Back to the Basics: The BigBasket Story
Everything I have written about is based on real-life personal experiences. I have, however, been a little cautious when it came to writing about the company I currently work for because anything I wrote could be misinterpreted or seem biased. Throwing caution to the wind, I am taking a shot at it.
The year 2016 saw BigBasket (BB) go from strength to strength in an extremely difficult space where many big names bit the dust. In this piece I will try and explain what makes BB what it is.
In my opinion, BB is what it is today on account of five reasons:
• BB has always seen itself as a “retail” company: It never saw itself as a ‘consumer internet’ company or a ‘technology’ company. There is a big difference – starting with the value proposition. The BB value proposition is, therefore, not just about making it easy to order, track (and deliver) orders using technology. The value proposition is much more: It is about being able to supply everything that a customer needs every single time, in the grocery and general merchandise categories, maintaining high quality at reasonable prices and being at the customer’s doorstep at the promised time. Only a retail company would understand the different components of this value proposition – warehousing, supply chain, logistics, farmer tie-ups, buying and merchandising – and the part they play. Each in itself is a highly evolved domain where the playbook has been written. If you have not been part of writing this book or playing by this book, there is no way you can hope to learn as you play along. In addition, if this retail company is also able to appreciate the disruptive power of technology and the internet, and can build a high calibre tech team, then you have BB! Analysts have written about how Yahoo could never see itself as a media company and instead saw itself as a technology or ad-serving company which eventually resulted in it fading away, rather ingloriously, into the sunset. There is an element of chance here – which is that all this becomes evident post-facto. It would never have been easy for Yahoo to see itself as a media company because that was not its origin. For individuals, or companies, where you come from and who you are – your DNA essentially – matters a great deal. If your DNA fits in well with the current circumstances, you have a good chance of winning. It isn’t easy to change your DNA to suit a different set of circumstances. Therefore, I’ve always maintained that while what got you here won’t get you there has a lot of wisdom, there is also wisdom in the thought that if you forget what got you here, you may not get there! In 2016, circumstances favored the retail DNA of BB. What was great that BB understood this well and drove home this advantage.
• The cohesiveness of the founders: I don’t think it can get better than this. Most startups quickly reach a place where one or more founders cannot add value, are out of their depths with the rapidly-changing circumstances, have hit their leadership ceiling, or are plain tired to play. The BB founders just seem to get better with time. Each of them is truly awesome – Sudhakar is one of the sharpest minds I have ever come across. He is pretty anonymous outside of BB. No mediaperson is likely to know who he is. He’s never visible. (Do you recall what describes a Level 5 leader, as outlined by Jim Collins?) His signature is there across most BB processes. Hari Menon is the charismatic CEO who is a people’s person at heart and a true blue blood retailer professionally. Vipul Parekh is a frugal marketer and a master at fundraising. Abhinay brings in a sharp understanding of different aspects of the business, a sense of humor, and a youthful zest. Ramesh has been the sheet anchor and a steady hand. All of them are down to earth, have plenty of common sense, don’t stand on ceremony or fads, and have a lot of confidence in themselves. I was generally of the belief that it is important to have one of the founders acting as the head and shoulders above the rest, leading the way for the most part. Even Narayana Murthy of Infosys had once made this point in an interview. BB has proved to be an exception to this conventional wisdom. A team of high calibre individuals with complementary skills (but completely aligned on values and execution focus) can work. And, if it works, you can achieve the kind of amplification and resonance that no single leader can hope to create!
• Ability to assimilate talent from different cultures and backgrounds: BB is a bit like a forest, unlike some other companies that look like neat and well laid-out, but are artificially created plantations. The diversity in talent is amazing. Amongst those that steer the company, there are very articulate individuals with Ivy League backgrounds and there are those that can barely write or speak grammatically correct sentences in English. Substance and execution trump style and strategy every day. There are individuals that have worked for MNCs like Sun and HP on one hand, and those that have worked for out-and-out domestic retail companies on the other. And then, there are individuals who have never worked outside BB. There are people over 50 in the management team and there are individuals under 35. All of them work shoulder to shoulder respecting the others for what they bring to the table. Influence is derived from what you bring to the table in terms of real value. What has enabled thisis the culture of humility and entrepreneurship – respect for those that can clean up the mess and make things happen, and seeing through the ones that are good at just saying the right things.
• Businesses exist to make money: 2014 and 2015 were years of mindless cash burns and a collective loss of rational thinking. It reminds me of the heady days that led up to the subprime crisis. It is easy to be carried away by such a tidal wave. It needs some nerve to stand up to this and stick to reason. Good investing is always about character and not about financial savvy. Sticking to what you know is fundamentally correct in difficult times is also more about character and less about knowing what is right and what is wrong. Walk into any of the BB head offices in Bangalore and you will get a good sense of the frugal culture. Grocery retail is a low margin business and if you understand this, you would know what are good costs to incur and what are bad costs best avoided. However, it is always those costs that fall in the grey area that don’t stand out as either good or bad that test your understanding and confidence. The approach BB has taken to recruiting talent, the kind of teams it has built, the timing of key recruits, and the facilities it operates out of are a clear testimony to a well-run business.
• Betting on the right acquisition/s and making it/them work: BB started off as a full service business (large-basket size planned monthly purchases), but quickly noticed that some customers, and these were increasing by the day, had a sizeable amount of unplanned purchases that were unfulfilled or fulfilled partially with a lot of friction and pain. In 2015, BB acquired Delyver, a great company with similar values. More than the company, BB added three young and intrepid entrepreneurs (Afsal, Praful and Reebu – all IIM Lucknow alumni). Riding on the strength of BB processes, these three entrepreneurs helped build the express business of BB. There were many acquisition opportunities that came in the way of BB, but it was smart enough to realise that if an M&A had to succeed, there needed to be a strong value alignment and a real gap in the portfolio that could be filled rapidly through the acquisition. As a result, most such opportunities were passed until Delyver came along. A lot of the large and well-funded startups have often gone on a buying binge without a clear thought about the purpose or the value. Most such acquisitions have been a drag on the main business and an unnecessary diversion.
Doesn’t BB have any shortcomings? Of course it has – and several. Some of the stuff I have written about on how not to do things is also drawn from BB – and when I post one of these, Hari Menon would smile and tell me, “I know you are referring to BB”. The point I am making is that you do not have to be flawless to win in life. You just have to be good at some things and be really good at them. You need to have the confidence and faith in yourself and your strengths. You needn’t sweat over what you are not good at. When your day comes, and what you are good at is what the need of the hour is, you will win big. And if that day doesn’t come, you can be happy that you have pursued your passion. It’s a ‘heads I win, tails I win’ situation.