All my so-called friends were suddenly unreachable, some are still 'travelling': K Vaitheeswaran, IndiaPlaza

30th Oct 2015
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It was two am sometime around September 2013. My cell phone was going off the hook. This was a daily occurrence. The creditors were relentless and restless, calling me for dues the company owed them. A company that had other directors and investors. Yet, when things went downhill, I was all alone. For close to 18 months now, the weight of the burden was just mine to carry.


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For the investors, I was just another item in their portfolio they had already moved on from. All my so-called 'friends' (investors, relatives, and well-wishers, and anyone I knew) were all suddenly unreachable, travelling or busy. Some are still travelling.

In retrospect, it's disappointing that 14 years of my pioneering efforts didn't pan out and today my company is not there to ride the e-commerce wave. I guess some things just aren't meant to be. We launched India’s first e-commerce company when no one knew what e-commerce meant.

Anything tried for the first time results in learning things the hard way; we had ventured into places nobody had gone before and in many ways made it easier for others to learn, copy and move ahead.

I feel being an entrepreneur is very addictive. There is this thing about the entrepreneurial bug that does not allow you to get back to working at a regular job. There is this joy in discovery and learning that cannot be gained by working in a corporate.

In a way I have been quite fortunate that through my thirty year career I have always been associated with startups. My first job in 1985 was with the Murugappa group, a large conglomerate but I joined in the electronics division as part of the first few employees.

My next job was with Wipro in 1989 when it was still more popular for the soaps business and the computer business had less than Rs 50 crores annual revenues. I joined the peripherals division as one of the early employees, another early stage startup experience.

These two assignments in small groups helped me learn early lessons in frugality, people issues, sales, marketing and operations that helped a lot later when I became an entrepreneur.

In 1997, I was assigned to a special project in Wipro where I had to communicate with people across time zones. I got myself a free Hotmail account (my first introduction to email) and while I was using this email account, I remember seeing an amazon.com ad for books.

I was bowled over by the fact that a company in the US could sell me books in India. At that time, I was looking for something challenging and different (joining another IT firm did not appeal to me in any way) and this was a pivotal moment – I felt here was something we could launch in India. I am not sure why but instinctively I felt that e-commerce can be big in India. And thus began the 14-year journey of Fabmart, Fabmall and IndiaPlaza.

In 1999 when we started, India was very different world. We lived in an era of dial-up modems and shell accounts to access the web. Mobile phones had just launched and outgoing calls were charged. The first six months spent in setting up was possibly the best time of my life.

If you ask me whether we fathomed the downward spiral, the answer would be no. We were in the middle of the dot com boom and it was an exhilarating period. I remember at a party a well-known gentleman, who I had never met before walked up to me and instead of asking my name, he just asked me what my valuation was!

We were riding the dot com wave; we were the flavour of the month. And then it was April 2000 and Black Friday happened. Our world changed overnight.

We had raised our first round of funding from Reliance but after this nobody was interested in the world of e-commerce anymore. By then we had launched multiple categories like music, books, movies, watches, jewellery and toys, but it was groceries that worked as the next turning point in two different ways.

So far we were catering to a largely male audience, but suddenly we were targeting mostly women customers. With groceries we had to introduce same-day delivery and cash on delivery payment option.

This meant setting up different warehouses for groceries. We had our own pick-ups, deliveries and now warehouses. We were trying to make our little money last longer but with groceries, where we were just bleeding earlier, we were now haemorrhaging.

On the other hand, groceries was also a massive opportunity as it was one of those categories that got the highest repeat rates. To ensure same day delivery and also improve margins, we started increasing our inventory. But this also meant we had huge stock. So we decided to sell groceries offline in January 2002 and launched the Fabmall supermarket stores.

I could claim great visionary insight here, but the truth is we were just trying to get rid of extra stock and this led to a massive business opportunity. The offline FabMall supermarket stores started doing great business. Soon, Aditya Birla Group acquired the offline business in 2006 (re-branded as More chain of supermarkets) and we kept the e-commerce site going by changing its name to IndiaPlaza. We raised our Series A round of investment from IndoUS ventures (now Kalaari Capital) in 2011.

In 2012, thanks to a series of internal and external events, things just went downhill. When I look back, I know IndiaPlaza had the best story in terms of financials. We were growing well and not far off from making money.

I was keen that my company should make money but that part didn't fly well with the investors. I got the impression that most of them were looking for a company that could take in a lot of funding and spend it quickly and raise the next round based on some future fictional far off promise but this model did not make sense to me. My views today remain the same.

I was concerned that the company was raising $five million from Series A and we were still not fully profitable. Our GMV was a little over Rs 100 crore from a run rate point of view (We always calculated GMV in the traditional way - the amount of products and services sold and the actual cash collected less returns and refunds was our GMV). Clearly, the world has changed.

If Indiaplaza had succeeded in raising money, we would have become an oxymoron- a profitable e-commerce company. In those 18 months, I put my heart and soul and tried everything to salvage the business and raise money for working capital. I travelled across the country and met close to 30 investors but things did not work out.

Unfortunately, everything is hunky dory till things go wrong and then a mess created by several people becomes the entrepreneur's sole responsibility. I was left trying to clean a mess that wasn't of my making alone. People I knew well and trusted distanced themselves. It was like I had contracted a communicable disease. And these were people who could have helped if they had chosen.

It's a feeling of deep helplessness and suffocation without any respite. It's absurd, the entrepreneur suddenly becomes a failure because his company failed. The courage, the risks, the efforts to do something unique and different, the strength to walk on a different path, the sheer experience of starting and running a company – all goes to nought and hold no meaning. And this is the dark side of entrepreneurship in India.

If we are to truly become a startup nation, then it's important this attitude changes. We need to understand and accept that businesses may fail but an entrepreneur.

(As told to Sindhu Kashyap)

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