Discover more from The Founder Thesis Podcast | Learn from disruptive founders
Dreaming with resilience | Wakefit
This episode is a masterclass in optimising failure, narrated by the man whose value of failure stands at 2484 crores today!
A story of a remarkable turnaround, Ankit Garg prudently converted his failures into learnings to build a successful venture that is Wakefit.
An alumnus of IIT Roorkee, Ankit’s first inning as an entrepreneur fell flat when a big MNC acquired his customer base. However, Ankit was not one to give up.
By using his learnings coupled with careful experimentation, he created the D2C brand that is today competing against old-school furniture industry giants.
Wakefit is one of India’s premium home solutions & sleep companies, alleviating the problems of sleep deprivation with research-based innovations!
In my conversation with him, he shares some pretty amazing insights for building a resilient, customer-obsessed business!
Other Ways to Listen:
Read the text version of the episode below:-
[00:00:00] Ankit, founder @ Wakefit: Hey guys, this is Ankit from Wakefit, the Founder and CEO of this firm.
[00:00:03] Intro: Intro.
[00:00:12] If there is one thing you will learn from this episode, it is simply the value of failure. Failure hurts, but it is the bitter medicine of failure that leads to a healthy and sustainable business and Ankit Garg's experience of failing miserably in his first business is what led him to building Wakefit as one of the largest home furniture companies in India. Wakefit is on track to cross revenue of 1000 crore rupees and you may find it hard to believe that 99% of what they sell is manufactured in-house. This means that wake fit is really competing with an old school furniture company like Godrej rather than any online player. This conversation really is a masterclass in embracing failures and making the most of them and Ankit shares some amazing [00:01:00] insights into building a customer obsessed business that lasts. Here's Ankit talking about his first failed attempt at entrepreneurship.
[00:01:08] Ankit, founder @ Wakefit: So, I was living in a 2 BHK with my friend, we were in two individual rooms and one room, I converted that into leverage. I got some business ideas. I said C, which is as follows. I figured out a C to make it cheaper. Assume that something is sold for 17 rupees, then you're able to figure out that I will sell it for 60 with profit. That was the time I realized that everything is possible because I was doing a lot of diversifying investment and all that. So I figured out, yeah, this is possible and then I picked up tools, whatever I learned and I converted my room into a library. For the first six months I actually closed the doors, so I would've had a lock and key. I would not allow anybody to go in and I started doing some casting, metal casting, finishing, buffing, all of it. So I'll come back at six o'clock from my job and I'll go to that small industrial area where a lot of small work happens, lathe machines and all this. I'll come back late, dark in the night because all [00:02:00] grease and all will be over you. That's how it started.
[00:02:02] Akshay Datt, host: But what was the product you created?
[00:02:05] Ankit, founder @ Wakefit: It was again foam, but a cheaper foam. It was better in properties compared to a traditional foam, but at the same time cheaper than that foam.
[00:02:12] Akshay Datt, host: So why wasn't Bare already doing it, like a big MNC, big research department.
[00:02:16] Ankit, founder @ Wakefit: It was not bare. It was a customer. So basically, there was a cost between a fixed cost and a variable cost. If you invest a decent amount of money in fixed costs, you can reduce the cost. If you're comfortable with high variable cost, then also it's into the business. A lot of people prefer to choose a high variable cost business and low let's say CapEx business. What I did is that high CapEx, I designed a way to reduce that CapEX by one third. For example, if you were to invest 1 crore rupees, you can just get away by investing 20 lakh rupees. So, for those six months I created it that way. So I was able to convert that mould I created, I think it's an aluminium mould, it will be too technical, but and I created something, a dye.
[00:02:57] Akshay Datt, host: I want to get into the technical part, I'll ask you [00:03:00] questions because I am a layman, but so bear wasn't selling foam, right? So what was it selling?
[00:03:05] Ankit, founder @ Wakefit: Bear was selling chemicals, which was to make foam. So to make foam, we used two technologies. One is TDI based and one is MDI based. So people were making MDI bases.
[00:03:18] Akshay Datt, host: And what is the difference between TDI and MDI?
[00:03:21] Ankit, founder @ Wakefit: Both are different types of polymers like TDI is crude, I mean, very technical, different types of, you can say different types of petrols. One is having higher lead, one is having low lead, sort of a thing. But for one you need a really sophisticated car and for one you need an ordinary car. So, a lot of people chose to not invest a lot in the car, but to choose a traditional petrol to run that.
[00:03:41] Akshay Datt, host: The tradition is MDI.
[00:03:43] Ankit, founder @ Wakefit: No, the mould, the dye. So you have to cast. So for example, the shape of the foam is where on the chair you are setting, it'll be a chair, right? It'll have shape, 3d shape. For the 3d shape you need a dye to cast your product.
[00:03:55] Now there are two ways to do it, either using MDI or TDI. In MDI, you can get [00:04:00] a cheaper mould. In TDI you need a very high precision mould because it may have leakages, there is a lot of technical stuff to that also. So what I did is I created that highly sophisticated tool at a very cheaper price, about one-fifth of the price. So a typical metal mode will cost me, let's say 70,000 rupees for a specific size, I was able to create a replica in 10,000 rupees. So that's where I got into that. My investment is let's say double of those traditional modes, but my cost saving is about 20 percent than normal.
[00:04:31] Akshay Datt, host: How does this save cost? Like if you use this kind of mould, then the variable cost is low. How does it cut variable costs?
[00:04:39] Ankit, founder @ Wakefit: So it happens, TDI based foam has a high mechanical property compared to MDI based foam.
[00:04:45] Akshay Datt, host: What do you mean by higher mechanical property?
[00:04:47] Ankit, founder @ Wakefit: Like your hardness will be more, your foam resilience will be more, the life of the foam will be more. So now what you can do is let's say, for example, you're getting three mechanical properties, hardness and compression, right? [00:05:00] Compression basically into life.
[00:05:01] So at a 40% density of MDI based foam, you can get, let's say X, Y, Z properties. You can reduce the density of the foam to 32. Let's say by 20% you can reduce the density, you can still get the same properties. So what I did is I, with TDI, so I, what I did is, I reduced the density of that foam, I got the same mechanical properties and offered it to the market. And of course in the market, if I'm using 20% less input of raw material, of course I can sell it for 20% less in the market. So that was the technology.
[00:05:29] Akshay Datt, host: Okay. So what did you want to sell? You wanted to sell foam or you wanted to sell the technology?
[00:05:35] Ankit, founder @ Wakefit: No, I wanted to sell foam because I wanted to keep, the technology is not really, it's not the costly technology. It's a way of manufacturing the mould. So if I were to send it to anybody, anybody can copy. So I had to keep it, that's why I closed my room and did all of that stuff. I did not share, how did I make that mould? If I open it up, then people will copy, there's no trademark. I at least did not have access to trademarks and IP, that stuff. I knew it by the time I would apply somebody will [00:06:00] copy it.
[00:06:01] Akshay Datt, host: Okay. And today, is this common knowledge what you did back then? Or is it still a
[00:06:07] Ankit, founder @ Wakefit: No, it's common now. Now a lot of people, in fact, companies like Yamaha, Maruti and all of that, they also use a lot of it, right? So they all work in this TDI based technology.
[00:06:16] Akshay Datt, host: But when you did it, you were like the first person ever in the world?
[00:06:19] Ankit, founder @ Wakefit: In furniture, I was the first person to do it.
[00:06:22] Akshay Datt, host: Okay, but people were doing it for other uses.
[00:06:24] Ankit, founder @ Wakefit: For automotives, they were able to do it because they were able to afford high cost stuff.
[00:06:29] Akshay Datt, host: So, you saw that, how they were doing it in other sectors, and then you were able to bring it into this sector at a lower cost.
[00:06:36] Ankit, founder @ Wakefit: True. That was a disruption and that's why when I opened up my shop, I think, first month I was able to do a 10 lakh rupee sale, second one was 80 lakh, I was growing, I used to get calls from automotive guys. How are you doing? So, but then later on, this became competitive.
[00:06:52] Akshay Datt, host: Well, I want to understand. So foam is sold, it's not like a sheet, not just cotton or paper, but it is set [00:07:00] as per a ball. What do you mean you opened the shop? Were you selling standard products?
[00:07:07] Ankit, founder @ Wakefit: When I say opened the shop, I meant, I opened up my factory, my business and I started selling. So when I started selling, I got a lot of income because I was very cheap compared to the market. Of course, B2B people are looking at the same things at cheaper rates. I did that.
[00:07:21] Akshay Datt, host: One question here before, how did you get money to set up a factory?
[00:07:24] Ankit, founder @ Wakefit: Out of that six months of work at my home, I was able to show it to one guy in the industry. He was used to knowing the industry. I showed him that foam, that date itself, he gave me a 1 crore rupees check.
[00:07:35] Akshay Datt, host: He came on as an investor.
[00:07:37] Ankit, founder @ Wakefit: Yeah, he was an investor, that time we did not understand anything, right? So I gave him 70% of my equity .
[00:07:42] Akshay Datt, host: Oh shucks..!!
[00:07:47] Ankit, founder @ Wakefit: And on top of that I had to invest 20-25 lakhs, whatever, I saved. I invested and then I got 30% equity. [00:08:00]
[00:08:01] Akshay Datt, host: And because you knew sales, so you were able to get orders.
[00:08:04] Ankit, founder @ Wakefit: I think sales of chemicals are very different from sales of foam because the consumers are very different, right? When you're selling chemicals, you're talking to industries, very large industries. When you are selling foam, you're selling to, let's say a small chair manufacturer, a small bus seat manufacturer, a small bike seat manufacturer. So you get into very small shops and I think that's where the biggest problem came into my business. I did not realise that all of this unorganised industry is gonna ask you so much of credit that you can survive. So even beyond getting that significant cost reduction, they wanted to work on credit because the old cycle was set like that.
[00:08:41] So, which I did not anticipate at all. And secondly, the first time you became an entrepreneur, now you're going to a factory and used to work in a very setup culture of MNC. The moment I walked into my factory, I was one guy and they were just, I can't talk to [00:09:00] anybody. I can't eat my lunch with anybody and if there goes some, because factories go through multiple failures. It goes through some challenges in the beginning whenever you start up. Now, imagine you are doing it for the first time doing it and something fails, your heart breaks like crazy. So I could not control my emotions at that point of time. So I felt very, very lonely, I felt very odd, like for example, I could not eat my lunch in my factory because I felt I couldn't be here anymore. Something fails and you're so stressed up. You can't fit that and eat lunch, right? So for about six months, not six months, actually for about three months, I kept on taking my car out for lunch and parking it somewhere under the tree, opening up the gates. I don't know why I felt like getting an open area is quite important. I opened up the gates, they used to be hot somewhere. I'll eat my lunch very calmly and easily and come back to the site.
[00:09:52] Akshay Datt, host: Where was this? Where did you set up your factory?
[00:09:54] Ankit, founder @ Wakefit: This was Greater Noida.
[00:09:57] Akshay Datt, host: I used to live in Greater Noida.
[00:09:59] Ankit, founder @ Wakefit: Oh, nice. [00:10:00]
[00:10:00] Akshay Datt, host: Yeah. I used to live in the sector PI.
[00:10:04] Ankit, founder @ Wakefit: No, this was an Ecotech near Yamaha. So that's where I used to do a lot of stuff, but I think that for an entrepreneur, let's say something is getting broken and there's nobody to actually support you.
[00:10:16] Akshay Datt, host: What was the problem that got you so down.
[00:10:19] Ankit, founder @ Wakefit: Yeah. So we got dye made, the dye I used to make, I got it made from some local manufacturer and then I was making foam by putting the chemical inside. The foam was not coming in exactly the right shape and there'll be pockets of holes, or there'll be some, let's say cavity formed inside that foam, which can't be used directly. So I used to have 20% rejection. So making a hundred seats, 20% will be rejected.
[00:10:44] Akshay Datt, host: So, was die manufacturing the problem?
[00:10:46] Ankit, founder @ Wakefit: Later on when I decided to sell it off, that guy came to buy my factory, did some goof somewhere, but then later on I realised that there has to be a minimum moment of pressure, which a dye gives a seat and he had kept certain hollow cavities to [00:11:00] reduce his cons, which ended up compromising on the quality of the product which was coming out which I did not realised, I didn't understood anything for a month. I kept on doing a lot of experiments and stuff. But every day was a broken day. Every day was a stressful day. I think that first time entrepreneurship at that age, I think was really, I took, I was very amateur.
[00:11:21] Akshay Datt, host: How old were you, at that time?
[00:11:24] Ankit, founder @ Wakefit: 24. I think 23 or 24.
[00:11:27] Akshay Datt, host: So essentially you were in losses because 20% of your output was defective.
[00:11:32] Ankit, founder @ Wakefit: Yeah. And I was not able to control those losses. That was the biggest pain and then when I'll get sales, because price was nice and all that, but every month I'm losing sales, I'm losing and then you realise you need a lot of credit. And then you realise that the industry is very small. Like when the industry is very small, you feel like what will I do beyond a point? For example, if I found some innovative thing, I launched it, I sold it in the market. Now, what do I do? I can use it to use my abilities or [00:12:00] whatever innovation that I did to do something even better than what I'm doing. But we will be stuck with that. So I realised B2B business is also driven by businesses, not by entrepreneurs. What I can do is nothing beyond just giving that product to him at a better price, right? So beyond a point, I felt like it's a very sad story. And then I was very emotional at that point of time, I was not able to control that factory. And then all of this put together, I decided yeah, to just let go. And within six months of opening it up, we closed.
[00:12:26] Akshay Datt, host: You sold it to the guy who made the dye for you?
[00:12:28] Ankit, founder @ Wakefit: No, we did not sell it to him. We found another buyer. So the other guy was able to connect it. So I had sold the technology, I sold the machine, I sold the dye also and I sold my customers also to him. So in fact, I recovered almost all of my money because I sold my customers also between 20 lakh rupees monthly business.
[00:12:44] Akshay Datt, host: Yeah. He got a running business.
[00:12:46] Ankit, founder @ Wakefit: He got a running business, he got an existing setup and everything and I sold my machine to someone else I knew in the industry, somehow in 2-3 years I could manage to get out of this, but I lost some and then all over. What about 15-20 lakhs that I invested?
[00:12:58] Then I started looking for a [00:13:00] job and then I had to do something in my life. So I think that was the lowest point in my life. I don't think anything will go through that point in time. And I feel good that, at least I was so early 23, 24, 25 that I had to go through, otherwise at this point enough I had to go through that phase. It'll be scary. I went into depression.
[00:13:20] Akshay Datt, host: Obviously. I mean, you lost every penny you had in a way that is 15-20 lakhs is massive.
[00:13:25] Ankit, founder @ Wakefit: Yeah. Dreams are gone, your trust, your friends started laughing at you whenever I'll go for, let's say some snacks, something with them, they'll laugh at you and they'll make jokes.
[00:13:40] So all kinds, very demotivated me. And then I started getting restless. We will wake up at two o'clock, four o'clock go for a walk for 2-3 hours, I'll not realise that I'm walking for 2-3 hours. I'll come back home and food is lying in front of me. By anyway, that point I started living with my parents.[00:14:00]
[00:14:00] So they knew it I'm going through certain problems. The food would be lying in front of me. I will not have it for two hours. And I will not realise I'm just sitting on the table and thinking something. My mama is also looking at me and she also knows that he's going through difficult times.
[00:14:13] She will also not cry otherwise. So those two, three months were really scary. And I think somehow around three months I came out of that phase, but I realised that my parents are now getting to that phase. Like I started realising that if I'm waking at four o'clock, they're actually getting up at three o' clock because they are aware that I am awake and I'll go for a walk. Even I got to know that some of the times my father used to follow me when I was going out for walks because they were afraid that where am I going? and how far I am going?
[00:14:47] Then I realised they are going through an even worse time than I am going through. Then I took up a job, which was paying me 6 lakh rupees a year and that was some pasta filled there. I left at 14.[00:15:00] So I realised I was a chemical guy, so nobody, there are not many chemical companies out there. There were very few. So you don't really get a job as fast as any other guy will get. That to get a salesman, not an engineer, right? So sales chemicals is a very long term contractual work instead of on-spot selling. This time I took an offer of six lakhs and I went to Mumbai. I started selling pastas like, no, no, no, no. My work was to do the sampling of pasta in malls. So I'll go to the malls, set up a stall along with the guy and I'll do sampling in that mall. I'll go and replenish inventory in malls, travel by bus and all, I think I went through another miserable life story. And unfortunately they were also a starter. Unfortunately they did not pay me for two months also. So it was even worse, but at least I was out, one of my friends was there in Mumbai, I think they made me stay in their place. They gave me food, whatever they somehow took care of me. And then they, this company transferred me to Bangalore and then I got into Bangalore.
[00:15:59] Akshay Datt, host: Which company was [00:16:00] this?
[00:16:00] Ankit, founder @ Wakefit: I'm sorry. I'll not be able to take the name, but in Bangalore I got this, another friend came in, he was studying in, IIM Bangalore. He took care of me for almost two months. So somehow four months I survived without getting paid and still getting back to life. By that time I already started Wakefit. So when I got my first job, I happened to meet somebody who was doing an online sale of mattresses and
[00:16:22] Akshay Datt, host: First job you mean Bare or the pasta company.
[00:16:24] Ankit, founder @ Wakefit: I mean, this is my second job, sorry. After my first field started, I got my new job. Yeah. After the pasta, this company paid me 12-14 lakhs.
[00:16:32] Akshay Datt, host: Okay. So after pasta, you left that company and you joined like a proper job.
[00:16:36] Ankit, founder @ Wakefit: Proper job. But I'm saying by the time, because I was going through such a bad phase of my life, I used to keep on meeting entrepreneurs and asking them what to do? And there was one really nice guy, he belongs to that industry and he showed me how, what he does? And that's where I picked up how to do online business? And he was selling mattresses, infact online. It was the turning point in my life. Then I started doing my research and he used to sell 10 mattresses a day, 60,000 rupees. I was [00:17:00] like, yeah, boss, what are you doing? In fact he was making 3-4 lakhs everyday. That is the profit he is making. I'm like a boss. That is 3-4 lakh rupees of profit every day. I was really surprised that this is also possible and I'm going through such a miserable life, there's just so much work and this guy smartly has put up a small share in doing a business and surviving. By the way, he was at 57, 58 and that was his fourth business. Every business had been doing successfully. So he actually, every evening I'll go to him and ask can I do it this way or that way.
[00:17:36] Akshay Datt, host: While you were doing that job. That job was again, a sales job, like chemical sales.
[00:17:40] Ankit, founder @ Wakefit: No, that was a different job. This is not a sales job but I think this guy came in and he showed me how he does the business? He said, you can also do something very similar. You can figure out what you would've said. And then I started doing it myself, then I figured out the problem. But by the time I got this job in this new company, this company was a startup. I can name it. It was called Akosha, [00:18:00] Helpchat and so they changed three names over a period of time. And that was the first point in my life where I learned eCommerce. By that time, I was a user of eCommerce, I would buy something from Flipkart, Amazon, but it was so I did not appreciate eCommerce at all by that time but then when you walked into that eCommerce startup, I think they were building an app, it was called a super app where you can do e-commerce shopping, grocery shopping, movie booking and stuff like that. They were doing a lot of stuff.
[00:18:26] Akshay Datt, host: Like before they went B2B. I think they eventually went B2B, but they started as B2C.
[00:18:32] Ankit, founder @ Wakefit: They started as B2B, they also progressed into B2C. B2B is still running by the way. And then that company, I got an opportunity to get into an excellence role where they taught me something new was coming up like they were starting some chatting system. They were to hire 500 people. So I had to build processes, get along with people to kindly chat with people and understand something. Then I was transformed into a category manager where you have to take care of a little bit of the demand also, [00:19:00] the problems of a customer, the journey of that category. So I learned a lot but that was like a 180 degree flip of what I did because I came from Roorkee, it is really far from Mumbai and Delhi. Our founders, our seniors were also a lot of IAS officers, IPS officers. So you happen to kind of aspire to become an IAS and IPS, but here, if you go to Mumbai and all you see everybody's doing a startup, right? So by then, I did not, I had no clue of starting up.
[00:19:24] Akshay Datt, host: Had you started Wakefit officially, like launching a website and all.
[00:19:28] Ankit, founder @ Wakefit: Yeah, it was all live. But again, I had to this time. I did not take this, again it came from a learning that you can't, unless you built a little bit of business so that you can survive financially, it doesn't make sense to leave jobs. So I kept on somehow, you paying off all the people in the factory. And I kept on paying from whatever I used to earn from this company.
[00:19:47] Akshay Datt, host: How did you like to get it off the ground? So you learned how mattresses are made? And I think because of your background in foam, it should have been relatively easy for you to learn how mattresses are made and then you [00:20:00] saw this guy selling mattresses online at a very high premium. So talk to me about how that led you to launch Wakefit? And what did you launch?
[00:20:09] Ankit, founder @ Wakefit: Yeah. I was talking about this see, I was helpless at that point in time and I had to do some business. So I learned from this there, how to do this? I started doing market research and figured out that there are problems within the market. People are offering really off prices, like really bad prices for the mattresses that people did, all the branded companies that you name in the market, you would figure out, you know what, for example, if your cost of raw material, let's say 20 rupees, sells at 20 rupees.
[00:20:32] Akshay Datt, host: Online market or even offline.
[00:20:34] Ankit, founder @ Wakefit: Offline market. So mattresses were traditionally sold off, right? I think I was the first guy in India, or let's say second guy in India who started selling it online. Like, for example, a retailer, typically places it at 35-40 rupees margins, then there's a stockage then there's like, a lot of people in the vantage chain were just getting, being fed for almost zero value edition, if I can call it. So I realised that there's no way that, you know, people can actually sell the mattresses without having a retail shop. And then sell it at a cheaper price and then [00:21:00] of course online was booming, Amazon is just taking a cut of 10% at that point of time selling mattresses. I said, what better than that?
[00:21:05] From day 1, I was able to manufacture almost at the same place where these were manufacturing, or let's say a little I had built on the fine foam and fabric. They were backward integrated, they were making their own foam. So I was, let's say manufacturing at 10% higher price, but because my cost of selling was only 10%, but their cost of selling was, let's say 15%.
[00:21:24] So I was able to discount my mattresses by 30 each. So I started, I lost all five, six types of mattresses which are available, like coir mattress, spring mattress. I just launched it because I thought it's an easy price disruption game where you can just be very lean and just offer the same product which is available in the market at a 20% cheaper price. And that clicked.
[00:21:44] Akshay Datt, host: You sold through Amazon, that was the strategy.
[00:21:47] Ankit, founder @ Wakefit: Yeah. Amazon was the platform to go ahead and trial, zero cost. I was the one who was selling, accounting, financing, buying, everything I was doing. You literally have to do catalogue management on Amazon, everything else was taken care of by Amazon. [00:22:00] So we have to do that and then first month was of course, very bad like we sold like seven mattresses in one month, but then it was also,
[00:22:09] Akshay Datt, host: But seven is not bad, totally a new brand, you haven't done any advertisements.
[00:22:15] Ankit, founder @ Wakefit: I did not do anything. And I was surprised to see that my first few buyers were actually, 50% of them were foreigners. So those who had already tasted Amazon, for example, my first mattress, I still remember there was a couple who was staying in Jaipur and they were from Germany and they came to Jaipur and they wanted to buy something latex for natural products. So they bought my product from Amazon. So they were early believers of Amazon and they thought no mattress can be bought online.
[00:22:41] Akshay Datt, host: Plus, you must have done a better job at listing that than other traditional companies.
[00:22:45] Ankit, founder @ Wakefit: No, actually I was really bad at that point in time when I launched. So this was before joining Akoksha, I was in, we used to do something in my life. So I just launched. So in fact, my first mattress photograph was very different from the actual mattress because when I picked up the photograph [00:23:00] from google, I picked a random photograph from Google and I said, this is my mattress. And I sold something else altogether, like inside everything was okay. But the color, finishing was very different.
[00:23:10] Intro: If you like to hear stories of founders, then we have tons of great stories from entrepreneurs who have built billion dollar businesses, just search for the Founder Thesis podcast on any audio streaming app, like Spotify, Gaana, Apple podcasts and subscribe to the show.
[00:23:34] Ankit, founder @ Wakefit: But that's the best part of being an entrepreneur, right?
[00:23:36] You get driven by things which you don't understand and I think that's the blessing in this case because if you understand a lot of stuff Then you really can't do anything because you'll get complex. You'll feel the problem like today, for example, if I have to open up a new company altogether, because of so much of knowledge that I've gained in the last six, seven years, I feel it'll be very difficult for, taking decision would be problem, [00:24:00] but that point I just wanted to make mattresses and sell it. It was that simple. So I think that is how it started. It started because tomorrow I have to pay my bills. So I have to just launch all the products which are possible at 30% cheaper price than these days. And then I sold seven mattresses in the first month.
[00:24:20] Akshay Datt, host: How were you manufacturing, that is the assembling?
[00:24:23] Ankit, founder @ Wakefit: This was all ready, yeah, because I come from this industry, I knew a lot of people who are manufacturing mattresses. So I happened to visit the factory. They were looking at me and they said that he is a young guy, help him. So they were very supportive, they were like, how much you want, you come and pick up the mattress, we will support you. So and in 3, 4, 6 months, it came to a point I started selling let's say two, three mattresses every day, within let's say, six months of time, I was able to sell two to three mattresses every day. And then if you were to calculate, I started making thousand rupees per mattress, that was a good amount of money. You make three thousands per day and then, somehow I get that confidence I'm done for the industry. [00:25:00] But in Akoksha, you were learning at a very high speed. You were learning about how to talk to customers because this was the first time in my life, right? So you can imagine how a first timer would behave on an online site where you're thinking, how to put this on Facebook? How much is the budget? How to target? Google has this and that.
[00:25:17] Akshay Datt, host: What was Akoksha's B2C business?
[00:25:20] Ankit, founder @ Wakefit: So they were selling, let's say movie tickets, they were selling the recharges. So, I was heading to the recharge category. So we used to do some 9,000 charges every day. So then you have to figure out how you get the transaction done? How do you load the wallet with money? How do you integrate with those supplies? How do you do credit? You learn a lot of online stuff and then the customers are not, failing to recharge, then we have to talk to customers. Then you talk to the product guy also, then you give the feedback about the problem. So you get into all of that learning of how to build a digital product and sell it to a customer, right?
[00:25:52] So that learning was amazing. So I couldn't leave that company. I didn't think I had enough money to get off the job and start again, because you [00:26:00] should at least build some model. So two, three lessons were there, which I learned during that period. One is, you should start, there's a saying in the market that you should fully get rid of whatever you're doing and do hundred percent in the business.
[00:26:11] Akshay Datt, host: Don't have your feet in two boats.
[00:26:12] Ankit, founder @ Wakefit: No, not two boats, I think not two boats, but I think it is better to be financially sound. Then financially stressed and then underperforming in what you're doing. So it's always better to be financially sound and then only take care of your business or the new idea. Otherwise, if you don't appreciate that it'll hurt you someday and the second part I felt is connecting with customers and really learning from them. So what is working, what is not working is absolutely critical. So what I learned at Akoksha, I used to call, let's say 30, 40, 50, customers every day. I will hear from them. This recharge is not working for me or the Paytm offer, I'm not getting that. So you somehow figure out those gaps, later you'll know how to talk to them in person and figure out why they're not buying stuff from. So those learnings came in and I think get very grounded and connect to customers. I think [00:27:00] they're the best people to talk to tell you what to do in life, other than anybody else. So I think I took that, again, after that 12 months of time, if I remember correctly I saved close to 8 lakhs and I invested 3 lakhs from that business and opened up a small factory. This time I started the factory and then at that point of time I met my co-founder.
[00:27:21] Akshay Datt, host: You started the factory with 11-12 lakhs?
[00:27:25] Ankit, founder @ Wakefit: With 3 lakhs. I'll tell you what I did. I did a lot of stuff. For example, if today I buy a machine at 5 lakh rupees, that time I did some mechanism, I constructed a machine for 12,000 rupees. Somehow the basic whatever tools that you require, I started doing that. Today, I have a machine which is a crore rupee which does an automatic laying of glue on mattresses. That point in time I bought a 30,000 rupees compressor plus gun, I used to manually spray? So you do all, you figure out all those when you don't have money, right? So I ended up doing that, somehow I started with this. That was in Bangalore but I think this time I was very determined [00:28:00] because I realised in those 12 months of working that it's very critical to control the quality because my other supplier, when I was selling 10-20 mattresses every day, the supplier, which was a good friend that started minting money by either giving me a poor quality product or let's say compromising on timeline or let's say not really listening to the companies that I'm giving. So then I realised, it's better to start some small bit of, I think that's how we could start. Then I have to meet my co-founder, who was the head of customer care. He was taking care of those chatting agents.
[00:28:31] Akshay Datt, host: In Akoksha?
[00:28:32] Ankit, founder @ Wakefit: In Akoksha. So we spent about two months together, maybe and then we became good friends. We started talking, he also failed out and that's how it started. And then he became my Angel investor actually, when I fully left the job at Akoksha and that point of time he was working another startup, he also left Akoksha and he started working on another startup and he possibly had a digital firm, which can do, let's say website building for you and can also do a little bit of Google marketing. [00:29:00] So he had some four, five member team and he was kind enough to extend that against equity but he supported me well on doing the development of the website and doing some initial content writing.
[00:29:11] This is how we started it.
[00:29:14] Akshay Datt, host: When you started the factory, how much you were selling on Amazon.
[00:29:18] Ankit, founder @ Wakefit: We were selling 10-11 mattresses everyday, I think it was, it used to fluctuate between three, four and it'll go up to 14, actually. Used to fluctuate a lot.
[00:29:29] Akshay Datt, host: Average like 200-300 in a month.
[00:29:32] Ankit, founder @ Wakefit: Yeah. 200, 300. Yeah. There'll be time when the labour is waiting for you, to take orders. That is how we will manage the factory at that point of time, but it was very exciting. I think again because of whatever learning that I had passed, because of that failed startup, then again, e-commerce learning and all that connected customers, having a decent amount of money always in the bank. I think this time I was very strong and that part of time I got married also. So [00:30:00] my wife supported me very well, she took care of all the expenses. I was not able to drive the salary from that venture but she was able to take care of the home. I think she managed over almost nine months financially independent, then I started making money. I started paying a salary from the factory. I think then, it went so smoothly. So this also leads to me learning that having mentors in life, having the right set of people around you, those are constantly guiding you because what you have not seen, what you're not seeing, like really don't know what you've not seen, right? I think it becomes very critical that people around you are mature enough to handle you at that. People around you should be, let's say, well connected or understand the ecosystem around you, so that they can guide you in the right manner. I think a lot of learning came during that period.
[00:30:43] Akshay Datt, host: So which month and year was it when you quit Akoksha?
[00:30:46] Ankit, founder @ Wakefit: When I quit Akoksha, I was talking to some foam and so for example, if I have to talk about a product. I think there was one gentleman, so this guy used to teach me every time, whenever I had a problem of how to bring the right [00:31:00] product? So he would always put the customer first. I think he imbibed that customer first approach in me and when it comes to planning product you don't think how the mattress would look or how you want the people who perceive the mattress look like, but I think the best part is to put the indigence is that when they sleep and close their eyes, they should feel they're sleeping. That product led approach, I think I learned from him. Every time I would want to commit some mistake, you'd come back and tell me, Hey, you're doing the right thing. I used to talk, in fact, I also became fan of reading at that point time most of my mentors I would say, would come from those books I read about, I think that seems to give me a lot of inspiration on how to think, how to strategically build teams, how teams are important, where at what point you should pay fund, how aggressive goals should pay for yourself, how you mature yourself when you are in a company of your own.
[00:31:53] So I think a lot of mentorship came from, or I would not say mentorship, I would say inspiration came from [00:32:00] those groups with all those fundamentals on which everybody has built. So for example, one of the fundamentals that Wakefit has picked up is I know we always event from it because we see that ultimately every business which will come in the market will come because it'll create inefficiencies in the market, right? Some or the other form of inefficiencies will get built. So I think that is what I picked up from Amazon, Walmart. So all these basic fundamentals on how you build the business came from his books, basic customer, I think somehow this was inherited in me about this customer operation, when to get the hint from customer to do what in a business. I think that was I'd know, how I picked it up, but maybe from Akoksha, I picked up this very strongly, so I was the first if I can recall because I started 2014, where I had put up a team of people who were there to call customers to collect feedback after delivery. I think at that point of time, I used to be very proud when I talk to the media and they say, have you [00:33:00] ever seen a company who delivered a property and they called you after let's say one month to ask you, Hey, how do you feel? And everybody was unanimously saying, no, we have never got a call, but we were the first one because of customer obsession, the product has to be right, people have to feel the value of the property. Otherwise the word of mouth will not happen, I'll go and travel and meet customers in person, for example, many of the YouTube videos, almost 12 of the YouTube videos, which have a million views now on YouTube, were all short by me directly. I went in at seven o'clock in the morning, took my camera, did the recording, had an open conversation with the customer, recorded and put it on YouTube, and learned what people think about Wakefit. So I think all of that customer obsession came in inherited IP and the inspiration came from the book and of course that does not goof off with the product. Mentorship came from that guy who taught me that you don't ever, ever compromise on a product.
[00:33:51] Akshay Datt, host: One year into this, like one year into being full time, you were earning enough to take out a salary. So what kind of revenue were you doing? How many [00:34:00] mattresses were you selling?
[00:34:00] Ankit, founder @ Wakefit: Yeah, so the first year we did the revenue of, after let's say quitting the job the first year revenue was close to 2.1 crores.
[00:34:10] Akshay Datt, host: This is like 2015.
[00:34:12] Ankit, founder @ Wakefit: Yeah, I think 2015, we did 2.1 crores. Then we did 7.1, we did triple and then we did 21, again triple and then we did 81, again triple and then we did 200, again almost triple. For almost four, five years we kept on doing 3X and we'll be surprised to know this, that every year was profitable.
[00:34:33] We were paying income tax almost, we were generating 10% profit after that. So, for the first four or five years, we were highly profitable, high growth and people were loving us. We had a 4.8 star rate for our product on Amazon because of this extreme obsession about building the right product to be at, almost every customer praises for the work that.
[00:34:55] Akshay Datt, host: So when you were doing two hundred crores, that was which year? Like 2019, I [00:35:00] guess?
[00:35:01] Ankit, founder @ Wakefit: Yeah. Yes. 2019.
[00:35:02] Akshay Datt, host: Okay. And the product range, tell me about the product range. How did it evolve? Like from 2015 to 2019?
[00:35:09] Ankit, founder @ Wakefit: Yeah, we started with mattresses then we, what we realised after talking to a lot of customers is that people were really not in for range of mattresses. So what we did is we cut down the couple of products that we were selling. We actually went down from six products to two products. So we realised that people looking for comfort, not for looks but actually they were really worried about if I sleep on it better, I'll get good dreams. So this kept on helping us trim down the extra fat that we had created in terms of the number of products you are offering, but then when we talked to those customers there were inbound queries. Why don't you guys sell bed sheets, pillows? So initially a lot of people will come to my small factory. They'll talk to me and say, we want that, why don't you sell it? We want bedsheets. All of the first time customers would appreciate it and they'll give you enough feedback so that you have enough thoughts [00:36:00] to work. So we kept on listening to them very closely and every time we used to hear that there is something unanimously coming on, hey, why don't you sell pillows along with a mattress? So we started developing pillows. Then of course, it went on a journey of getting better and better. Then we launched protectors, bedsheets, comforters and then we realised we want to become a complete sleep solutions company which meant anything around sleep is what we would like to do. And then that's the time I think we closed 200 crores.
[00:36:30] Akshay Datt, host: So by the time you closed 200, you had this whole range like below bed sheet comforter.
[00:36:35] Ankit, founder @ Wakefit: And then from there we started the thinking that the mattress or the sleep solutions market might not be foppish, that it will help us continue to go and create every year. And that's why we made up another category which was in 2020 and that's where we decided to get into other products of mattresses, which is bed, wardrobe and stuff like that. And then in 2021, [00:37:00] we declared in our company that we are going to be a complete furniture company, which means we are gonna sell you everything, which comes under furniture. I think we have been progressing with that concept for almost 18 months. And then, recently we have built it as if, or let's say extended us to columns and foam solutions company, which means that we are now, say, anything inside the wall you come to us we'll have a cloth. We've now been extended to curtains, to path mats, to door mats, to racks, to decors, to lighting. We've gone very deep into the number of products, often that we believe that the vision has now become most loved furniture company, most loved means like we should be and the mission to carry out that would be to really be able to fulfil needs of customer in terms of personalised furniture at extremely affordable price. So the original fundamentals of the company is staying on being very soother on the product design development that you are doing from a customer first [00:38:00] point.
[00:38:00] So if you were to compare our financial costs, almost 50% of the traditional furniture shops that you'll see, 50% of the price that we give, but we'll give you either the same or a better quality than them. So this all comes because of the backward indication. In fact, today I'm sitting in a factory where we have invested 250 crores. So we are putting together a really large setup. I think it's going to be India's largest furniture factory in terms of manufacturing scale. And because of this factory, we believe that we can truly reach the new milestone of making organ cloth, which is going to be the biggest furniture company in India from a D2C perspective. I think that's our ambition today but lot more to come in the next two years. Generally what we do Akshay is, we prepare for what is to work after two years today?
[00:38:48] So we start getting into an experiment today. Because we believe, if we experiment today, we'll fail this year, next year we'll learn and we'll do a little better. And then next year after that we should get to disrupt. So I think we are [00:39:00] already at writing something which is gonna work for, let's say, two years from now, but we are today, trading on furniture that we had put up a full bet on.
[00:39:07] Akshay Datt, host: So everything is manufactured in-house, like bedsheets or curtains or even sofas and all.
[00:39:14] Ankit, founder @ Wakefit: Yeah, we manufacture sofas, dining tables, beds, everything. So almost 98 or 98.5 percent of our overall sale is the product which we are manufacturing. So we do a little bit of trading to understand the market, how the market works? We do trading for a small amount, and then eventually we get into backward integration. So for example, we have got into trading of lights as of now, lights means decor lights. And now we are learning the behaviour of a customer. What do they like? What do they hate?
[00:39:42] Akshay Datt, host: Okay. So you did 200 crore in 2019. What are you going to end this year at? What is your estimation?
[00:39:48] Ankit, founder @ Wakefit: This year. I think we are going to stop at close to 650 crores.
[00:39:53] Akshay Datt, host: Okay. Amazing. So you're not too far from thousand crore, maybe a year away.
[00:39:58] Ankit, founder @ Wakefit: Yeah. So next year we're targeting close to 1100 [00:40:00] crores.
[00:40:01] Akshay Datt, host: Wow. And, and so you said this is the largest buy turnover, you are including like a pepperfry, kind of a company in that or they are just a market.
[00:40:12] Ankit, founder @ Wakefit: No, we are including that also. Actual invoice, remind you that we are talking about. I think the biggest company in this space.
[00:40:18] Akshay Datt, host: Which is the biggest company in this, is it pepperfry?
[00:40:21] Ankit, founder @ Wakefit: Godrej.
[00:40:23] Akshay Datt, host: Godrej, okay.
[00:40:24] Ankit, founder @ Wakefit: Yeah, Godrej is the biggest company, then comes other companies. But I think we tend to pass them this year.
[00:40:31] Akshay Datt, host: Wow. You'll be bigger than Godrej this year. Okay. Amazing. Why are you qualifying it from a D2C perspective? What else is there?
[00:40:42] Ankit, founder @ Wakefit: No, they do a lot of office business.
[00:40:45] Akshay Datt, host: Okay. So, in home interiors you will be the biggest company. Why home solutions and not home interiors? So home interiors are something we are looking at from now.
[00:40:56] What is the difference between home solutions and home interiors? For [00:41:00] me both seem to be the same.
[00:41:01] So home interior is basically when you do your kitchen and wardrobes and tv unit, where you call a carpenter and you give him a plywood and he does a lot of manufacturing, that's called home interior business in India. Home solution seems to be that, you want curtains, you want lighting, you want sofa, bed.
[00:41:17] Okay. Got it. So you're saying, you'll get into this home interior market, like making modular furniture and stuff like that.
[00:41:26] Ankit, founder @ Wakefit: So our research and studies and experiment has already started and once we get the pulse of the market we'll start an experiment, then we pick it up and we learn. So we know that we are gonna fail it for first attempt. So we make sure that for the first year we should behave like an entrepreneur who knows nothing on how to disrupt the market? That's why there's a two year period of any industry that we pick up.
[00:41:45] Akshay Datt, host: You know, so far everything that you're doing is easy logistics but modular furniture and all will have complicated logistics now. It's generally made to measure and all installation, the consumer will not install it himself, so [00:42:00] logistics will become quite complicated with that.
[00:42:03] Ankit, founder @ Wakefit: Yeah. So Akshay, if you would notice what you've done and again this is coming from an inspiration from, I think the guys who Walmart set it, only the hardest thing is something that nobody will pick up. So almost everybody will come to the business, let's say, another year from now, everybody will try to do whatever easy work, we felt that trading is the easiest work. So everyone I'll become a brand I'm sure it's not easy, but people will think that we put money into and make TV mats and then we become a brand. So I think we, Wakefit, since we have gone through all of the fundamentals, we very strongly feel that we have to choose only the problem, which is the hardest. So home interior, we figured out, one of the basic tools is that this is a very hard problem to solve because you have to go and customise in the time without fault and satisfying a person for almost 30-45 days of time. Somebody has to [00:43:00] go through that phase of building the interior for the home. So there are a lot of expectations, there are a lot of improvements to be made, stuff like that, but we realise that it's a very difficult work to control and you can start off into one or two projects. If you have to do, let's say, a thousand projects a month, really have to build a cycle and engine and take. So that's why we are very inspired. Then this is something that, you know what, this is what we are built for. This is what we love. In fact, you'll be surprised to know I'm not sure whether you are surprised or not, but almost all the category managers that we have process excellence, that we have. All of us sit in a factory, all of these guys are IITs and IIMs and all other excellent universities in the world. All of these guys come sitting just next to me, they'll operate out of the factory. They'll be sweating day and night. And I think they have also understood this art, the thing that, if you go and start taking interviews of people from industry, you want to hire people for this job. And when you talk to them, you figure out that most of the people have not gone through that hard journey of really going through the factory, [00:44:00] understanding the raw materials, building the product by yourself, doing testing, going to customers out and taking the feedback.
[00:44:05] So we hire people who are almost fresher from the college from already good colleges. And we put them through one, one of your hardcore training where they go through it. If you talk to our guys, they'll talk like a CEO, they'll talk like me because they've learned everything almost from the fundamental understanding of the market, building the p&l. I think they are super rich in terms of knowledge. So I think this is what led me to aspire to work. We believe that true talent comes from doing the real hardwork and doing it by yourself.
[00:44:35] Akshay Datt, host: So that would put you in competition with say live space, which I believe is about to be a unicorn. They are also into that space only and there are others also, I think there's a design cafe and couple of others which are doing that.
[00:44:48] Ankit, founder @ Wakefit: The idea here is that literally we would give you everything which is inside a great quality product at an extremely affordable price. Like most of our customers, if you really ask them. So for example, [00:45:00] we call hundred customers who don't buy from us, they'll put products in the cart and they'll not buy, and then we'll call them to figure out why they did not buy? Almost 30 percent of the customers say, we are very confused. How are these products cheap?
[00:45:14] So we go through a very different problem: we have to convince customers that not all good products are costly, right? We're going against the wind and saying, Hey, we are building back. We've built logistics which is very efficient. We're doing a lot of innovation in terms of packaging, disperse, and power.
[00:45:28] Like all the brains of the cream from the world is actually working on building the operations part of the company. So it seems very different.
[00:45:36] Akshay Datt, host: What are those innovations you're doing in operations, in driving efficiencies? Like how are you driving efficiencies in logistics and warehousing?
[00:45:43] Ankit, founder @ Wakefit: We are a true fan of Toyota when it comes to manufacturing, we are the first one in India, all planning, lean concept manufacturing. So when I say lean manufacturing, imagine your factory running at an efficiency of 97 percent, like for you to gates, let me give you a framework. A traditionally [00:46:00] furniture factory, if you were to pick up in India. For example, one person let's say making 600 rupees on labour can create a hundred rupees value on furniture, but is actually creating 60 rupees for furniture. We do a lot of improvisation with whatever process it is? We started making 97 rupees, like we started creating more products in that small period of time. It's not innovative as such, but it's actually learning from the giants of the world like Toyota who have hundreds of factories and then they are able to so easily and peacefully replicate their success in every country they go through, I think we get inspiration from them and that's what we're doing. We are building on zero packaging waste which means that, for example in furniture, you have 7%-8% of the cost as the packaging cost because furniture has to move from A place to B place to C and the furniture is very fragile. It has to come with those thick coated boxes, right? Now, we are building from a point of view that we wanna have 0% [00:47:00] as packaging costs.
[00:47:01] Akshay Datt, host: How is that possible? Fragility is there, right?
[00:47:04] Ankit, founder @ Wakefit: That's a little bit of a trade secret, but what we are building is we are working on recycling. So for example, you buy a product from us. We could deliver it to you in a very safe form. And then we take back all the quests that it's getting collected in house, recycle and put it back. So almost a zero percent regulation of waste, so this is another innovation. We have figured out innovation in marketing. All, if you look at, let's say some acquisition costs, people work at 15 different markets, we operated five, six. So that's again,
[00:47:34] Akshay Datt, host: What does that mean? If you are selling for 100 rupees, five rupees is the cost of acquiring that customer. And in other D2C businesses, it's 15-20 rupees.
[00:47:46] Ankit, founder @ Wakefit: 15 to 20 rupees. That's again, a lot of hard work that our team has done to figure out how to target the right set of people. We do all that hard work, a tradition, so we take inspiration from actual teams. I think they're the ones who have [00:48:00] really created a large D2C brand. They really have an engine too, like every year they create probably two, three brands and almost all of them, 50% success rate has made them powerful.
[00:48:10] But then you take inspiration from them and how do you create those powerful brands? How do you create those right fundamentals of talking to customers, the right product, the right pricing? We believe that, if you are not efficient, someone else will be more efficient than you, and he'll disrupt you.
[00:48:26] So I think we always try to beat ourselves to the next level and figure it out. So we think very stupid way, one of the way to tell you is that customer needs a 100 rupee valued product for 50 rupees, what will you do? And I have to make five rupees out of that 50 rupees that means I have to work for 10 months. So, let me do some six months of work, put a team together who could create logistics which can handle zero wastage in packaging. We do a lot of backend work, which is all the smart work, it's not the, we are not the first one to do [00:49:00] this, but we take inspiration from all the big giants and this all is being done from a very fundamental perspective of learning buyers.
[00:49:07] We don't really get consultants, or let's say people who have done it already, what we do is we want to learn ourselves because this is another group. If you don't learn it the moment that manager gives you the factory, you'll go back again. So we all go through that hard part of, in fact today, if you would notice that I'm sitting in a factory where I don't have a roof, which means I'm sitting in a factory, the new factory, I have to go personally, invest, learn machines, learn the technology, sit and talk with the people who have come from, so there are lot of engineers who have come from Italy and some of them who have come from Taiwan. So I'm sitting with them, having beer with them in the evening, trying to learn what this machine is about? How it'll work more efficiently and how we do low maintenance and all that here, they share a lot of stuff with you.
[00:49:47] So being a CEO of this company, I'm not indented to sit in a factory and run a factory. But I think this is not about being a CEO sitting there. I think it's about building that culture of being connected to what really matters to a customer.[00:50:00]
[00:50:00] Akshay Datt, host: Do you do logistics yourself, or do you work with third parties?
[00:50:04] Ankit, founder @ Wakefit: So we've built our own logistics.
[00:50:06] Akshay Datt, host: Okay. Why is that, again, for cost cutting?
[00:50:08] Ankit, founder @ Wakefit: Yeah. So people, earlier we used to use third party lawyers and we used to pay about 1800 rupees per mattress for delivery. And we figured out this is a huge amount of money we are paying. And you won't believe that today we are paying 120 rupees per delivery. This all is because we are backward integrated. That all happens because we are all fundamentally thinking on how to give more to a customer, how to give more, because we, again believe in the same thing that some new startup will come and they will disrupt us because they'll be more efficient than us, otherwise nobody can disrupt.
[00:50:41] So it's again a fear that drives us that nobody should look to disrupt us. We keep disrupting ourselves every month, every quarter, every year and we find innovative ways of saving some bucks and bucks for the customer, either in form of a discount or in the form of product.
[00:50:55] Akshay Datt, host: So these are all like your on payroll people, the people who [00:51:00] do installation, the people who are driving the trucks.
[00:51:02] Ankit, founder @ Wakefit: Yeah. Yeah.
[00:51:03] Akshay Datt, host: The people doing logistics, look, this is all, how big is your headcount?
[00:51:07] Ankit, founder @ Wakefit: No, it's quite big. I think 4500 people out of which 500 people are, or maybe 700 people are those who work out of office, some, 4,000 people work out of the factory. So we realised that carpenters in India do not have that skill set that they should actually assemble furniture. And we realised that even if he has that skill is really not charging a lot because he's not getting enough jobs to do. And then, we realised that it's not sustainable, that you pay 800 rupees or 700 rupees for a person to go and install furniture at a customer's house.
[00:51:39] So what we did is we created Gurukul in our factory, now we have 250 carpenters in that and they go through a crash course of four weeks where first week, second training, third testing, fourth is approval. So they learn about maintaining hygiene. How to talk to a customer? How to [00:52:00] assemble, if there is something wrong at assembly, how do you talk to the backend team? And we are very proud that we created 250 carpenters in the last 12 months with us. They're all working with us and you know why we did it? Because we wanted to infuse the customer and experience for using the product, we didn't want to send some random guy in the market and go and assemble the product. We wanted our own people so that they can maintain that big philosophy while setting the product at customer house. At the same time, we were able to reduce the cost of that 700 to 150 rupees. So those efficiencies, we train them on how to success screw faster than the traditional screw? At what angles to fit? What all machine you require?
[00:52:36] I don't know where I left, but we created almost 250 carpenters, all those skill sets which are required. So for example, one of the best things that we did is, if you happen to buy furniture, let's say from an online company or traditional offline company, they'll probably deliver you furniture first and then there'll be a carpenter who will come within next 48 hours to come and assemble.
[00:52:54] So we took the thought that we are not gonna do this. We are gonna deliver and assemble at the same time, [00:53:00] because we don't want our customers to wait and call somebody and then wait for the time and all, because it doesn't make sense then why are even delivering the product if you're not going to assemble it, right? So we created process, which again added lot of efficiency, at the same time, it's all customer problem that they don't have to wait. At the same time, we reduce the cost because we were able to do it very efficiently when we did it the same time.
[00:53:20] Akshay Datt, host: That cost of traveling is not there.
[00:53:22] Ankit, founder @ Wakefit: Correct. You picked it so well, I think the petrol cost itself comes about 5000 bucks and then the carpenter is wasting a lot of energy. He does a little bit of job inside the auto also while he is going to customer house. So we picked this up from bigbasket. I think I'm a great fan of big basket. I think it all talks about those operational efficient where you can actually you'll have to go first principle, you'll have to go very fruber in your approach, very driven in terms of customer operation. But at the end of the day, if you have to imagine what bigbasket at the seven o'clock bang on time the customer, the guy comes with everything fresh, nothing damaged and stuff like that. It delivers [00:54:00] 99% on time, the right product. So if we can't build something like that, I think as I said, there'll be someone that will build it and disrupt.
[00:54:08] Akshay Datt, host: So is there anything that you outsource or is everything you are like doing it in house? Because from driver to installation to, the trucks and all are also like you purchase or you rent those trucks?
[00:54:20] Ankit, founder @ Wakefit: No those trucks and all are rented. Yes. We're not buying those trucks, in terms of outsourcing. We do outsourcing of, let's say, whatever is not available in house, in terms of marketing, branding and technology. So for example, if somebody knows better ways to build a brand, we take learning from them and all and they help us do all of that. I think these are the stuff we feel there, we are very weak. I'll not call it very weak, but if there are better people available in the market, we try to learn. Mostly around technology and mostly around brand building, I believe that's a very different game altogether in what compared to what I know.
[00:54:58] Akshay Datt, host: Okay. So what is [00:55:00] the sales channel for you? You started with a hundred percent Amazon. How is that evolved over the year and what is it today?
[00:55:07] Ankit, founder @ Wakefit: So we started with them, then we launched our own website two years from the time, then over the period of time, we started building a lot of stuff on our web website. We started building traffic on our own, started a lot of heavy marketing and then the ratio has shifted to almost 70% on our own web and then now we are working on almost four, five large platform, like Paytm, Amazon, Flipkart and we have our own web. Now in recent past, we are exploring a path to go offline. We are in process of opening, couple of experience centers that most likely in next three months we'll do.
[00:55:38] Akshay Datt, host: So these would be like in malls, like high footfall areas?
[00:55:42] Ankit, founder @ Wakefit: High footfall area, malls you are right.
[00:55:45] Akshay Datt, host: Where something like what urban ladders had done, like they had at airports, they had some display units or something.
[00:55:53] Ankit, founder @ Wakefit: No, I think we are very focused on putting up a store where already people go for furniture shopping. So if [00:56:00] already there is an area which is called the furniture market.
[00:56:02] Akshay Datt, host: There is always an area.
[00:56:04] Ankit, founder @ Wakefit: But then I think we are placing a shop there instead of airport. But if there happen to be a lot of furniture shops in airport, we'll end up putting up there.
[00:56:10] Akshay Datt, host: Okay. So yeah, you don't want to waste money on just brand building. You want to target people with intent, which is why you would put it in their furniture area.
[00:56:19] Ankit, founder @ Wakefit: That is also true and of course it is coming from that again, fame based logic that we don't want to become an inefficient organization. The name of building some high-fi brand, like we have a showroom in airport, we don't want to do that.
[00:56:30] Akshay Datt, host: Okay. So these would just be like display centers. The ordering would still be online, like pretty much what lenskart does, like you can go to a lenskart store, see the frames, test it out and then place the order. And the delivery goes to your home
[00:56:44] Ankit, founder @ Wakefit: Correct. It's almost like that.
[00:56:45] Akshay Datt, host: Okay. And 70% of your business currently is through your own in-house website. Okay. Which again, reduces your cost because I think your margin to Amazon would be getting safe.
[00:56:57] Ankit, founder @ Wakefit: That's true. But I think the true measure of [00:57:00] measuring in how we were able to reduce the marketing cost, we're really creating a word of mouth channel for ourselves. It'll be a surprise to know that more than 50% of our sales come from, which means all of those fundamentals are actually really paying of now. Every year we grow because our customer base grows. Like we'll hit automatical growth. We really are not investing a lot of money in, let's say spendable marketing of brand. So everything works on those first principles, right product, right prices, right deal reaching, listening to customers. Any problem that they've, solve it as soon as possible. Those fundamentals has always kept you evolving.
[00:57:34] Akshay Datt, host: That call after purchase, like the feedback, all those still happen.
[00:57:38] Ankit, founder @ Wakefit: So in fact, I was talking to one competitor of mine and he happened to mention that we are doing a really large, so they're also close to 80o-900 crores of business. And I asked them, how much strength do you have in customer care? And he was actually saying we have 70 people. And he happened to ask me like, how many people you have and we are doing almost 650. I said, we have [00:58:00] 500 people, he was surprised, like, what are you guys doing? I said, yeah, we're talking to them. We're trying to learn from what they're trying to pass on to us. So I think we have a very strong feedback loop, which we try to listen to almost every customer and we do it proactively and try to improve our product and service every month, every day. I think that's how we have been.
[00:58:19] Akshay Datt, host: How does that feedback reach you with 500 agents who are talking? What, how do you make that feedback loop work so that you hear?
[00:58:26] Ankit, founder @ Wakefit: So we, again, we have tech team, they have built up a channel, there's a platform. They go and they click the problems. Then it goes into a data structured format. So, all the factory managers on the click know what are the problems that they created when the product reaches at the customer home. So the factory managers daily looking at those. So every problem that has been created by a customer should be heard by the person who actually created it. So we have mapped almost, 90% of the problem, which can be directly related to a person who's on the floor. So for example, a guy, a shift in-charge [00:59:00] exactly knows that yesterday what all problems came at customer house when a carpenter went for the delivery of the product. And then he's already working on that which is corrective improvement of action. And then he deploys and gives us a action plan, the next one week, it should not repeat it. So it's all, so backward connected.
[00:59:16] Akshay Datt, host: So, because you are tracking that this inventory was manufactured here, this team manufactured it. So therefore that information goes back.
[00:59:25] Ankit, founder @ Wakefit: We in fact have the recorded timestamp. So when we scan, we recorded timestamp and we know exactly. So for example, a product A is getting delivered at, let's say some customer's home. And let's say that product had a problem. So the guy who's sitting in a factory looks at the barcode or looks at that, whatever has gone, the batch number. Then from that batch number, he looks at what time it was extended packaging. And then we add that time, opens up the video camera which is around the factory to look at what problems are created. And then he finds the guy, he finds the guy, this is the guy, he'll go. So now [01:00:00] I know people on the ground will exactly know that, customer is watching you also.
[01:00:03] Akshay Datt, host: Wow, amazing. Okay. So what else is your tech team doing? This is fascinating, what you have built like to make the feedback loop heard by everybody. Amazing. What else is your tech team doing? Like what other ways are you using technology to build efficiencies?
[01:00:19] Ankit, founder @ Wakefit: So technology team also helps us reduce a lot of personal, again from the basic fundamental, for example, other than usual product management of picking the funnel, improving the funnel, getting the right intent customers, giving feedback loop to the marketing team, they are the type of customer should not to the platform because they're just not coming, they're just fishing, or, they give right feedback to the marketing to get better other than those simple product issues and all that. I think they're also eradicate and the dependancy on the person.
[01:00:47] So the basic motto that is given to the tech team or the product team is that to build this company on processes instead of people. What I'm trying to say is that a process can always sustain and stay for years and [01:01:00] get better but the people, irrespective of the, because we know that people will switch off, they'll go to better places that they'll find in their life.
[01:01:06] So, they eventually are building this whole company, like a robot. Their mandate is to either remove man power dependency as much as possible so that all the goodness can be passed on to the customer and all the negativeness, what can be restricted at the backend or the operations. So majorly the goal is this, and that's why they end up picking lot of problems of building stuff for us like people, like the thing that I said, they're broken NPS, Net Promoter Score dashboard into five level problems like an engineer. So there's a design team, there's an engineering team. They designed a product, let's say they designed a bed and that'll be given to production team. Now that engineer who created a product, got launched to the market has a way to access every goodness or negativeness the customer is going through what product used. He's so connected to the customer that again, kind of inspires the guy that, Hey, I've created so many happy faces, all sad faces, he knows exactly the impact of [01:02:00] the work which is again, getting connected to the real world. He even sometimes talk to the customer, they thank you for that application. So tech team is all building that culture of proactive in nature and solving customers problem at the same time, it is driving systems driven, process driven systems instead of man power depend much.
[01:02:18] Akshay Datt, host: Okay. So what kind of hiring or what is your people strategy? What kind of people do you keep? I'm assuming the people who design furniture would be like NIT graduate or something.
[01:02:29] Ankit, founder @ Wakefit: So all the people who have designed the designers from either the NIT or there's a NIT Bombay also. So we take people from those good colleges. Our engineering team is all coming from automotive, almost all of them are automotive background because they understand nuts and bolts.
[01:02:43] Akshay Datt, host: Engineering team means, what do you mean by that?
[01:02:46] Ankit, founder @ Wakefit: So for example, if you have to make a bed, a designer can make it look like this is all the bed should look like. You'll do a sketch and now engineer is the one who's building the connectors between two components. There are for example head holder, side holder, platform [01:03:00] holder, how will you connect them to each other so that you're not investing a lot of money connecting them. But at the same time, you can offer five years into any of the warranty. They're the ones who will put up, what are the best efficient ways of manufacturing that product, the product, whatever they have designed has to be production friendly also. So they are the bridge between production. So we hire engineers from all of the automotive background because we understand that these guys have gone through those stress test of one kg, extra in a car, and the CEO will fire you, right? Because you are just getting more inefficient, right? So we get those kind of background, all of the senior management in my company is, one time, minimum failed on the process. I think this is something really amazingly, we got 11 senior leaders in our company, almost 11, 10 out of 11 are one time at least failed on, which means they, they appreciate the work that is being done. They appreciate the money that people are spending there. They have a crazy focus on the things that more like they're equally passionate. They talk like me. I think that is [01:04:00] something we do and I think one of the best things that we have done on hiring is hiring people from references and they're very, very strong on that. So one of the funny thing that I can mention here is that whenever there's somebody who joins my company, had a little decent senior look, I'll pick up a phone call or let's say a video call. And the first thing I'll say, Hey, congratulations, thank you, blah, blah, blah. But from the organization that you have come, you think you can recommend to good people from that day. So he'll get into thinking more and then he'll start thinking about, what are those amazing guys in my company? Then it'll put forward, then I'll talk to them and figure out like, so we've built the culture of, there's a saying, right? Good people attract good people, bad people attract bad people. So if you happen to build a chain of, let's say good people we'll always get good and better people. So I think this is what we do, other than that fundamental thing I told you, we hire people who are freshers from good colleges and we make them go through their journey of understanding customer, understanding background, getting the gene of really sure about that customer. This is [01:05:00] how we build those new people in general.
[01:05:04] Akshay Datt, host: So these 700 people in the corporate itself, what is their split like? Like how many in your tech team, how many design, engineering?
[01:05:12] Ankit, founder @ Wakefit: So tech team would be close to 50, design, engineering close to 30, marketing team is close to 30, category management is close to 30 and customer care is close to 500.
[01:05:26] Akshay Datt, host: What does category do?
[01:05:27] Ankit, founder @ Wakefit: So they are the one who understand the customer for the category. For example, one guy is selling coffee table. Now this guy understands the customer's IQ of buying a coffee table. Why do they buy? What price they buy? From where they buy? What does it attract? He understands the customer and goes back to the factory and designs the stuff along with that designer, engineer. And then he goes to the logistics team to tell him that how to deliver it? So he's the guy who actually.
[01:05:53] Akshay Datt, host: So he's your replica.
[01:05:54] Ankit, founder @ Wakefit: The basic idea was to actually replicate me in manufacturing.
[01:05:58] Akshay Datt, host: And tell me about your funding journey. So [01:06:00] you said you've been profitable but you've also raised funds then.
[01:06:03] Ankit, founder @ Wakefit: We raised 65 crores about three years from now, then we did a second round.
[01:06:08] Akshay Datt, host: Which was for what? What did you raise that for?
[01:06:11] Ankit, founder @ Wakefit: We raised that capital for building some mattress, we wanted to build some mattress.
[01:06:15] Akshay Datt, host: For backward integration, basically.
[01:06:18] Ankit, founder @ Wakefit: We did the second round after an year or a year and a half actually, that round was almost 180 crores. This was again to build a furniture factory, then we have done a recent round and this is purely a growth where we gonna invest in building awareness of the company, build lot more talent in our company.
[01:06:37] Akshay Datt, host: And what valuation was this most recent round?
[01:06:42] Ankit, founder @ Wakefit: This was at 1800 crores.
[01:06:45] Akshay Datt, host: So, I guess by the time you launch, uh, whole interiors, you would hit like that 1 billion valuation mark,
[01:06:53] right? Like, yeah. I hope so. I, I, I really hope so, but I think, I don't think we, we take, I mean, it could be a very [01:07:00] stereotypical estate. I don't think we take the.
[01:07:02] Building a unicorn. What, what really led us to us is these are the true core values that are, I think we take, we take pride in empowering a low income earning, for example, a carpenter that we created. I think we are very proud. We are very proud that we created 3005,
[01:07:25] what we think in or industry
[01:07:39] I think we, we are trying to, if, if at all, you know, it is possible that we could try to, you know, bring them them in, enable them to kinda sell it to that. That's the dream that, which I think that's, that's what we, after I'm sure. Uh, dollar evaluation. Should should fall [01:08:00] in between that path. I don't know where intended from ahead, but the ambition is to actually empower you.
[01:08:06] So your manufacturing is all in Bangalore or do you have like regional?
[01:08:11] We get food
[01:08:18] Bango and I think great. Not have we tried with the rentals are console crazy again, we realize that, you know, the more of money that we'll spend by justing doesn't make sense, but we ended up hoping a little far from that, but we saved some money on that. Mm-hmm
[01:08:31] and these are like, what mattress? Or like, what
[01:08:33] are the F sofa, sofa manufacturing on manufacturing and.
[01:08:40] If you like the founded thesis podcast, then do check out our other shows on subjects like marketing technology, career advice, books, and drama, visit the podium dot N. That is D H E B O D I U N dot I N for a complete list of all shows scholarships.[01:09:00]
Before you go……the analytics only tell me so much, I want to hear what you feel and think about the conversations.
Mail me at firstname.lastname@example.org with your comments & feedback or if you just want to hear my comments on your startup idea - I love getting your emails!
Until the next founder's thesis📕,
Your host, AD