. He's 28 years old. No, he's 35. 34-35. You're 38. No, I'm 43. You're 43. Yeah, yeah. 43. So anyways, I worked there for 3 and a half years and then started picking up. You look very good for 43. Trying to, working with young founders, you have to stay tuned to that. Anyways, so I worked for three and a half years. They moved me to, I saw a huge gap in the international product development. I picked up that piece and that's where journey started. I moved to Hong Kong for the first time.

1:15:19And I think it was 2007 era where I saw global brands were there. And whenever I used to travel, people used to ask me, go and buy this thing for me, that thing for me. I used to import a lot of blackberries from there. I think it was blackberry time. So I used to buy and trade off for 1000 to 1000 bucks and sell it in India in my office. It was like jailbreak phones. So every time I used to go buy 10 phones and bring it here. And eventually I realized that I'm solving a bigger problem. Not electronics, but textile. Let me do it myself. And I started my first business in 2007, which was fashion accessory, textile merchandising basically.

1:15:57Buying house, quasi concept. And I had 60 ,000 bucks in my pocket. And again, how could you do a business with 60 ,000 bucks? So I started it in Seven, based out of Hong Kong. And I think that's where my journey with H &M started. H &M was my first customer. I worked with them very closely with the design team. So that's how I realized that there are brands which are built at center. So India was, I think, fashion, Big Bazaar time that time. It was Micromax and Big Bazaar which were at the bottom. And H &M was right at the center. Not cheap, not luxury, but selling to the world. Uniqlo, H &M. And that's how I think my roots got leveled at good quality product at an affordable price.

1:16:44Not the cheapest, not the expensive. I did that business for seven and a half years, eight years, traveling a lot. And then Gaurav, my cousin actually, he was 21. He became commercial pilot. I think at Airdekan time or Kingfisher or Jetterway, something tanked, no job. And he asked me to get an iPhone that time. It was just launched. And I said, are you mad? What year? I think, what time iPhone? The first one? Yeah. 2007 or 8? 8. 2007, 8. So I think, No, he asked me to get the iPhone 3 sometime. So I got an iPhone 3 for him. I said, are you mad? It is 25 ,000 bucks. And I got a jailbreak phone from Hong Kong for him.

1:17:27And I got a phone for him. He said, then I need to buy a cover for this. And there were no covers for that phone. And that's how our journey started. He said, let me get… I have a problem. Can you solve it for me? If I have a problem, my other friends would have a problem. So we started mobile accessories that time. In which year? I think 2014-15. I think Xiaomi came to India at that time. We launched iPhone covers. We flopped. All stocks are at home. Under the name Noise? Yeah, it's under the name Noise. So the company started in 2014. 14-15 we started doing mobile accessories. As a side job, he was as a hobby doing it.

1:18:03I was doing my business, what I was doing. And then iPhone, we had a huge failure because the market would be what, 0.5%. We were the only few customers buying iPhone. And then we flipped to Xiaomi. He was doing a side project and that's our journey came down. And then what happened? The business started becoming very big. The phone, all Chinese guys came in. The business started becoming very big. You sold accessories for the Chinese phones? Yeah, we sold accessories. Because see, please understand, we couldn't do tech. I was coming from a fashion background. I just knew designs. and mobile cover is just an accessory.

1:18:42I mean, it's like a t-shirt. It's such a simple product. You get it, you print it. We had a small setup also manufacturing in a factory where we used to ship thousands of cases every day. And then we realized that this market is getting super commoditized. And then when did noise blow up? I think in COVID. No, no, no, not COVID. I think we started picking up in 19. I'll tell you the trajectory, what happened in between. So we're doing cases. It was fine. And we realized that the pricing is going down. I mean, we started selling for 500 bucks and eventually it landed to 150. And 150, whatever case you sell, you can't make a big company.

1:19:19So we were growing, but we were a sub-100 crore revenue company. Then we thought of starting doing different categories. We launched, everybody said marketplaces, flipkarts of the universe. Why don't you do headphones, nickbands or whatever categories. We did that, we failed. There was no differentiation. There was no differentiation. And then out of interest, we realized what categories to pick. So our thesis was clear, we'll not fight the big boys. Like Sony was selling wired earphones or Philips. I said, why would somebody buy us till that time we were cheaper and you can't be cheaper till the time you cut cost.

1:19:55And we were searching for a smartwatch for ourselves that time in 19 something. I don't remember that time. And only Fitbit was available for 20 ,000 grand, Fitbit Blaze or something. We got a refurb watch for 10 ,000. We realized, is this a gap in the market? And that's how we started doing watches. The market was 2 million units that time. Maybe 2 million in a year. And nobody was doing watches. We started then and then it picked up in 3-4 years and COVID it picked up. So I think there was a tipping point of… So watch was the tipping point? Watch was the tipping point for us. Because you were able to buy refurbished for cheaper and…

1:20:33No, no, no. We bought refurbished for ourselves. But then we realized that there is a market which exists. Can we do in a brand where we could do up 5 ,000, 8 ,000 rupees watch, which is affordable to a mid-level consumer. Good part, Gaurav was 25 that time. So he had that young taste. He never wanted to buy cheap. And he never wanted to buy the most expensive one. And all India market was Chinese knockouts. So that was the desire to build. Can we use something for ourselves and gift it to friends, family? And today you're more known for earbuds? No, no, we are not known for, we are less known for earbuds.

1:21:07We are a dominant share for watches. Watches is more tough category. How much is your share now? We would be north of 25 % for the last three, four years. So watches are more complicated. How big is that market? It's close to a billion dollar market revenue. Wow. So how much are you selling now noise in terms of revenues? We would be watches, we would have close to 10-14 % of the revenue share. It's about 100-140 million. Close to 100 million. And the rest of the products in Noise? Are audio devices. So as in now, we were very clear that we have limited capital. We bootstrapped the business. So we couldn't go very width-wise.

1:21:48We never had the… Have you raised money now? Last year, we raised a strategic investment from Bose Corporation. And now how big is the business revenue wise? We would be somewhere sitting 150 to 200. That kind of 100 in watches and 50 to 200. And we were very clear we'll go deeper in the category because we never had capital to experiment multiple ways. Crazy, super impressive to have been able to bootstrap to that scale. I didn't know that. I thought you guys had raised the venture earlier. No, we didn't. I think it became a blessing for us because first, we never had to dress up our company for any external benefit.

1:22:31Like today, sometimes investors say chase GMV, second day they say chase market share and sometimes profit. So we were in that luxury of taking our decisions which were right for the business in the long run. So having less set of people, having less products, go deeper in the categories where you are. But Nikhil, this is what the difference is. You know, these are the real businesses. Yeah. Because see, if you see all older, you know, businesses. Yeah. They were all coming from their own capital or having access only to the banks. Yeah. You know, and taking the debt from the banks and doing those things.

1:23:06It was not like raising an insane amount of capital and say, okay, you go and experiment with somebody else. Yeah, yeah, yeah. Right? So, I think, yeah, these are the examples. No, no, crazy impressive. I like pushing people to see how they defend themselves. I'm trying to figure out how to push Amin. Yeah. Okay, so what is today for? Today is for any young Indian boy or girl under the age of 25 wants to start a consumer electronic brand. It could be cell phone, it could be TV, it could be speaker, it could be earphone, it could be smartwatch. We want to like plot a roadmap of what they need to look at, how to identify the opportunity, which vendor to go to, how to test the product and how to finally take it to market.

1:23:55We'll go into, do you sell on quick commerce? Do you sell on Amazon? Do you sell through physical distribution? So the first thing we thought we might do is establish market size. How big is the consumer electronic market A in the world? B in India? How fast is it growing there and how fast is it growing here? Should I start with smartphones? Yeah. Smartphones globally is about 1.2 billion units every year. In India, it's 120 to 140 million annually, depending on what number you look at. So if you assume that the ASP is$300, then 1.2 billion, that's over $300 billion just on the hardware side.

1:24:40ASP is average selling price. Very different in India compared to the rest of the world? Probably, yeah. Every country is different depending on the market dynamics for capitalization. Yeah. Where is the sweet spot? If I want to start making a cell phone today, where would I price it? Personally, I don't think there's any more opportunity and I wouldn't recommend any of my friends to go into this business. Right now, the market is very, very tough to compete in. But you need to understand that what exactly, if you want to make that, what exactly are you trying to solve? Are you trying to, let's say, make a luxury brand?

1:25:18Or are you going to make a mass brand? Basis that, you need to figure out your TAM. What is the market I'm going to address? And basis that, you can define, okay, this is that, you know, then you can find the sweet spot. Because otherwise, the category is like, if you see mobile phones, iPhone is$1 ,000. dollars. And then you're, you know, the average selling price, as you said, is right. Between the, you know,$250 to$300 in India. So maybe let me break it for India market perspective, so that at least viewers could understand it well. In a category like Truly Wireless, for an example, the India market would be like 60 million units.

1:26:01In a category like? Audio devices, for an example, like this, this market would be like 60 million devices, Let's say 6 crores. Yeah. And 90 % of the sales… And value-wise? Around a billion dollar market value. So… Can you just tell me… For India specifically… How much is smartphone? How much is TV? How much is earphone? How much is watch? So… Like… This… Phones… Who do you got? 150 million dollar phones? 150 million devices in India. Am I right? 150 million smartphones and then let's say still… around 50-60 million feature phones. Feature phones. So on a broad level, India has a penetration of 600 million smartphone users in the country.

1:26:45That's the right way to look at it. 60 crore people use smartphones, is that right? Yeah. More or less? More or less. I think you gotta look at the annual like 120-140 number. Yeah. They broadly say that 72 billion is the consumer electronic market in India. How much? 72 billion per year. Is it total consumer electronics? USD or NR? No, billion dollar wolves he's talking about. In that they say cell phones, smart plus feature is 50 billion. Very true. I think large market would be smartphones only. Right? Yeah. So in all the consumer electronics in India, because you make TVs and everything else and you make earphones and watch and all that.

1:27:32Where is the opportunity? For me, say I'm a 20-year-old kid who has managed to raise some money from somewhere and I want to compete in this space. Where is the opportunity? Tell me anything. Tell me wired earphone. Tell me… No, so first of all, I think anybody who wants to enter a space, first of all, everybody should enter to a space which is growing and has a larger time. There is no point to enter to a space which doesn't grow or doesn't have a future, for an example, which is not large enough because… So you're saying first you make a box of that target. I mean, if the segment is big and growing, then it's a point to go because if you're a 2 % player also, you'll be a sizable company.

1:28:11Let's say if you go in a market which is 1 ,000 crore overall revenue, you become 5 % also, you'll be a 50 crore company. It doesn't make sense. Which one is growing? The fastest? No, so… Okay, in our space, let me take you through top-down. You might understand. Let's say in this case, this is 60 million odd devices we sell in a year, which is 6 crores. And interestingly, 90 % devices get sold below 25 dollars, which is sub 2000 rupees. You're talking about Bluetooth earphones. Bluetooth earphones. So, and that is 60 % of the market revenue. Which is what… 5 ,000 crore is like this market. And 25 to 75 dollars, which is medium segment, entry-mid premium, that is close to 7 % and would be 15 % of the market.

1:29:02And then it is all$150 plus majority Apple, 1 % market share and then… So are you saying it's a good market? If I want to start, say I've raised$1 million. Should I start a earphone, ear pod company? So I personally think technology works in a very different way. It's not like fashion where you just create a product and sell it at any price point. Technology, you need an access to partners we were talking about. a lot of proprietary things. So I think it's a very tough space for somebody to enter. Yes, somebody want to enter into sub$20. Yes, they can. But that's a race to bottom. And$22.50, which is a sweet spot, like a thousand or 1500 crore markets, it's tough and bigger brands are sitting there.

1:29:45And when you say partner, everybody's partner is China? No, no, it's not about those partners. We have partners. So one is partners who are giving us chipsets. But then you need to have your own app teams. You need to have your own algorithms we were talking about. So those expertise is also needed. Mainly supply chain. For us, we have US partners, Chinese partners, Japanese, Korean. Yes, it's very international. So how do I say I have an idea to start an airport company? How do I connect with these partners? I'm a newbie. I have no track record. You have not worked in this industry. I've not worked in this industry.

1:30:26Completely coming from outside. I personally think, Nikhil, it's really tough until and unless you're getting to a segment which is fairly new and not being cracked by all of us. I mean, a niche space. But see, you guys started recently, right? I'll give you one example. So I did OnePlus. So I'm relatively known in the industry, right? In the electronics industry. And when we started this new company, Nothing, we wanted to make phones. Nobody wanted to make phones for us. They said, hey, look at the past 10 years. So many startups have come and failed. And why are you different? Do you raise money?

1:31:01They also raise money. You have experience. They also have experience. We're not going to make a phone for you. Like, go away. And then we're like, okay, we can't make a phone. Maybe we can make earbuds first to prove ourselves, to prove the skills of our team. We go to the earbuds factories, and they also tell us to go away. They're like, hey, just go on Amazon. There's 2 ,000, 3 ,000 earbuds brands. Who are you? like what's your differentiation? What's your strategy? How much money have you raised? Go away. Like even, we were shocked. Like we thought we had some reputation in the industry that, you know, some of the factories want to work with us.

1:31:40But that wasn't the case. So what changed? How did you do it? We went to the worst factory. Like the factory, if they didn't take us on as a client, they would go out of business immediately. In China? In China, because they were on the blacklist of a lot of other people for quality issues. And how did you find this factory? One of my co-founders, I think he, yeah, he knew some of the salespeople in the supply chain and found this factory. But this was a factory that had been put on a blacklist because of quality issues. But we had no other choice. Nobody wanted to work for us. That's where we started.

1:32:17That's true for all of us. We had to start work with factories which were less known. people don't want to work because bigger factories don't want to touch you also. They are saying we are happy making Apple bosses of the universe. Marshall. Marshall. But how do I as a 20 year old find this factory? Like you had somebody. I think you can't. Like they won't. No. They won't. What if I just go to China and look for them? But there's no reason for them to engage. Nikhil, these are the large businesses for example. If you see the size in terms of value, automobile and mobile phone will be similar.

1:32:50In terms of value. Yeah, very right. So if I reach out to one of you guys, if I happen to know you, and asks that you can connect me to a factory, is that the way to do it? If we connect also to the factories, factories has no motivation to work with you because everybody works with MOQs, certain processes. They find you working with… I would need to pitch who you are. I would go to this founder of the factory. Hey, I have a friend who wants to talk to you. This is this person's background and credentials. Can I make the intro or not? So… I have a recent example going on right now. So right now, we have this technology of making connected glasses.

1:33:34Right. Because we feel that's the future. That's where Wi-Fi is going to move. We are trying to find out who are the right brands who can do these glasses. And establish brands in the glasses space. Yeah. Right now, we are just pitching it to them. Like Meta glasses? Exactly the same. Right. Exactly the same. So with, actually with Meta. Along with Meta. When you say along with Meta, what do you mean? Meta is Meta, the operating systems, for example, the whole AI is from Meta. So which, so for example, they have done the same partnership with Lexotica, Ray-Ban. Right. Similar. Do you guys think there's an opportunity there?

1:34:16The form is changing and it moves from cell phone to something else? No, I think interestingly, our industry is evolving every decade. So like nobody thought that Nokia could be disrupted for an example. So any of our devices could be disrupted and form factors are definitely changing. People are working aggressively on glasses. So that is one form factor to look into. But like he said, it's a game of people who have, for glasses, I think all mobility is working. Entire mobile brands in the world are working towards that. So it becomes very difficult for a young company to still compete. Glasses you can do.

1:34:55Glasses you can do. So you got one gap. There is because see, look at the glasses industry. Last year, Meta with Luxottica, and these are public numbers, they sold 2 million glasses. 2 million. And the number what has been projected in the next 4 years is around 30 million. that's a CAGR of let's say more than 43-45 % on an annual basis right and since we've been working on that so the tech is so earlier the glasses came with only speaker here yeah yeah right yeah gen 2 there was a camera yeah in let's say gen 3 with this whole AI engine coming in there Gen 4 you have a heads up display correct now once you have a heads up display then whatever for example is going on my cell phone I have a display here on the frame no no no on the frame it's a heads up display like you have in your cars you're projecting onto a wall yes no no not on the wall you're saying like car speedometer speedometer yeah that's a heads up display you can see so here I can see so today for example if it is in let's say black you know black and white tomorrow it will be all colored it will evolve.

1:36:17And then for example if you're watching your Instagram Reels you're just flicking it. Just sitting and then you're not taking out your phone because in your phone you have a display you have speaker mic and a camera. All things are solved. Then why do you need to take out your phone? Do you think that'll be the future of form? Cell phone will move to glasses? See nobody can just firmly say that okay this is although for example Zuckerberg has said that this is going to be. But he said the Oculus and all of those things were the form as well for a long time, which didn't play out, right? Correct.

1:36:52So as I said, it's nothing right, nothing wrong. You have to go out in the market and test it out. Right. But looking at the tech right now, that what exactly is it going to solve? I think I've seen all the new glasses coming up. I seriously feel that this will be the the form factor to watch out for. Right. Yes. And there, so if somebody new watching this wants to get into the industry, this is the industry. Right. I have a different approach. If somebody was young and watching this and wanting to get into consumer electronics, I would urge them to first become a content creator. Bang on. Marketing.

1:37:32Because the barrier to entry is very low. Everybody can do it. And that's the arbitrage opportunity now. like the millennials and the older people, they're going to have a harder time to learn the latest algorithms, latest trends. 100%. If you do the content well, like Mr. Beast, like now you can do anything. Make chocolate, you can make a TV show on Amazon. When you have the traffic, you can, you have leverage to sell any product. Then when I do the intro to the factory, they will, oh, it's Mr. Beast, of course. It's just some random kid. It's impossible. But I feel there are very niche spaces which are coming up, which none of us are solving as bigger companies.

1:38:13When you look at our space, this product, hearing aids is a decent space. But right now, it's like 150 ,000, 1 ,50 ,000 rupees or$2 ,000 there is a hearing aid. It looks ugly. I see industry working in a space which is over-the-counter hearing aids, way affordable, looking better. That is one market. And when you look at our category wearables, I see now penetration has happened in wearables. Like as parents, we have used Rahul. Now the problem is we have aging parents. We need a device for them which could monitor their health. And more importantly, we live in urban cities. We have kids. And you won't believe I get a message from five people every day, do you have a kid's watch?

1:38:59Because none of us are looking at this space. The space stands at zero. You're saying for kids and senior monitoring. I mean, yeah, two spaces because see, first market… But can't an Apple watch do that? Apple watch does it but it's 50 ,000 rupees. Will India price point get solved with 50 ,000 bucks? India would need a watch for a parent maybe at 8-10 ,000 rupees. Not a 50 ,000, 100%. So… Coming up to his point of hearing aids, again, anybody watching, there's the space to get to disrupt. because all the hearing aids, if you see, are like 1 lakh rupees, 2 lakh rupees, close to 3 lakh rupees. Or like I, you know, went to buy from my dad to a doctor.

1:39:43It's 1.5 lakh rupees hearing aids. And I said, do you have a better one? They said, yeah, it's 2 lakh rupees. I said, what is the difference? Software difference. On phone. With this, we give you three more extra features which you can unlock. It's very uncompetitive in the market. I said, why? No, no, with these features, you know, you'll be able to understand if the voice is coming from behind or front, all these things. Then I went into why these hearing aids are expensive. Because back then, putting something in a small form factor was expensive. Was expensive at that time. But not today. I think, no, it's not about this also, Rahul.

1:40:23So cost would be cheaper for the manufacturer who is selling it brand. But it's just about only one or two brands doing that business, selling at maybe 80%, 90 % gross. There's one company I'm just forgetting. They have the majority market share. They have all the three big brands in the world. Yeah, yeah, yeah. Hearing aids. Yeah, there's one company who's bought out all others. Three to four big brands in the world. Is it a big market? It's a narrow, not big. But is there another advice? Pick narrow markets where the large incumbents are not going after. Yes, if you're passionate about it. Yeah.

1:40:55Passion has to keep you… Explain, like why would I be passionate about hearing aids? That's what I mean. If you're not passionate about a business you're starting, like businesses are tough. There's some good days and a lot of terrible days. So if you're not really in love with what you're doing, it's hard to persevere when it gets really difficult. But can I be passionate about hearing aids? Some people are passionate about it. Some people are, by the way. They are trying to solve real problems. No, we are. I mean, if somebody wants to do it, you know, crack the code, go out of it. So, for example, you're saying you want to introduce someone and all.

1:41:29I mean, we can introduce to them all the chipset players, you know, all whatever. Because nobody's there in that space that's available for somebody to take on. And we're ready to fund them. Right. 100%. Think I'm not interviewing you guys. Think I'm a 20-year-old boy sitting in a room. I've had the great opportunity of sitting with three of you. I have a million dollars. I want to build something in consumer electronics. I live in Bangalore in India. So you three have a conversation and I will try and learn along the way. And intervene once in a while. What else? We have already given the cards for example.

1:42:03You know, the glasses, hearing aids. What else? What nots? I'll be very clear. If somebody is trying to go to a commodity market, it's no go. It's a race to bottom. There is no winning there. What is the commodity? I mean, let's say somebody says I want to do an earbud which is 1500 bucks. No go. How will you win? I mean, what's your right to win when there's overcrowded market? And when large plays are there? I'm a content creator. I have distribution. Let's add that. I'll tell you, content creator also has a shelf threshold of, let's say, whatever million followers they have, they could reach to 5 ,000 units, 10 ,000 units.

1:42:40Not beyond that. Didn't somebody, a content creator, recently sell a watch and he sold a lot? Yeah. What was his name? Shlok. Enark. Layers. Yeah. Shlok. Tech Burner. So they did it, but if you look into it… What if the kid is 10 times or 100 times bigger than Tech Burner? Mr. Beast has done that. But I'm just saying tech is very different. Tech, they failed because the product was not up to the mark. They were new in the town. It's not like selling t-shirt. You can just stitch it and sell it. And there is no tech to it. A same factory makes a 300 rupees t-shirt and a 30 ,000 rupee t-shirt also.

1:43:20So tech is not like that. But if you're outsourcing the tech, the production, if you're going to a co-packer almost. No, it's not like this business. So like all of us, we choose what components to get into. That will get into it. It's a super customized business. Some of the software layer are being customized at our level in our teams. Some are outsourced. Am I right, Karth? Yes. And then we design a product and then it comes out. It's like a CPU. It's just not you buy from it. You choose specific components, run software on it, develop software. It's not that easy. That's why companies are failing.

1:43:56So I had the same idea before trying this business. There's a bunch of factories. They all know how to make it. We just go and order and then just pay them. It shows up. Done. That can't be further away from the truth. Like these factories, sure, they have the common models that you can buy off the shelf, but everybody can buy those. Yeah. And they don't have the best engineers. like the best engineers they're not going to work for a factory. They're going to work for Apple or Samsung or like a brand, right? So they don't have good engineering. So what is happening in China and what is happening at Apple?

1:44:26Explain the engineering process. We just were discussing we weren't on a break about the camera. Yeah. Yeah. Yeah. Camera is a great example. Like if you want to create there's so many fields within these products, right? There's a radio antenna there's industrial design there's camera there's software it's like so many different things. everything requires a lot of investment and time and energy to do it well. So I think maybe taking a step back, the one piece of advice is to really also respect whatever new thing you're doing. Like, okay, now we're making earbuds. Let's learn about how to make earbuds, how everything works.

1:45:03Well, now we're doing camera tuning. Let's really learn about how that works. So we just have a very simplistic view and outsource it to other people. We don't even know what the underlying principles are. It's going to be very bad. So just for camera, we've been struggling with camera. This year it got a lot better. It's not that we're not smart enough, but the camera is a very hardcore resource investment. The way it works is you make the phone recognize the scene. The scene could be two people sitting here. It could be nighttime. It could be city. Fruits. Fruits. The more scenes you can define, the better your pictures will be.

1:45:41The more you can define, then each scene will have its own tuning. The team will tune it differently depending on the scene to make it as beautiful as possible for this specific scene. So if I have a big team, I can define a lot of different scenes. So then there's a very high likelihood that the phone will tune it in a way that's nice. If I have a small team, I can only define a few scenes. So if I only have a few scenes, then I'll miss a lot of the long tail potential use cases for the camera, and customers are not going to be happy. Yeah, I think identifying gaps and as I said, you know, in terms of passion you were saying.

1:46:17So, still so many categories are there. Example. Let's take an example of Dyson. Can you disrupt? Bang on. So, if you look at India as a market, there is no Dyson. Yeah. It's just Dyson which is like 40 ,000 bucks and there is Bajaj to buy. No. So, there is a company called Shark Ninja. The number one in the USA. There. Disrupt Dyson completely. By Dyson, do you mean vacuum cleaner, hair blow? Multiple things, yeah. Home. See, if you look at it, there is no young brand in home. Look at the customer. Our parents grew up buying Bajaj. We aspire to buy Dyson, but Dyson is too expensive. So look at that 25 to 35 age group, what they would buy.

1:46:56So, for example, if I have to use an analogy, if Dyson is the Mercedes-Benz… Yeah. No Toyota is there. We need a Toyota, a Honda, or a Hyundai. We have Maruti. So, Maruti is Bajaj? I mean, those kind of companies, yeah. So, you know, these are the segments. So, you have to really identify those gaps and say, yes, is there a market? And I think… But also… And if you have a passion and all, you will figure out a way. You know, find out the right people. Maybe take a step-by-step approach. Like, instead of starting your own company, work for somebody else. That is important. Learn it. if there's so many mistakes you can make in our industry if I didn't do it like once before the chances of failure would have been way higher it's like eight to nine months of a cycle when you're committed and when you're committed you're committed with few million dollars you can't get out Carl you've said the easiest way to differentiate is design in a bunch of interviews can't I look at the same devices, but re-look design altogether?

1:48:07And do what design? Like re-look my design philosophy altogether. Why do earbuds have to look like this? What if I change the form factor completely? Then there's PMF risk. What is PMF risk? Product market fit risk. So if you look at our products, that product and this product, design is different, but actually there's very low PMF risk because these are products that consumers already know how to use, what to use it for. They already buy a lot of them every single year. If you deviate too much from the current product definition, then you have to take care of the risk. And then it's a question of whether the risk versus the reward could potentially be worth it.

1:48:50But there's no way to test it? You can test it. You can do a mock-up. You can even use AI to generate a picture and then go and speak to people. But I think besides mock-up, it's all about functionality, usage. So that also plays a bigger role. So I think we don't want to change people's behaviors the way they are doing. Just little changes. It's a different business strategy. I think we're in the fast follower strategy or late mover strategy. Explain. So we're coming into an industry that already got created by other people. And we're just trying to carve out our space within a big industry, a billion units a year industry.

1:49:29that was created by other people. So then we don't take the risk. We come into a very mature category. And then we can differentiate through design. But if you're creating something new, like back in the day, drones were new, or now electric vehicles are new, or robotics, then you don't have to differentiate on the product because the technology is fresh enough as a differentiator. But then you have the execution risk on the technology and also the PMF risk on whether consumers will want to adopt this product or not. I personally think late mover is easier for me. That requires a different way of thinking, more survival-focused, more capability-building, more long-term thinking.

1:50:13Whereas the technology approach is more like, you have one shot. If it works, it works. If it doesn't work, you've got to start over again. So just asking Carla one now. So, Karl, on the phones, for example, where do you think some disruption can happen? I think the disruption can happen on the OS side. I think the hardware side is very hard to differentiate on because all these suppliers that we have, they're all very concentrated, and they're very strong, and they're investing in their product roadmap, upgrading their batteries and processors incrementally every year. Like we don't, we can't really differentiate.

1:50:57And as a supplier, you want to sell to everybody, right? But if a phone, you know, the form factors are changing now, four-level phones are coming in. Don't you think if you can bring the cost by innovation of the four-level phones down, it will have a mass adoption? Because relatively, it's a game-changing thing because, you know, from a single screen, you're going to a bigger screen. Or maybe a triple screen. That's also not up to us, right? because the screen manufacturer is the real decision maker for that product. It's not us. Also, just to adding on to it, a screen manufacturer is also booked and he also wants to take advantage of it because he knows after three years, there's going to be the same price as a normal screen.

1:51:37So he will also not reduce the price. And you want to go with the biggest vendor instead of a startup like us. So I think for us, our biggest opportunity to differentiate in our next phase is through the OS. I think the next differentiation for all of us would be through software only. But aren't you using one of two softwares which are in the market and operating your devices on that? So, phones is a different universe. They're Android or iOS. But in our case, we work on OpenATOS operating system where we build our operating system layer. Right. And what I mean is more softwares would come in like, could I fine tune my audio based on my hearing capabilities of my ear?

1:52:27Like Apple is doing it now. It's pure software. Or could I have AI capabilities in this so that I could interact with it? A lot of companies are working on a friend kind of a concept. So it's all software what I see is happening. And same is going to happen on the... Today we're based on Android. but I see some disruption opportunities to become the next Android. Blake? I think there's a couple of trends, right? The one trend is, if you look at the current big OSs, iOS and Android, they're very successful already. Android has 3 billion plus users. iOS has 1 billion plus users. So they can't really change the product that much.

1:53:09If you change the product, a lot of people are going to be confused. because they have too many users. And it's very profitable. They're making a lot of money on the software and the services. I don't know the number for India, but in the U.S., Apple makes$100 per year on each iPhone user, just on non-hardware stuff. It's a very high margin. Very profitable, very big. Now the disruption moment is with Gen AI and large language models. Correct. If you look at recent news around Apple, they announced Apple Intelligence at WWDC. and still today, almost a year later, there's nothing there to use. Now they're reshuffling their management team and this is like four years after ChatGPT.

1:53:55It took a long time to implement this. So I think one, they're too big and too successful. So then the question is like, how do you disrupt? Like, what is their biggest moat? I think for, at least for smartphones, their biggest moat is their developer ecosystem, right? If today we launch our own OS based on Android or a fork of Android, we don't have any apps on the phone, no app store, no apps, nobody's going to buy the product. Like, I want to use my apps. But again, if you look at AI, there's a disruption moment for app development because now with AI coding tools, you just need to write what app you want and then it shows up.

1:54:37in the future you can just speak what app you want into the phone and that app shows up. So then that gives a smaller company like us the ability to compete with iOS, which has, I don't know, a million, two million apps already. But we can empower every normal person to also be an app developer. If you have an idea, you just speak your idea into the product. Therefore, we can also quickly develop our ecosystem of developers and apps. So I think that's the main opportunity that I see, that a younger, more nimble company can navigate a changing world way quicker. And the big moment that's enabling all of this is the advancements in AI.

1:55:18How else can AI present opportunities if I were to want to build something in consumer electronics as a 25-year-old? It's kind of like the personal computer. The example of, it enables you to manifest your creativity into reality. The personal computer allows you to go to Photoshop, GarageBand, iMovie. Now, like, creating stuff is easier than ever. Like, we talked about creating apps. You can create graphics, create advertising, create content, create product design, code. It's really, in one way, lowering the bar to creativity being manifested. I think that is one segment which will again a great idea, you know, for all the youngsters.

1:56:05For AI, in terms of training the models, you know, we all see that you will need these many GPUs, you know, hundreds of GPUs, thousands of GPUs to train your models and all. I think all those things are going to, you know, will change. There will be a time where you will be able to train the largest of the models using one single server. You will not need a farm of servers. We have seen a trailer in the form of DeepSeek already. And I think very soon, we'll be able to... So what it implies that how it is going to change? So this means that the access to technology will be massified. Right now, it is with only a few people who are working on these LLMs, for example, running 405 billion tokens, or now the new model 7, 780 billion tokens.

1:56:56which only big server farms can do. But once there is a technology wherein within a single server you'll be able to, you know, you can run your models. I think then all the youngsters and they are way more creative. They will be able to come up with, for example, an operating system. They can just come up with an OS and then figure it out. Maybe then find a Mr. Beast and say, okay, hey, I have this. and then so but there will be numerous opportunities coming out of that once it's massified one trend that I see in the market is the youth of today does not want to buy from the corporations of yesterday I feel like things like Louis Vuitton Gucci are not cool today like they might have been 10 years ago everybody wants streetwear the new independent brand look at how you are dressed for example Do you think there's a play there if I start a consumer electronic company where I will use the narrative of not a corporation?

1:58:08I think there's an opportunity, but I think you would first need to start in a different category. Yeah. Like make a fashion brand, make that successful. Then you have the credibility to go to the consumer electronics suppliers to get them to want to work with you. because they've seen so many, these guys have seen so many failures and so many pitches. They're very pragmatic. That's an interesting idea. So you're saying start an independent design-themed brand, start elsewhere, succeed, and then transition into this? You have to have volume. That's the core of the consumer electronics industry.

1:58:46To be able to work with these suppliers, you need to show the numbers that they can believe in. So look at our case, like we didn't come from electronics or consumer electronics background. So in my wildest dream, I could have never thought of, you know, working in a space which is led by mobility brands or other brands. So we started with mobile accessories. It's like I still say it's a T-shirt business. It's a simple case. You just print designs and designs are a character. And we started understanding the user consumer pattern and knowing and started building volumes. our partners saw a confidence in our SQR.

1:59:23They are doing good volumes. We could test something with that. So maybe our entry also was not on day one here. We learned consumer from a basic business. But by the way, I have a very fundamental question which I have realized as a founder. What is the segment of the market you want to chase? Like what customer you want to… I'm asking you that question. I don't have data like you. No, it's not about what I want. It's about what you want to build. I'll tell you for an example, the game what he's doing. He's saying I'll not fight the cheapest in the market like he's not doing the Xiaomi Play. But what he's doing is in the mid-segment, which is super painful, which needs time.

2:00:07His gestation would be, success will not be shot up. He would have a patience of three to four year capital to build it. and then there are chances he might see and might not see success. So as founders or whosoever young people want to start, they need to be very clear what segment they are trying to build because different segment, when you talk about design. If I come to you with a blank slate, what segment would you recommend I build in? If you ask me, I would say don't go for the mass. Mass is important, but have some brand aspiration, have your identity, have your brand uniqueness. No point to fight for a commodity that's a raise to bottom.

2:00:43You buy for$20, sell for$20, somebody else will sell for$15,$12,$11. Have your own community, one narrow cohort of users who are selling. And that community should be your evangelist there. And that always happens at somewhere a little above, not to the basics. You're not solving basics of anyone right now. How does India build the supply chain? Great. So it's a process. So the process is that you start with, initially, to start with EMS. EMS is? EMS is the Electronic Manufacturing Services that you start the EMS process. Then you start getting the design out there in country. Then after design, you start working on the supply chain, the component ecosystem.

2:01:33Right. So this all is a process one by one. I mean, if I'm 25 and I want to start a component company, I raise a little bit of money, put up a factory. How will I ever compete with somebody in China who's manufacturing millions of units? So you can do that. So there is so much of material which goes inside. For example, a glue on a glue machine, on SMT, is a glue. That's glue. So I just found out that glue, the particular glue is still coming from China. Why can't we make that here? And I started finding out why the chemical companies can make that glue out here. You can do that. Probably there is, maybe somebody has to find out and get into that.

2:02:19I know someone, you know, who said, okay, after finishing my engineering, what should I do and all? And then went on search that what India is importing a lot. And he found out all the coins material. Right? For the coins, currency coins, the material, we still import. We started making that, we started supplying that. So you just… Is that an opportunity for me? I think US will, in the tariff world, not buy from China like they once did. Components is a huge opportunity. So for example, now India is projecting a market of$500 billion by 2030. It's a huge market. 60 % of that is components. And we're also incentivized to use the locally manufactured components.

2:02:59If manufacturing is coming here, 100 % components will come here. Like batteries… That's an opportunity too. 100%. Like I want to make money. I'm 25 in this industry. Component is part of it. EMS is a, I think next 10 years is EMS. So, and the component PLI scheme is coming. Maybe by the time this podcast is out, the scheme will be announced. How do I go about starting that? Let's say a EMS company, a EMS manufacturer. So take a mobile phone, get into each and every component. There are so many, there are, so in a mobile phone, there are, let's say 700, 800 components. Maybe in his phone, maybe it will be more.

2:03:32iPhone will be way more. Right. Get into that. How do I find that out? Like, I want to know. I'm assuming US, China are going to hate each other for some time more. Apple phones are made in the US. They can't buy that particular product that they have been from China anymore. How do I figure out what that component is and then how to build it? Just tear it down. Nikhil, these days it is actually simpler. You go on ChatGPT. There are sites on internet where you could just see tear down of every phone. You can find out what are the components and then you find out how many components are there in India.

2:04:07Go on the export list, import list of what all are getting in the country. Right? What is the volume? And these days you can get access to all the customs data easily. Yeah. So, huge opportunity. You should also work at EMS to get some industry knowledge. Experience. If somebody working with him for a year, he would know everything where there's opportunity to lie. How big is the incentive for someone like Carl? Say you're selling nothing phones in India. You source from me in Bangalore versus a Chinese component manufacturer. Is the incentive enough to warrant the change in price? So right now we have to pay duties on components that are sourced from other countries like China.

2:04:54So the more we can source locally, the more we can lower the prices of our product, then be more competitive on the market. So we're very incentivized. And if we're able to tap into PLI, and I think the PLI regulation will also be more and more requiring of the brands to source locally. They will raise the bar every single year. We're very incentivized to source locally. As a business, we just need to make the best position for our shareholders. So till now, you've told me, go to ChatGPT, figure out... No, no, just as I said, These days, there are a lot of avenues where you can go and find out multiple sort of information.

2:05:34Right. So I figure out one component which is going into US cell phone manufacturer, which is coming from China. And then I go about figuring if that raw material is available in India. I identify that there is. What do I do next to set up a factory which makes it? Okay. Let's take an example. Karl, can I use your phone?

2:06:00Let's say these are this USB socket. Yeah. Right. This USB socket is the most abused component here because let's say a million times you're going to. Right. So this means to say that this will require a special sort of material. Study that material. Where that material is available. Who is manufacturing it. At what cost. and absolutely go to the root of that. And then see what are the... If you can go and visit these factories, buying, tapping someone, getting into a network. These factories in China? Wherever. Wherever. Wherever. If possible. See, and then understand the standards. See, why this is not happening?

2:06:49Why I gave you a glue example? Because people said, no, India can't make that. Why can't we make that? We have fantastic in chemical, our chemical industry, our pharmaceutical industry, they're doing brilliantly well. Probably there is, maybe there is, you know, not awareness of that, or the volumes and everything. But I think it's, if you are going to go, let's say, from 100 billion to 500 billion dollars, it's a massive opportunity. Similarly here. What else can be done? Like, see, the outcome of this is we want, even if it's five kids who start solving for the supply chain problem dependency that we are talking about, if that is the go-to action that happens because of the time we have spent today, I think we can all say today was worth it.

2:07:35And I think we will need 5 ,000 of those kids because it's a huge universe. And we don't have it here. We have to bring it in. Yeah. And by the way, brands like us are desperately looking for people to do it for us. I mean, it's our need also. What is the biggest need? Say two things that you want. Let's say for us, for an example, in watches we do, the largest component is the screen. The screen is like$5 or something. And if I import, there is a 15 % duty. Which means every screen I am paying what? One and a half? Close to$1? If you make it in India, it's a huge volume. It's maybe half a million, one million screens a month.

2:08:16What is the margin in screen business? I'm sure if we cost arbitrage, if you look into it, if it still makes 10 % or 7%, it's just one SKU you have to keep producing. Oh, you know the smartphone screens from China? Those companies are losing money to sell the screens. Yeah. Because they have policies that subsidize the creation of that industry. So at least for the smartphone screens, it's very hard for… So you're saying our import duty has to be higher than their subsidy at the least? At the least. Yeah. So one is import duty. And second, of course, the PLI schemes coming on components will incentivize to use more Make in India.

2:08:57Any advice to the government? Because I'm sure somebody will be watching. How should the PLI scheme be structured for components? It's already structured. It's just going to be announced in two, three days. He would be a part of it. It's a good scheme. Yes, it's a good scheme. It's a good scheme. But see, the larger point here is that you have to ensure that locally made products make more sense for anybody who wants, who's selling, let's say in India. I'm not even talking about export. If Karl wants to buy, let's say, a middle frame, he should be able to source it locally and it should be cheaper for him, not because he's forced because of a regulation.

2:09:43It should also make sense economically for him to do that. And that in today's world, because of scale, can only happen with custom duty or the tariff. Yeah, so tariff, no. Depending on the components. Yes. I think plastic should be very easy, right? To replicate here. Yes. Plastic and, and second, as I said, the government incentive schemes. Because, you know, if you see how China was built, because of all the government schemes only, and why their exports went up, because the export schemes are like massive. You three continue talking. Like I am a 25-year-old. I'm trying to learn from three stalwarts of our consumer electronic industry.

2:10:23I want to make money. End goal. The biggest moneymaker is like the industries with fewer competitors, right? Like Nvidia. Look at the Nvidia share price. It's insane. But even for our industry, I think the chipset makers, their margins are way higher than the EMS factories, right? I don't know, is it Qualcomm is 40, 60? 45 % I think is just declared, yeah. Gross margin. But Foxconn is, I think, 10%. So, eventually we also have to move upmarket right into more and more difficult lower competition areas of the stack. Yes, but, Karl, again, Nikhil's point is that how do we inspire the young generation out here to start doing something?

2:11:14You know, how do they spot opportunities? So, as I said, if you tear down the phone, what are the easiest five things, ten things you can just pick up and say, hey, this I can do. This is a little, it's not that complex. By the way, you know, he's right, you know, so making these mechanics, for example, the precision mechanics is not that easy. We still, you know, a lot of things are getting imported, even on precision mechanics. Yeah? Yeah. But once there are a lot of incentives and all, we have ample people here who can take a shot at that. I'm curious to hear, how does the next Qualcomm, if a kid is watching this, say 30 years later, they've created Qualcomm, the next Qualcomm.

2:12:05How does that path happen? You know, Karl, you're just straight away talking about a moonshot. But instead of a Qualcomm, one Qualcomm, I'm saying, can we make, for example, if I have to take an example of automobile in terms of components can we make 300 or 500 mindas here? Inde is a good example. Auto is all making money.

2:12:37Makes sense. Yeah, I think that's a very large opportunity knocking on our door. How much money would I need to start a factory around say the USB port? I think it would be very less, right? For USB port. It's not easy. You would know it the best. Yeah, it's… You know, Mali and all, there are like specialized Europeans who are working on this. But again, it was just an example. But once you go inside, Nikhil, as I said, you can find out… For example, inside there is a… You have battery. One battery to dissipate the heat. You need some mechanism to dissipate the heat. You need a graphene, small film of graphene, which you can put, which can dissipate the heat.

2:13:26You can make it air. It will go in every phone. So I'm not saying straight away you go and target, okay, I'm going to make the next Sony camera or something like that. And the PLI scheme will incentivize all of this? So as of now, they have structured it for, let's say, components which are high in value, let's say, which covers 70 to 75 % of the mobile phone. But these are all B2B businesses then. Everybody has a different inclination towards what they want to build. No, anything is fine. I just want to build something in this space where I can actually make money. Is there financing available?

2:14:05Let's say I figure out a certain product, which is under PLI, that I start building. But I don't have too much initial capital. How does one go around getting that initial funding? If I come up with a business plan and come to somebody like Rahul, will you give it? Yes. If I see that your product works, working as per the standards, and then… Would a bank give it? I think yes. But of course, bank works on collaterals. I don't have collateral. There are a few banks who might, you know… Is there some startup scheme, some government subsidy where I can get that initial capital? Yes, you can. There are multiple schemes.

2:14:44Again, yeah. Very good point. There are so many schemes which people are not even aware of. For example, for MSME sector, for ESA, you know, from Invest India, from Startup India, there are multiple schemes going on which people are not even aware. I'm not aware. How do I find out? You have to do so much effort. Then you need to go after that and find out how many schemes are available and then one by one. Which one applies to me? Yes. For example, there is a PLI everybody knows, but there is a DLI, which is Design-Led Incentive. For the chipsets and all. You should know that. There is a grant for that.

2:15:20You need to show your designs, government, you know, they will come inspect and see what you are doing and then you can do that. For a right idea, you will knock on 100 doors, one door will open. But you need to knock. You just can't say that, okay, as you used to say, either a bank will come up or a VC will come up or a government scheme will come up. Something will come up or a right idea. I was reading this thing. Somebody had sent me an email saying semiconductors, something drastic is happening in India. Is that a possibility? Like drastic means? Like, so the backstory goes that at one point India was really focused on semiconductors.

2:16:05There was one particular factory which burned down. But in the last 20 years, we've been left behind or 30 years, we've been left behind. and they're restarting the effort to manufacture more semiconductors in India. Is that possible? With TSMC and all of that? The whole world is relying on them. You mean like start a new TSMC or get TSMC to… Like both semiconductor design and manufacturing. Can I… So you can't create a TSMC… I think it comes down to like the depth of the thing, right? Like how many millimeter… So we're working in one of the companies on semiconductors. And what you're referring is, there was one fab in India, only one fab which was in Mohali, government owned, long back, doing probably, you know, 100 nanometers or something like that.

2:16:55Today, TSMC is doing 2 nanometers. 2.3, 2.3, correct. So, of course, I mean, you can't catch up with 2 nanometer. Even, see, China started their semiconductor program 20 years back. They're still not able to compete on that. But it is very, very important. All four of us, like 15 years back or so, have you ever thought that semiconductors will be more valuable or important than oil? Not even a thought came across to our mind. Back then. But if you see today, it is. And I'm assuming the same thing. I'm assuming US-China continue to fight and Taiwan becomes… I don't know, maybe our friend in that fight or maybe not our friend.

2:17:39if our supply chain gets disrupted where we can't get those 2 mm semiconductors, what does India do then? It's a tough question because it is divided in multiple parts. So it's not only about 2 nanometers. 2 nanometer is only one segment. So government is saying, you start with let's say 35 nanometers right now is good enough. Because you have to start coming slowly one by one. Right? So even that if we can start at 35 because those are larger components which can go into other things refrigerators and TVs vacuums and round cars and all and then slowly slowly you start coming in for the ITs and the mobile phones but at least we'll start attacking the 35-40 nanometers 25 nanometers start attacking that so that is the opportunity straight away you can't leapfrog.

2:18:37As I said, China has put billions and billions of dollars and still they are not able to achieve that. And again, it's a country play. A company can't build something like this. Country, you know, has to come into it. For example, to do a, let's say anything less than 10 nanometers, you need to have lithography. What is that? It's a machine. It's a technology. That technology is right now with with Holland, Netherlands. There's a company. This company name is... ASML. No competitors. Yeah, so ASML has those machines, right? You need to have access to that. In those machines, the software actually is coming from the United States.

2:19:21So it's all a... Because it's a game where you need to work on this technology and need to stabilize the technology. So the government has to come and play into that. So it's way more deeper than what we feel. because, you know, but, you know, semiconductor is a vast range. It's not only that, only doing a TSMC, because when we talk about semiconductors, we always talk about TSMC. Memory. Why can't India have its own memory? Can we design? Arul, let's, for example, in your IT, there is Gen 4, there is Gen 5, now there is Gen 6. Why can't India come up with, let's, I'm talking about, let's say Gen 8 or Gen 9.

2:20:02End of the day, you have to have that. So these are all opportunities. I'll ask you a question on top of your question only. Why is it not happening? Because in India, we were good in services. So we were, our services sector was doing good. So people said, okay, let's build on the services business. So if you see all these Gen 4, 5, half of their manpower will be sitting in Bangalore and Hyderabad and designing for the other bigger brands who are somewhere in US or other countries. but not for us because A, we were not having those government programs earlier. They were not right. Not focused on creating something like that.

2:20:44So where the buck was moving was okay, service is an easy business, let's go there. Half of the people working on those technologies will be from India. He was talking about Qualcomm or MTK, their biggest R &D centers are in India. Yes? So the folk, but now we have, you know, with the current government, all the new schemes coming in, people are becoming more aware of that. See, today we are discussing about semiconductors. Otherwise, if it was a consumer brand or electronics on that, why will we be discussing about semiconductors? Because now all of us, because of the policies and everything on whatever happened, we are more aware of that.

2:21:28You're doing a bunch of very new things, right? Like with television, operating software. There's one company that we're both part of around television as well. What's happening in that world? Would you like to tell us? No, that's more on the aggregation because the way we consume content is completely changing. Can you tell us your thesis around that? The thesis is that you buy a product and then you start getting multiple apps and then you start paying different apps. Then your user experience is then that whatever recommendation, one is showing something else, the other is showing us some different recommendation, third is showing something else.

2:22:12Why can't I have an experience where I switch on my TV and then I I don't have to go in any app. There is one user interface and all the apps are stitched into that. You just type in your, let's say, username. Let's say, nikil at gmail.com. And then everything from your Netflix to your Z, to your Sony, as per your choice and recommendation, everything starts coming on one screen. You're not going in an app. That's one area. Because again, it's an evolving space. and then you bundle it along with the hardware piece wherein you move on a SaaS model. How do you... I'm pretty interested in this business model because as a content platform, you don't want to be unbundled, right?

2:23:00You want your own app, your own user experience. Yes. How do you get their stuff... It's not in their incentive to unbundle their content. Like you're saying, how do you get access to that content? Yeah, for instance, Netflix. If I'm Netflix and you say you just want to take the content, Apart from Netflix, you take some other example, because that's a different animal altogether. Hotstar. Let's say a hotstar, yeah. So I have my own app. I have my own users. I don't want to give you my content because then I lose my competitive advantage. Then my content becomes a commodity on your platform. So, I mean, the platform, the content platforms, they would try and hedge against us, right?

2:23:40So if there are, like, say, 25 apps, which are the most widely used apps out here, And out of 25, 90 % of the apps, you're able to get inside the app and get the permission for recommendation and everything. And then, you know, put it on your screen for the user. I think it's acceptable. So for them, it's like incremental. Yes. If I don't work with you, I won't make this money. Might as well make the money. Because they also need distribution. Yeah. So then you have a few big ones that are harder to negotiate with. They will come with scale. So once you achieve scale, they will say, all right, we are in a world.

2:24:21I get it. It's a bit like cell phone and app store, right? Yeah. So when there's a new OS on the cell phone, the big app makers are not going to adopt. They're going to wait for the distribution to come first. So I think it's about that adoption. Yeah. But when you bundle, I think it gets cheaper. Yeah. Why don't you guys speak like I'm not in the room and there are no cameras? Yeah. We're trying to. Carl, what opportunity exists in the consumer market? Besides phones. What do I want to have exist? I mean, what are the opportunities? What opportunities exist? Not for the large players. I'm only thinking about like very big categories all the time.

2:25:08so I'm thinking about like EVs and robotics stuff but I agree like if you're young you have to start with something more simple What is China like? What else do you think we can learn as a country from them? I don't spend a lot of time thinking about policy but I do think the PLI is set up you probably know more about PLI than me but like we are very keen to be a part of the next generation ELAI scheme. I think if India wants to develop its own smartphone ecosystem starting from the factory EMS side is very good. That's already happening. Incentivizing foreign and domestic players to build here, it's already happening.

2:25:55I think to reach the next stage it can't just be manufacturing and exports because ultimately that's not the highest value add. The next stage will be to design and engineer here as well. So what is the next stage policy after the goal of PLI has been accomplished? What is the next stage plan? I'm not sure. I'm just starting to spend more time and to learn more about this. I think to your question that what can we do, if you see what they have done in the last 25 years in terms of all the government policies. So we're discussing about incentivizing. That is one. That is one incentive. But rest of the other enablers, for example, the whole supply chain in terms of materials and everything, they have worked a lot deeper on that segment.

2:26:45In terms of logistics, they have created logistics parks to enable that. Today, if we are talking about, for example, now we have, let's say, iPhones going and exporting and doing all those sort of things. the way we are expanding you will need two full bigger you know large aircrafts every week to ferry the product from here to Chicago we need to have that we need to build you know build bigger ports wherein you can reduce the time because they have done taken all that measures so not only in one segment because we talk only about this but every segment they have done you know with all those policies Yeah, I think consumer electronics is a very expensive and difficult thing for somebody without experience.

2:27:38Yeah. So all of a sudden, going… Experience is key, I believe. Without that, you can't do. And you, in fact, can't do also, I personally think. Yeah. Doing is expensive only. You'll 100 % make mistakes. I think we've found a couple of themes, you know, where people could start. something more focused, something more niche, lower risk, lower capex, start from there, evolve from there. It could be on the consumer side with clothing or accessories. It could be on the supply chain side with parts of the stack that are easier to make. And then just evolve from there. It could be on the distribution side with content creation as a means of distributing information.

2:28:22But Rahul, what is What is your thought? We have seen all brands across the globe coming to India. In consumer electronics. Hardly there are brands we have gone out. To gone? To gone outside India. So, Indian brands? Yeah, Indian brands. Forget Southeast Asian countries for a while. But none of the brands have gone outside our home turf and played a game there. Do you think the world needs some new age brands? I have solid thesis for that. Tell us first. So I personally think India as a country, I mean, we all work with scarcity mindset. So what has happened that what a US or a European entrepreneur would try to solve a problem by throwing a dollar, a dollar is 90 rupees for us.

2:29:09So what I'm trying to say for us, every penny counts. And for something what they're producing for a hundred dollar, a similar great quality product, Indian entrepreneur could build for, let's say, 30-40 % cheaper than them. We have captive consumption. Entrepreneurs now are very smart. They are very evolved, traveled, done across. Why can't we take that arbitrage and take these brands to the globe? I mean, we are good at marketing, by the way, Indian entrepreneur. Software, we are good at. Hardware, we can learn from our peers. Why can't Indian brands… why can't we build brands who are based out of India and move to global scale?

2:29:55There are no brand existing everywhere. There are traditional brands. It's starting now, right? Yeah. With you guys. No, so that's what we are trying to do. We believe that it is the right platform for us. We have gained decent experience and international markets, we could do justice. but I'm generally talking we need more brands one brand can't do I mean I've seen we all buying international brands are you talking about you want me to answer in consumer electronics I'm talking about consumer electronics specifically in consumer electronics you can go into those markets where your products are relevant bang on so for example in Indian demographics whatever products you're making you're going to take the same product because you have scale and you go there so that's what I'm saying So when, I mean, I want to cater to a market which is, let's say, mid.

2:30:50Because I don't want our cheapest product. That's fine. Indian demographic. So those products you've taken into those similar categories and similar, you know, geographies. Yeah. That you can do. Yeah. Southeast Asia, all other, you know, so for example, all the SAAC countries. Then this side, Russia, Eastern Europe. These are fantastic markets. Yeah. Right. Then second, if you're saying that you want to hit the upper deck. I'm just saying middle. I'm very clear, let's Sony, Samsung play the game, what they are playing or Apple. We don't want to touch them. The consumers are very loyal. They have an ecosystem.

2:31:30They have advantages of whatever they could. You already have a scale in India. And then when you're going outside, you know, you go with that. Same scale and cater to that. create one or two more brands and use, leverage the scale what you have. And you know, you can attack the market. That's what I'm saying. We can do it. India need those brands. We are just no more about basic necessity brands where we're just solving for features. And you will be surprised. I'll tell you where I'm coming from. We just launched in Dubai in Virgin Stores. Traditionally, Indian brands would have gone and launched a$20 product.

2:32:13We launched ourselves at$75 to$100 pricing and we're getting a great response. I mean, look at the kind of response people are giving for a decent price for products. Again, innovation is one. 100%. Innovation is needed. You can't enter a commodity space. Innovation and then you can have, create different brands for, you know, different needs. One brand can't serve all, that's true. Look at, here you have OPPO, then you have Oneplus, then you have Realme. Under one umbrella only. We have two brands. Yeah. You have to come up with CMF because… We need the scale. Yeah. The scale 100 % is needed.

2:32:52I think you can build mid-market with a scale. Otherwise, nobody's going to support you. Yeah. But I think it's… The Indian economy has gotten to a point in time where there's entrepreneurs with a skill set to go global. And there's already the language advantage. The language and culture advantage. It's easier to do marketing. Yeah. Right? Easier to do US or Europe. But on the product definition side, it's easier to go to more similar markets first. There will be more risk going into… You need product market fit, which I'm aligned. Like we also go into similar markets, which are easy acceptance.

2:33:29And then try to go in territory. I respect all territories. So I mean, let's say US, these are all a tough market. It's not easy to go and break there. So I would like to go small there, do little trials. fail and then take on. Yeah, so there are, as I said, going to suck countries, going to, you know, Russia, Eastern Europe. These are all, you know, great markets for you to do your trials and all and then also tweak. Maybe we should start like a hub. Like start a place where we fund young entrepreneurs to build some of the stuff we spoke about. 100%. Right? Like get some land, give them the resources you guys all have the know-how like start one place where people can like an incubator of sorts with real estate and it's easier to do and it could be anything you know you can if somebody comes up with an idea with a diaper which will have some connectivity which will tell us that it is wet or not or whatever it's same tech what you're using let's say in the ring?

2:34:39I just found out a tech where my daughter, my wife wanted to monitor my daughter about fever. And you can't measure every time for a kid. So there was a socks she could wear for when she was six months or a year. It could track the sleep, the temperature and everything. So these are micro niche markets, but yeah, innovations are there. What's the deal with these rings that you're wearing? Why are they growing so much? Why is everybody buying them? So I think market moves in different form factors. And market need newness. This form factor like watches are maybe mass adoption phase, whatever phase you want to call.

2:35:23Rings are a new category, early adopters. And people are getting more health conscious also. So they are pairing it with their watches, by the way. They are not a replacement for a watch. Is that an opportunity? Health related consumer electronics? You guys seeing any trends there? So… I wear a whoop on my feet. So what I have realised… I am into… I mean… I am a little bit into this space so I understand it. So consumer is saying it's good to have. I want a fitness device but I will not track fitness. I mean you would see a guy wearing a whoop. I was talking and eating a McDonald's burger and a cola and a hundred kilos.

2:36:09So it's just visual cues to tell people that I belong to this universe where I know. I want to know what I am, but they're not cautious. I think they're a little bit aware of it, but not that India is a market internationally. Yes, people are more and more health conscious. Preventive health care is, you know, that patch which measures the... insulin spikes. Yeah. I've always been thinking that at some point an Apple watch can start doing that. Do you think that's an opportunity if your watch has a CGM monitor in it? So if you look at use cases, so I think these devices, okay, diabetic is a very big used case, this problem.

2:36:52And this doesn't work, by the way. Nobody uses it. For us, we have used for wellness. But diabetic patient also doesn't use it. It is 5 ,000 bucks. It's too expensive. And nobody want to prick it every time. So we feel variable gonna divert towards health side like we were talking about health as a segment 35 plus you start getting those problems Apple is 100 % working on it but Apple will only come when it becomes really solid mainstream proven because it's health Is there no opportunity unique to India? What do we want in health that other people don't want? Which Apple won't get? No I think this is a good space if somebody is working on it honestly I would like to invest in a space where people are working on CGM.

2:37:34So Apple is working. Samsung has a huge R &D center in Bangalore where they are working on blood pressure and CGM on device where it's non-invasive. So I think in two, three years' time, we'll see it there. I believe in health. Health has a PMF in consumer electronics. And another field that has PMF is children's education. Parents are always willing to invest in the future of their kids. What would that look like? We have a common friend who is building this company called Super Learn, where he's trying to build a tablet, which costs$150, where you can't really browse the net and go to YouTube and Netflix, but replace your school bag with that device.

2:38:24You mean learning like that? Do you think something like that could work? That could work. It could also be some form of smartwatch for kids, for learning maybe with an AI companion. It could also just be a teddy bear. That's there, no? The toy is there. Mikko is doing good. I just know that it's a space where people want to spend money and are not price sensitive. So wherever you are spending, you will spend for your parents, you will spend for your kids. And your health. And health. What do you guys think of Elon Musk in Neuralink? I like the thesis. It's trying to make the communication but more efficient.

2:39:02Efficiency is always beneficial to humanity. But maybe there's other ways to get to higher efficiency. I don't know how long it will take for that to really work for mass markets. Do you think people will be willing to do that? Like put something in your body, not on your body? If the benefits are there, I think so. But currently, I don't think the benefits are there. Just Dr. Iling into his question. wherein these days people are talking more about organic. They don't want to take unnecessary medicines. I mean, for somebody who's disabled, then they get a lot of benefit from using that product today.

2:39:43But at what point does it become beneficial for a normal person to use that, and why? I think there's still some time to go. Wouldn't you suddenly become so much smarter if you have something in your head which is telling you everything? You can almost have that already now if you have earbuds and chat chubiti. You can speak to chat chubiti voice. And with the AI glass also coming and you're sitting in front of this. This is the setup. This is happening. And that's way easier to adopt than operating something into your body. What happens to the world? Like if intelligence is on call, traditional intelligence is on call or information is on call, we still have to differentiate.

2:40:24How do we do that? I think most people are going to, I think 80 % of the population will just chill and receive income from the government. And a small group of people will leverage the new technologies to push society and humanity forward. Like universal basic income. Yeah. I think that will happen for sure. Yeah. I think you can't replace, you know, emotional quotient out of that. You know, that's what makes all of us unique. All of us, you give us the same piece of information to all four of us. all four of us will behave differently and we'll have different actions. I think that is something which you can't take away.

2:41:06Do you think? A little bit agree on this. Basic, I think 80 % of the jobs will be done for 20 % you would still need. Human. The productivity will increase so much. But I think he's also right that we all will become more lazy. Like kids today don't need to use their brain. They will be doing everything on… You need to be very self-motivated, but those people can really leverage the technology to create so much more productivity. I wonder if a kid will think tomorrow, if I can just regurgitate a book from my device at any point, then why read the book? That's how I was thinking when I was in school.

2:41:42I can just Google the information. Why should I memorize this? Okay, last part. I want each of you guys to give one advice to me, the 25-year-old. Having watched this today, tomorrow morning I want to wake up and figure out what to build. One piece of advice. Would you like to go first?

2:42:06I think if somebody needs to plan something in this space or whatever space, I think definitely a thorough research is needed. I mean, why you're going in. I think you need to have that fuel or patience also to build it. that passion we are talking about. And do pick up a narrow niche instead of going too broad. I mean, pick up a smaller subset of whatever problem you want to solve. Go double down and then move on. Definitely, there are going to be failures, learnings, but I would term them as learnings and you keep pivoting with that. So that would be one thing. I would say be really sure that you want to do something.

2:42:50It's not always fun. I think most people should not be entrepreneurs. Most people have a much higher quality of life doing other things, specializing in a tech field or working for somebody else. Very inspiring advice to one of the entrepreneurs. It's better to say it now, right? Rather than finding out down the line. Just be really sure. I think it needs to come from a deep passion around something. because it's going to be hard. There will be euphoric days, but there will also be terrible days like lack of sleep for weeks. We've all been through that probably. Why are you going to keep pushing forward when you face those difficulties?

2:43:37I think you've got to be sure. You've got to be sure this is what you really want to do, that you're passionate about it. I believe in the potential of every individual person. If you really want to accomplish something, you can, but there's a cost associated with it. And I think for most people, the cost is not worth it. Rahul? My only advice will be, show me your five friends. Because

2:44:10if you have to build a successful company, then you have to keep a good company. So if you have, and you will become like that. So, if you have a good company of people who are like-minded, then even if you have, you know, if there's certain qualities and things which you don't possess, you can, you know, A, rely, learn, and do, and, you know, and come up with, come out with various difficulties. So, basically, you will become like whatever your company is. So if your company is like, there are guys who are doing other things, you will, eventually, you will, you know, go that way. But if you have five people reading biology, you will certainly go, you know, that way.

2:45:08Even if you are not, you don't want to learn, you say, no, I'm not a bio person, I'm a physics person, but at least you're doing physics. you're not just doing anything else. So just keep a cohort of those people. And I think you will, a lot of things will get resolved. My fleeting thought, I'm quite excited about this component incubator. I would say let's each of us put in a little bit of money, not care too much about the upside, and try and get not too many. I think we should find four kids, support them in building a component company with time, money and all of that. And maybe other people can learn from what we have done and replicate.

2:45:58And I hope we are successful. But thank you to each one of you for flying into my home and doing this. Very kind. And I will reach out to you for different kinds of advice at different points of time. and also to help all the young wannabe entrepreneurs in India. But thank you. No, no. Thank you so much and thanks for the great food. Thank you. Good food. Thank you, guys.

2:46:26It's like a high-protein dessert. It's protein powder, yogurt and dark chocolate. Very nice. Yeah. It's all like really clean food. Yeah. Did you guys have fun? Was that okay? No, no, super.