Being house of brands allows the affordability to invest more, says Mensa Brands’ founder

Thrasio-like Mensa Brands looks for ‘customer love’ in ‘quality founders’ they buy-out to partner for at least five years, and then think of scaling the brands to get bigger, Ananth Narayanan said at YourStory’s flagship event TechSparks 2021.
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At TechSparks 2021, India's most influential startup-tech conference from YourStory, we hosted Ananth Narayanan, founder of Bengaluru-based Mensa Brands, which acquired 10 brands only about a month ago.

“We will be announcing new brand partnerships very shortly. We have the next 10 (brands) coming up,” Ananth told Sindhu V Kashyaap, Associate Editor, YourStory, in a fireside chat themed ‘Building a House of Brands & Enabling D2C Brands to Go Global’.

The Thrasio-like startup, which was incorporated in April 2021, has been investing in digital-first brands operating in fashion, beauty and home segments, among other categories.

Mensa also claims that it would keep the founders of these brands onboard for about five years.

“We essentially become the third co-founder for the brand even though we acquire a majority stake in these firms,” said Ananth.

In his previous avatar, Ananth was the CEO of Medlife which was acquired by healthtech unicorns Pharmeasy. Prior to MedLife, Ananth was the CEO of the Flipkart-owned fashion e-commerce platform Myntra.

In terms of the investment targets, Mensa is majorly interested in brands which are profitable making between Rs 7 crore and Rs 70 crore in annual revenue. The house of brands, also looks for founding teams that have managed to grow the brand frugally, but kept the quality intact.

We want to see how hungry a founder is. If someone has managed to grow their brand while being bootstrapped, then that's another tick for us because it is very difficult to do so,” says Ananth.

Thrasio, and India

Thrasio is an American startup, which acquires third-party sellers on Amazon and promises to provide them economies of scale. Seeing the $3 billion valued American unicorn’s success in less than three years of being in business, India is currently seeing a flurry of Thrasio-like startups including Mensa, GlobalBees, and 10Club.

Sindhu V Kashyaap, Associate Editor, YourStory at a virtual fireside chat with Ananth Narayanan, founder of Bengaluru-based Mensa Brands during TechSparks 2021.

Thrasio has now reportedly set eyes on India, and is planning to launch soon seeing the accelerated online shopping due to pandemic-led lockdowns. To compete with its Indian counterparts and cash-rich Thrasio, Mensa Brands is reportedly in talks to raise funds at a $1 billion valuation, on a possible path of becoming the fastest unicorn in barely six months since incorporation.

Mensa is also operating in the fashion and apparel category, which many Thrasio-like startups seem to shy away from. “Home is another category we will be keenly investing in. Creating a global brand is more quality-led than by discounts. So, we have to focus a lot on the quality of the product and quality of customer reviews,” said Ananth.

Brand-building in the new era

The surge in digital brands started with demand coming from accelerated online shopping, evolved distribution channels such as e-commerce marketplaces and logistics getting democratised. “Brand building has become very different with content and data, and the way the two are consumed is very different. Today brand building happens very  differently from what it used to be earlier,” said Ananth. 

To build a house of brands, Mensa is trying to build synergies in the digital world by hiring the top tech talent, building quality products, growing on marketplace and own websites, and focusing digital marketing and branding. “We are trying to build brands for the next 50 years, which is very different from how brands have been built in the last 50 years,” said Ananth.

Referring to global FMCG leader Unilever as an ideal example of a house of brands, Ananth said that the reason they are a house of brands is because there are synergies.

Advantages of housing many brands

Mensa, which is also a house of brands instead of just being a single brand, is doing so by investing in technology. “There is an opportunity to leverage the whole bunch of learnings across the brands,” he added.

“By having multiple sectors you understand consumers better because you are looking at their multiple buying needs,” said Ananth.

Having multiple brands also brings economies of scale because more investment in talent, technology, marketing and product development can happen across brands. Doing this for a single brand can become an expensive affair. And, a house of brands can attract talent very differently- which in Ananth’s view is the name of the game.

Opportunities galore

In India, currently, there are less-than 25 brands across categories which are more $100 million-plus digital first brands, according to Ananth. Hence, there is a huge opportunity to build global brands from India both in fashion, beauty and soft-home furnishing. “Why can’t the next ‘Bed, Bath and Beyond’ come from India, '' he asked.

Ananth cited the case of premium saree brand Karagiri, which started exporting after being a part of Mensa’s portfolio.

While Ananth sees immense opportunities in apparels, what he is more kicked with is the fact that exports done through dot-coms was around $1 billion dollar last year, growing at 100 percent year-on-year.

“I think now is our time to build global brands from India,” he said. For Mensa, the next road of success will come by picking the right partners and making the right investments.

“With our brands, we are not doing turnarounds, we are doing accelerations,” said Ananth.

Also, online penetration in India, at 4-6 percent is a tad lower compared to 17-18 percent in other markets. So, unbranded to branded and offline to online are the two macro factors which will play a defining role.

Ananth counts personalisation - whether it's beauty or fashion; sustainability - because people are growing more conscious in terms of what they are consuming; and the content to commerce integration as the three important trends to watch out for.

How you consume the content and how it translates into commerce will become more and more seamless,” said Ananth. Ecommerce, historically, has been more transaction-driven. “They are now shifting from transaction to commerce,” he added.

The success factors

Execution on the acceleration is the next big success factor, in his view. How is that done in a tech-led manner is important. If you have a portfolio of 50 brands, you grow very linearly with an army of people. What you need to do is to do it with product and tech, said Ananth.

On the winners emerging from the Indian direct-to-consumer (D2C) arena, Ananth highlights that at a macro level, India is mostly an unbranded market. “So we could have 5X the current level of investments, and we would still be underinvested,” he said.

There is no winner takes all in this market, as multiple large profitable businesses can be built. There is no network effect here, said Ananth. As long as you have a great cluster of brands, with a focus area, and doing it well, that’s the key. “If you execute well there will be capital that follows,” Ananth advised.

Edited by Rajiv Bhuva

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