These two guys built a startup, sold it to study & work, and founded MyGubbi
Every year more than 40,000 to 100,000 apartments are readied for delivery in each of the country’s five major cities. But while real estate may be slowing down as an industry, home ownership is only likely to grow in the coming years and people are going to spend at least Rs 10 lakh, on an average, to furnish their homes. With this as a premise, two technologists and former retailers, Umesh Sangurmath and Ravi Rao decided to take the plunge and integrate the entire furnishing of homes with their startup MyGubbi in early 2015. The company raised $2.5 million from a set of high net worth individuals, which includes Vipul Parekh, the co-founder of Big Basket.
The founders got into startup mode four years after selling their stake in a retail startup in 2010. And what happened in the interim? Ravi Rao got himself a PhD in Agile computing from IIM-B, while Umesh went on to become the CIO of the $3 billion Future Group. Meanwhile, in 2014, the two friends decided to ideate again and invested in a small real-estate company. It was there that they noticed an opportunity in furnishing, while delivering houses to the public. “The idea was actually born in the airport when we were out for a business meeting. We looked at the number of homes per city and the opportunity,” says Umesh Sangurmath, founder of MyGubbi.
He adds that the key to success in this business was leveraging technology to solve the offline experience. The name “MyGubbi” comes from the Kannada word “Gubbi”, which means Sparrow. The sparrow was a common bird, in Bangalore, but rapid urbanisation pushed the bird’s habitat outside the city. “At the Bangalore airport, we saw a lot of sparrows and we were reminiscing about old Bangalore. But when we decided on the business and were looking for a name, the word Gubbi stuck with us,” says Ravi Rao, founder of MyGubbi.
But it is not only about furnishing, they have stayed true to their technology roots. Their technology platform, in the long run, will be able to customise furnishing for each home buyer, after collating data from several home owners. According to a report by Technopak, a consulting firm, home furnishings will become a $30 billion market by 2020 from the current level of $20 billion. Home furnishing includes modular fixtures, décor and hard line products. Nearly half of consumer spends are on modular kitchens and wardrobes.
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“We have focused on retailing for the past 15 years, and have built our own technology in each of the businesses that we have worked in. Home furnishings needs solutions because people do not have the choices today, it’s random designs that they select from carpenters and catalogues,” says Ravi Rao, Co-founder.
Umesh and Ravi were classmates in engineering college and have served long stints in IT Services businesses. Umesh worked in Wipro for over a decade, while Ravi worked for Infosys, during the same period, building and maintaining applications for global retailers. The two quit their jobs in 2003 to become retailers themselves. After learning retailing operations by running a couple of franchised stores, the two started their own brand called “Smart”, a grocery retail chain in 2005. In three years, they sold their business to the Wadhawan Group, a Mumbai-based real estate group, who were expanding their retail operations to South India. They stayed on till 2010 and exited the company to pursue other interests. “We built close to 50 stores with a farm to fork connect and also worked on expanding organised retail into areas that large retail outfits would not bet on,” says Ravi Rao.
The business model
Their business is not very different from Homelane, their nearest competitor, which raised $54.2 million last year. Their first round of funding was received from Sequoia Capital, who put in $4.5 million, and the business was seeded by K Ganesh of Growth Story. There is little doubt that funding is available for such a business.
Then, there are furniture marketplaces like Urban Ladder, which has raised $50 million so far. PepperFry, another market place, has also raised a total of $128 million. There a dozen odd market places that offer services in the furniture and décor space. However, only HomeLane and MyGubbi provide an end-to-end service by controlling the design and delivery of the product.
MyGubbi works with a team of in-house designers, whose designs can be accessed by customers. Once the customer decides on the décor and furnishing, the company promises delivery with 45 days. The orders for modular items are then sourced from different factories and assembled at a central location. The items are shipped to the house on the 30th day and then fitted in under 15-days. On an average, customer spend on modular designs is about Rs 5 lakh, Rs 2 lakh on décor and about Rs 3 lakh on sofas and cots. “The furniture part is dominated by furniture sellers and other market places. It is the modular part that we focus on,” says Umesh. He says that the only difference compared to the competition, is that the design process is controlled tightly by MyGubbi.
On an average, the company works with 20 homes each month, and expects to break even at the corporate level if it provides furnishing solutions to 35 to 40 homes per month.
“I have known the two entrepreneurs for more than a decade. Their business is an asset-light operation and home furnishing is a large business that needs technology intervention,” says Vipul Parekh.
Currently, the company operates in Bangalore and has plans to scale to over five cities this year. This business is bound to grow because even old houses can be re-furnished. Although a slowdown in buying new houses continues, there are many families willing to refurnish their old houses. Nearly 95 percent of the home furnishing business is disorganised, so it is time for these new businesses to offer transparency in pricing and execution.