How He Makes 100 Cr/Year Selling Kids Toys!

[00:00:00] Speaker 1: we launched in america and that took off immediately we did one crore in two weeks [00:00:04] Speaker 2: this is a toy company that came from india from india coming from dhwanil shait who is skillmatics's founder we have made such a toy company which has innovation in india manufacturing in india and export in the us in today's podcast we learn how you can build in india innovation manufacturing and consumer business [00:00:22] Speaker 1: toys is a category jubilee is a very large category 120 billion dollar market size lego has got a single digit market share it's crazy right when we were doing this full analysis which categories will move online us may 50 percent of toy sales happen in calendar quarter four because of christmas so agar apka dukane economics don't make sense for a standalone retailer no money demand is much much lower this was a category that was keep moving online it was a nightmare our first hypothesis the best age group to target is three to six year old children zero to three may the children only have certain amount of capability three to six there the child is a lot more active talking is running at that time the child is going to school for one hour a day there's a lot of free time that the parent has to occupy their children with 2020 was just a straight up so that 10 crores went to 50 crores three things that worked was 2023 to 2024 calendar year we went to almost 500 crores by the end of 2024 we had essentially more capital than we had ever raised everything was going well solid team and then comes 2025 and tariffs chaos let's see how this year goes this year on track to do 650 hopefully 10 years when you should be at i don't know 5000 crores there are some founders and entrepreneurs who can think like that do you think like that no i don't like that time um what was it 20s so no one funded us man because like like it was a first it was a bombay based company that time it was very different today it's not like how it is now only danglore very heavily tech uh and also most importantly no one was willing to buy this idea that you'll make a brand in america why would they buy that you know there was if you also a lot of the investing principles was that time proxy [00:02:16] Speaker 2: uber ohla yeah you know it's very inspirational copy very very tried and tested right there's [00:02:21] Speaker 1: no first principles thinking is me yeah amazon it's not wrong it's not wrong yeah they were many every business was like that in fact they told me also like uh you may not get the best fund i mean there are a lot of other caveats but you will not get it you will you should certainly be able to get it because it now value creation why today everybody wants to invest now today if i had to leave bcg and do my business again my whole partnership only would have invested my bosses all of them would have only given me the seed money so times are very different um to go through that for three years then that time it's still fine only again if you ask my dad's generation they're like what are you crying about we too mortgaged a house to build a business fair fair so my uh progressively it's become much easier nothing to complain like i can't tell you what it's been like it's been a i would love to know later i mean it's it's crazy right i mean imagine running a business where 70 percent of your revenue is coming from america 55 percent by volume and you don't know what the rate is going to be of the tariff how many times has it changed yeah yeah but going back to the og story why toys why toys i think it's it started because of my coming back to my bcg days right uh um i was working in u canada where uh studying toronto toronto i was basically studying key like um how will uh categories in offline move online our clients they were large canadian retailers so okay they were selling everything that's a key example let's say walmart type of the canada canada ke walmart as a type of general merchandise retailer like they say in india in dmart or alliance retail like where you have everything you get in the market and walmart best example um and their problem was that our categories are how will they move online right and how can we prepare for it right as an offline retailer and what we were doing at bcg was understanding from a consumer perspective that everything is online but where do consumers prefer the online experience right or uh or the second most importantly that how are the economics online that is also very very important right like uh while you can sell everything online everything is not a good business so those are the two important things we were analyzing and one big insight that came was that parents as a cohort of consumers are a category that would move online in a big way now why is that because parents specifically first time parents who are buying for their children unki liye what are the main things right one they want more information about the products they're buying uh whether it's grandparents or parents most times their first time shopping the category right now offline may in u.s canada there's no assisted sales as a koi sales bandana who'll tell you what this product by this or buy that shopkeeper so online there is so much more information so you have videos you have content and most importantly you have validation of other parents in the form of reviews social media presence so offline you don't know right so that was the one it solved the problem of more information and more validation that other parents have said this is a good thing and that's how parents typically buy so that was i think a big opportunity that i saw now the the second part to that was that um now toys is a category globally is a very very large category right i think 120 billion dollar market cap here tam uh tam right worldwide worldwide worldwide not market cap i would say like consumption uh sort of market size and uh 7 lakh crore yeah i think the uh 35 percent is in the is in the u.s now category is actually very attractive because it's a very large category or coffee fragmented there are multiple brands who have built very large positions in this market for example lego has got a single digit market share but unka 10 billion ka revenue hain peris taka ka profit like what i'm trying to say is you can build a very strong niche in a very large fragmented market um and there is an ability to differentiate like because you can create a differentiated brand or products um asana ki saare products are commoditized right like i mean jesse you know fashion made it becomes more and more difficult yeah uh and and the the idea that i had was that look as this category moves from offline to online how toys will be purchased will be different jesse offline environment may kia hota hai that the child drives the purchase like a girl may walk into a store may like a barbie doll and therefore barbie a dolls are a product and bobby very good point yeah but when this is correct and so therefore the the decision maker is very different it's the child um and the whole purchase experience is very different as this category moves online the buying behavior is very different abhi parent grandparent uncle aunt they are buying who's building a brand for them what do they want right what are parents needs parents needs are key let's keep my first and foremost if there's a brand that adds value to my child in terms of skill building or reinforcing a learning outcome obviously that is top priority for any parent second is there a product that is very engaging that can keep my child independently occupied parents have limited time independently occupied so that i don't have to give them a screen right because any parent i'm a parent right i have a three-year-old i would say screen time is among the top three concerns that we have right you want to ensure that possibly you want to limit that exposure yeah and so if you could so the idea with skillmatics as a brand was precisely this right that how do you build a brand that addresses the new age parents needs you know which is learn through play which is uh screen free uh which is sustainable like our products are we we do the we do a carbon offset of whatever carbon footprint our products leave right right and that is now almost 70 percent coverage of our sales um these are all architected to address a parentals considerations obviously the products have to be fun and engaging for children um but in our view that is a secondary consideration right it has to obviously happen otherwise the brand would not have grown to the extent that it has but uh that was really the opportunity and the whole idea was that if i take advantage of india's cost structures manufacturing talent technology and use digital channels to go direct to consumers globally right because theoretically barriers were not right your ability to reach consumers through social media had removed the barrier of access you could sell to them through your website amazon at least initially and most importantly you could understand preferences because abhi itna data hai right you can scrape reviews to understand ki parents ko kya achha lagta hai kya bura lagta hai it's very easy to understand actually but no one was thinking like that and so our idea was that if we take a in fact when we started nobody was a parent only in our company and today we are by far india's largest toy and game business right obviously now many of us have grown into becoming parents uh but the funny part was no one was when we started uh we looked at it very analytically ki you know what is the opportunity and that's how we started um obviously it didn't work out as easy as i would have thought uh you know as i mentioned first three years um really struggled right 2016 17 was starting 16 17 16 may uh uh challenge 17 may launch were um uh exa laga just to get the [00:10:28] Speaker 2: product off the ground we will come to the 2017 but we will come to the pre-ease so you have been interesting about you offline to online when you research are you know that the parents interesting for me is that you have a parent's segment of the segment of the other genji young audience is not answering that young people are selling online parents very specific [00:10:45] Speaker 1: things you have said correct um i think that category or cohort of consumers i felt uh both attractive uh because um see a brand when built should have some purpose and meaning right um and uh what is a brand really right it's a essentially a proxy of trust that you're accumulating right um sure you can make another gen z fashion brand but is trust very important i don't know right it's more about like style speed i mean other attributes right but um but when it comes to parents buying for their children there is a value in building a brand right because um parents have to trust the brand you're essentially giving something to your child you have certain um standards in terms of quality safety experience learning value so brand banane banana asan nahi hai like in jab agar ban sakta hai then it'll have a lot of value right um and lot more defensible to easily i really liked this category because genuinely there is a need for a brand right uh in some cases you don't like like you don't need a brand of coffee mugs but the brand but it means that that is not in my view what is a brand like just putting a logo on something does not make it a brand the question is is there genuinely a requirement of like trust um involved and i think that that is why this category i thought [00:12:17] Speaker 2: was very attractive um uh yeah i think that was it name and branding kathy skillmatics [00:12:28] Speaker 1: the original thinking was that see we wanted something that was very clear it should be learning first uh because that was the whole idea right that is what parents want learn through play right that was our proposition that we wanted to bring to market global toy and game industry main name itne toy brands i would say 95 percent of them are play first got it right like they're from hamlies to your or a barbie or a hot with all sort of the brand is very play oriented right so we were like the opportunities to be differentiated and do learning forward right and that's why we wanted a brand name that um you know really spoke to that positioning of the brand and the products the second thing was that we wanted a brand that um um sort of was self-explanatory in what the products and the brand kind of stands for so we wanted that learning part to be kind of encapsulated in the name uh we but we didn't want to call it like edu something or learning something like you know how many thousands were right so we wanted something that was slightly differentiated uh and actually one of the inspirations was that you know when i was working in canada we were doing this project where we were studying how learning is going to move in the next 20 years from a sort of subject orientation to a skill orientation and i will go to the extent to say that look we are not a we are not delivering learning outcomes like we are not a substitute for a school or in any way but our brand and products are to supplement what you are learning any way in your natural course um and so that's how we think of ourselves right um you think ourselves as an education but more [00:14:08] Speaker 2: additive right like sure it's not a replacement but it's extremely added it's very exciting in a sense that like when i saw the you know i was seeing few products guess the 10 and all that and then amazon there was a crazy branding man called me like the u.s company u.s ke logan but uh yeah the point was ki usually like ja maybe sf me tha and i met an indian american person there and i was who a pne bachchuk ke saath ai thi because school all khatam ho gaya tha wou lagay tha wou lagay tha apne phone mein or hunki mom bein me daughter di ki this is not allowed like she works at google only so she also understands ki kya impact hai like nahi phone wapes ko wui lalai chal rhi thi and i was just thinking ki hmm screen time wala panga toh bada hai or hone bhi wala hi hagi for especially young kids so jo do, 3, 4, 5 sal ke bachche hai which is like the building block years in the long long run should be a game changer like yeah hopefully right i [00:15:10] Speaker 1: think that we um i think the problems are very real and uh i think our whole goal is that can we be a partner to parents and families right and uh you know when we started hum humara like that that time our focus was on three to six three to six as an age group uh and then eventually obviously as we grew we were like ki you know one year say 12 years tak you know whatever your child's development will be preferences will be um passions will be whether they like puzzles or problem solving or art and craft you should keep coming back to us right and or other we should basically be able to offer products uh that essentially fill all of those needs and therefore you know whether you know today three years old you may want a product that helps your child have to learn how to write at you know seven you may want a product that you know teaches your child about science uh the point is the consistent should be us as a brand right and that would be the i would say the the larger goal [00:16:13] Speaker 2: we're trying to build um got it and is your insight to start aapne doh chishe boli ek offline to online ka java research karthi while you are at bcg you realize that there's a big market for parents buying online number one and number two that the toy thing where it that comes from that insight ki toys [00:16:31] Speaker 1: uh because when we were doing this full analysis uh which categories will move online which categories will not move on toys was a category that will move online in a big way i'll tell you why toys is it does not make sense in north america as a standalone offline business this is why toys r us has not surprisingly gone bankrupt that was a big standalone retailer because u.s may 50 percent of toy sales happen if not more happen in quarter four calendar quarter four because of christmas so if you have a shop for a calendar you're lucky for yeah oh and d it doesn't the economics don't make sense for a standalone retailer because nine nine months demand is much much lower right fully concentrated demand there um so this was a category that was going to keep moving online right uh because like the only people who can play this game are either like you're a large mass market retailer that can adjust their space right q4 may bada toy section um but again online also the other thing is that toys is a category generally parent parents are less on time what do parents want when they shop right they want a convenience also right um and online gives you now now to same day delivery but even back then used to get maybe one day delivery um so anything parents are buying and toys was one of the largest categories um would again suit online models because you'd be able to offer convenience to parents now why no why toys versus other categories which parents buy for their children was that ability to differentiate see if i was making let's say diapers now what the diaper is special right there are people who've been making diapers for hundreds of years right now unless i can bring some innovation in that which i could not think of uh so i thought that i thought that this category is not good because see you have to look at categories where you can differentiate bring something new to the market or also uh where there are not a lot of lot of incumbents taking dominant market example i always like to give is i say like you look at if you wanted to start a beverage brand today like coke and pepsi are like you know 80 percent of the soft drink market yes you can create a health there have been many cases but it's always it's very high competitive intensity here the good thing about the toy and game industry is that it's very large and while it's competitive uh intensity is low because not single players don't have substantial market shares so like when one company has like 50 percent let's say lego right is how much eight percent yeah eight percent whatever you do ten billion by hundred and twenty billion that is their market market share less than higher percent so what i'm trying but they're so dominant that doesn't mean they're not dominant right they make 35 i think if i'm what i last remember 35 profit so it's not it's not like they're not they're not dominant hey three and a half billion three and a half uh top line no 10 billion top line okay three and a half billion yeah so what i'm trying to say is that this crazy crazy right so like the point is that and there are many players uh like this obviously this is the most famous example but that was my point right that you know at least you can come in here build a big business if you have a differentiated like lego built it based on a differentiated product at the time like the interlocking brick and so on um so that's what i liked about the category you know i i prefer [00:20:02] Speaker 2: categories where there's not some crazy competition but being a ca where do you develop a marketing slash [00:20:09] Speaker 1: branding slash product differentiation mindset that's a great question yeah uh i think honestly uh i think i i still don't think i have that capability as well as my team i uh i think what i realized is what is the capability that is required and then how do you identify the right people and convince them that they should join this purpose and this mission for example you said our first hire in america was not a head of sales to go do selling to offline retailers which would be the first hire for most people this is after not too fast forward too much but like you know when we became successful online we eventually started building our offline presence so for example we have like people who have studied uh who have basically studied design in india and in the u.s and have come here we have someone who's done an early childhood education from harvard like a master's program study child pedagogy like how children learn pedagogy is the art of teaching correct um then we've got someone who studied child psychology again in the u.s uh so what we've tried to do is identify what do we need and then how do we basically identify the right people and bring them on to our team um and i think that is what we've been good at as as opposed to saying that's actually far from the truth um you you i think everybody has certain skills i think there are certain skills i have uh that i've tried to like double down on but frankly like in most cases i'm actually very aware that i'm not good at many things and getting the right people has actually been the key reason um um [00:21:58] Speaker 2: yeah uh fair enough uh to pela product we actually we had worked with an eight design agency [00:22:09] Speaker 1: to make the first product so there was a there was an agency that that did a lot of india-based agency but they did a lot of work for global publishers and they were working with international book publishers and so they had a lot of experience in the children's space and from an international perspective as well so uh we had worked with them so obviously i worked hand in hand with them but day one where i realized that expertise is how do we work towards it and how do we collaborate right so that's how we did it in the beginning um and this is true for all functions like when i started i didn't have money to hire a performance marketeer and all of that so we started with an agency to start amazon ads and so on right obviously over time we built all of these capabilities in-house right as you grow uh but i think for anybody starting you know in terms of in the audience or or watching this is that like i think you should be as light as possible in-house and leverage experts because there are experts everywhere and i think that was the basic principle we used whether it was on product brand marketing uh i think wherever critical like our first 10 hires our first hire was a teacher first hire in the company because we're like we really want to be learn through play we need someone who actually is an educationalist uh and so that was our first very first hire uh so that one or two hires you make but then you have to start working with experts and that's kind of how we have you heard about this company called surasa surasa no i haven't you [00:23:43] Speaker 2: should check them out surasa is a company dubai-based uh uh when i went to pedagogy and research together so basically i worked just after college and they teach teachers how to teach oh wow so they're all based on pedagogy which is 3-3-3 lakh of course and uh and uh uh before they have been working with us for 10 years in dubai based dubai in dubai in indium too they teach teachers how to teach how to teach and then their life cycle is their customer is teacher but there's big synergies between surasa and skillmatics that are again funded company nice to aap chakkarna no no definitely sounds very interesting but a very interesting one like pedagogy you're teaching teachers like you're also doing something similar but like of course you're [00:24:31] Speaker 1: no no definitely not teaching teachers but i think that they're uh uh but very interesting [00:24:35] Speaker 2: i would love to get connected uh maybe it was like thesis and you can correct me if i'm wrong but i have i'm i've been lucky enough to speak to a lot of bcg mckenzie people right from like anant of mensa to like a toshan from london to uh jadeep of rebel food sab mckenzie valen and you guys are insane at finding gaps times scaling business from one to hundred yeah like mensa is a you know big ass unicorn rebel foods is a giant in the food space is it because it's like talking about you because you work across the globe you get a lot of businesses I think you know what time is going on and what gaps are going on, the world is moving on. In that basis, you can take a decision that if you want to do something, then I will do these 2-3 things. [00:25:25] Speaker 1: Bang on, I think it's a context. Like when you work across multiple, I worked with a bank in Sri Lanka, a digital tech company in Japan, a retailer in the US. So at a very young age, you get exposure and keep in mind that even before that as a CA, I was working in Deloitte as an article ship and I used to audit a large IT services company. So I was, my first exposure to business was even before BCG, what articles are in the CA, I was working on a client that did IT services. But that's when I got introduced to the India-US business model, which as you can see has become a very outsourcing. But I think the principle that I took away was that by dollar revenue, India cost, business is very easy to see. Right. So, you know, as you, the advantage of working in sort of these kinds of things is when you get exposure to multiple businesses, you start to pick up principles. Like, you know, how do things work, you get a lot of diversity. But I think the one other thing consulting does in general is that especially early on Pehle, you know, I think doing it for too long can also backfire because then you don't, you know, it's a lot of it's, it's, it is more structured and theoretical. I agree. Right. But it helps you think in very structured ways. One of the things all these like McKinsey, BCG and all talk about is like problem solving. They train you how to attempt. Attempt. Two by two matrix and all that. Like see, today they put a, you think of a consulting team, right? You have no domain experience in say a certain space. You're going into a company and you're these young, you know, sort of maybe high IQ people like attempting to solve a problem. But it's the process of structured problem solving that these firms kind of train you in that becomes very, a very good frame. Whatever you try to do, you kind of have that discipline in your, in your mind key. Okay. This is the problem. How can I structure the problem and break it down so that I can then try to solve it? So that is, I'm not surprised, you know, like all consultants will have a similar kind of problem solving mindset. People are very similar across the world. And, you know, while there's a lot of focus on differences between countries and people at their core, parents, for example, are the same all over the world. Every parent wants the best for their child. Every parent globally wants things that will help their child build skills or keep them away from screens. And these common human traits are actually universal. And even if you think of children, right, you know, the good thing of why Scalematics has been able to scale globally is that, you know, every three-year-old has learning how to write. Every five-year-old loves animals. So like in some ways, the world and humanity is so similar that, you know, on anything which is fundamental and core, you'll find deep similarities. On the flip side, how people operate is very, very different in different countries. For example, in Japan, I saw that, you know, it's very hierarchical way of working. A lot of reverence to whoever is senior, whoever is the better title and so on. Right. You know, you see that in, like, for example, North America, that's not so much the case at all. In the US, it's all very meritocratic. In fact, I don't think I've seen a more meritocratic culture. [00:29:04] Speaker 2: Exactly. [00:29:05] Speaker 1: It's like the free, free capitalism. I don't think I've seen more pure form of capitalism than America. You know, it's just merit. You know, of course, rather factors, but merit is really the core engine of progress there. And that is represented in cultures also. Right. Like when you work there and even as you operate there as a business, it's very, very meritocratic. I think India is a blend of both. Right. It depends which industry. Hierarchy or… No, no. I would say that, you know, yeah, exactly. Right. Agana, if you're working in a large multinational, you will find it more hierarchical and more bureaucratic. More Japanese. And more process-oriented. If you work in a startup, you probably will find it more meritocratic and more flat. Fair. And so I think that that's the nuance that I've learned. Right. About like operating, living, operating in multiple countries. [00:30:00] Speaker 2: It's just interesting. [00:30:02] Speaker 1: Fair. [00:30:03] Speaker 2: Now, let's go to 2017. Launch. What was going on? How did launch? [00:30:08] Speaker 1: What was the first product? It was a nightmare, right? I mean, first, you know. [00:30:13] Speaker 2: How did you start investing in your starting scene? No, no. [00:30:16] Speaker 1: We had started with just some family capital between me and my co-founder. Very modest sum. I think we started with 40 lakh rupees. And that was because we didn't have and, you know, we had some savings from BCG and, you know, some family savings. And that literally was the amount we started with. 200 lakh. 40 lakhs. And in that 40 lakhs, we had to hire a team. Also, the main cost was inventory. Because how do I manufacture. Right. So there was a constraining factor. It was extremely, extremely high stress because if the first product failed, the company would have only failed. Because if that inventory had not moved, how would I have started the whole engine? So we did spend a lot of time testing the product, testing the price. What was the first thing? So our first hypothesis was that the best age group to target is 3 to 6 year old children. Because, see, 0 to 3 may the child is very young and there is a limited amount that the child can do. And therefore, your ability to create a differentiated product is less. Because the children only have certain amount of capability. 3 to 6 actually is a good age because there the child is a lot more active. Is talking, is running, is a lot more active. And at that time, the child is going to school for one hour a day. Preschool, nursery, whatever. So there is a lot of free time that the parent has to occupy their children with. And obviously, you don't want to give a phone. Even if you want to give a phone, I would assume you don't want to give them more than 10 minutes or 15 minutes. So how do you occupy the children? Also, there is a lot of development that happens during this, right? Because you go from preschool to primary school. Around 6 you go into first standard. So learning how to write, for example, was a very important skill during this period that in our research came out. So we built these write and wipe activity mats. That were essentially a kind of like table mats where you can learn how to write. And the whole USP was they were reusable. So you could use it, erase it, use it again. And obviously there was more to it. The content was very innovative. We taught how to write and all these really engaging and fun ways. The form factor was very different. What happened first? There were these write-in by books, which were so small. But for a 3-year-old, that's not enough space. They need more real estate. Because that's how they sit. Also, those books, we studied that. The pens were like a felt pen. Very narrow. Young children need like thicker circumference of a marker, like a crayon almost. Like a thick crayon because they're still forming their basic grip. So we reinvented and designed a new pen. So we did all of this work to kind of create a very differentiated product to address a problem that was very critical in the mind of the parent. And that worked. [00:33:04] Speaker ?: Can you say a production like manufacturing? [00:33:05] Speaker 1: So we found contract manufacturers. I think one advantage we had was that, you know, both my family and my co-founders family had some background in printing and packaging. And so we had that advantage that at least we could find somebody to make this first product. It was not so complex, but it gave us some start, right? The complexity was not really the contract manufacturing. It was more the design of the product itself. Where I mentioned I worked with this agency and so on. How long have we been doing this? One year. [00:33:39] Speaker 2: In 2017? [00:33:40] Speaker 1: Yeah, almost. I think we, I think we, I'm, I'm, I'm, I'm company incorporate here August 2016. Yeah, product launched in August 2017. So one year it took to just make, design this product, get it manufactured. And MVP. [00:33:57] Speaker 2: How was it? Like you, you, you gave a lot of parents. Tested. MVP. [00:34:02] Speaker 1: How was it? We, we, we had prototypes made. And we used to go meet mothers and get testing. Actually, even tab. We had shipped some samples to America. Even at that time, because our vision always was that we build a global business. [00:34:18] Speaker 2: Why would you buy in America? Because of the delayed experience. [00:34:21] Speaker 1: Because of my experience at BCG, right? I was like, you know, why can't you build a global brand from India, right? That was genuinely, our company's name was called Grasper Global. Grasper because children grasp and learn concepts. And global because that was genuinely the main idea. Because I was like, there are much larger business opportunities if we can do global. And you know, why aren't there global brands from India prevalent, right? That was genuinely like how I saw it. Um, so that was the thinking, very honestly. And, uh, uh, and that's why initially also we were like, keep by us consumers. We feedback later. So we sent it there. Then we had a Google form like, you know, like, you know, they give us feedback. And we refined that feedback. And then see beyond the point, actually, you just don't know. You have to take a, a bet. Hmm. So we tested, you know, how do, how do you know which product be good, but which theme will be? Will it be like the writing theme, the preschool theme, the animal theme? We didn't know. So we took some calculated bet. Uh, and we launched. [00:35:21] Speaker 2: And fortunately, the results were good. 2017, August. Hmm. To December 2016. Where did you launch? What did you do? [00:35:29] Speaker 1: First of all, we started in India because there was no way to get to America that time. Our, the only, there was no online way. Uh, this whole global selling from Amazon and Walmart was not possible. Uh, and the first trade fair was in early 2018. There are all these trade fairs in Germany and US where you can go take a booth, show your product. Canton is more for factories. Like when you go, if you want to sort something from China, uh, this is more like front ended. You can find a distributor or something like that. Okay. So you go to Germany and you see, show your products. Someone likes your product. A retailer may say, I want to look into it. Or a distributor will say, I have to take your rights in the US. So we were like, okay, it's time. So let's start in India. Uh, I think the easiest way to start that time was online. Uh, we had listed our products on Amazon. Uh, and we started selling on Amazon. Um, we at that point did not start our website because we had no money. Uh, you know, to start marketing on D2C, you need to run Facebook ads and meta ads. And it, you know, the economics were not very clear. But it was good. [00:36:34] Speaker 2: It was like peak performance marketing time also. Yeah. [00:36:37] Speaker 1: I think we had, I agree. I think if you look at all of us, they all first, like, so some of these other founders were. Boats of the world and Mama. Yeah. Mama. Minimal. All of us were around the same time. Yeah. In terms of starting. Uh, we were definitely first movers and we had the benefit of lesser competition, lower CPC, all that, you know, we were the first to enter across categories. Um, so that helped, uh, no question. Um, and, uh, we started online and then we also did, we also did offline. Uh, we, we looked at key, you know, there are two parts. There is modern trade. That time Hamilies had five, 10 stores. In India? In India. I don't know. Must have been in India. In fact, Hamilies that time, Reliance was the franchisee of Hamilies. Now, obviously they own the whole chain. Um, and they had like, I don't know, must have been 10, maximum 20 stores at the time. That's crazy. And, uh, we, uh, you know, we met, we got an appointment. We hustled our way to find out. We found, we hustled our way to find out. Found the, found a contact. Explained why they should meet us. They gave us a meeting. Uh, that. One product. One product. Uh, I mean, there were 10 themes, but the product line was one. What was it? Right and Wipe activity. Right and Wipe. Like our Guess in 10 game. Like there are many themes, right? There is an animal theme. There's a geography theme and so on. Um, and, uh, then in the meeting, Hamilies had break. They started with certain number of stores. Then we, uh, uh, Why do you talk to the family? [00:38:09] Speaker 2: What did you talk to them? What did you talk to them? [00:38:11] Speaker 1: What did you talk to them? I think we convinced them that the product is differentiated. And, uh, in your shop there should be some learning products also. You can't just have toys. Like parents also want products. Uh, you know, you're talking about procurement team. Uh, you're talking about buying teams. Uh, you're talking about buying teams. Uh, you have thousands of toys. Uh, but, uh, your consumers, uh, also, they are looking for things that are educational. And, uh, you have to do this because that's what your parents want. And, uh, they agreed. It was very logical. How many people took them? 100 pieces? No, no, they took more. They took more. They took more. I think the first order was, I think it was 20 or 30 lakh rupees. Was the first order. First order. Congrats. [00:38:54] Speaker 2: Yeah. Must be feeling like crazy. [00:38:56] Speaker 1: Oh, yeah. It was amazing. [00:38:58] Speaker 2: It was amazing. The first order. How many products? 1,000 rupees? 700 rupees. So, how much? Uh, 30,000 units? [00:39:07] Speaker 1: No, I don't know the math now. But, uh, because it was across multiple lines. So, you know, but I know it was around that, that, that amount. 20, 30 lakh was the original order. First order? Yeah, first set of orders. What was the first order? It must have been lower. But I mean, I remember 20, but it came very quickly. Because what happened is, uh, first five stores, then they roll out to more stores. So, it was quickly, quickly. So, I'm saying maybe in the first three, four months, we got this much. This was before 2017. Yeah. [00:39:37] Speaker 2: Before 2017. [00:39:38] Speaker 1: Yeah. And, uh, that year, I remember, like, our revenue must have been, like, one crore. Annual. So, in five months. Yeah. No, in one year, 2017, 2018, around that. [00:39:47] Speaker 2: So, August 2017 to August 2018, it was 1 crore. Till March 20. [00:39:51] Speaker 1: Yeah. [00:39:52] Speaker 2: That was the financial year. [00:39:53] Speaker 1: Yeah. And, um, it was 1 crore or something like that. But that's very good, right? Yeah, it was good. Did you get this PMF or not? I think clearly, I got it. Um, because we were profitable, right? Uh, we, uh, in fact, we've been profitable mostly throughout our life as a company. And we have more capital than what we've raised also. Yeah. Uh, and, uh, I mean, partly also because we had no option but be profitable. I mean, it's not a problem. It's not a problem, right? It's not a problem. The company will be closed. Uh, so, uh, so, uh, the PMF was very, very clear. I think our proposition was relevant. Parents wanted it. Experience was good. Pricing was good. Um, we then launched into general trade. So we hired a, uh, someone from the toy industry. Um, he basically helped appoint distributors. So we appointed five cities in a distributor. Mumbai, Delhi. General trade, retail stores. Retail stores. Local stores type. Local stores. Local toy stores. [00:40:54] Speaker 2: How does it happen? [00:40:55] Speaker 1: Distributors, we went and pitched the product, right? Um, no, Admi, uh, he worked in another toy company. I forget what it was. But, you know, but I think he had an experience in fun school and all back in the day. Uh, so he had a lot of experience. So I had seen his CV. How did he win? 20? 2017, that time only. Um, and, um, convinced him to join. Uh, you know, he was the first few people who was like one head of sales for general. Um, head of sales for general trade. And one teacher. Smart work. [00:41:20] Speaker 2: It's not just hard work. Hard work. Smart work. [00:41:23] Speaker 1: Absolutely. Uh, you know, uh, thinking and taking the right decisions is, is most of it. I would say. Um, and, uh, that's how we had started. And then we broke in. Then we started to get revenue. Then he kept growing, added more channels. Uh, then 2018 came. Uh, we tried to build more product lines. Um, grew the team a little bit. Still 10 people only. Chota tha. Trying to get funding was a big priority. Why? Why did you want funding? Because how to grow, right? If I had to grow my business, I needed money for many. Fast growth. Fast growth be no, but like I needed some base. See, you need some little critical scale, right? Like, uh, to buy, to make also products, you need money to give. So you can get inventory. You need money for marketing. You need a little base team. Uh, Hamara business was not like a service business, right? Where you don't need capital. Like you can just keep growing organically or, uh, or, uh, you know, like a just a pure tech business or tech product where, you know, there is no inventory cost. So I needed capital, right? Uh, and also such a small company, even though we were profitable, how much bank loan, you would not get anything, right? There's, there's no history only of the company. So there was really no option. I needed some capital. Um, so I was speaking to a lot of VCs and getting introductions, trying to figure out meeting SM, like explain, explain our proposition, explain our vision, uh, got a lot of rejection. Yeah. I would say, um, all of 2018, I think I spent my biggest priority was try to get some money. Um, and, um, that completely failed around that time. We had also gone for our first international fair. And I remember, in fact, one of our first hire in our product design team, I told, I met her before going in there. If I get an order at this fair, I'll come back. I'll be able to hire you. Otherwise I can't hire you. And, uh, and I, and, um, uh, we luckily got an order, but where, Germany? No, it was random. It was Russia actually. Russia? Yeah. No, Germany was gone. The order came from a Russian distributor. Uh, and so that's how we started doing exports also. We used to first do B2B exports. So a distributor. Russia was our first export. Actually, Russia, funnily enough, it was two markets. It was one Trinidad and Tobigo, West Indies, and Russia. Two random countries. Uh, completely like random. Like, you know, they just met us. They liked us. They took the product. Uh, uh, because that, but that allowed us to like, you know, start the funnel. But we realized very quickly that we have to go directly into America. Why? Because there are too many barriers, right? You are selling as a brand to a distributor. A distributor is selling to a retailer. The retailer is selling to the consumer. Plenty of barriers, right? You need to go direct to the consumer. So a couple of things that work. So 2018 was like a giant failure of sorts. 2018 failure. Yeah. Funding failure, right? Funding failure, but even business was not really growing. Uh, I, I think we went, we grew. We had, I think, I think that year we did 1.7 crores in revenue. Uh. Financial year or calendar year? Calendar year. I think it was 1.7 crores. Um. Hardly like 2030. Yeah, but it's not some crazy growth. And then the next year in 2019 is when things started to change. The things that made, the biggest point was that we managed to onboard on Amazon's global selling program. Where they had started to identify brands and say, okay, now you can, you know, their help enable you to launch on Amazon America. And because we had spent so much time and effort making sure our product quality. So, I think we must have had maybe two, three main lines of products. Right? So, right-hand wipe was one line. Aisah dothi not hai. Um. And we launched in America. Um. And that took off immediately. Like, I remember we did 1 crore in two weeks. In our first three, two, in our first, four weeks may se chalo, first two weeks were just setting up. The next two, like the third and fourth week, we did 1 crore in revenue. That must be a drug. It was like, I could not believe what was happening, right? Uh, it was like insane product market fit. Um. Like, it was just, it was, I mean, you know, people say, how do you describe product market fit? It's something like this. Like, you know, you're like, you can't believe the demand that is happening. And you're just only worrying about supply. Like, you're no longer worried about performance. Like, how do we make the product? Like, when you have that problem, you hit PMF. Uh, and, uh, it just immediately took off. And, and then we were finally able to prove that look, international consumers want our products, right? Because it was directly coming from consumers. There was no intermediary. Amazon was just a platform. Fortunately, around that time, uh, this was then early 2019. I was in talks with, uh, you know, Sequoia Capital at that time. Uh, they were one of the guys. They had liked us, but they are like, you know, we need to see proof that, you know, okay, you're saying global when I got like, how show me something to prove that consumers will like it. Right? You saying it is not enough. And I think that, that was the evidence I could give that look, look at this traction, uh, that there is something to what I'm saying. And, uh, fortunately, they backed us. They backed us in our seed round. And... [00:46:42] Speaker 2: It was seed? [00:46:43] Speaker 1: It was seed. I mean, we did... Next was series A seed. Yeah. Then, yeah, we did one seed and then series A and series B and that's it. [00:46:50] Speaker 2: Don't we have raised 40 now? [00:46:51] Speaker 1: No, no. We've raised 24 million dollars in three rounds. Seed, series A, series B. was in 2021 and 2022 beginning the money came in. After that, we've never raised money. I understand. So, how did it raise in 2019? 1.8 million dollars at that time. Not a lot. No, no. [00:47:09] Speaker 2: It was a lot. [00:47:10] Speaker 1: I mean, it was like, it was like, I could not explain how much money it was at the time. Uh, I thought it was a... Not a lot of compared to the 24. Yeah, yeah, yeah. Correct. In context of where we are today. Yes. But at the time, it was like, boss, 10 crores. Now, like I could not believe that someone was giving me this much money. Uh, I think it worked out very early. Early 2019. In 2019. I think it worked. It was in hindsight. It worked out very well for everyone involved. But, um, that was a big break. Uh, also, we had some angel investors who had backed us. Exited. No, no. They're still with us. Maybe one or two we've exited. But, uh, they were, they all came in along the same time at, as, uh, as a peak 15 or now peak 15. That's how they call your capital India. Um, and that gave us a lot of ammunition. So, funnily, 2019, we came with a lot of momentum capital. Uh, like, you know, everything us was growing, uh, and 2019 was amongst the worst years. Worst years. Yeah. Because we made crazy amount of mistakes. We were just not used to having so much capital. I think I'll give you an example. The one lot of the, so I hired a bunch of people. One big mistake I made was I hired a very senior marketer. Hmm. And India? India. Uh, this performance marketer. And great CV, great ref checks, everything. And for whatever reason, I didn't feel this person's performance was. Under se lag raha tha ki yeh fit nahi hai nahi chalne wala hai. But I was so scared that this person is so experienced. Maybe I'm the problem. Right? Like, uh, and my judgment is wrong. Cause it was my first ever senior senior hire. How old was he? How old was I? How old was she? How old was she? I don't remember her age, but she was, you know, five to 10 years older than me. But I'd seen her release in terms of experience also. Right. Um, but then eventually I took six months to kind of say that, look, this is not working out. Had I done that a lot sooner? Maybe. Were you good at firing? Now, very good. I mean, fortunately not having to fire people that often. Frankly, I think we've gotten very good at hiring. So you don't need to fire. Um, but I think I've become a lot better at understanding. You know, like if there's something off, uh, it's also now we have 300 plus people. So like, there's a lot of experience at that time. It was the first time. Right. So, um, but what is not playing with her? According to, I just think that the, the, the work ethic I felt was not, uh, aligned to what I had in my mind, in my expectation. I wanted someone who was like all in and, uh, and, um, I felt that that was not the case. And so, um, that was the major difference. It was not nothing else really. And so, uh, that was one mistake we made, which kind of set us back a little bit. Uh, the second mistake we made was we appointed a distributor in America. Like absolute idiots. Like I was the first person, which didn't say that we should go direct. But after seeing the traction that we got, some big distributors came to us and said, we'll give you crazy numbers. Um, they were pretty promising. Um, and we, you know, gullibly said that you're going to be a distributor for us. Exclusive. Exclusive. It was for one year. And they did good numbers, but we realized that we are losing control of the market. And very quickly we realized that it was a wrong decision. But we had to let the contract back. What happened? When you have a distributor in the middle, you lose control of the market, right? You're selling to the distributor. The distributor is selling on Amazon. And there was a stupid move in hindsight. Uh, see at that time, we didn't have warehousing in the US. There were a lot of other operational constraints. So like, we were like, this will help simplify that. We'll just make cash flow and then we'll use that to grow the business. Fair, no? Fair. But, uh, we realized that they were not like, we were, we were one of 100 brands. So while they were doing a decent job that the drive and energy you have, they will never have it. And therefore we learned early on that that is an important lesson. And so, you know, we had to wait all of 2019 to unwind that. Uh, and then 2020 came. COVID. Yeah. And, uh, by then we were, had rectified our mistakes. We had got a correct team in place. We had got, uh, the, the, the product engine was now giving new products. And we launched, uh, and our US channel was very much in our control. And that time we launched Guess in 10, which went on to become a blockbuster game. Uh, and the idea was very simple. Actually, we were trying that 2020, 2020, sub 2020. And the, the, the, that time we were mostly selling learning aids. Like these right hand wipe activity mats resources to help your children learn how to like build these kind of core learning skills. But we said, okay, why don't we get into educational games, right? It's an adjacent space. Also that time a lot of our products were three to six years of age. We were like, why don't we do something for six plus children? Hmm. Expand the time and so on. Yes. And what we did was we tried to identify ki bhai, bachi ko kis tara ke game pasand hai already. Rather than trying to create an underlying game mechanism. So we found that six to nine year old children love trivia based games. Trivia? Like, uh, like question answer guessing games. And, uh, there was this game 20 questions, which people played all over the world. Matab ki, my source now, uh, and you can ask me 20 yes or no questions to guess what I'm thinking. It could be on any topic. Like, is it a celebrity? Is it an animal? And you have to say yes or no. Yes or no. And so we took that a step further and created this game called guess in 10. [00:52:51] Speaker 2: Hmm. [00:52:52] Speaker 1: Saying you have 10 yes or no questions to guess what's on the card. And there is more to the gameplay, but that's the crux of it. Uh, and there are different games. So there's an animal theme. There's a state's theme, geography, countries of the world theme. There is a like underwater. So all the topics that children are learning about during that age. [00:53:09] Speaker 2: So in my card, Africa, I have 10 questions. [00:53:13] Speaker 1: No, no. You have to ask the 10 questions. I'll give you an example. So if there's an animal theme. I picked up an animal. You don't know what it is. I have to, I'll give you two clues, buzzwords. So I'll say, let's say herbivore and land animal. I'm just giving a random thing. Now you can ask me 10 yes or no questions. So you can ask, does it have four legs? Does it fly? Is it found in Africa? Is it light? Kids ask all these very basic, simple questions. Interesting. But the idea is through this game, you build problem solving skills. Yeah. Because your instinct will be to start guessing. But that's never the right way to win. The right way to win is to actually narrow down. Eliminate. Eliminate, right? Now this is how you teach problem solving to children. Right? Because then they'll realize that the right way to, let's assume it's an elephant. The right way to have arrived at that is to narrow down on what could be the thing through these yes or no questions. And that's how we created guess in 10. And they just. Such a simple. Super simple concept. In fact, one of the core tenants of our product design process is simplicity. I think it's underrated. It's actually very difficult to make simple products. 100%. You know, people, it's easier to make something complex. But nonetheless, we launched it and immediately took off as well. So like several things worked for us in 2020. Also what worked for us was Covid happened. Online push. And so online boom also happened. So after a lot of, I would say average years where we were growing, 2020 was just a straight up. So that 10 crores went to 50 crores. In 2020. In revenue. And that's exactly what happened. So then we also did a series A. In? In late 2020. Where exactly that. Like, you know, we had a conversation with Sequoia and they were like, look, this is amazing. Take more capital and let's go further. Uh, invest more in or product. So then we raised about $6 million. Uh, like 3 million came. I think in 2020 and 2021 beginning another 3 million came. Um, and that was our series A. Then we use that money again to expand the assortment, build the team, standard things. Asa kuch, you know, special nahi kiata. We were still very much in India. Covid bhi tha. So it was, while all this was going on, on the good side, the back end was chaos. Because sab factories banh hoge tha hai. Right. Uh, you know, you're not allowed to work then. Subcontent manufacturing. Pura. I mean, we had some facilities, but you know, we used to essentially control the mass. So agar tooling tha, we used to buy the tooling. With the molds, we used to buy it. If it is a content, we used to design it. Hmm. So just, in our mind, we were still the manufacturer. I forgot to manufacture. [00:56:04] Speaker 2: Yeah. Later. [00:56:06] Speaker 1: But, uh, that was, uh, uh, challenging because poora back end shut ho gaya tha. And we're seeing skyrocketing demand. Uh, and at the same time you had like your offline sales had gone to zero. India mein joo offline sales tha. Because, so, a lot of, lot of, lot of, lot of things to, uh, deal with at the same time. Uh, most importantly, ambiguity tha na kaafi. Um, and so, we navigated that period. Um, COVID-19. 2020. In 2021 b, I think COVID continued. I think reopening ho ha 2021 mein. Uh, uh, business kept growing. Right. You know, at that point we started to build a proper product engine ki nae products, nae categories mein constantly launch ho rahe te. Product team was building. Supply chain was getting stronger. Uh, brand salience America mein buddra tha. Uh, we were only doing Amazon at that point in the U.S. Um, there was a lot of momentum. Um, despite all the supply challenges with COVID. 2021 COVID was mostly over. World came back. Luckily, many businesses actually had a high from like, in COVID online businesses. But, unka phir dhap ho gaya 2021 way. Many cases. Right. Uh, luckily for us, we, again, almost doubled. We went from 50 to like 90 something crores. In 2021. In 2021 calendar year. In 2021 calendar year. Lot of things. Profitable right now 2021? 2021. Again, 2021 marginally loss making. Uh, 5% types I would say. But by design. Yeah. In the sense we knew what we were doing. We were profitable at CM2 level. But we were at that point like growing. We were investing so much in team and growth. Makes sense. Um, uh, but not like some, nothing crazy, right? Like, uh, I mean, charcoal loss is nothing. Yeah. I mean, nothing but, I mean, I think as a principle, we've never believed in losing too much money. And we never have actually. Um, so 2021 was, that was the main focus. Uh, ended 2021. Uh, momentum was strong. And that's when we raised our series B. Um, where we realized that look, now we need one world. Because there it was clear that America is a total PMF. And we're like, look, we can't go the distributor route again. So if America is going to go, then we have to do what Unilever did when they came to India. Which is set up a local team. Ulta means we have to set up a team in America. Yeah, makes sense. Right? And, uh, and, uh, so we're like, but now for that, you need more capital. Because these are American salaries, American operations, American warehousing, everything is way more expensive. Um, so we raised a 16 million series B. Uh, all our existing investors, uh, whether it is Sequoia, Peak 15. Now it was still Sequoia Capital at that time, Sequoia Capital. Uh, Sofina was the new fund who came in. Also all our family offices. Uh, so we had one large family office, uh, which is, you know, Jalaj Dhani, who's, uh, the promoter of Asian paints. Uh, him, Ariyant Patni, there were a few other, uh, sort of seasonal. No, yeah. But they are not involved in, in our investment is, is Jalaj Dhani and Ariyant Patni. They were, uh, sort of some other family offices and we had some other, you know, angel investors. Well, all of them doubled down, um, in this round. And we sort of everyone came in and that was our last round of funding. And that was what we used to really scale up systems, operations. 2022. 2021 was when we raised, 2022 the money came in. And then we like, uh, What did you do in 2022? A lot. Like I think we, um, Yeah, yeah. I'm trying to think that what all we did, I think the priority that time was building out the US operations. So warehousing, um, team, we started hiring in America. You built an office in Palo Alto, right? Uh, yeah. We had one office in California. Now we are main offices in Dallas. So we have two, um, marketing team sits out of California and our, uh, sales team sits out of Texas largely. Um, and we started to build the US operations full fledged. Um, and we needed people to go after a lot of times. I used to be there all the time, actually. Uh, so that was the main, main, main focus. And so there we went from, uh, and then we also basically launched Amazon in the UK. So we got into the UK market through Amazon as well. Uh, India continued to grow for us as well. Um, and so, you know, the, the business grew quite a bit. So I think we went from 90 crores, 90 something crores to like 180 something crores. Um, um, no, it was more, right? What was it? Yeah. [01:00:47] Speaker ?: 180 crores ish. Uh, so we again doubled again. [01:00:49] Speaker 1: Um, um, um, this year, uh, the main focus was to build all the supporting capabilities, right? Uh, yeah. Yeah. Um, make sure your infrastructure infrastructure, that's the absolute right word. Start to build systems, tries to build leadership, a real leadership team. [01:01:12] Speaker 2: Uh, you had a CEO of US? [01:01:14] Speaker 1: No, uh, I, I still am the CEO of both countries and I would like, I go there. But like a right hand in the US you must have. Yeah. We started high. We had a high, we started building like senior people, right? Head of brand marketing, head of sales. Uh, started to try to build a very, uh, decentralized leadership. Uh, so just to give you a sense that our average age in India is, uh, is like, you know, is, is, is maybe half that of our US team. The US team is very senior experienced people. 40 people, 40 years old. Uh, yeah. Yeah. I mean, say like, you know, from 40 to 60, I would say in India, probably like 20 to 40. Right. Um, and so we went for a lot of experience and because again, there it was, the idea was to have their networks, their relationships. Makes sense. Their, um, uh, you don't have leverage there. [01:01:58] Speaker 2: Exactly. It leverages via those team members. [01:02:00] Speaker 1: Correct. Exactly. And, uh, whereas in India, we wanted hunger and drive and creativity and, and so on. [01:02:06] Speaker 2: If it happens, it happens. [01:02:08] Speaker 1: Correct. Exactly. Bang opposite. And so very different strategies also. Yeah. Yeah. Also learning. Right. I feel, uh, uh, I felt that like, uh, work ethic was also way better. Um, um, you know, I felt that funnily enough, younger people in the US, I don't know how, like their work and that thing also coming out of COVID a lot of people were like only wanted to work from home and stuff. Right. Understandably. So, but, um, uh, you know, we were so young that we needed that intensity to get going. So that was, those are the main, I would say, uh, uh, main things, but around that time I think is when the business started to also kind of get little out of hand in terms of how to manage it. And that's when I, yeah, it was getting big, fast. Uh, you know, I was also new to building systems. Uh, luckily at that time I had, um, you know, I had this program that I was part of, which I got, uh, where, um, you know, I got, I got Bini Bansal as a mentor as part of this program. What's the program? What's the program? It's called X to 10X. It was a, it's a, it's a, it's a program. It's a consulting firm that he's founded. Uh, they work with Sequoia portfolio companies, certain high growth companies, and then they mentor you over a period of six months. So, uh, Bini was my, uh, I've heard about that. Yeah. Bangalore based. Yeah. Bangalore based. So Bini was my mentor. So I spent, uh, and I learned a lot through my, you know, the mentorship he gave me. Uh, where he, like. [01:03:36] Speaker 2: That was a game changer. [01:03:37] Speaker 1: It is a game changer. It, you know, in terms of how do you scale a fast growing business? How do you think of this principle of OKRs and I'm not getting into it. It's pretty technical, but, um, you know, how to think about organizing to scale. And, um, and that played out, right? The following year we went from 180 to 290 crores. 2022. Yeah. Um, yes. Uh, 2023, we went to 290 crores, profitable. Turned profitable. Turned profitable. Yeah. Yeah. No, meaningfully. I think the scale grew. Uh, what worked in 2023? I think honestly, nothing new. There's more. [01:04:19] Speaker 2: The investment upfront money started getting returned. The economy just started coming in. [01:04:22] Speaker 1: Yeah. Correct. Exactly. Like standard consumer business, right? Like you started to see clear compounding product engine, uh, was firing. We were entering more categories, more products. We were, uh, distribution was getting deeper in every market we were in. Um, online. Uh, offline. Um, we were entering more and more channels. We had focused on US, India and UK. So we went deeper into that, those countries. Um, honestly, it's just, I would say the three things that worked was, there was greater brand awareness building, there was more product lines that we were adding and there was more distribution we were adding. So all three. [01:05:01] Speaker 2: Very fundamental stuff. [01:05:02] Speaker 1: Very basic stuff. And there was nothing rocket science. Right? [01:05:05] Speaker 2: No market, no product, no distribution. [01:05:06] Speaker 1: Right. And it's like basic product. Take it as far as possible. And, um, and, and that's basically, uh, that's kind of what happened. And then, um, and then in 20, this was 2023, I believe. [01:05:20] Speaker 2: Yes. 2023. [01:05:22] Speaker 1: Yeah. And then we went from 2023 to 2024 calendar year. We went to, uh, almost 500 crores. Um, uh, calendar year, full year. 24 full year. Yeah. Jan to December. Jan to December. And, um, and that's when it was a big milestone because we hit the 500 crore mark, which was a big deal for us. Uh, you know, I think for me, it was always 100 crores and then 500 crores. Um, uh, and again, nothing, nothing really new again. You know, it's, it sounds like these numbers are bigger and bigger, but in a way, this is what compounding is, right? Like this is just, it just plays out. Uh, I think one thing that helped is that our offline business in the US started to kick in a big way. Uh, all that investment we did in 2022 and building the offline team, we started to see big results. Families and Target and all that. Walmart and Barnes and Noble and Costco. Kohl's and all these retailers that we started to sell into. Yeah. Hobby Lobby, uh, Michael, we started selling into these chains and, you know, we started doing meaningful revenue. So that's why that jump became again so much because we unlocked a new channel of growth. Right. If you, if you think about it. Um, and so that was, that was really the, the big unlock there. Um, and, um, yeah. And again, we were profitable, uh, very meaningfully, uh, in 2024. Um, and that's, that, that, that, that, that's pretty much the journey before this year. Um, uh, just trying to think if there's anything else material. Yeah. We, that was pretty much it. So again, we had not raised much money. We were profitable. We were growing. Um, I think by the end of 2024, we had more cash and net working capital than what we had raised. Um, that was the 24 million or so. Correct. Correct. So it was a great year from that perspective. Like, you know, we hit the 500 crore mark. We had essentially more capital than we had ever raised. Everything was going well. Solid team. Team had been consistent. And then comes 2025 and you know, all the status chaos. Uh, so, I mean, like I said, I think that's one thing you learn about businesses like this. If you see in our journey, it's always like, it's always like, you know, there are good years, bad years, good years, bad years, good years, bad years. Right. Um, so in 2025, um, this year has been definitely challenging. So I think on all of this, like India has been growing really, really well for us. Right. Even last few years. So our India business has been growing at almost a hundred percent. A hundred percent. Every year. Yeah. Uh, and, uh, you know, a lot of tailwinds in India, you know, BIS has been introduced, which is reduced all these Chinese imports. Um, our market may 80% of goods were Chinese imports. Okay. Um, I mean, uh, I don't think it's gone, but come to definitely, uh, there is a greater shift to branded. Um, and our brand skillmatics is now widely recognized in India as like a high quality brand. Uh, it's a lot of trust has been built also because of time. Right. Um, now we, we started in 2017 in India. So there's been a lot of trust that has been accumulated by consistently delivering value to parents and children. Um, and so we started to see a lot of inflection in our India business, uh, which is a real big growth. India is what? 15% of the business. India is 30% by volumes. Uh, about 15% by revenue. And 75% is us. No. Um, see again, if you look at it, if I take volumes, see volumes is the like to like comparison, right? Because it removes pricing as a, um, sort of beat. Uh, the U S is about 55. Last year, this year may change, but last year, 2024 was maybe 50, 55% was the U S but 25, 30% broadly was India. UK is about 10% and then a few other markets, but they were primarily focused on US, UK, India. Got it. [01:09:14] Speaker 2: What's so special about UK, India, US? [01:09:16] Speaker 1: Uh, I think there's consistency of English, uh, is one very common trait, right? That, uh, you know, these markets are all English speaking markets. Australia, New Zealand, Dubai. Sure, but they were smaller. We're in, we've launched in Australia. We've launched in the, in, in the Middle East, but they're smaller. Like you, the combination of a English speaking market with large TAM. What about Europe? So Europe is not English speaking, right? Uh, Western Europe. Uh, in fact, actually none of Europe, right? Uh, largely it's all local, local, local, local languages. So we've decided to go into Europe through distribution partnerships. Largely. [01:09:53] Speaker 2: And you're planning to like have languages or something. [01:09:55] Speaker 1: And we do it in different languages. So we do German, French, Russian, Polish. Uh, but there we don't do it directly ourselves because each market is very different, right? There is a local language, like, you know, uh, distinct culture. So, you know, it's also a matter of focus for us. Uh, and our focus is very much these English speaking countries, which have also similar education systems. Largely, right? UK, India is so highly similar. Yeah. Uh, I think we are a full derivative property of that, right? I mean, at least. Yeah. They are our parents. Uh, well. Uh, not by choice. I wouldn't say they were our parents, but they, they had forcibly adopted us for some period of time. Not by choice. Yeah. Not by choice. And nonetheless, uh, uh, you know, very similar systems. And therefore, amara focus ki, let's focus here. And also see, these are deep markets. They see the U.S. is, is, is, uh, 35% of the global market. So just keep focusing there now. It's still, I mean, I know we've become larger and larger, but still it's not, it's not depth there that why, why go elsewhere? Right. First become even bigger there. And, uh, similar view in UK. Right. Uh, that there's sufficient depth. It's a, it's a much larger economy. Uh, and India, while not as deep in terms of market size, the growth rate is the highest here. Hmm. Nobody is growing at, uh, the rate India is growing at. Right. I mean, I don't think dunia may aisa market hai that is like India. I'm completely bullish on India. Hmm. Um, uh, we have the perfect recipe for growth in this country. Right. I look at like, you know, GDP growth, infrastructure development, digital infrastructure. I mean, everything is in our favor, young population. If I had to go double click on hamaari category me today, people are having children later in life. Uh, like. 30 plus. 30 plus. When 30 plus. Like I was 30 plus when me and Priyanka had Asan Javi. Right. Um, my parents had me in early twenties. Right. Uh, literally, I think it's almost a 10 year gap. I don't know the exact number, but it must be almost a 10 year gap. Uh, second thing is people are dual income now. [01:12:12] Speaker 2: Hmm. [01:12:13] Speaker 1: Right. Um, so not only people having products, children, sorry, uh, uh, having children later in life. They're now dual income. And so therefore their approach to products for their children is always that I want the best for my child. And so if you are offering quality products, it's a great, great market to be in. And India is in a young population. Aaj, if you look at our population distribution, it's today, most of them are not even in that marriageable age. Eventually all of these guys will. Next five years. In the next five, 10, 15 years, we'll all get married and all will have kids. You know, while people talk about declining birth rates and all of that by India may, I don't think that is going to be a reality. Right. Yes. [01:12:59] Speaker 2: It will go down. Not for at least next 25, 20. [01:13:01] Speaker 1: But again, the go down is at the averages. People will stop having seven, seven kids and five, five kids and all of that. Right. That will start bringing the number down. Um, that used to happen, you know, uh, with greater education and all, but I think people will have one and two kids and they will go out of their way to make sure that their children have the best. So very, very bullish market and opportunity. And that's been a big focus for us. Uh, uh, this year definitely tariffs has been like a major. How has that been? Like, what's happening? I mean, look, in some ways, it's similar to COVID. Hmm. Where it's similar characteristics, right? Ambiguity and global macro. Abhi, kya hua? [01:13:38] Speaker 2: Abhi effect hua hai kuch? [01:13:39] Speaker 1: Haa, effect to hai. Tariff badh gaya hai. See, look, pehle kya tha? Humari category mein tariff zero tha. Uh, tariffs aa gaye tha, leakin baur jaldi 10% ho gaye tha. So, tariff pay. So, if you have made 100 rupees, you have made 500 rupees, then you have to pay a tariff of 10%. Hmm. So, just think of it like your cost has gone up by 10%. Simple way to think about it, right? Uh, uh, but MRP is a cost or cost? Your cost, your cost, not MRP. You can pass on the price if you want. Kogs ka cost ba hai. Haa, Kogs ka cost ba hai. Fair. Right? It's like a tariff is on your cost, right? Fair. Uh, it's like basically jab haam import kar rahe hai into the US, you have to pay a tariff on that entry price. Now, so, the, the 10% was not a very big deal, frankly speaking. Uh, of course, cost ba hai hai, leakin, oh, it was only by 10%, right? It was not some- [01:14:32] Speaker 2: In the US, anyways, higher margin, so. [01:14:33] Speaker 1: Yes, correct. We had the margin to absorb it. It was not a big deal. [01:14:36] Speaker 2: You didn't pass it on to the customers. [01:14:37] Speaker 1: We did not pass it on to the consumer. Uh, because, uh, you know, we wanted to be competitive in terms of pricing or, uh, it was, in fact, kaafi faiida bhi hua tha. Because China had gone to 145%, right? Uh, beach made. So, for example, hamaara jo assortment walmart mein hai hai, we quadrupled our assortment. Because suddenly. Four times. Four times. Because, suddenly, you, everyone is looking to India for a solution. Sari jo US retailers tha. So, hamaara jo offline, like, momentum tha, actually went even more. Badi hai hai tha. Yeah, so, in fact, while I would not have envisioned this scenario asa. More volume at a little less margin. Yeah, but, thik hai, but itna haad badra tha na, because they are also now like, we can't, I mean, so, there was a lot of momentum towards India. Actually, covid ke time se, I think the world has realized that they cannot be such extreme supply chain dependence on China. Uh, because even 2021 mein, global supply chains went for a toss, right? Toh, and everything was being made in China at the time. Um, and since then, there has been a sort of China plus one movement, right? Ki, how do you diversify sourcing? Vietnam, Indonesia, India. India. It's not an India thing. I mean, several countries. It could also be local sourcing. Basically, alternative, right? Uh, that could be domestic in your country. It could be in Vietnam. It could be in India. You know, it's a movement that is clear. I think this again accentuated that in a way, right? Uh, and so, I think hamaari le, it was beneficial actually. But definitely navigating all of this complexity this year has been very challenging, right? Because, uh, how do you do pricing? The cost he pata nahi hai. Yeah. Right. Uh, it's definitely been. Funny. Right. Uh, like it's, uh, it's like the way I like to describe it ki hum game khail rahe hai, lekin rules pata nahi hai. Uh. Uh, rules are changing. Uh. And so, uh. Crazy. [01:16:36] Speaker 2: Every day you're waking up to like, oh, rey bhai, kya karna hai ab. So, thik hai, it's part and parcel of business. But sounds fun to me. Like, I'm sure. [01:16:43] Speaker 1: You know, it's fun in a, in a very different way that like, you know, see, jitna bhi business, my mental model is that like, but yeah, I think that's 2025. [01:16:51] Speaker 2: Let's see how this year goes. Nice. This year on track to do 650. Hopefully. Hmm. Crazy. [01:16:59] Speaker 1: 10 years now you should be at, I don't know, 5,000. Hopefully again, again, too tough to say. See, I think there's some founders and entrepreneurs who can think like that. Uh, do you think like that? No, I don't. Uh, I, I'm a, uh, very step by step kind of individual. It's just my mental model. Uh, I don't believe in a limitation, but I believe in like, I, I, of course, as you get bigger, you think bigger. It's just part and parcel of like life. It's kind of how I feel every human will behave. Uh, but I didn't start this business saying that I'm, it's going to be 5,000 crores in revenue one day. Right. I said, okay, let me get to a hundred crores. When I got to a hundred crores, I'm like, let me get to 500 crores. Right. Now I'm like, okay, you have to get to a thousand crores. And then let's see. Uh, I think the good thing is that we operate in a market that is got no defined limits in a method. Um, if I was building this business only in India, then there are natural constraints, right? Because the market size is limited. So to some degree you cannot become, um, I mean, there will be limitations on your growth because of the size of your domestic. [01:18:03] Speaker 2: You're almost 100 crores in India also. Yeah. [01:18:05] Speaker 1: Yeah. I think we should cross that number soon. And, uh, uh, and, um, uh, the, um, the opportunity because it's a global business is much, much larger, right? Like, uh, I mean, I gave the example of Lego Lego is 90,000 crores in revenue. What's their split like? Have you studied them? Yeah. I have studied them. So, uh, so 90,000 crores and we're sitting, I'm saying thousand. [01:18:30] Speaker 2: Hmm. [01:18:31] Speaker 1: I mean, there is a lot of room. I'm not saying we will get to 90,000, but I mean, and just keep in mind Lego is single digit market share. Yeah. So you put it in perspective. [01:18:40] Speaker 2: So what's the market like? Unorganized or organized? Globally, I would say it's quite organized. Organized? Uh, yeah, yeah. So they're like what? 10, 15 players are at 8%, 5%, 6%. [01:18:49] Speaker 1: No. There are many, many, many. So Lego is an example. There are many, uh... What is Hamli's number? Hamli's a retailer. It's a little different. I don't know their number. [01:18:57] Speaker 2: How many companies are there? [01:18:58] Speaker 1: There are many. There are like Mattel, which must be like 5 to 10. Mattel has Barbie, Uno. Okay. These are all their brands. Mattel. Hot wheels. They're about 5%. I don't know their percentage, but they would be well above 5. They would be 5 to 10 billion in revenue. I would assume. Um, I don't know the specific, but the point I'm trying to make is that like, there are enough large players, right? There are many, many companies who I know of who are over a billion in revenue. [01:19:22] Speaker 2: Now that story is what you understood. How does manufacturing happen? What does supply chain happen? What is the product from metals? What is the product from metals? What is the product from metals? What is the product from metals? What is the product from metals? What is the product from metals? What is the product from metals? What is the product of your company? We will talk about marketing strategy. All of that. What is the product from metals? First of all, manufacturing. How has it evolved? How has it evolved? How has it been? [01:19:41] Speaker 1: Yeah. I think manufacturing is sometimes in general, um, not. I think the way we think of manufacturing is that all the core IP should be owned and controlled by us. If you are making a plastic product, we need to be our mold. If the product is being printed on the product. [01:19:59] Speaker 2: You can buy raw metals as well. [01:20:01] Speaker 1: No, no, no. The IP should be ours. I mean, say for example, there's a mold that is used to make a product. That mold should be mine. Right now in our journey, let us become best at something. And I think if we are the best at product innovation and let's say digital first brand building and go to market and using like a technology enabled business. These are the things that we can become the best at. Really? Let's become the best at that. I love it. And see and see because we are competing in a global market. Right. So I need to be the and I think the good thing about a global market is we are the best at one thing. You will get rewarded. And so let's see over time. We may scale up manufacturing and so on. But right now, I don't personally see any need to really invest there. I would rather invest my focus and my capital on the front end, which is sales, product innovation and so on. So that's how we do manufacturing in a nutshell. [01:20:59] Speaker 2: But a sidelined question. What do you think about manufacturing in India? What do you think about manufacturing in India? What do you think about manufacturing in India? [01:21:06] Speaker 1: I mean I think we have no option. I feel like I think the economists' notion that India should become a service led economy. I think I don't agree with that. Change? I think we have to invest in manufacturing as a country. I don't think it's an option. For a couple of reasons. We are a large, young population. You can only create jobs in manufacturing. Services, in fact, I feel are getting now with AI coming in. I do think that service jobs will decline, right? All your call center jobs, IT services jobs. I mean, AI will be able to do all this much, much better customer service. Some will be automated. So I see a lot of headwinds for that from a job perspective. Whereas manufacturing, while people say robotics, automation, a lot of industries are very labor intensive. Textiles, toys, leather, footwear. These are all labor intensive industries. And we have the benefit of a large labor population with a lower labor cost than China. And so we should be taking up all of this in a big, big way. It's also important that manufacturing happens in India for self-reliance, right? We can't be dependent on China also for a variety of reasons, right? And given the large domestic market in India, which is now being created, I think manufacturing in India is like an inevitability. It has to happen. And it is happening, right? You're seeing it left, right and center. You're hearing that Apple iPhone is being made here. And, you know, semiconductors are being made here. Look, I still feel we're far away from China. I'll be honest. It's not like, you know. I'm going to China? Of course, many times. They're very advanced. I mean, if you compare like, let's just take a standard plastic toy manufacturing factory in India and one in China, there is a world of a difference. Part of it is also because how they built their ecosystem. They're years ahead of us, right? It's not a fair comparison. The way they built their clusters and I mean, there's a reason they control the world's manufacturing. It's like we flew to incident now, you know, like, so they are advanced. They're ahead of the curve. But I mean, I think, you know, it's good. There is a playbook for us to follow. Learn from them. You should learn from them. There's no problem, right? You should learn how they've done it. Imbibe best practices, you know, wherever required. Can there be R&D transfer tooling? I'm quite bullish ki India mein we should be like pretty advanced in manufacturing over the next decade. I wouldn't be surprised and all. We are making defense equipment and all. Like, so, I think, and I think that's very, very important in India kirihe. So much to do. There's so much to do. We don't, we have, like, we don't manufacture anywhere near as much as we should. You look at it as a percent. Why? What is the problem? We don't have our mindset. We don't have our mindset. Look, there are challenges, right? Like, you know, firstly, like, you know, doing business in India has dramatically improved over the last, let's say, 10, 20 years. That's also very difficult. It's difficult to do business in India. Like, let's be honest, right? It's not, it's not easy. But the question I always look at is not what is the current state, but what is the belter change, right? That is what needs to be looked at. If I had to look at no sal pehli when I started my business boss, tab octroi and all tha. There's this octroi and VAT and all. GST di nahi tha, when I started the business. So I'm saying that there has been a lot of simplification as things have become more digitized. And, you know, look, I'm not saying the way, the way I would look at this is that India, it's not, if you compare India with say America, yes, ease of doing business is not comparable, right? At this point, but has it improved? Yes. Is it continuously improving? Yes. So same question when you apply to manufacturing to run a factory was an extremely difficult task, right? Abhi wo badal raha hai hai. Like it's becoming easier and easier to manage land, labor and so on. Rules are getting lesser. Complexities are getting lesser. GST has simplified things dramatically. All this octroi sab nikal kaya. So it's getting easier. The other piece is that now there is more capital availability. See, how do you start off? You need money to build factories. So barring like your five, ten conglomerate families, like, you know, other people also need access to capital, right? And today that is happening. You have a private capital ecosystem. You have private equity venture capital. These guys are also willing to invest in manufacturing, which was earlier. If you go for 10 years ago, then VCs would never invest in manufacturing. VCs would only invest in capital like technology business or consumer brands broadly, essentially asset light businesses. Both of these are. That's changing now. You see like all capital intensive manufacturing, drones, aerospace, all of that getting semiconductors, precision manufacturing, getting the VC money also. Even at early stage. So there is now also more capital available. And I think that that's also a very, very good thing. So if you as these things come together, it will be there. I don't think it's a mindset problem. I think the mindset is also changing. So I, you know, earlier, I think we had this mindset of like good enough. I think that has to change to like best. There's a huge difference. And we cannot say that this is good enough. It has to be the best. And when I say best, I mean in quality, right? That has to be the mindset. And compare any price level. Like price. I'm not saying that China at any price level you go, they make iPhones and they make like, you know, all kinds of other rubbish also, right? Like, but at whatever price they target, they do it pretty efficiently. So I think that mindset is changing. It really is changing. I see it on the ground all the time. I think the one thing where India needs to improve en masse is actually service delivery. Means agar we are saying ki we will deliver on this date. The goods have to be ready on this date. Right? That chalta hai attitude that one day delay is okay. Do din delay is okay. I agree. There was a monsoon tha to warehouse flood hua. To we had to stop production. Holiday hai. And as a result, people have not come. I understand these are challenges. But the difference is that I found that in other manufacturing nations, they anticipate these things and plan and give timelines considering these buffers. Good point. We don't do good planning in India. I would say en masse. All of us. I'm not trying to put the country down or anything. I think that's an area where we can get a lot better. Being like, for example, I had BCJ to have a German boss. You had a German boss. [01:28:20] Speaker 2: A German boss in Canada. [01:28:21] Speaker 1: That's very true. I could not. I mean, it was unbelievable. Right? I mean, working with him. I mean, this is just a person, not a country. But he was literally like a machine. You know? In terms of, and it was actually, it's not like he was working 12 hours a day. So, 8 hours a day or whatever the regular time. Like, but he was so efficient around it. And the efficiency didn't come from anything but exceptional planning. And I feel like if we get better at planning, we will get better at service delivery. Like, we cater to a lot of US retailers. Right? All these companies. You can't have a single day of delay. It's not acceptable. I mean, you'd be like charged for all of those penalties. And so, you know, that is very, very critical. Like, I feel. Right. And I think it's, again, it's happening. [01:29:12] Speaker 2: But I feel like that's an area where we can learn and improve. Got it. Supply chain, kese salta hai? Raw materials, to manufacturing, to this, that. Kese salta hai? Kya ap ka ho? Gaadi liye na, flight, all that, logistical. Yeah. [01:29:24] Speaker 1: Where does it start? Starts with the product. Like, you have to start to say, bhai, yeh banana hai. Right? These are the specifications. This is the design. Then our supply chain team will figure out, kya apko yeh chahiyeh. Kaha se lehengeh? Like, kal daayengeh. Like, you have. For example, we make, you know, in our products, we don't use plastic dyes. We use wooden dyes. Which costs 10 rupees more. I mean, 10 times more. 10 times more. 10 times more. 10 times more. I mean, it's 1 rupee versus 10 rupees. But wood is obviously more sustainable. It's a more premium feel versus like plastic. I'm sure customer appreciates that also. I hope so. But I think that's kind of, when you say you want to be sustainable, you have to like live it. Right? You can't just say you are. And then we basically try to figure out kya bhai kaha se manufacture karne waale hai. And like, sometimes we make it, some parts are ourselves. Sometimes we make it outsourced. Now, again, with scale, most of your supply chain is built. You know ki ye sare raw materials ke liye yaa jaana hai. Agar kuch naya banana hai, then that's actually where the supply chain work really starts. Which is identifying and scouting new manufacturers who build these capabilities. What we have found actually in our case is that in most cases, we have found a lot of success working with people in adjacent industries and getting them to manufacture toys and gear. So we work with people who are in auto components. And we convince them to start making our category. We work with large scale packaging companies and got them to start doing this. Because what we found is that these companies have very robust systems and quality checks. And scale. And so you have to just convince them that your business will be meaningful enough. So typically that's kind of the approach that we obviously helps now that we're bigger. So we can promise certain volume. And how do the deals work with manufacturers? It's actually very straightforward, right? You will get a couple of quotations from other people. Then it's a quantity cost discussion. MOQ. MOQ. MOQ ke zhaada. Typically now we are well above our MOQ. So we don't really worry so much about MOQ. We worry about like costing. You know, so like let's say MOQ is 3000. We are probably starting at 20,000. So at 20,000, like what is the benefit? So it's 20,000, 15,000. Where is that better cost? Then make that much. Because in each product is a little different. And then you start and once you figure it out. Typically we always start with at least if we have shortlisted four, we'll start with two. We won't just start with one. You know, and then it's straightforward. How is the payment cycle? Depends on vendors, right? Sometimes if you're starting a new supply chain, I would say the most extreme is that, you know, you're even paying upfront, advance. Maybe not the whole piece, but like some advance and some on delivery. This is the worst payment cycle. We are basically paying on delivery. I think when you're starting with it, it's very terrible for cash flow. But again, you're working with say a larger company and you want to convince them. And this is a way to convince them saying, I'll pay you cash now. And over time, you know, obviously you start to build credit in. I think in certain cases, in most cases, I would say we have 60 days credit, 30 to 60 days credit, depending on what the, kya factory hai, kya terms hai. It's essentially part of the commercial negotiation that you want. You can use payment or cash as a leverage point. So if I have, if I have cash rich, then I can pay better and get better costing. Or I can say that, bhai mujhe zyada credit de do me thoda one, two rupees. I'll give you more, whatever, you know. But broadly I would say 30 to 60 days on the guard is the general payment. Closer to 60, I would say. [01:33:21] Speaker 2: Yeh kya story hai khilone ki, like China khilona, like toys in China, industry versus India. I remember growing up, I just remember reading yours articles how Chinese industries are destroying the Indian toy industry. [01:33:33] Speaker 1: Yeah, I think to some degree there's truth to that, right? Like, you know, because kya hota tha tha, India used to be a dumping ground historically. Toh kya hota tha, China used to have lot of production, they used to have excess production, defect product, reject mal joo US consumer has not taken. You should just flood the India market, right? That's why 80% of toys in India were from China. And in many cases there were no safety standards, there were no import barriers. So kuch bi aara tha, right? There was no testing norm. Every other market in the world has safety norms around toys. Any developed market, you need to have a certificate that shows you're compliant. I think in the last few years, India has made huge progress. So they've done two, three things. One, there are now like safety quality standards called BIS, which is at the product level and the manufacturer level, which has been great in a way to regulate. At least there's some degree of regulation in terms of like what again is the norm globally. Also, I think to promote domestic industry, the Indian market has added higher duties on imports. As a result, I think in the last three years, imports from China toys may has fallen 70%. So agar 100 import ho raha tha, abhi 30 import ho raha hai. And the market is also bigger. Whereas exports have grown by 80%. So, I think that has been very, very good for the domestic market and domestic players. And frankly, good for Indian consumers also, right? Why should we be getting some quality material when it's not required? It's not that you can't import Chinese materials. You can, you just be compliant. How do you see innovation in innovation? Most important part of our business. [01:35:12] Speaker 2: Like you have a team separately. [01:35:14] Speaker 1: You can't really sit in innovation, innovative, innovative, designer, just sit and do it. No, no, it's not that simple. Like I'm saying that we have 300 people in the company. 135 are involved in product design and innovation. That's a lot of work. I think it gives you a sense of how much priority. It's like 40%. That's too much. Correct. I don't know if it's too much, but I feel that it is the core driver of our business. And we have over indexed on that as a capability. I would rather do this. And in our innovation team, there are two, three parts to it. There is a design team, which is graphic designers, game designers, product designers. They come from mostly design schools, US schools, Indian schools. For example, NID has a masters in toy and game design. There are many, many design schools now. Actually, the field is getting more bigger in India. Then we have industrial engineers, product engineers, people who understand substrates, manufacturing, some materials, like the more I would think of them as hardware almost. Okay. They have a better insight onto what materials will behave, how, what can we use, what we can't use. A link to them is in some way, some supply chain capabilities. And then we have a content team. The content team will, we call the content team, but essentially, our products have a lot of content in them. And I say content, I mean like, like what's it like a book, like printed content. And there we have, you know, teachers, educationalists, people who have a background in teaching. We have people who studied, as I mentioned, early childhood education, child psychologists. Their main role is to essentially ensure that learning outcomes are being delivered appropriately by age. And so you can't say you're a learning brand. We don't have people who are actually experts in the field of education, actually involved in the product design process. So innovation, what's the cycle? Yeah. So the cycle is that, look, we have, we launched a lot of products a year. Like we have a very robust- Launched the market. [01:37:28] Speaker 2: Yeah. [01:37:29] Speaker 1: We have, we launched maybe close to a hundred products a year. [01:37:31] Speaker ?: Oh yeah. [01:37:31] Speaker 1: Yeah. And the way we do this is that, you know, we have a large team. And so different teams are working on different products and different categories. They are constantly, there is a cycle, right? There is an innovation process where you first identify what is the problem you're trying to solve. What is the unmet consumer need? How are you going to create something which is differentiated? Then you build a prototype, you know, there's certain amount of testing that's done. Then, you know, so there's a whole process around it, but this will be do it in parallel across multiple products. Like it's this concept of parallel processing, right? You're basically doing this across different, different products at different, different time. The other piece is even when we're developing a single product, forget multiple products, we do parallel processing there as well. I mean, when the concept is being designed, it's not like the concept gets designed, then the industrial design happens and then everything happens somewhat in parallel. So as the team is designing the basic idea, the engineering team will already be thinking about what specs will be, what prototype will be, even before the actual thing is not finalized. What this does is it makes the thing extremely compressed in terms of time. So we ideate pretty fast and then because we have an agile supply chain, we also are able to prototype fast, launch fast. So we launch a ton of products. I think what we try and do is that we don't necessarily launch all the products in large quantities. We're very big on testing what products work, what don't, right? Sometimes a product is designed with an India specific orientation. Sometimes it's an orientation just for the US, but just for the offline market. Now we're developing some products just for quick commerce. So all 100 products are launched everywhere in all channels. There is a strategy per channel, I mean per market and then per, within per market per channel. So for example, my AOV for example at Walmart is like, you know, $5 to $10. My AOV on Amazon in the US is $20. Big difference, right? So the product strategies are also very, very different and we have different teams working on each of these things. But I think the core tenant on our innovation team is these two, three things, which is that one has to be learned through play. There has to be a core something value we are providing in terms of skill building. The second is that there has to be a certainly a high degree of differentiation in the product. We would try and stay away from like doing something which is already there by and large. Because that's what we found that all our biggest wins, whether it's been our guess in 10 or our foil fund. Or most recently we launched this product called Aqua Puffs. All these products that are like, and some of these product lines do like almost 100 crores in revenue, single, single product lines, right? Have come because of high degrees of differentiation in the product. So that is our core focus. And our main aim is that, okay, we can launch 100 products, but there's to be some that really work and then we really scale behind them. So that's really the, I would say the innovation process in a nutshell. Like I think essentially differentiation, speed, and like learning value is really the core part. Top marketing channels, QC, e-commerce, retail. The limitations of quick commerce is like you will not have selection everywhere, right? [01:41:00] Speaker 2: Yeah. [01:41:01] Speaker 1: But whereas like, you know, something like an Amazon will give you selection. It's there. It's there. [01:41:07] Speaker 2: Nice. Rain of thought and animals in the wild and push and pop, guess in 10. [01:41:12] Speaker 1: Yeah. [01:41:13] Speaker 2: Love it. Love it. [01:41:15] Speaker 1: Which platform were you checking? Blinket. Okay. But anyway, and then in the US actually we sell even on like platforms like TikTok and stuff like that. Right. So there are, that's not, that's not, that kind of commerce is not there in India. [01:41:30] Speaker ?: Yeah. [01:41:31] Speaker 1: Yeah. So like those I would, those I would, they're smaller. [01:41:35] Speaker 2: When you say that TikTok means like video me dekha vahin se order kat de wala. So inka within built D2C rata hai. Absolutely. So that's so cool. Yeah. [01:41:43] Speaker 1: It's very cool. But it's still smaller, but it's growing. I think so. These are the online channels offline in India, you have modern trade, which is like your Hamleys, your crossword, like organized retail lines, retail, smart bazaar. And then you have unorganized retail, which is your general trade stores. They are local mom and pop sort of stores. I would not call them Kiranas because they're like toy stores and bookstores. So that's the offline. [01:42:06] Speaker 2: Stationary shops and all that. [01:42:07] Speaker 1: In the US, the offline retail is broken into like, there is different types of formats. There is mass national retailers like Walmart target. [01:42:15] Speaker 2: Yeah. [01:42:16] Speaker 1: Costco. Costco is a different format called club. [01:42:18] Speaker 2: They're like wholesalers. [01:42:19] Speaker 1: Like you can't buy like, like, you know, when you go to Costco, you can't buy one toilet paper. You have to buy like, you need a membership also. Yeah. And you need that. They give you like a hundred. That's the club channel. Very different format. We don't have that kind of retail format in India. Then you have like travel format retailers. Like, you know, like there are lots of travel retailers, airport stores and all of that. You have pharmacies, which are really large like CVS. And then you have like, you know, specialty stores like Michael's does a lot of art and craft product. Barnes and Nobles is like a bookstore, which also does a lot of toys and games. So I guess what you'll notice is that in America, there is a lot of specialization, even on retail format, because it's just a more mature market. And so when you operate in so many types of formats, you know, your product cannot be the same in all. There is some modification in price components to meet the requirement of that channel. Right. So someone going into a travel store is buying it to use on the plane. You know, maybe for example, someone at Walmart is more price sensitive. Someone at like Barnes and Noble is more like, you know, branding matters more and like quality. And so, you know, you have to eventually start having a nuanced strategy, which is like, what is my product strategy by channel that you have to start building towards, which is now what we are trying to do as well. Must be a operational nightmare. Nightmare. Yeah. Fortunately, we have a very, very, very good team who manages that part of it. But again, it is very operationally complex. No doubt. [01:43:53] Speaker 2: Why don't you apply to Shakhtar in US? [01:43:55] Speaker 1: Oh, honestly, I never thought about it. It's a great exposure. Yeah. We would, I mean, maybe earlier it would have been helpful. [01:44:06] Speaker 2: But even now it would be great. Like maybe you not raise funds, but like from a marketing perspective, why not? [01:44:12] Speaker 1: Yeah. I mean, why not? I guess I've just never thought of it. I think the, honestly, the idea of going on TV and pitching is quite scary to me. Bro, you're damn good. You speak well. Honestly, I don't know. I'm not like the, like I haven't done many podcasts and stuff. It's not like something that like naturally comes to me. So I think like podcasts are still easier because it feels like I'm just talking to you. Yeah. Nobody else in this room right now. But like the idea of going into like a studio and like, I think maybe a bit intimidating. Food for thought. Food for thought. [01:44:53] Speaker 2: Yeah. What about the US market? Like if you can teach us about the US market, how is it different from the Indian market? [01:44:59] Speaker 1: Yeah. Look, I think the US is a far more developed economy than India is. I think we have to recognize that, right? That couple of characteristics. One is way more developed. It's way richer. Like GDP per capita 60, $70,000. Here we're at 2,000, 30,000. [01:45:12] Speaker 2: Whatever it is. [01:45:13] Speaker 1: I mean, there's like, you know, there is a very different market. However, India has to be de-averaged. India has $3,000, but I mean, we are not selling to all of India, right? I'm not selling today's Kilmatics products are not accessible to say farmers, right? Because of price points. Like our AOVs in India, like 299 to let's say 999. I mean, broad range, right? So you're not catering to a certain part of India. So even India has flipped. That being said, I would say principally that the biggest differences I would say is that America is more, I think things like innovation and differentiation are very, very important. Look, all of these things are important in both. Don't get me wrong. But I would say that is one. Second thing is they're higher bar on marketing and branding. Yeah. [01:45:59] Speaker 2: They are the best brand. [01:46:00] Speaker 1: They're the best. I mean, like, I mean, look at the America story, right? Like it's essentially a case study. I agree. Yeah. Marketing. [01:46:09] Speaker 2: Even the Britishers, damn good. [01:46:10] Speaker 1: Yeah. So the Americans are amazing marketers. And so like, if you want to build a brand in America, you need to be table stakes at that level, which is why our marketing teams are all based out of the universe. They're excellent. And I think that the bar on marketing is very high. That being said, looking at some of the D2C brands we have in India, I feel are at par. You know, they're just really, really cool, innovative marketing happening in India today as well. You know, maybe some of the traditional companies as well, but like, you know, I definitely see it more in the new age businesses. So I think that's where America, I would say is like, you know, has a higher bar and consideration on those criteria. Because they're a richer country, I think price is not as important to them. It's not like it's not. Price is important everywhere. I mean, that's it. Sure. [01:47:02] Speaker 2: Sensitivity is. [01:47:03] Speaker 1: Yeah. But compared to India. Too sensitive. India is an extremely price sensitive economy by and large. And I think Indians value price above all else by and large. Again, if you de-average India, if you look at the cohort of India that is buying on quick commerce channels and buying online, I think they behave very similarly to American consumers. They care about like innovation, differentiation, brand, convenience, right? Like they care about instant delivery, next day delivery. Like that's the sense you're paying for that, right? So I think there are parts of India that are very, very similar, but by and large, there are these very, very big differences. I think from our perspective, I think that the innovativeness of a differentiation of our product is more appreciated in America. Whereas in India, the educational value is more appreciated. I think that's also a reflection of the psyche of like, I think India. India education, US, you said? The differentiation of the gameplay or the idea. So like while they also appreciate the innovativeness, but what I'm trying to say is that like, I would say they would place a little bit more weightage also on the engagement value. Let's say today, there's a product that has an education value and engagement value, right? Obviously they care about both. [01:48:31] Speaker 2: Maza anachi thoda sa karte ka. Yeah, yeah. Experience achha anachi. [01:48:34] Speaker 1: I think also, Indians also want that. It's not binary. But I'm saying that the weightage will be more balanced for an American consideration of a month. Here, I think the educational value will have higher weightage in the consideration on the product itself. And so I think these are some of the some of the major differences between the markets. I think the other just fundamental difference is America is an organized market. You don't have everything is branded. Everything is formalized retail. Everything is very structured. India is still becoming branded. It is moving. Yeah. It is getting more organized. So I think it's at a different stage of its journey overall. And in some ways, it's evolving very differently. Right? Like we have like we missed the PC and went to phone. We missed like I don't know whether how much we've gone to quick commerce. I mean, like, you know, I think in some ways we are evolving in a very different way. They are different. [01:49:35] Speaker 2: Yeah. [01:49:36] Speaker 1: Yeah. And which is understandable. Even China has evolved in a completely different way. They have like live shopping is huge in China. Live shopping has not worked in India at all. Yeah. [01:49:45] Speaker 2: So it's interesting. [01:49:46] Speaker 1: What about marketing? [01:49:47] Speaker 2: How do you look at marketing? What is the marketing strategy across channels? Yeah. [01:49:51] Speaker 1: I think we focus on product as the primary driver of marketing. Very, very honestly. Meaning like how can the product be so unique that it drives word of mouth? How can we build referral loops into the product? Like for example, we have this guess intent game, right? Now the game is designed that you have fun. Now you may like an animal theme, but you know, you want to learn about countries around the world. So there's another theme. So like we add assortment bread to essentially drive marketing through the product, right? Because you're buying more products because of the products itself. So I think our first, when we think of marketing, we really first started product marketing itself. Like how can we use the product to market more products is an important characteristic. The other channels of marketing, I think I'm talking about from a channel perspective is the standard, right? We do a lot of performance marketing, which is like ads on Meta and Google and Amazon. What's the communication like? See, so for search marketing is there's no communication. So I'm saying like that's just your bidding. The push ones, yeah. During display marketing, the communication is exactly what our brand promise stands for, right? Like we focus on learn through play. We focus on the product itself. So in our case, our products are very innovative and things. We like to showcase the product, right? I would say the product is the hero of most of our ads. Like, which is just really just displaying or demonstrating what the product does or how it's being used or like, how it can keep your kids engaged or phones. You know, like, I think these are the kinds of messaging that we like to communicate and demonstrate through like say visual ads and so on. That's pretty much it. No rocket science. We do a lot of partnerships. I feel. Partnerships as in? I think that's a, that's a type of marketing that we've leaned more into as we've gotten bigger, which is like, you know, we've done collaborations with like Pampers and Nestle Lactogro. And like, for example, with Nestle, we did this thing where, you know, Lactogro is this infant milk. We had a Skillmatics product alongside every Nestle Lactogro or we do in America. There is this restaurant chain called Chick-fil-A. So one of the largest, like billions of dollars in revenues, one of the largest, it makes chicken sandwiches. One of the largest in America. You know, we had our, we had a version of our Guess and Ten product in all the kids means. So that kind of marketing is also like now something we focus on. You have to pay them, they pay you. It's a barter thing. How does that work? It's, it, there's no pay in, in, in, so it depends on the model. Like in some cases, if they are doing the manufacturing, they pay us as a, they pay us a licensing fee for introducing our, using our product and our brand. So essentially we, we get paid in some cases, we do it on a cost basis where, you know, we sort of make the product and we just give it to them at our cost. Hmm. Uh, and then they take it on. So it depends. So it's, it's typically, uh, like those, the various models, those are some of the models. [01:52:45] Speaker 2: What about educational marketing? Like, do you get into systems, like a line of communications, like early age, you should be able to build your children in the right way? No. All of that you don't do. No. But that's, that can be a great part of your. [01:52:58] Speaker 1: It can, but we don't, uh, do that. Um, we don't get into like, um, I think it's a, it's a, it's a blurry line to get into deceptive marketing, uh, where you sort of, I think that line, that line of marketing works very well in India. Um, if you were to adopt it, there have been some ed tech startups who have taken that to an extreme in my view. Um, where you get into like, you know, you know, if you do this, you know, it will happen and all of that. Like, I feel all of that is deceptive. Okay. Fair. Uh, I feel like, uh, you are, um, um, you are essentially kind of then preying on some sort of parental insecurity. Fear-based marketing. Exactly. Fear-based marketing. Which I don't, which I don't agree with. Okay. Uh, I think you should, you should, um, market solving a problem, which is like, okay, this can like, you know, help keep your child engaged when you're traveling. This can help your child learn through play. This is what you learn. You can spotlight your product, what it does. Uh, I think those are all very healthy, normal ways to market. Go ahead. I'm not a believer in sort of this kind of fear-based marketing. Design head. So overall design rolls into my co-founder. Uh, she's, uh, sort of leads all creative. She's the right brain operation. She's the right brain operation. Yeah, she's the, exactly. She's right brain, I'm left brain. I think a simple way to think about it. Uh, so eventually rolls into her. Um, but then we have other, like, sort of design. [01:54:28] Speaker 2: I mean, like final say, you don't interfere. In fact, it's very important that I don't interfere. Because, uh, there is, I'm unemotional about the products. I love your clarity of thought. Yeah. Uh, I am, uh, completely unemotional about the products. [01:54:34] Speaker 1: And it's very important that she's not involved in the marketing because she's never going to be unemotional about the products. It cannot be. If you've created something, how can you be unemotional? Um, so I think division of responsibilities is also very important. Like, so even within marketing, like, you know, more of brand marketing rolls into her because it's more of a creative function, like my co-founder. Uh, but like performance marketing and how much capital to allocate behind marketing certain products, that decision should be done based on data and not based on, I mean, of course you can take the input of like, what is a high conviction launch and what is not. Um, but overarching the division is, is actually helpful. [01:55:25] Speaker 2: I feel like you're a left-brained person. Right? You're a co-founder as a right-brained person. Innovation, product development, those things, like, I am also, I feel a left-brained person [01:55:33] Speaker ?: only. [01:55:33] Speaker 2: With money, money. With money, money, money, money, and money. [01:55:35] Speaker ?: I don't have to pay for money. I don't have to pay for money. [01:55:35] Speaker 2: I don't have to pay for money. I don't have to pay for money. I don't have to pay for money. I don't have to pay for money. I don't have to pay for money. I don't have to pay for money. I don't have to pay for money. I don't have to pay for money. I don't have to pay for money. I don't have to pay for money. I don't have to pay for money. I don't have to pay for money. [01:55:47] Speaker ?: I want to pay for money. [01:55:47] Speaker 2: I don't have to pay for money. I don't have to pay for money. I don't have to pay for money. I don't have to pay for money. You don't have to pay for money. You don't have to pay for money. You don't have to pay for money. You don't have to pay for money. You don't have to pay for money. You don't have to pay for money. You don't have to pay for money. You don't have to pay for money. You don't have to pay for money. You don't have to pay for money. You don't have to pay for money. You don't have to pay for money. You don't have to pay for money. You don't have to pay for money. You don't have to pay for money. You don't have to pay for money. You don't have to pay for money. You don't have to pay for money. Is that correct? [01:56:10] Speaker 1: Yeah, I would say that's true. Not only for innovation. I would say for many things. So, you know, while I may be analytical. I don't know if I'm the best person at operations. Right. So, you know, do you have the best person who can do that? You're like a killer CEO. Yeah, we do. Right. And so like that, right. You have to identify what are the, it's not just right-hand, left-hand. Right-hand, left-hand, I think, makes it binary. It's simplifying. I feel like, yeah, you should not think of this in a binary way, right? Like, at least the way I think about it is as much as you can, you should try and identify who are the right people who can do that. Our job as like founders or CEOs is that to identify like, you know, what are the problems? What are the capabilities needed and identifying the right people to bring into the fold who are, you know, going to fit into our culture and who can solve those. It's very rare that the founder is good at multiple disciplines. [01:57:11] Speaker 2: Okay. So another question. For example, if I was Dhunil of 2016-2017, this comes in my mind, the mental block, that it doesn't come to me, it doesn't come to me, it doesn't come to me. It doesn't come to me. You're saying that this is the wrong approach. You have to look at the market, you know, you have to look at the opportunity, you have to business. Find someone who can do that for you, don't leave an opportunity. [01:57:30] Speaker 1: I absolutely agree. I think that is my view. And I feel that you should not, not go after a business opportunity. If you're a business person, like, let's take that as a starting point. See, some people are naturally like inclined differently, but if you are a business person, you have that sort of entrepreneurial DNA, that banya kind of mindset, then you should not be limited to go after an opportunity because you may not be the person who's like, you know, knowing how to do it. [01:58:05] Speaker 2: Invest time in finding that person. [01:58:07] Speaker 1: Or find ways around it, right? Like, you know, I see also a business is not just a product, it's a combination of multiple things, right? Like there is a product, there is a business model, there is a supply chain, there is a capital structure means eventually there is a lot of aspects that go into building a system, which is essentially a company. And so my view is that you should not take that as a limiting factor. Give me the best example, right? When we started this business, none of us were parents. Let's just start there. Like, forget all this right brain, left brain, simplest point, right? Like today, you will most inclined to start a brand where you are a consumer. Right? Because I feel like, but then I, in fact, you know, so I'm saying that these are not, these are not natural limitations. Like now, obviously, now we are parents, but we weren't parents. Now, how did we do it? Um, so these are all like, uh, very solvable problems. Got it. [01:59:01] Speaker 2: Awesome. Thank you so much, Anand. Thanks, man. Amazing. I had a lot of fun. [01:59:06] Speaker 1: I hope you also had. I did, I did.