The Making of Snapdeal
Cricket stats record the fastest hundred, fastest fifty and every time the record is broken, it is prominently recorded. But the fastest growing companies have no record-keeping body or an award-giving organization to show that they have grown faster than others. Media keeps talking about them when they make news but it’s more like flirting rather than a solid relationship. So the company hogs limelight for sometime and gets to business as usual. Scripting success is not easy and growing at a faster pace is even more difficult. Kunal Bahl shares his interesting journey of founding Snapdeal and growing it really fast. Snapdeal is a company, just two-and-half years old. Seeing its traction today, it’s difficult to believe so. "The hidden star behind Snapdeal’s success is Vani Kola, MD of IndoUS Venture Partners," says Kunal. When asked Vani what she thought, she says modestly, "This speaks volumes about Kunal and Rohit, and not about me at all. They are smart and driven, as most entrepreneurs are. They have additional great leadership qualities, as you can see they are modest and humble, they attribute their success to me, their team and others, who were only enablers. They take responsibility for creating success, but shy away from hogging the limelight."
Meeting Vani and starting Snapdeal
Kunal Bahl decided to start a business with his school friend Rohit Bansal after a stint at Microsoft; Rohit was with CapitalOne. And they launched an offline couponing business in 2007-08 as the internet was still in its infancy in India. The business was doing well and to seek investments, Kunal started cold calling investors through their websites, as he wasn’t sure who would be interested in investing in his kind of a business. On meeting Vani Kola, he says, "It was a cold call. And in a couple of hours, Vani called us and we set up a meeting." Elaborating further, he recalls: "That first meeting didn’t go off too well, and it ended with Vani saying, ‘why are you guys doing 5 things if any one idea can end up being a 100 billion dollar business?!’ We thought we were never going to hear from IndoUS or Vani ever again. But they got back to us the next day, saying ‘We liked meeting you, and we’d like to know a little bit more.’" The subsequent meetings were fruitful and IndoUS Venture Partners invested in Kunal’s business. He happily states, "They had invested in September 2009, and about 4 months after that we launched Snapdeal and from thereon it’s been a fun journey."
A couple of merchants working with them suggested that Kunal and Rohit look at the online business. They brainstormed on how to go about it on January 26, 2010. Soon after that, they registered a domain and that was all that the Engineer-cum-MBA duo knew back then about online businesses in India. Kunal remembers: "Eight days later, on February 4, 2010 we took the brave plunge and launched Snapdeal.com. The site sucked initially, and we made a lot of mistakes. But however, we were extremely agile, we obsessively tracked the customer preferences, and continued to rapidly revise and improve the platform. We evolved and learned from our mistakes and kept moving forward by taking intelligent risks, eventually things started working out pretty well." Recollecting the early days, Vani Kola adds, "Going in with a sense that we don’t know what is going to work, so let us listen smartly, proactively and learn fast - was the attitude that paid off well. The quality of extreme agility and being unafraid to take risks and make mistakes has made them successful."
Hiring, Learning, Scaling and Vision
After having started, there was no looking back for Kunal, you could say. The main ingredient of his success is his people. "The only reason as to why we’ve made substantial progress over the last two and half years is because of our people. We are a business with no plants and machinery and our success and failure is dependent on the quality, focus and the motivation of our people; our speed, our sluggishness -- everything is our people," he explains without any hesitation. Vani Kola’s inputs proved to be crucial in managing people. And growing from 30 to 1500 strong organization in a couple of years being managed by twenty-somethings hasn’t come on its own. "We have a team called the cultural team that takes care of the cultural stuff in our company. As a 20 something year old, managing a company that grows this fast in size is a little challenging especially when you haven’t done this ever before! So the inputs that Vani gave us along the way about culture and people have been quite helpful." Commenting on this Vani says, "The credit really goes to Kunal and Rohit who have a great ability to listen, learn and absorb like sponges. With a quiet confidence, they just keep executing. I was amazed how they brought innovative thinking and open mind to everything. In HR practices too, they always kept thinking about how do we make our people learn fast and learn from each other better. How do we take one good idea from one employee and manifest it throughout the organization rapidly. On their own they came up with many many creative ideas about employee enablement and created unique culture specific to snapdeal."
Hiring people on demand is at the core of Snapdeal’s philosophy and never on a whim or as an experiment. And when customers who were buying services wanted Snapdeal to sell products, Kunal felt the customers’ needs should be fulfilled. He goes on to say, "And that led us to create that largest assortment of products in India in a span of 6 months with over 2000 brands and merchants now selling thousands of products on Snapdeal."
Among his learnings, Kunal lists culture and objectivity. Describing Snapdeal’s culture as "smart, generous and humble," he feels culture determines the speed of growth of a non-traditional business like Snapdeal’s. Another key factor is the ability to solve problems. He points out, "all the problems that we face in our business are created internally or externally by human beings and they can also be solved by human beings. And so the quality of your team, the education of the team and the direction of the team is key determinant to whether you’ll end up solving those problems or not." And religiously remaining objective (doing the essential things) has helped the business grow instead of losing focus on umpteen other things.
"All the mistakes that I’ve made are to do with hiring the wrong people," he says thoughtfully. It takes a bit of time to understand an incompatible hire and keeping that resource for long also becomes painful. So Snapdeal has over time constructed a process where the fits or misfits are identified early.
The secret sauce of Snapdeal’s ability to scale faster than anyone else is, in Kunal’s words "our ability to move very very fast." Another secret of success is the people who have helped it grow. Kunal gives Vani the first credit for people behind Snapdeal’s success. He says, "I don’t think we’d be doing what we’re doing if it wasn’t for her." Her mentoring at the early stage of Snapdeal was a huge differentiator.
Speaking about the fast-paced culture at Snapdeal, one of the early employees, Amit Khanna who heads the Product division added, "What I like the most is the speed at which we execute or implement anything. Whatever you think you start it small and then you execute in a bigger platform. Most of the companies are not able to validate if their idea will work. Here we experiment at a small level and implement it on a larger scale. That’s the advantage you have if you are at Snapdeal."
The fulfilling moment in the journey for Kunal was how Snapdeal was able to create social impact. Installing hand pumps in a village totally transformed the lives of people. Kunal believes if Snapdeal grows bigger, it would be able to bring significant changes to a large section of the population.
Kunal has a business vision and a philosophical vision. "My business vision is to make Snapdeal into India’s number one B2C marketplace. And philosophically, I would want Snapdeal to have the most admired alumni in the country." He would be happy if Snapdeal is able to disengage with employees on a positive note and they go on to build something valuable. But Snapdeal is so young that no one has left them yet! PayPal-like Mafia in India soon maybe!
E-commerce Best Practices
Kunal bets on working backwards to fulfilling what the customer wants and then aligning supply chain, technology, product management, and customer support towards this objective. He adds, "We interrogate things about what is the best experience for the customer." In doing all this, a conscious effort is made to make it cost-effective too.
E-commerce business is built around three pillars: value, assortment, convenience. The value-based approach of Walmart for example is hard to replicate. In India, there is no middle path in convenience. You are either convenient, or you are out of business. "So, the only differentiating factor is assortment," says Kunal. Snapdeal, with 500,000 products and adding a product every 10 seconds, has that edge in assortment as of now in both online and offline modes. Another significant factor is the retail sector worth $500 billion in India is only 10% organized. Clearly, Snapdeal has zipped ahead of others.
Cash on Delivery, Chinese E-commerce model and E-commerce of the future
On the contentious issue of cash-on-delivery hurting e-commerce companies, Kunal has a different take. High charges for COD transactions and customer returns are quoted as two reasons for COD being unfavourable. Snapdeal’s experience is different. Its COD charges are lower than expenses of online payments and so Kunal prefers customers buying on COD. The courier companies returning products don’t charge Snapdeal. Furthermore, the returns are still single-digit figures, which doesn’t eat much into Snapdeal’s sales.
Kunal agrees that Indian e-commerce will move along the lines of Chinese e-commerce companies built on two models: inventory-less company realizing $100 million in sales and inventory-centric companies needing to raise capital constantly to keep with demand. With a touch of pride, he adds: "If our business is a testament from a growth perspective, it probably is moving in that direction."
E-commerce-enabling companies are next on the horizon. Kunal feels companies in "tax-based e-commerce infrastructure solutions such as warehouse management software, billing software and customer support software specialized for e-commerce in the Indian context" are doing well already.
"Customer base largely on word of mouth"
Snapdeal’s ads don’t attract the majority of its customers. On acquiring customers, Kunal explains: "So I would say that if you are a good service or if you have something unique to offer, your assortments are very large, very unique, very broad and very deep, you provide a service which is convenient for people and if you can upscale the service in case the customers have an issue, which they will, the users will always come back to you. Almost 75% of the visits on the site comes organically, without clicking on any advertisements. 90% of our transactions happen without people having to click an advertisement to come to our site." A customer buying a diamond ring for his wedding worth Rs. 40,000, was the ‘aha’ moment for Kunal.
Inspirations and point of view
On his inspirations, he again turns to Vani Kola. "I respect Vani a lot, because in a male-dominant industry, be it as a tech entrepreneur or as a venture capitalist, there aren’t any other like her. I respect Vani for her intellect, aggression, and results. Everything aside, I respect her for taking a step out of the comfort zone and doing something that is non-traditional for Indian women. I think she has set a very good example." His next inspiration is his dad who was an entrepreneur.
He advises entrepreneurs not to venture into business for monetary reasons. Social dimension to starting a business is important in his view. When do you rely on your abilities and when do you go for a venture capitalist? "It’s relative to the entrepreneur, the market and the opportunity. However I feel that, if your business needs money to function, it is better to raise that money earlier rather than later."
His reading list can provide some insights into his thinking. He likes books by Jared Diamond. His opinion is, "In a way companies are not very different from civilizations and constant evolution plays a very key role. You can relate a lot to it if you’re an entrepreneur because you’re under threat all the time and I think you learn a lot from the study of evolution of civilizations." He also likes reading about cults. Why? "Because I feel that companies are very similar to cults and are very similar to religion. They all have one strong leader and everyone follows. Only the goals are different. Some are violent, some are evil, some are economically motivated and some are socially motivated, so I like reading about cults and what makes a cult leader successful," signs off Kunal.
The wisdom, that a few years in a cut-throat business like E-commerce in India can impart on an entrepreneur, is profound and Kunal Bahl is testament to that.