Part 1: Vidit Aatrey on building a problem-first mindset into Meesho's culture

Hello and welcome back to First Principles. I haven't said that in a while. It feels good to be back. It feels even better to have you back as a listener. Thank you. On 20th June last year, we published an episode called Well, last principles. It aged like milk. Here's me from that episode. No, this is not a stunt. And yes, I mean exactly that. We will not be publishing any more episodes of first principles.

And I'm back again. It wasn't a stunt. Believe me, we did wind down first principles. But then we saw that our earlier episodes with over 41 founders continue to attract new and repeat listeners week after week. month after month. So that got us thinking. And here we are. First principles is officially back again, but with some changes.

Firstly, I plan to publish one deep conversation every month instead of the two I used to earlier. Why? Because I'm also the co-host of the Ken's weekly podcast 2x2 with my co-host Praveen Gopal Krishnan. I hope you subscribe to it. but that does sort of limit the time I have.

Secondly, we want to maintain a very high bar for guests and conversations in first principles. A lower frequency gives me the space to pick and choose the best for you without being pressured by the burden of a fortnightly calendar. And thirdly, first principles will now be available as a premium and free version. All subscribers to the Ken's premium plans will have access to this premium version via our iOS, Android or iPad apps.

premium subscribers will be able to listen to the full episode the day it's released free subscribers will get to listen to the first half of the conversation the day we release the episode and then the remaining half a week later

No editing, no cuts. I think that's fair, no? I mean, that's how we ran first principles till last year, remember? Now, let's jump into my conversation with Vidit Atre of Bisho. I met Vidit Antre, co-founder and CEO of Misho on 14th February. That's exactly two months ago from the day that we're releasing this, which is 14th April. We met at SpaceBot Studios in Indira Nagar. Vidit is tall, lean and clean-shaven which is a rarity these days.

He's a careful listener and measured speaker. When you ask him a question, you get the sense he's spending time passing all its meanings and then playing out a few versions of responses in his head, perhaps even doing a little bit of editing before replying. Of course, all of this happens in a few seconds. So it's easy to miss that unless you are, well, having a conversation with him for over two hours. That's enough time for both of us to pick and read cues from each other. Think about it.

Can you spend two hours in a room having a truly open-ended, candid and widespread discussion with another person about their life, their business, their colleagues, their company and its culture and even their family without getting to really know them? I'd been wanting to have Vidit as a guest on First Principles for a while, even during our first two seasons. But as it turns out, things clicked only in 2025.

I'm glad though, because I do feel Vidit's and Misho's journeys are a wonderful opening to Season 3 of First Principles. There's a lot of good stuff we talked about, why Vidit is so eager for Misho to build for a long-term view. why he values problems way more than solutions. The humility and willingness to be led to new places by customer insights, the much-talked-about zero-commission model, and building products for users who aren't in the top.

5% of India. Let's get started with the conversation shall we?

Vidit, I want to start by asking you, what's your favourite animal? Not an animal that you probably have or want as a pet, but broadly, across the animal kingdom, what's your favourite animal? Hey, no one asked me this question. It's a tough one. Which animal do I like the most? Or admire? Alright, we'll come back to that. Who's your favorite superhero? Oh, my favorite superhero is Spider-Man. Why? I don't know. I think I spent...

A lot of time as a kid, just watching Spider-Man, imagining myself to be a Spider-Man. I still call my wife and my old girlfriend as MJ. So it's a... Sometimes there's no rational reason. You can obviously create one later on. And retrofit it. Alright. Who's your favorite historical character? My favorite historical character. Do you have one? I think I have many, but I have to nail down on one person. Who will that be? I'm just thinking about it. Again, no one has asked me this question again.

I think let me pick one in India. I think Mahatma Gandhi definitely. Why? No, I think it's just like some of the things we were discussing, like one person trying to change the system, believing that you can change the system, rallying so many people behind you.

I'm doing that. Vidit and I were just discussing Bangalore traffic and can anything be done to solve it just before we started recording. But hey, that's it. All right. Last question on that in that line of thread is who's your favorite business person across? All time. I think my favorite business person of all time would be Jeff Bezos, I think.

And I think Mark Zuckerberg is close, but I think Bezos a lot more. Why Bezos? I think because the cultural philosophy and general personal philosophy, I think I see a lot of comparisons. Focus on experimentation, focus on innovation while staying frugal. taking a very long-term view of the things that you do in life. I think a lot of overlap around like core personal philosophy as well as an organization, I would say is one.

That's why if I have to pick one person, I think it would be that. Again, all of us spend so much time in tech. So sometimes it's just about who do you think about and who do you read about a lot more that influences you?

but yeah I think that would be the reason I asked you these questions who's you know what's your favorite animal who's your favorite superhero your favorite historical character and business person is because I was trying to get a sense of You know, the kind of organization that Misho is and what sort of influences, a significant component of what Misho is derives from you. I mean, you have your co-founder as well, but I mean, right now we're talking about you, right?

And when I look at Misho, many of these threads kind of seem to kind of cross for me, which is it's an organization. If I were to imagine it as an animal evolving. Or as a superhero with some skills or strengths. Or as a person. There's so much of, I think, constant evolution. And, you know, this...

It's always running ahead of something. It just looks like, you know, you started in a particular space and then you did it for two years. Things seem to be going well, but then you move on to something else and now you're doing that. for two, three years before people figured out what you've moved on to something else. So, I was just trying to understand, is there any threat? And of course,

We'll come back to this because you did mention two of the examples that you gave of Mahatma Gandhi and Jeff Bezos. Both have that strand running, which is people who created outsized. long-term change, which is very interesting. I'd want to come back to this, right? But let me follow this up with a question. What do you think is the single most important trait or ability that differentiates great startups that last from others?

I think it's to me and I was referring to that when I mentioned Bezos here. But I think that's just taking a very long term view of all your decisions. I think there are too many startups who take a very short term view of their decisions. Do I win in the next six months? Do I gain market share in the next six or 12 months? But I feel like less number of people take that view over a 10, 15, 20 year view. And I think to me, that's basically...

That's the big difference between great startups, as we say, built to last ones, where the way you define success is not just how big have you become in a... period of 4, 5, 10 years. But are you really relevant as an organization 100 years from the time you started up? To me, I think that's measure of success. I get it. It's a, I would say,

I mean, if you gave most founders a chance or CEOs a chance, they'd say, yes, I would want it to. And yet, not all organizations are able to. So what enables some organizations to be... forever organizations and be around versus others surely it can't be that some people are thinking long term it's not just thinking right it's the ability to

execute and innovate. So my question again, you know, follow up question is that what is it about an organization that lets it be around for the long term no by the way I will disagree on this I don't think if I ask most people that's what they will say right thinking long term is an implicit understanding and people believe it fits in with every other thing that they do because

I think there's an obsession with scale, which is a lot more. Like how big you are and how big impact that you create sometimes overtakes the... aspiration to basically do it for a much longer time period. So I'm just saying thinking big and thinking long term sometimes are not the same thing.

You're saying they're orthogonal. They may not be. I'm just saying they may be in the same direction sometimes. They may not be. And I'll tell you why. Like you see a lot of companies who try to like open 10 businesses at once. Why? Why do they do it? Because, hey, I want to become large. very very fast right i want to create a lot of impact so if i my probability of creating large impact via 10 businesses is higher as compared to if i focus on one business but many times you realize like

can you be really relevant for the long run in 10 businesses? The probability, by the way, goes down because you can't focus on 10 things at a time. They consume a lot of your resources. Everyone's focus gets split. So my broader point is, I don't think everyone wants durability.

or like sustained impact or long term as the primary goal, a lot of people just look at scale and many times they're not in the same direction. This couldn't have come naturally to you as a founder in an entrepreneur because... Going back to when you started, when you start, this was your first startup, right? When you started, I mean, please correct me if I'm wrong. In your first year,

or even in your second year, you would not have been thinking, I want to build something which lasts 20 years from now, 30 years from now. But at some point, I'm guessing some switch started flipping and you realized that, look, We've come here. We can do this. Or we've done these two things. Or we've pivoted twice. We are not dead. Now maybe it's not about staying alive.

But it's really about, can we be around 10 years, 20 years from now? Do you remember when that happened to you? When you started thinking about, hey, it's not about scale in the short term, but it's really about sustainability and...

over the long term? I think it's hard to pinpoint at any point in time where it changes. For example, thinking long term has been part of our cultural mantras as we say, I think from 2018. So I think we were thoughtful enough to put it in some document and say this really matters to us.

So you can go back and say maybe that was the time, maybe it was even earlier. It's hard to say, but to me, the reason durability of impact is also important apart from scale of impact. And I think durability takes over.

In many cases, I think that started to matter because many times we took decisions where we thought that it may take certain time for you to see the... return of all the efforts that you're putting into something right it could be and I think we will discuss the story of Misha from the beginning but a lot of things we did in the beginning we took a very long term view let's dive there right let's

Let's start with Fashionier, which was like the first, like tell us, I mean, you were founded in 2015 as Fashionier. take us through uh the journey from fashion year in 2015 to me show in 2025 we're exactly at 10 year mark and of course there are multiple interesting pivots in the middle please take us through it

Yeah, of course. So if I go back to 2015, like both Sanjeev and I, first of all, knew each other for a very long time. Sanjeev Banwal, your co-founder. Yes. So Sanjeev and I were batch mates, hostel mates. roommates you can call because next to each other for a very long time in college so again very close friends but we did very different things right after college Sanjee was working with Sony in Tokyo

for about three years. I was working with ITC here in India. I was staying in Chennai for a while. Then I came to Bangalore, worked with Inmobi for a year. And I think that time was very interesting because Inmobi was an ad tech company. And the thing that happens to the art tech company, you see who all are spending money on ads. Correct? And you can see a lot of these sectors going up like crazy. And this is 2014. And I used to think there's never been a better time because you see everything.

having a hockey stick. So the whole thing that entrepreneurship can be considered at this point in time, I think started to happen when I was here in Bangalore. Frankly, this was not the case when I was working with ITC in Chennai. Because you work in a traditional old business in a factory, you don't see what all is happening. But as soon as you come here and you see like so many things blowing up.

At the same time, you feel like this is the moment where if you want to do something, you do it now. The air is full of possibilities. Yes. And I could see, as I said, to me, ad tech company is sort of an index. Like who all are spending means all these businesses are growing and that's why they're spending so much money. So I think Sanjeev and I started chatting and we said, let's do something together. Sanjeev was also trying to figure out how to...

move into entrepreneurship. He had been with a large company. Again, things were slow. All the typical things, you know. So after spending some time, we said, you know, work on a problem that has two things. First, We should be able to create outside impact to the world at large in our lifetime with that problem. And second, we want it to work for a market and for consumers or users, whoever, that we can connect with.

So that when we make a positive impact to them, we feel proud about it. We just said, after looking at lots of ideas, these are the two things we came to. Right? Like, large market. opportunity, potential to kind of make a dent. Second was a customer segment that we connect with. So what that means is that you would not, for instance, decide to start a cloud based ERP platform.

Because it's too abstract. It doesn't connect back to you as a consumer. Correct. Got it. Correct. So, mostly the ideas that we basically thought about after that were consumer ideas. So, after a long time... We basically came to the idea that we want to really bring like really Bharat online. And the reason I say this is both Sanjeev and I come from middle class backgrounds all our lives.

Us, our families bought from small businesses, right? And when e-commerce was happening back in 2015, you just felt like this is a very tier one phenomena. you go and speak to the small businesses where you grew up and you ask them, are you selling online? The answer is no. If you go back to the same neighborhood where you grew up and you ask people around them, are you buying stuff online? The answer is no. So it just felt like...

the e-commerce way was not very inclusive. So we said, like, someone is coming online and buying stuff. It doesn't look like the people that we connect with. So we said, maybe we will bring them online. And I think the idea that we needed... was we will bring small businesses online and we will bring Bharat online. But both Sanjeev and I had zero experience in retail or e-commerce. We did not know how. So the first thing we did...

We said, if this consumer has to come online, as I said, small businesses have to come online. So we started meeting some of the consumers, all of them. Like, as I said, like my family used to buy from the boutiques close by, from the Kirana close by.

So when we asked consumers, people said, hey, I buy from small businesses, but in my area. So we said, maybe that's the way to do it. And that's when we built Fashionier as a local marketplace where you can buy mostly from small businesses close to you. that's what a shortened form of fashion nearby nearby because the first kind of

businesses we started to onboard were these fashion businesses. So we went to Kormangla, Indranagar, HSR, mostly Kormangla and HSR. Went to these, again, we did not go to mostly branded shops, we went to these small businesses and asked them. Would you be willing to sell online? No one says no.

Right. Like when you ask some of these leading questions. No businessman, small time businessman or shopkeeper will ever say no to more businesses. Yes. So it's like because they don't understand the cost yet. Right. So yeah, of course, I would want to go online. You'll give me more growth. Yeah. So he said. We've got the idea. People are saying yes, so this will definitely work. And we basically built, we onboarded a lot of these businesses on an app.

And then we started to kind of distribute pamphlets in that area. And like maybe these people buy from these businesses because they've been buying in the offline world. And no one bought for months. And then we went and spoke to consumers. And then we realized we should have spoken to consumers earlier.

We should have not started by onboarding these businesses without understanding value propositions. The consumer said, this is the worst of both worlds. When I go in the offline shop, I can try and then buy. And when I go to e-commerce apps, I have a lot more selection than just local ones. So neither do you give me the option of trying and buying or you give me the option of range. Then you try doing try and buy.

at home that model was like much tougher so we shut that down right how long did you do fashion we did this for like 6-7 months so like we we figured out that we made like a big mistake very soon did you raise any kind of capital in this time or you were just we were just trying to like play around with all the money we had saved for ourselves so nothing so he said like we have to do something else so this time we said like we're not gonna ask people

because when you ask mostly we ask leading questions people say yes to everything and feels like this will be a great idea oh so that's one of the I think all entrepreneurs and startup founders make that mistake of asking leading questions. You ask questions to which you want to get the answers you hope will validate your assumption.

Absolutely. That's exactly what happened to us. And we thought that we have the next billion dollar idea. So we said this time we'll do a different thing. Before we move on from this. I'm sure, and from whatever I've read about Mishu as well, your customer centricity and like talking to customers is one of your core values. Yes. What do you do differently if you had to kind of reduce down to...

what you learned about how not to ask questions in surveys to what you do now, what is the shift? When you go and survey customers today, How are you not making those mistakes now? So by the way, now we put this as part of a culture code. We call again one of the mantras and we call it problem first mindset. I made a note of that in the conversation. So it comes from this.

Don't go with a solution and ask feedback on a solution. Go with a curious mindset to discover the problem. And now we've made it part of this. So no one goes and asks. Hey, do you want this? Because if you say this, no one says no. Yes. Right? Like you have to go and ask them what their problems are. So you discover the problems in life. So you never go and ask the solution. You ask problem, you come back. understand that problem two levels deep, and then you build a solution.

So I think one of our big values came from this. The mistake that we made in the early days, we have not made that mistake again. Nobody had that problem and you were trying to create a solution for something that didn't exist. Correct.

wanted just local selection online. All right. So what happened after Fashion Year? So this time, as I said, like we said, we'll not go and ask whether the solution works. We said, let's take another different approach. So this time, Sanji and I used to go and just... request these small businesses that we will just sit on the side and observe what you do. We will not bother you. Can you just let us do this? Some people said no.

Many people said yes, which is great, right? As you said, we were discussing before this, people in Bangalore are generally nice. I don't know if the same thing would happen in other cities. So people said, yeah, you're free to do it. Sometimes the wives of the shopkeeper will come and give us tea and biscuit and all that.

so people look quite nice so we'll just sit on the side and observe what happens in that shop morning to evening so I mean before you go on I think you've essentially skipped one level to the top version of consumer behavior right like you know the the bottom rung is asking someone do you want my solution

because you never get real answers to that. The next rung of that is that can you tell me what your problem is? For me at least, the top rung is that observing what they actually do, what they spend time on, what they will spend money on. Because that is actually even they may not be able to articulate what the problem is, but you can see through their actions what that is. But yeah, I mean, please.

absolutely correct we just wanted a different approach we said if we take the same approach as the last time maybe we'll land up on the same thing what did you observe with these shopkeepers what kind of shopkeepers were they by the way So mostly these were, again, the shopkeepers we had onboarded as part of Fashion. So these were fashion small businesses in Kormagla and HSR again.

So we just go and sit there. So one of the things after a few days, the thing that we observed, which was amazing, is we realized, and this is 2016 now, the beginning of 2016, we see that people come. into that store, look at this product and come to the shopkeeper at the end. Hey, I want to buy this T-shirt. Give money and are leaving the store. At that point in time, the shopkeeper will say, you give me a WhatsApp number.

I will add you to this WhatsApp group of mine. And there I keep posting all the new products that come to my store. And he will do this with every customer. And we found it fascinating. So one day after like this. like the whole day was over he was about to shut the shop shopkeepers are like the ultimate community people because they were doing community before any of the large internet giants told them that community is important correct

So this comes naturally to them. And then I went and asked him, both Sanji and I, at the end of the day, went and asked him, hey, why do you do this? He said, it first keeps... The customer remembering that, hey, I exist. So every time I post something, they see a notification. And many times now people don't even come to my store after this transaction. They just tell me on the WhatsApp group, I like this t-shirt. Can you send it home?

And he sent the chhotu from the shop to give the product, collect money and come back. This is 2016. And this guy told me that he's doing 20% of his business on WhatsApp. We met then another business which was doing even more. And we were fascinated. We were like, this is how a small business will come online because we keep talking about like this business has to come online. That guy is doing 20% of business online already, right? Like WhatsApp is online. So we said, can we...

Then we tried to figure out problems. How did the payment happen back then? I mean, you can use... That's why whenever he's going to give the product, he will collect money. Alright, alright. That's where the chotu goes. Alright. Correct. So then again... So we said, let's just observe this behavior. So we figured out that some of this is happening on WhatsApp. We tried to find like, how can we add value to this? How can we make more people do this?

So again, we went deep. So we figured out what are the problems that exist in selling on WhatsApp. One was you put three photographs on WhatsApp. One customer buys that T-shirt. By the time second person messages for that T-shirt, that product is gone.

So many people used to be disappointed because you can't see the inventory view somewhere. And second was, as you said, like payments was a big problem, right? Like three people are saying, I want this. But sometimes they'll say, I will come to the shop and buy it.

but I will not come. And because I committed to someone, I will take that product off the store and I will not make any sales. So that guy also wanted some commitment. If you can make a transaction on WhatsApp, I will keep that product separate and not...

sell it to anyone in the offline shop. So payments were the problem and inventory management were the problem. So we said let's just solve this. So then we created our Misho 1.0 as we say. And Misho means Mary shop because you wanted to give the first online shop to that particular small business. So essentially you're trying to build a Shopify.

equivalent of buying them. But for selling on WhatsApp and we found people doing on Facebook as well. So it's like social focused Shopify. You can say that. So we built this product. And now again, we went and asked that small business, hey, I can see these two problems. Do you have this problem? Of course I have this problem. If you help me this, I will definitely use it. So we built a product that helps you manage inventory and help you connect payments.

And then we roll this product out. We spend months and months and months. Some people are using it. Still two of you or have others joined you? Now some people have joined us. Like gradually one by one but a very small team. You still bootstrapped back then? No, so after this idea, I think a few months later, I think about a quarter later, then we raised some money mostly from individuals, like angel funding. Got it. So now we are...

built out the product, went to small businesses. Everyone says, yes, yeah, I will have my first online website. Super cool, this and that. I think a year later, we realized not enough people are using it. Even if they sign up because they want to have a shop of their own. if you see the retention on that product was pretty bad. And then we go and ask them why. He's saying, this looked very good, but now every day I have to come and update my inventory.

what I have in the offline shop I do it for one day then I do it for five days then I do it for ten days but it's just not worth it sales is not commensurate yes it's just not worth it and a lot of these shopkeepers by the way are not the young people So for them to learn how to use a website or an app is too much. I don't want to figure out how to use this.

I think after some time we were trying to understand like if this person can get growth, why would he not use it? And we realized we were not solving for growth for that person. I was just about to say that because the same person will do whatever it takes to learn tech provided. There's like enormous growth coming on a month to month basis. Because his customer base is still the same. Right? That customer he already owns. So all you're doing is that moving it to an app.

We were trying to make it convenient for him. Yeah. And possibly take a cut out of that. And he says, I don't need convenience. I have all the time in the world, right? Like most of the time, no one is coming to that store. Right. And I'm saying, I can chat with people. Three people ask me, this product is gone. I'm okay with telling them it's gone.

Right? I can move it here and there. I can send my chotu to collect payments. Collecting payments is not our biggest top of mind problem. So again, we realize like Do not build a product for small businesses, which is about solving for convenience, making stuff easy around inventory management, stuff like that. Small businesses only care about growth. They will spend double the time and do it, triple the time and do it.

they will not pay you for convenience, right? They won't even use the product because there's a cost of learning a new tool. We did that for a year and didn't work out. This in some ways explains...

The reason why the much hyped Kirana inventory management like spreadsheet like all those startups in that space because in some ways it's that I mean those Kirana shop owner is essentially thinking if I adopt this if I spend time on it what do I get out of it? Are you going to give me 50% month-on-month growth, 100% like quarter-on-quarter growth? If yes, but otherwise, no. Absolutely. And most of these tools, they are mostly tools and not demand generation platforms.

And it doesn't work in India because in the West... labor is expensive so people are okay to invest in a tool that helps them maybe like get rid of labor but like you rightly said in india the person is saying that i'm here all day i can chat with customers i can send my person to do it so what's

your software really solving? Absolutely. So we realized it's not working. Now again, in I think our journey, we have seen like serendipity works amazingly well because of the thing I will tell you just now. So we built this product for offline shopkeepers to sell on WhatsApp. We realized they were not using it. But at the same time, when we were discovering that these offline shopkeepers are not using our product, we realized there's someone who downloads our app.

and keep selling using our app on WhatsApp. And who's this audience? Every time we go and meet someone in the offline store, they're not using it. But there's someone who's using our app again and again. This is from your internal dashboards, etc. Yes. So then I started to reaching out. I reached out to, I think, minimum 50 of these users who are using it a lot. And we discovered one profile.

that profile that we discovered at this point in time is mostly of a homemaker who will tell you that she is running her boutique a fashion boutique on whatsapp what does that even mean she said like I I always wanted to run a fashion boutique offline. And you would remember. Yes. Even now, I think if you go to many towns, you see a lot of these fashion boutiques run by homemakers in their house. Like they will stitch, they will sell products to people around them.

So these are women who had the same aspiration of starting a fashion boutique from their home because they were home makers but very ambitious but they did not have the capital to buy inventory and sell. So they figured out in the online world, which is on WhatsApp, I don't need to hold inventory. Like I just need to have connections with sellers. They'll send me photographs. I will curate on a WhatsApp group and people start buying from me.

And they used to call themselves resellers, these fashion boutiques on WhatsApp. And we found that they were native WhatsApp sellers. Correct? Now, they are not close to their customers. Physically, right? So they have to collect payments online.

Because many of these people are on WhatsApp groups. And they don't employ anyone to go and physically collect or deliver things. So they don't have to do it. So they were using it to collect payments, also to manage inventory. And inventory will not be managed by them, but by the seller.

So when I share it with a customer, people buy, the seller gets the order, can ship it himself. And they were finding value because they were WhatsApp natives sometimes selling to people in their community, in their family. very far away. They would be based in Bombay. Their family would be based in Delhi. I don't know. Like all of these cases were happening and they were using our app. And we discovered this behavior. So we went deep.

We tried to understand why this is happening. And I'll give you the insight that we, that basically defined our business at least for the next five years. The insight was, this is pre-geo. So the cost of data in India was very high. So, you would remember in 2016-2017, most of India used to have only one app on their phone and that was WhatsApp.

including my mom. She used to not have any other app. I'll ask her, she'll say, no, no, no. Either everything else is too tough. I'm used to using this. So you realize most of India had just one app on their phone. Obviously, WhatsApp was easy to use, so accessibility was a big reason. The other big reason was that the cost of data was too high. And all shopping apps have images.

Right. So as soon as you open the app, it will consume a lot of your data and they didn't want to do it. So consumers want to buy stuff online, didn't want to download these apps. And they were. That long list of e-commerce platforms you would remember from those days, like Shopclues, Woonik, Craftsvilla, Snapdeal, like Asmi Bazaar. I can go on and on that we're trying to sell to Bharat.

And running marketing campaigns, making people buy stuff online and no one was downloading those apps. Why? Because data was expensive. But they were willing to buy stuff on WhatsApp. And some of these women who are running these WhatsApp groups full time. right they were able to sell these products to these consumers so we said when we figured this out this was like a eureka moment for us we're saying maybe this is the way how Bharat will come online

to transact for the first time on WhatsApp, not on a separate app. Because it's already happening. A lot of these women are already doing this.

So when we discovered this behavior, we basically just shifted our entire business in enabling more and more of WhatsApp commerce to happen. This is now early 2017 when we discovered this behavior. Then we said, let's figure out what are the problems that this woman is facing. And we started to build for it. The biggest problem that she had was getting access to supply that she could sell.

So we said she needs access to supply what kind of stuff she needs. She wanted, because it was a fashion boutique, she wanted to mostly sell apparel and mostly ethnic apparel. So we just went. to Rajasthan, to Gujarat and onboarded a lot of sellers in that category who basically sell ethnic apparel for women. And I think that was it. In 2017... you went and found sellers looking for new markets. And you went to women entrepreneurs, homemakers looking for reliable sellers. Correct.

sort of became the connection So we created this platform that connects these women who are running WhatsApp groups to sell products to their consumers. And on the other side, we have these small businesses who are manufacturers or sometimes traders of all these kind of fashion products. We did that.

And I think after that, the business just took off like crazy. And because it was also happening on WhatsApp, you can imagine one woman who will buy from another lady and she also has an aspiration to start a boutique. She'll say, I want to do what she's doing. She'll ask her, tell me, how did you start this? Because it's also a very viral and social community. Yes. Women talk to each other in the neighborhood, in the community. Correct. So we realized, like,

people ask other women, you tell me how you're doing this, I want to do the same thing. So we created a RFL program, so we incentivized the other person to also help. And we did that, it just grew like... something we could not imagine. Yeah, I saw your, I think, fundraising slide deck from back then. You were growing almost at something like 100% month on month for months at a time, which is unbelievable. And without spending...

anything on marketing because it was growing on WhatsApp. So we started this model in 2017. I still remember end of 2020, which is just three years later. We had 10 million WhatsApp groups. where products were being shared from the Misho app to sell to consumers. 10 million WhatsApp groups across the country in parts of the country that people couldn't imagine. So I think that was one of the big learnings for us that...

maybe first Bharat will come online because of WhatsApp. Because it made it first easy to buy online and second, I don't have to think about data. So now what happens is Jio happened. It was great for us. And then the pandemic happened. It was even better because it forced everyone.

to not go out for some time and hence they had to fulfill all their needs online and they learned how to buy online and they didn't think about data anymore. So in 2020, we observed another unique behavior. This consumer who was buying from this lady on WhatsApp, started to download other e-commerce apps on their phone. And we said, like, now we got a lot of these consumers, we have their shopping behaviors, what they buy, from who. At this stage...

What was the Misho app in 2020? It was only for these women who were running. They're called resellers. Got it. So there was no consumer-facing app. There was no consumer app at this point in time. so in 2020 we didn't have any consumer app but we figured out that these consumers now because they were they didn't think about data and they were okay to basically shop online because pandemic forced them to learn how to shop online

They started to download e-commerce apps. And we could see it on the wall that if we don't very aggressively move them to our own e-commerce app, we would loot these customers to someone else. So in 2021... early 2021, we launched, we shut down our reseller app and we launched a consumer app.

the Misho consumer app, and that's been a business since then, asking consumers to come on our app and start buying everything that they were buying via these entrepreneurs on WhatsApp. They could now buy on the Misho app. We did this in July 2021. We are sitting now in 2025. Every month since then, we've been the most downloaded shopping app in India, period. Right? And again, as I said, like...

When we grew like crazy on WhatsApp, we could not imagine at the pace at which this is happening when we move to our own e-commerce app. I don't think we imagine that it will pick up so much and pick up so fast. And again, the capability that we had built earlier of onboarding the supply, especially the small businesses that these consumers buy from I think helped a lot. No one else had access to this supply as this kind of pricing.

And that basically enabled us to make these consumers download our app and buy. Our MAU now is almost 200 million. It's the highest for any shopping app in India. That's monthly active users. Monthly active users on our app, right? It's 200 million. I think it's higher than any other shopping app today and it continues to grow at a faster rate than anyone else. And most of this is organic because anyway, the company, we don't spend so much money in marketing.

So yeah, I think this has been the journey of our product. Today, we are a horizontal e-commerce platform. People come and buy everything, anything and everything from us. We are very diversified apparel. is about 35 percent um non-apparel fashion would be about 20 percent

Kids and baby is about 10%. Personal care and beauty is about 10%. Home and kitchen essentials that people buy is about 20%. So it's very, very diversified. All the needs that consumers in India have, they come and fulfill it on our platform. And we stand for affordability, easiest app to use, lightest app on their phone so they don't have to think about space, all of that.

The problems that India cares about is what we have solved. Just to be clear, your model, just like other e-commerce platforms, is also that you're not selling anything directly. Yes. third parties which are essentially selling to individual consumers.

and of course it gets the you handle the orders and like you know the payments etc and then fulfillment will eventually get to that you used to use other third parties and then you kind of started your own fulfillment service called Valmo as well correct alright so you said earlier that we've been huge beneficiaries of serendipity And you said it'll become clear when I say this. What is the threat in your mind?

That connects everything that you just described from starting out with fashion year, making mistakes, trying to build a Shopify of India. then essentially building the seller app and then like there are multiple pivots right you're essentially like uh changing yourself every two three years or so what how do you see serendipity here and what allowed you to find serendipity? I think the common thread has been a mission from day one has been the same. Which is? Which is to really bring

All the billion consumers in India online and all kinds of businesses online. As I said, the reason we started this, we wanted to 85% of India retail today is still small businesses. So you can't have e-commerce to be mainstream online if small businesses are not online because they are majority of the economy. So when we started the company, we said we have to bring all small businesses online and then we will bring all the consumers online. We just kept...

trying lots of things to figure out how to make that happen. And as we learned, we implemented it. So I would say our mission has been same, irrespective of what business we are doing from day one. which has been about really democratizing internet commerce for a billion consumers, for all like tens of millions of small businesses. And now with Valmu, as you talk, I was just mentioning the logistics.

ecosystem also like how do we really reduce the barriers or take away the barriers that have held them back so far so our mission statement has been very consistent I would say we have never deviated from that and that has been very important for us

That also brings clarity that every time we've been very agile to change direction because we knew what we care about. I don't think we were ever very defensive that we should keep this business on WhatsApp. We built it over so long or we were doing something else earlier or doing something.

because our guiding North Star has always been our mission statement. Now, in terms of serendipity, I think we've been... As I said, like a lot of value has come to us because serendipity, because we've always stayed very close to the customer. As I said, we spoke to that lady who was using our app. With that, we built for an offline small business.

who was using it to run her fashion boutique on WhatsApp. And we discovered that insight. In 2020, we discovered that these consumers who were buying on WhatsApp from these homemakers are now downloading their apps themselves and buying for themselves.

We discovered that behavior. And when we discovered that behavior, we basically acted on it. A lot of people said, hey, how can you just change your model at such a large scale? I don't think a lot of companies have the courage to go and basically change their business altogether that you've built over five years. What made you do it back then? Because we saw the consumer behavior changing. But in an alternate parallel universe, I can also imagine another company saying,

hey folks, we have what, 10 million, what did you say before that shift happened? 10 million WhatsApp groups. Right. This is massive scale. We're doing quite well. All of that. Let's figure out how to grow it. Now you're saying you saw something much bigger and therefore decided to kill this.

model and move to that something bigger but i'm just saying that it's perfectly imaginable for another founder another organization to not see that as an existential question but perhaps as an option why did you see it as an existential question and this goes back to the first question that I asked you what is the single most important trait or ability that differentiates great startups that last from others because as I see it

you kept changing, right? And we'll get to Valmo also. So there's something in the... essence of me show and which of course i mean as you as a co-founder and ceo as well that is kind of different right like you know what's that what's uh I can easily imagine that maybe two years from now you say, oh, this is great. 200 million is great. But here's this, you know, 1 billion opportunity. And you're not, you don't seem opposed to that possibility. Why?

Correct. What drives you? I think mission statement drives us. To me, I don't think we ever care about the solution as much as we care about the mission.

We saw the writing on the wall in 2020 when we saw these consumers are downloading these apps. And we said, now you don't need WhatsApp to bring Bharat online. Right? You would need... a great consumer experience on your own app to kind of drive that we had to take a risk and we did that and by the way you will see no other reseller app like us that existed at that point in time made that move

And how many other names do you remember who are called reseller apps? I don't think you would remember anyone. And are they relevant anymore? The answer is no. Because that whole concept of buying and selling on WhatsApp is gone. So we saw that and we made that move. A lot of people did not make that move at that point in time. So I don't think it was an option. You mentioned it as an option. I could see that if we don't change direction, we won't be relevant anymore.

These consumers are going to move away from WhatsApp and we will be stuck with this. So we could see this and we cared about the right long-term answer of bringing a Bharat consumers. is to do that on your own app. They don't have the same hesitation and challenges of using the app and data that has gone away. So we can do it ourselves. So that's why we made the move.

We've just stayed closest to that customer over the last 10 years. And which is why I think we see some of this sooner than other people. I feel if you try to figure this out through data, you are late. Because data is lagging, right? Like for data to become significant. It takes a while.

I know a lot of organizations and the data is showing it's not just lagging it is available to everyone else by the time you see something six months later or one year later all your competitors or the entire market is also looking at the same data and figuring out. Correct. So we did not wait for data to show that our current model is not growing anymore or it's de-growing. At that point, I'm assuming you were still growing fairly well. Yes, because the pandemic was growing really well.

So I'm saying we were growing, but because we spent time with that customer, we spoke to that customer, we understood that this change is happening. So we made that move in our core business that we built over so many years was still growing. And we went and said, we will change this business altogether.

Okay, I think I now get it. I think what defines you folks is that it's a mix of rigidity and flexibility. The rigidity comes from what you say. Staying focused on this large market of underserved like small businesses, small town customers, etc. and stuff like that at scale. So you're saying that that's our mission and we're rigid about that mission. The flexibility and openness comes from the fact that within that, we really don't...

we'll go where the customers and the trends are taking us and we'll constantly observe what customers are doing. And if we need to change, so be it just so long as we are kind of following the larger mission. Is this the essence of like, you know, that you're fixed that that cannot be questioned, right? This is a larger goal, but everything else can be questioned. Correct. And which is the problem first mindset that I talked about?

We care about the problem so much that we end up never caring about the solution that much. Because we're going to attach to the solution. Yes. So we've never been. The problem for us is our mission statement. We have to bring...

A billion consumers online. And by the way, you mentioned small towns. 20% of our users are in big cities. Because you find there are enough people in the big cities who also buy from small businesses. Not everyone here is buying branded products all the time. A lot of them are buying. unbranded products or from small businesses so to us it's never been small towns big towns because a lot of times people articulate our business like that but I think it was very clear from day one

Can you explain to me what your geographical distribution looks like using any kind of metrics of your users and business? Yes. So 20% of our demand comes from tier one cities. 80%, which is tier two and below. And 60% of our demand comes from tier four cities and below. When I say tier one, it's like the top eight cities, right? So it's very distributed. And historically, we've analyzed.

our demand distribution is very closely correlated to how population distribution is there in India. So that's how it should be. Like how population is distributed, that's how it should be. In most of the businesses, you don't see that most of the demand comes coming from tier one cities. In our case, it's fairly distributed of how the population of the country is distributed.

Let's imagine a hypothetical world in 2025 where Misho didn't exist. And you're still you. You're with it. You know, you're maybe just... you know, a couple of years out of college, somebody's backed you with $100 million in capital. Would you be able to spot the opportunity that Misho is today? If it didn't already exist, if you weren't already, if you hadn't serendipitously and through multiple pivots arrived at this, would someone else be able to spot this opportunity?

One of the learnings I've had is you just have to stay in the details for long enough to create opportunities to be lucky. The serendipity does not happen by luck. You have to get yourself lucky by staying in those details longer than anyone else. Which is why I say one of the again key mantras for us is be user first. Entire company.

goes and spends on the ground, not just on phone, goes on the ground and spends time with sellers, logistics partners, consumers all the time. They go to small towns, big towns, but they go there because when you go there, you get that insight that no one else is seeing. And you have to keep doing it to improve the opportunity that you will see something that everyone else is missing. So I would say just serendipity is not luck.

you have to make yourself lucky by just being in the detail longer than anyone else so that you find this and no one else can do it. I mean, one can... Look at serendipity as like a good version of law of averages. If you stick in a particular area and you do put hard work into it, it could be your career, it could be your business.

eventually the law of average is going to catch up with you and it's going to give you some insights or it's going to give you like in your case, like, you know, insights into newer markets or serendipity. But like you said, but you want to stick with it. Correct.

Interesting. I want to ask you some questions about Misho. We know that you were established 10 years ago in 2015. The numbers that I have on employees say you're roughly what? 5,000 employees and roughly 17,000 associated employees? No, actually we are 1,600 people. Okay. So you're 1,600 employees. 1,600. 60% of them rather slightly higher are in R&D, which is tech, product and design. So mostly... It's a lean organization for you. And how big are you in terms of revenue?

or customers or whatever metrics you can tell us about your business yeah yeah so basically last 12 months unique transacting customers on a platform would be about 190 million so 190 unique million 190 unique people have basically made a purchase at least one alright I think this financial year we will be doing very close to 2 billion orders across the country so roughly more than

close to 11 number of orders per year per customer. So very active for our typical customer. And as I said, they are distributed across the country. And all the numbers that I'm talking about, be it annual transacting customers, are MAU, which is number of people. who come to our app. All of these, I think we would be number one now across all kinds of commerce markets. So basically, we are the leading shopping app that a consumer in India comes to fulfill all kinds of user needs.

All right. How much venture capital have you raised to date? We've raised about $1.4 billion. We talked about the geographic split. Do you track... any kind of a gender split yes we do so about 65 percent of our transactors customers are women that's very interesting that's again it bucks the trend i would assume largely because

I mean, it's not that 65% of very few apps that I can think of where the users are women. Correct. And I think that this also happens because one of the key categories that men buy is electronics. And we don't sell that on our platform. I saw that because I was checking out your website in your electronics. You only sell some basic accessories kind of stuff, but not smartphones and white goods, etc. and stuff.

Absolutely. And a lot of other categories in lifestyle, etc. You tend to see women being more active than men. And which is why we have this queue. Interesting. Are homemakers still a key customer or a critical customer group for you? any platform that has women as a target customer, homemakers will be. Because homemakers, as a percentage of women population in India is still the majority, right? Above an age of 25. So, a large part of our customer base is homemakers.

Also largely ignored, I mean, for the longest of times. Absolutely. Absolutely. And I think a lot of pride the organization takes is just understanding that customer better than anyone else that we've solved over time. Got it.

I want to ask you some questions about social selling. Now, it's something that you tried as part of your pivots where you can think of homemakers selling products on fashion wear. to their community as some form of social selling. But we've really seen social selling operate at scale in China, where it's a gigantic phenomenon.

Why hasn't that sort of, you know, where like there are these live streaming events, events going on and people are buying during it. And like, you know, it's just this incredible numbers, influencers selling so much. That has never translated, not even in a remotely closed manner, to India. Why? By the way, I feel that's just a matter of time and it's changing. So today, our social...

part of the business is now not on WhatsApp anymore. It's happening on Instagram and YouTube and on our own app. And I'll just give you like very recent statistics. Now we have very close to about 30,000 influencers who are creating content with Misho products and promoting this across all kinds of platforms.

Because again, they make money as a percentage of the sales. So we basically, over the last few years, have built a new platform in our business. It's a three-way platform with influencers, consumers, and sellers. Sellers put up their selection. that influencers can promote. They share some economics with them for that. And we have seen that has taken off in a big way, both live as well as short videos. But with it, I mean...

Pardon my skepticism. We've been hearing this now for years, right? Even, you know, before the pandemic and then once India banned TikTok, etc. And... there were a bunch of video based influencer based shopping apps that came we've been hearing that this is the next big thing it's really taking off but really the numbers

are nowhere comparable to what happens in China. So, do you really believe that this time it's really happening? No, I'm saying it's happening. I'm not saying it will happen. I'm just saying it's happening. I'm talking about the numbers that we see. We see... A very large share, I won't share the percentage here, very large share of our platform sales today happen because of these influencers creating content, mostly video. So how does it work?

On Instagram, they're creating content and there are purchase links. So basically, they create content and put it on Instagram, put it on YouTube, put it on the Misho app directly. And whenever consumers buy via that video... They basically get a share of the sales. And it's, by the way, a legit source of income for many of these influencers who otherwise could not figure out how to make money off their following.

No, absolutely. I mean, which was in many ways the original TikTok model and TikTok shop and all of that, right, around the world. I'm just, you know, I mean, I was asking... why is it not happening in India? And you seem to be saying that it is happening at scale. Because short video is growing now. So if you see short video now has become mainstream in India. I don't think that was the case even three years ago. Like three years ago, Instagram was a tier one phenomenon. You remember?

Now, because of Reels, I go to a very remote part of the country and that customer is using Instagram. She never uses stories or the feed. She only uses Reels that has replaced TV for her. Interesting. So now short video adoption is the similar to WhatsApp was once the trigger for your business. Correct. Short video has now changed the game. And before short video, I did not think that.

The influencer economy was as mainstream. It was still, again, very tier one focused. But after short videos, if you see the DAUs and MAUs of Instagram today, it's very mainstream. It's not a tier one app anymore. Right. And it's mostly and I see the same thing happening with YouTube, like shots on YouTube has grown a lot. So I think the inflection point was growth of short video and becoming mainstream. And that's when now we are seeing.

those consumers spending a lot of time in those short video and when these influencers promote products a lot of people take recommendations from there I sense that there's another pivot internally happening I'm not saying you're pivoting your entire business but I'm saying that it looks to me that you really see that as a significant trend and investing serious resources into it. By the way, I have always believed that if you want to capture a large part of customer wallet,

You have to be relevant in all the places where people spend time, right? The old ways of being an e-commerce app that you hope that people will remember when they want to buy something, they'll open your app. I think those days are gone. If you see you spend time on Instagram, you see an ad in between. I don't use Instagram. I get your point. Mainstream India, they spend time on Instagram, they get an ad there, they click on that website and buy. Correct?

A lot of D2C brands, a lot of new age sellers are basically selling directly to consumers on Instagram. And they never ever, these consumers basically just finish all their transactions here and they never open a shopping app. to buy a lot of these products. So I think how commerce has been changing is you have to be relevant to a consumer in every touchpoint.

in the long run I feel if you just keep waiting for the customer to open your app to buy something I think your relevance will keep going down and that's how we see it like we basically built

people are spending a lot of time on Instagram. We have to be relevant there. People spend a lot of time earlier on WhatsApp. We had to be relevant there. We have been relevant on YouTube for a while. So I'm saying it just, you have to stay relevant in lots of places so that wherever people are, they want to buy something.

You are top of mind. This is rare. This sort of pragmatism for a large-scale organization that we are not wedded to the fact that... we will be the destination where people will always come that we are not

You know, we are pragmatic and open enough to say if WhatsApp is where the action is, we'll be there. If Instagram is where the action is, we'll be there. If YouTube is where the action is, we'll be there too. I'm just saying that this sort of... we don't really mind or care as long as we are there, is not... a very common phenomenon in large successful startups because the opposite takes hold. When you become really large and successful, it's like we are this big.

We have built this destination. How do we create strategies to bring more people to our destination? If you remember, you know, I mean, of course, we've gone past that phase. There were times when... If you remember, Flipkart had shut down its website saying that, no, if you want to use Flipkart, you got to download our app, right? Because the app is where the action is. So this pragmatism, how do you...

Where does this come from? Because it's, I mean, in some ways, I mean, you've been able to see it because it's part of that rigidity and flexibility that we talked about earlier that be rigid about the larger market, but be flexible enough. to kind of do whatever it takes. How do you spread this culture internally within the organization? That don't be wedded too much. Let's say...

you know, you're a large organization. I'm sure there's a particular product team which is in charge of, let's say, doing influencer videos in the Misho app. Now that team... will see, hey, but wait, why are we going to another destination and doing this? Because those people could potentially come to our app. How do you resolve these differences within the organization? Because everyone will kind of see their own silo, right?

Correct. And I think multiple questions, but let me first pick the first one, which is... Why are you not trying to be the destination? Why are you basically being relevant everywhere the customer is? I feel it's not either or. It has to be and. We have to be destination for whenever people like think

explicitly, hey, I want to buy something right now. So they should open your app. But the thing is you have to also be relevant when they're not thinking intentionally they want to buy something, but where they will get inspired and maybe create an intent of making a transaction. like many times you go you're walking on the road and you see like I see your t-shirt I really like it I'm saying I want to buy this at this point in time

If I may help you buy this t-shirt. You're not going to open up the Misho app to search for it because it's impossible to do that. So you're saying, what's the next best way? Correct. So you have to be basically relevant on both. So I don't think it's, hey, we're not trying to be the destination. I'm saying we are...

We believe that you will only be the destination when you are doing both. You are serving the use cases on our app as well as off the app. Got it. So that we stay up in the list of... Who will help me like fulfill this need? And that's what I'm saying. As I talked about, our MAU is almost 200 million. It's there because people come to our app. This is our app MAU.

People come to our app. 200 million unique Indians come to our app every single month. And that happens because we've been relevant to them everywhere they go. Now coming to the other part of... the thing which is the culture like how do you make sure that people are able to figure this out they don't have agendas around hey no no we have

high ego that people should come to our app only we should make the best experience only on our app and not outside I think that comes again back to being user first The culture of being very user first and solving the problem, I think makes people care less about what the internal goals are, but more about what the problem for the customer is.

We can put a lot of content on Misho. Does not mean that people will not use Instagram to look at content. We are not replacing Instagram in customers' lives. they will still go for all the other stuff, which is around entertainment, connecting with their friends, family. They will continue to go on Instagram. So taking an aspiration that, hey, we will just get all their time on our app and not there, to me is like a foolish one.

So the fact that we have to have content on our own app should never coincide as a goal. with being relevant on Instagram and YouTube or other places as well so I think that's how the entire company thinks and it again like how do you get this culture to be in like people generally follow what the leaders do right So what we say and what we do, historically we have done, that basically becomes the precedent that everyone wants to follow. All right.

And I think that's how it's been. Even in this particular case, people see that, hey, everyone at the top really cares about what the customer wants to do and they're swallowing for it. So let me also do the same thing. All right. I want to switch gears right now and talk about Valmo.

Now, early in the conversation, you said that, look, there's no point trying to do 10 different things because you can't be equally good at them. And pretty much a lot of the things that we've discussed till now seem kind of aligned in the direction of helping a large set of users find affordable products, buy affordable products, help sellers sell them, et cetera, right? Some point you decided like,

you know, so this is the business that you're in, right? We want to enable this. You decided at some point that we also want to be in the business. And in this business, up till this stage, You're handling the app payments, etc. But as for the actual transportation of the products which are sold, you work with third party logistics providers who essentially pick them up.

and deliver them or take returns etc for a fee at some point you decided hey but wait a minute we should also be in that space and i'll let you explain how you're in that space where did that come about because it doesn't look like a linear expansion of your business model, right? You're like a large scale horizontal e-commerce company which built itself very differently from the way Flipkart and Amazon did.

which was very different, right? That we'll build infrastructure from day one, etc. You were like, asset light, you know, we'll enable this at scale. At some point, you're like, no, we need to do delivery. Why? Why did Valmo come about? I think Valmo came about and Valmo's name comes from value mobility because we really wanted to solve value. And that's why I don't believe it's... What does that mean when you say we want to solve for value?

What we want to solve for is the customer should get the best value for money that they spend on the Misho platform. If you want to serve a billion consumers, you realize most of India cares about value for money every day. They have limited budgets.

They have a lot of aspirations. How do they come together? They're going to save whatever bucks they can save for every transaction so they can do more with that limited budget. Now, a lot of what we did in our seller platform solved for that problem. But in an e-commerce business, our largest cost is logistics. And if we are not able to really bring the same principles of doing things in a low-cost fashion to logistics, we really can't achieve our mission.

So the reason, by the way, we started Valmo is not for any other reason. When you say the largest part of your cost is logistics, help me understand that. Like when customer buys a product on the platform. In our P&L, the largest cost is basically logistics. It's not cost of marketing. Can you illustrate that with an example product? Yes, so let me take an example of...

Like if someone is buying like an apparel product worth 500p in our platform, then they will have to pay cost of logistics. Like the seller pays in our platform, seller will pay cost of logistics of... 70 rupees, 60 rupees per product. That's the biggest cost. Like if you look at the cost of marketing, cost of payments, cost of support, that is much, much smaller. Cost of tech infrastructure, much smaller. So the biggest cost is this. Now,

If this 500 product is available at 450, a lot more people in India will be able to afford it as compared to who can afford it today. But they're not able to because the cost of logistics is high. We wanted to kind of make a big difference to this. And that's the big reason why we started Valmo. What is Valmo? So Valmo, we have, by the way, and I'll give you some background behind how we discovered the opportunity of Valmo.

But the big difference is, as you said, like Flipkart, Amazon built out logistics. They built out logistics for a very different reason than why we did it. Both of them sell a lot of categories to a lot of customers who care a lot about speed. They want stuff fast, right? So when you want stuff fast, you need a very different kind of logistics design to fulfill that. Like one of the big principles is you want to deliver fast, keep.

a lot of inventory close to the customer and that's why they will have a lot of fulfillment warehouses close to you. Even the principles of how every part of that logistics infrastructure is designed, it is so that there's limited time between one of those nodes. So the design is very different. Everything is designed for speed and efficiency. Correct.

Speed is the big one. Okay, efficiencies are very broad. Now, in our case, the big customer comes on a platform not because of speed. Speed is obviously there. Customer, you are not okay with getting a product in 30 days, but they're okay if you don't give it to them. in 30 minutes on a day, right? They're okay if you bring it to them in three days. But they really want the lowest cost. Now, the third-party logistics ecosystem in India evolved while serving us.

but also serving other customers who care about speed more, we care about cost more. So the logistics design was neither for the lowest cost nor for the fastest speed. You get it? Because they're also serving Flipkart and Amazon and all the other tier one e-commerce platforms. I get that. If you're like a third party logistics player and you're serving these large companies like Flipkart and Amazon, which are optimized for speed.

right, then you have no option. Like as a supply chain operation, you can either optimize for slowness and cost or speed. And higher cost. But you cannot do both. You cannot do both. So we said, we tried for a long time. But we realized like there's no way we can achieve the goal of building the lowest cost logistics.

to our consumers if we continue to work this way. And that's when we started Valmo. And we started Valmo with the goal of building the lowest cost logistics platform in the country. But Valmo is different. Valmo is different. You don't own... We don't own any hard assets. And I think that's the big one. We basically took the same approach to the logistics problem that we took to the seller problem, the seller platform. Before us, and even today, by the way, we are the only true marketplace.

right like everyone else today even if it's a marketplace not a marketplace you know they have alpha seller they keep inventory and sell across all kinds of categories in our case we're a pure platform we don't have any alpha seller, any inventory, anywhere, right? So that's a big difference. And we believe that you'll be able to deliver low cost when small businesses in India can provide their products to consumers, right, at the lowest prices. We said...

What if we also allow the small businesses in the logistics sector to come and offer the services to our merchants to sell to consumers? And the... Logistics companies, who are these? These are small local courier companies in this particular area. These are small trucking companies. These are small warehouses who can offer short center capacity to you.

All of these small businesses that exist in the logistics sector, they have much lower cost, but may not have the same kind of reliability and hence speed that is required to serve some of the other customers. If we bring them to our ecosystem, we can really make a big dent to the cost of logistics. And that's the reason why we started Valmo. So today, Valmo is basically built like a marketplace of lots of small logistics companies.

who are offering the service. So we have a lot of gig workers. I can't escape the comparison that you seem to be very similar to what ONDC is trying to build. Yes. So I think the mission... When we have talked about it again and again in many places, the mission is very similar. We wanted to bring a lot of these existing small businesses in that sector that already exists. By the way, there's a lot of capacity.

These are the folks who are delivering your letters and postcards 10 years ago. And you must be asking questions, where are they today? A lot of them still exist. They're just underutilized most of the time. So we invited these people. We invited a lot of gig workers. We invited a lot of people who have spare capacities around warehouses. And we said, why don't you become part of our ecosystem? And we listed that supply on the Valmo marketplace.

that our sellers today use. So the separate Valmo app or website that people use? Correct. So it's a separate platform that the gig workers, the logistics entrepreneur use to offer this service, get listed. And then they are basically providing the logistics service to our merchants. And as I said, it's much cheaper. So just so I understand, so through and now I'm connecting and trying to connect everything back together.

let's say out of these 200 million active users that you have for the Misho app, one of the people decide to open the app and purchase, let's say a Salwar from the app. Now that order goes to the seller who's also a Misho user. Now that seller has to figure out how to fulfill that order and deliver it. Let's say the seller is in Bombay and the buyer is in Delhi. Now the seller has to figure out how to get this order from Bombay to Delhi. So now the seller opens the Valmo app and gets to see...

a list of, you know, smaller courier partners who are offering to do it and the prices and he or she selects one of them. That's the chain. No, think of it as like every order we split into two jobs. One is of supplying the product and then supplying the logistics service to ship that product from the seller to the consumer. So as a seller, you don't have to go and select.

You don't have to, as a seller, you don't have to go and select some partner within Balmo. All right. We basically just ask you, hey, you pack that product and keep it. at some place or in your warehouse and the logistics partner which is Valmo here will come and pick up the product. So who's selecting the final courier? We do that. Because we again have a lot of data on the performance of every partner. So we say this local courier company in this particular pin code has good performance.

and can deliver a great value to the merchant. So we decide that, please go and pick it up from the seller. So it's like, every order is allocated to both of these platforms, our seller platform, as well as the logistics platform. seller platform provides the product and logistics platform provide the logistics service to take it from point A to point B. You said you started Valmo.

With a view to bring down costs of delivery. Yes. But when you look at Valmo as an independent business within Misho, what is its revenue model? No, it's not a... We did not start... Valmore to make more revenue in our business. I'm saying that... are you running that business purely to kind of say let's not make losses there because our only objective is to keep driving down cost of delivery or are you also looking that business as

a standalone business which will deliver maybe not comparable numbers to Misho but actually profits? I think, I don't think we think about... Hey, how do we monetize the Valma platform? At some point in time, there could be an opportunity and we may think about it. Today, we are very focused on fulfilling our mission using that platform. How do you bring 10x or 100x more?

small companies SMEs in the logistics sector online so we can improve the value proposition of the seller platform even more so Does that mean when you take a call to invest certain amount of money to set up and run Valmo on a regular basis, the investment decision that you're making is let's invest X million dollars into Valmo because the benefit to us will be it.

It will bring down prices, which will lead to more transacting users for Misho. Is this the chain for you? That's correct. That's correct. All right. Okay, great. Tell me about 0% commissions. You...

allow people to resell it's just confusing to me right now someone can come on me show and order a product But you also have, I went through your website, you also have this reseller section where you say 0% commissions. No, no, not reseller. By the way, like sellers for people to sell. My bad, my bad. Seller section, right?

What is the difference between... So, or is that just the back end of the... It's the seller platform. Oh, it's a seller platform. How do you offer 0% commission? So, what's your revenue model from a seller? Yeah, I think for this, I'll again go back to the history. And I talked a lot about what we solved on the demand side, which is cost of data being high, not so tech savvy, don't know how to buy.

on shopping apps directly and so on. But one of the big problems also for this customer was that enough small businesses were not listed online anywhere. So I couldn't find the supply I buy offline online anywhere. So when we spend time in understanding why are these small businesses not selling online, one of the big reasons was every small business used to say, my cost of doing business online is very high. I make losses every time I go and sell anywhere.

There's no returns equivalent in the offline world, right? There is no cost of packaging in the offline world. I have to sell one by one, each and every skewed separate ship to the customer. So a lot of these small businesses were not selling online. That was the big problem. And they were not selling because the cost was too high. So when we spent time with them, we said, how do we bring these small businesses online? We realized that unlike brands who have much larger gross margins,

These small businesses have much lower gross margins. So other brands, you can charge them commission and they will pay for cost of logistics and pay for cost of return and they will still make money online. A lot of these small businesses cannot do that. because their gross margins are smaller. You know, like, small businesses don't charge 60-70% margin on their products. So we said, we have to really bring this down. We have to solve this problem.

So we said we can't make money the same way everyone else is making money. So we started with a zero commission platform for sellers to sell on a platform today. And I think that was a big disruption to this. I believe that's one of the big reasons why so many small businesses came online to sell their products for the first time. Half of the sellers who sell on Misho today, they sold their first...

ever product online on Micho. Nowhere else. And the reason they did it because... No, I get that. I mean, it's great for a seller that you can go to Micho and you can sell without paying Micho anything. But... my question obviously is, what does Misho, how does Misho make money from sellers then? So by the way, we make money through some of the other value added services as we say, right? Like one is advertising. You come to the platform, you grow a bit.

Now you want to grow a lot more, right? So, hey, I'm willing to spend to take that top slot in a feed. Tell me what does it take for that? I get that. So then you come and spend on ads. You've shown this merchant that they can actually make money. Correct. Now that merchant is willing to invest more to make more money.

Absolutely. Okay. So then they start to spend on ads. Then they grow. Then they like that growth more. They spend more on ads and so on. So I think that is one big way of doing it. We make some money.

by offering some of the other services. Is that your largest revenue source? Largest revenue source. All right. Ads are largest revenue source. We make some money in the logistics that we offer to them. We make some money... from some of the other tools we have for our sellers so by the way we have over time built some of the SaaS tools equivalent for our sellers that help them find insights

figure out what kind of products I should make, how should I price them, which part of my P&L is positive, which part of my P&L is negative, right? So all of that. insights we also give them we make some money there but majority as you said comes from ads very interesting again this is counterintuitive right because uh I don't think there are many marketplaces that will say I'll neither charge a premium to the seller nor to the buyer.

Correct. We have zero platform fee. I think platform fee is the flavor of the season. A lot of platforms now charge it 1 rupee, 5 rupee, 10 rupee. We do not charge anything from the consumer and we do not charge any commission from the seller. And I think we could see it very early on in the early days that if you really want to bring Bharat online, bring all small businesses online, you will have to build this business differently.

You can't do it the same way by making commission and platform fee, etc. When did you launch this 0% commission? I think we launched it in the early days. I would say this is pre-pandemic. and I would say like what because you would have then given up at that point I'm assuming you were charging commissions so we moved to

zero commission as soon as we got to enough critical mass that we could launch our ad product. So no business can have the ad product on day one because ad product requires competition, right? People want to come at the top when there are enough people who are taking away that visibility, right? So I remember the same quarter when we launched our ad product, we basically moved to zero commission.

So it was just to kind of have some revenue source in the early days to fund your expansion, fund your business. You're bootstrapping a particular business model before it exists. Yes. So the day we... started an ad business. We said we don't need this anymore. Let's just get rid of this. Interesting. All right.

You talked about quick commerce. We were talking about like, you know, top cities and speed, people wanting stuff in 10 minutes, 15 minutes, 20%, which is primarily also urban phenomena, top eight cities, top 10 cities, etc. you though strike me as the antique

quick commerce right even though your roots seem to lie in some version of quick commerce fashionier seems to have been a quick commerce business for fashion ahead of its time but today you're saying it's okay we don't mind if you know our customers don't mind

if the orders are late, etc. My question is, what are your views about quick commerce? Do you see quick commerce as, I mean, for someone who's so astute towards... threats and opportunities how do you view quick commerce because there is this school of thought that says quick commerce is this virus slash monster which is constantly spreading and eating category after category

And if you can offer something to a customer in 30 minutes, why won't they take it? So how do you view quick commerce? Do you see it as a threat? By the way, in general, we look at everything. So I never say something is very relevant, something is not relevant. What is quick commerce? Quick commerce has basically taken the Amazon model to the extreme. So Amazon used to keep...

maybe 100,000 or 200,000 SKUs in a large fulfillment warehouse on the outskirts of the city and deliver same day from that selection. They said, I will bring 10,000 SKUs or 15,000 SKUs. but so close that I can deliver it in 15 minutes, right? So just taking the same model here. Now, Amazon was a convenience format. This is hyper convenience format, right? Like I'm not willing to wait even for a day.

Five years ago, when I used to go and meet consumers, they said, Amazon is the fastest. When I need something very fast, I buy from Amazon. I was speaking to a customer in Tier 1 City recently. She said, Amazon is so slow, it takes a day to come. So it's just five years for that opinion to change so strongly, and I'm sure you also feel that. We did not focus on convenience five years ago, and we're not going to focus on convenience today, right?

we've been very clear of the problem that we solved. Like, even then, people used to ask, hey, people are getting used to same-day delivery, next-day delivery, when will you offer that? I'm saying, every year, by the way, we get faster. Because the consumer expectation never is that you give me in 30 days, as I said, and I will buy this product, that will never happen.

So every year, I think we cut almost half a day from our average delivery time because we improve our operations across the board and we will continue to do so. But I don't think we will go and increase the cost and offer a very limited selection to the customer because it's 15 minutes. We today have 150 million unique selection on our platform. A dark stroke can hold...

15, 20,000 SKUs at max, right? Like it's a very different thing of what the customer wants. And that customer is willing to pay some platform fee, willing to pay a slight premium for getting that product. so fast, our customer is not willing to do that. Right? So I think that's the big difference. But as I said, I think we continue to observe, we continue to learn what's happening. Our goal will always be just

offer the best pricing to the customer for maximum amount of selection as fast as you can. That's how we think about our business. So we will continue to make progress on all these three fronts.

Better and better on pricing, go from 150 million to eventually 300 million, then 500 million selection on a platform. And then offer products even faster. One day... lesser two days lesser and so on so i think that's how we think about it um we have never been the ones who want to do everything as in our history you can go back and see we're never solving for tier one and tier 10 and offer

selling all kinds of categories. We're 10 years into an e-commerce business, we still don't sell smartphones, right? That's the easiest way people grow their GMV. We've never done it because we could not figure out how will we create a very disproportionate... value proposition for our customer as compared to what the alternatives are so giving a one liner on this

I don't think it's a relevant proposition for a customer today, but I think we'll continue to see how it evolves and if it's relevant to a customer at some point of time, maybe we'll see what to do about it. Thank you for listening to the first episode from Season 3 of First Principles. This episode was produced by Hari Krishna. Mixing and mastering for the episode was done by the wonderful Rajiv C.N., our resident sound engineer. And before you check out...

If you've been a long-time listener of the podcast and are glad we're back, do tell the world that by sharing this episode with everyone you think will find it valuable. Okay, this is me, Rohan Dharmakumar, signing off. We'll be back soon with another episode.