She failed twice, but all she could see was the 'Upside'
Failure is frowned upon in India, and it’s worse when you are a woman. Anshul Khandelwal failed twice before she started making any money. Her current startup Upside9, a studio model for app development, has created a slew of apps that will be monetized later this year. But before she tells us about Upside9, she narrates how her learnings from her low phase have made her a stronger entrepreneur.
After graduating from engineering college in 2006, she moved to Bangalore to work with a large IT Services firm. But entrepreneurship was always on her mind. While she was working, her friends told her about opportunities in Mathematics tutorials, if lessons could be delivered over the Internet. Anshul, who founded Upside9 in 2013, says, “I was good at Mathematics, so a friend and I decided to start a chat-based tutorial.” The company was called Epadai.com.
Anshul decided to aggregate NCERT Math Text Books onto her site and then train students, from Classes 8 to 10, based on queries posted on the site. The website also offered one-on-one lessons, which cost Rs 250 per chapter. She created an audio file of all the formulae, which could be downloaded to any MP3 player. Anshul tied up with four schools in Bangalore and began to scale up the idea. She also created voice recordings of all chapters for students to revisit in case they had doubts about a problem. But she faced certain challenges.
“We would work in the day and start training students from 5 pm in the evening,” she said. After two years of running the business, the workload of running a startup and working in a corporate had taken its toll. The two things that she learnt here were:
- When the business model works, quit your job and give your entire time to the startup
- You need to build a great team
“My partner walked out in the middle of us scaling up and I could not tie in the pieces to run operations,” says Anshul. Epadai.com was shut down in 2009. But the amount invested in the company was less than Rs 1.5 lakh. It was not a costly error, but more a waste of time and energy. However, she lost the opportunity to scale up the idea, which was perfected by TutorVista and sold for more than $127 million to Pearson PLC in 2011.
Anshul would not give up her dreams of working on her own. She continued working in IT Services till 2013, when she started a food delivery startup, which would deliver meals late in the night for working professionals. Two months into the business, she realised that the operational costs, in the form of managing deliveries, would be too high for her. The money required to scale up such an idea was a lot and she found it could burn her savings in six months.
- The learning from this short-lived stint was that not all ideas can be scaled up and that some ideas require a lot more capital to manage the complexity of the business.
- The stickiness of the customer was very important. On average, an individual would have to order five times a month to keep this business running.
That was when some introspection, when she travelled across Rajasthan for six months, helped her realise that she should leverage eight years of IT Services experience. She took the leap and turned full-time entrepreneur, opening an app studio called Upside9.
Related Article: Why failures are important for entrepreneurs?
Finally it made sense
Failures teach lessons. It also hones one’s skills. By 2014 it, was clear that the whole world wanted apps, and that they needed engineers to build them for rich user-experiences. Anshul set up shop in Jaipur and employed Android and iOS engineers to deliver services to global clients. Upside9 connected with businesses in the US and India to deliver apps as per their request. She invested Rs 15 lakh in the business, which began to generate revenues straight away. She would charge her clients based on a milestone or on a upfront basis to deliver their apps. However, she realised that she had to take her own bets too. She used the money generated from the services business to fund her own ideas.
She brainstormed with her team and began jotting down experiences and services that the Indian consumer could explore. The first app she launched was Karosell, a platform for people to sell their “used” accessories, books, and paraphernalia. The app is a month old and the Upside9 team is out raising money to market the idea.
Pre-owned sales are the highest in cars and electronic items. Adoption across other segments has been less rapid. “The Karosell app will focus on smaller accessories like collectibles and books,” says Anshul. She adds that it’s a market, which is not yet been explored in India and could be scaled up over a couple of years.
According to Technopak the fashion accessories market is valued at $3.4 billion in India alone. Greendust is the largest company in India to sell pre-owned electronics. The company has raised $40 million from Vertex Ventures and Kleiner Perkins Caulfield and Byers. So fund raising in this segment has generated some interest and Upside9 can raise money if it hones its business model.
Upside9 will guarantee the quality of the product by partnering with various agencies, who will verify quality of the product. The Karosell platform will allow buyers to negotiate with the seller directly. The price discovery happens through a chat module in the app. The app is available on iOS and Android.
AliBaba, the billion-dollar Chinese company, connects sellers directly with buyers through a chat module. The data collected from this social community of sellers and buyers is very powerful to customise products according to individual preferences.
“Such businesses have to figure out guaranteeing quality and also manage customer services better,” says Harminder Sahni, founder of Wazir Advisors.
However, the real challenge for Anshul will be scaling up. While app services continue to be bring revenues, Upside9’s apps would need capital for marketing. The Karosell app will require some mechanism to build trust should be built in by the company for consumers to buy pre-owned items. Credibility could go away in an instance if the items delivered are fake or damaged.
“Such businesses have potential if there is reasonable acceptance by consumers. But it is a risky business, which is dependent on the entrepreneur’s ability to build the market,” says Mohandas Pai, MD of Aarin Capital.
Anshul has learnt from her previous startups that entrepreneurship is continuous learning. She definitely has the appetite for risk. Otherwise, she would not be an entrepreneur. The studio model of Upside9, through which they will launch their apps, could work if the apps are able to create a market of their own. The first launch, Karosell, needs a lot of testing beyond Jaipur and Delhi. Once it is accepted by four cities, then the company could raise capital easily. Perhaps the biggest upside is Anshul and her determination not to accept failure.