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The healthy house of brands | Wellversed
From corporate misfit to e-commerce maverick- Aanan Khurma’s story is a testament to resilience and innovation.
Not one to fit into the corporate straitjacket, Aanan fearlessly experimented, building multiple products and startups for a decade.
He finally found his calling in consumer health with his brainchild, Wellversed. Founded in 2018, Wellversed is an e-commerce company focused on improving consumer health.
This house of brands is a digital native with an online first sales strategy. The startup acquires and nurtures new digital-focused wellness brands, taking them from small beginnings to a wider audience using their know-how in business and brand development.
At present, Wellversed boasts a collection of over 40 brands, all achieved with funding of just 3 million dollars! Aanan speaks about building and scaling Wellversed!
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Aanan: I'm Aanan Khurma. I'm the co-founder and CEO of Wellversed. Wellversed is an e-commerce roll up for digital first wellness brands.
After B.Tech, I joined a startup. The mandate of the startup was not very clear. It was working on different things, providing web development services, doing some ed tech stuff and things like that.
My heart didn't really lie in that kind of uncertainty. There's this aura that got created in those early days that startups are cool and all that. So I just joined it out of coolness. It was not a very well calculated decision. We were a group of people trying to do a bunch of different things, trying to figure out how we can generate revenue.
I did that for 5,6 months and I realized that this is not really working and something systematic has to be thought of. At this point, I took up a job in a MNC company called Aricent, as a software engineer. I had software engineering skills and I thought let's just monetize it, during the time that we think of what needs to be done.
In my college years I had spent third and fourth year working on health tech projects. I also incidentally happened to do a six-month internship in Massey University in New Zealand in my third year. We created a Lab-on-Chip device. It was an electronic innovation for doing blood cell separation on a very small chip.
So instead of having huge centrifuge that separate blood cells, you could do it on chip.
Akshay: This is the Theranos promise?
Aanan: Back in the day it was called Lab-on-Chip devices. There was this huge hope that eventually we'll develop labs that can fit into a single chip.
We managed to do something, we managed to separate white blood cells from red blood cells on a chip through a process called Dielectrophoresis. We were one of the pioneers in that. We also published a research paper. It's a seminal research paper that got published.
That kind of arrangement that we created on Chip is still being used today. When I did this six-month stint, which was a very unstructured thing, I started developing this huge gravitation back towards healthcare, that this is something where my heart really lies.
And after joining a MNC and working there for 6 to 9 months, I again went back to the field of health tech and I joined IIT Delhi as a project scientist in a lab that was trying to develop medical devices that were more economical versions of products that have already been created in the US and Europe.
India has a huge problem of not having at par medical devices. And the major problem is the cost because there are so many features in these devices that are developed for the western world, not required in India. And those devices are not being imported just because they're so costly.
So we wanted to develop strip down version of those devices, and that's how I came to be in IIT Delhi for a year.
Akshay: Which device were you focusing on?
Aanan: We were developing a device called the Plasma Argon Coagulator. It uses argon gas to create cold temperature plasmas that can reduce or eliminate lesions in your gastrointestinal tract. That was the device that we were working on.
Akshay: Tell me something, why couldn't Theranos commercialize or build a commercially viable product?
Aanan: There are certain limitations when it comes to diagnostics. There are certain limitations in terms of cost of testing, time of testing, accuracy of testing. Bringing all those together and then implementing them into a system where there are critical time constraints.
If the efficacy of test is not reliable, it's not going to get adopted into the medical system. That's why within the given time constraint and the given efficacy constraint, senior professionals or veterans would want to differ to reliable methods. And that is why innovation in the med-tech field specifically is slower.
There are generations of people who have been trusting certain devices and certain methods for let's say 20, 30 years. And they're not just going to shift immediately until the efficacy is proven. I think it's all about delivering the promised efficacy within the promised timeframe and developing that trust around it.
Akshay: You can't move fast and break things in med-tech.
Aanan: And incidentally what happened was, I got selected into a program in Stanford, it's called the Stanford Biodesign Fellowship. I got selected into that program because we were developing these medical devices in India and there was a collaboration between Stanford and the Indian government to support health-tech innovation.
As a part of that program you spend part of your time in Stanford and part of time in Indian hospitals. And what we could see that there were so many great innovations that doctors have already developed, but the adoption is very slow because of systemic changes. For example, let's say there's a batch of medical students who have been trained on certain technologies on the first day or first year of their jobs, they want to prove their worth.
They don't want to do anything wrong. They don't want to take risk. So they'll rely on methods they have been trained on for those 5,6 years of medical training.
Akshay: What came out of this Stanford Fellowship? Any kind of product innovation, or what was the focus of it?
Aanan: Me and my team, we developed a device for preventing hospital acquired infections that spread from one patient to the other, or from caregiver to patients, so spreading any kind of cross infection within the hospital environment. A company came out of that entire endeavour, it was called HandSure, and that company got funded by Microsoft Ventures, Johnson & Johnson.
So there was a huge promise because infection prevention is a huge thing within the medical domain. Very ill understood but a huge thing because you are losing a lot of lives to secondary infections, not to the primary condition. And after Covid infection prevention has suddenly it's now a very big thing, but I think this was 10 years back when we started the company, this was 2013. The adoption within the industry and we also fell victim to the adoption of the devices within the medical setup. We had access to all the funds, we had access to all the hospitals, commercially we weren't able to make it very successful.
I would say it was partially implemented in several hospitals, like Fortis, Max. But commercially, I won't say that. It got completely sucked into the system.
Akshay: You were like a co-founder here in this company? What happened here?
Aanan: I was the primary founder in this company. And the way it worked is that when you are part of the Stanford Biodesign Fellowship, you get exposed to a lot of problems that need solving. And that is the entire purpose of the program. They systematically train you in Stanford's D.School ideology of coming up with innovation, developing products and things like that.
And at the same time, you getting exposed to systematic environments where the problems exist and you try to identify them, try to identify the size of the market and then try to solve those problems. So the aim is to create entrepreneurs that then go ahead and try to solve those problems.
That's how it came about to be. And I was really excited to be part of HandSure because just losing someone or losing your loved one to a secondary infection, which is completely preventable.
Akshay: This was like a funded startup. You raised funds also. Essentially, you're saying the traction was not enough and hence you shut it down or what happened?
Aanan: The mistake that we made was we raised VC funds early in the lifecycle of the company before understanding the growth trajectory of adoption of the product.
We just raised around 1.5 million dollars as seed funds. Not a lot. What happens when you run or you jump on the VC treadmill is that you have two show growth numbers. Otherwise, even if you have a great product that eventually will get acquired or adopted, it's not going to work.
There is a lot of high degree of pressure on you. I think that's the mistake we made that, we shouldn't have raised those early capital, although it sounds fancy and those were the earlier days when we see capital was flowing into India and all that stuff.
It was exciting that we managed to raise funds. We were one of the few companies that raised funds such early in their lifecycle. Even our product was not fully functional. So commercially the growth trajectory didn't seem VC fundable at that point of time.
And eventually the product got absorbed into Johnson & Johnson. Commercially what happened was, once it was clear that we won't be able to raise subsequent round of capital, we won't be able to raise a Series A because of the growth trajectory.
Johnson & Johnson decided to adopt the technology within their system. I'm not sure if they're exactly using it or not. Some part of it they are. We shouldn't have probably gone the route of Venture capital for that particular company that early in its lifecycle, that's what the learning was.
Akshay: So J&J bought the IP for it. Then what?
Aanan: It is from that point onward that, something interested started happening in my personal life also. On a personal or a more philosophical or a spiritual level, I started getting obsessed with the thought of death and the thought that eventually our consciousness won't exist.
I think this is a thought that comes to every person's mind, especially, let's say just before going to sleep or for me it's highly exaggerated because I feel that thought or I get that thought, let's say several times a day. So every time something great happens, you feel like eventually it's going to go away and every time something very, very bad happens.
You feel like it doesn't matter. It's going to go away anywhere. When that company was in the process of winding up, there was a huge part of mine that was obsessed with this thought. And I started doing a lot of research into what people are doing around life extension, health span extension, and whether human race will eventually be able to be immortal and things like that.
Akshay: One quick question here. Was it that failure to build that company kind of really made you re-examine life and made you realize how futile everything is and made you more philosophical, like a lot of people become poets and philosophers after a heartbreak. Was it something similar?
Aanan: It's interesting that you mentioned that because, there was a certain degree of high in the lifestyle that we had when we were building that company. We had raised funds, we were in the US, we were in Europe for a few months. We were in Israel for a few months.
It was a certain degree of professional high that we had. And then we came back to India. The company did work out really well, so obviously the thoughts may have been instigated through that failure also. And incidentally, I took poetry also after that, although I had been writing earlier as well, but I took up poetry systematically.
There was a lot of this philosophical spiritual change that was happening in me around, what is the meaning of life and what is the meaning of death per se. And I found it to be a very unfair proposition that we were brought into this world without having agreed to this arraignment that, your consciousness will be there for a while and then it'll cease to exist.
I didn't consent to that. It's a non-consensual arraignment, unfair arraignment. And this is where I started doing a lot of research on what people are doing around, life extinction and especially immortality, whether we'll be able to live perpetually or not. I found that people are taking two to three directions.
So there's one direction where people say human biology is capable of living up to 120 years of age. Their aim is to maximize the health span, so to say, so that you can live up to 120 years of age without having any ailment and vitality that you have as a youngster.
That is one of the approaches. And they say that, dying is part of spirituality. So we'll just extend our health span to 120 years of age and we'll die. Second approach is where people say human lifespan can be extended within its existing biology. And this is this school of thought of Ray Kurzweil who is now the head of technology at Google. Google recently acquired a company called Calico, not recently, it's been 5,6 years now. They acquired a company called Calico that is, specifically working on a biological life extension. And the capability of biology to live perpetually already exists.
So we have certain kinds of jellyfish that are immortal. Our cells like sperm cells and egg cells, they have perpetual lifespans. Within cell biology, there are mechanisms that allow the cell line to live perpetually, but due to some evolutionary pressures, the gene structure is such that the cell automatically destroys itself. So this is the school of thought that believes that, you will eventually become immortal in this biological form.
Unless we are exposed to physical trauma. Then there's a third school of thought where people like let's say Elon Musk and people like these come in who say that, we will be immortal, but that immortality will be digital. So our consciousness will eventually be transferred onto a digital medium.
That digital medium will be powered perpetually by let's say star energy and protected physically by certain mechanisms and things like that. I found all of this very exciting and I want to be a part of generation that eventually ends up living perpetually.
And I think even both biological and digital immortality, although a lot is being talked about them in a lot of different circles and people claim that we'll have immortality by 2040, 2050, 2060. I believe that is going to happen sometime in this century. So my aim is to first, to extend my health span so that you're able to live up to 120 years of age.
Because when you are living, it's not just about living, you also have to have experiences. So my approach is that maximize your health span in the next 10 years. You develop that lifestyle; you have that financial freedom. And that is why we are creating Wellversed because the aim of Wellversed is to extend or maximize human health span.
So I'm going to work 10 years on Wellversed till 2030, and then the next project is going to be either biological immortality or digital immortality, working on one of those things.
Akshay: You started Wellversed immediately after handshake was getting shut down.
Aanan: The product was called HandSure. It was a long journey and it was a nebulous journey. So after HandSure, we wound that up, I started a brand called FYNE Superfood with zero understanding of starting consumer brands.
Had no understanding in food tech or food tech supply chain. FYNE Superfood was, you can say a Hummus like product or you can say it was a superfood chutni or sauce. You consume it with your Indian food and all your nutritional deficiencies are taken care of.
It was that kind of product, fairly novel in those days. This was 2014 pre-Zomato, pre-Swiggy era where distribution was a major challenge and only way to go about distributing perishable products of 20-day shelf life was to go through retail outlets. I had zero understanding of food tech. I had zero understanding of creating consumer brands.
I had zero understanding of offline distribution.
Akshay: This was like a refrigerated product.
Aanan: This was a product that I used to consume for myself. Like I told you that, I started dwelling on extending human health span.
I had started radically changing my own lifestyle. I was totally into anti-aging techniques, breathing techniques, yoga and all that is obvious. And I radically changed what I used to consume and all that stuff. Had zero understanding of how to build this brand and but still we managed to scale it to 20 lakhs per month kind of a revenue, which is not a lot.
Akshay: What was your go-to market then? Obviously, it could not have been e-commerce, which today probably people would've started with that, but you must have gone through offline stores.
Aanan: It was a very jugadu go-to market. We had a website built on a Wix kind of a platform where the consumer could just click a button called 'Order Now', and it was connected to WhatsApp so the user would be routed to WhatsApp and then we had a WhatsApp chat, we had their numbers and all that stuff. So that was the primary way that we started it. But then we started targeting corporates where we used to supply in bulk and it used to be distributed from their canteens. What happened luckily for us was that I immediately came to know that the kind of operational hurdles and the kind of operations that I will get into is not something probably that I would be able to sustain.
Akshay: This was getting manufactured in your kitchen?
Aanan: We had taken up a place. Eventually, the volume at which we were using it, we were not able to manage it through our kitchens or our places. So we took up a dedicated space for that.
All that was happening, and I decided yaar ye offline distribution to nai ho paye ga. Incidentally what happened was, there was a brand called Sattviko, which is now a consumer brand. They pivoted to consumer brand. Back then they had restaurant outlets across India to serve Sattvik food.
Akshay: This is like a franchisee model or they were operating the restaurants themselves.
Aanan: They were operating the restaurants themselves, and their aim was to bring Sattvik food to modern day consumers. And this product fit into their mandate. They acquired it on a revenue sharing basis.
They were able to scale the sales to about 2-2.5x and we were getting royalties out of it. It happened luckily for me that they acquired the product because, one- it gave me financial freedom and it gave me a lot of time to think about what I wanted to do next.
After this I joined 1mg as a product manager.
Akshay: This was like an IP licensing, like you licensed out the IP to them and they would continue to pay you a percentage of sales? And they would be displaying the product to customers who walked into their restaurants.
Aanan: This was the first stint that we had with consumer brands. And I had told myself that "no, I won't do consumer brands after this". And it seems very funny in retrospect because now we are building a company that operates a portfolio of consumer brands.
I thought bas consumer brands nai karna hai baki kuch b kar ly gy. So that's why I gravitated more within Health-tech only. I gravitated more towards digital products. Manufacturing is a very hard thing to pull off. There are a lot of operational challenges.
There are a lot of working capital cycles. It seems a lot more like what traditional businessmen do. So that was the mentality back then. I came in touch with Prashant Tandon and Gaurav Agarwal of 1mg at that point of time.
Although it was a digital pharmacy, but they were also working on a doctor patient consultation piece, which was very small when I joined their team. And I thought, why not take that up. Because most of the queries that they received in their early days of that platform were related to wellness and not specifically health queries or disease queries.
People are coming to them and saying, sexual wellness issues, hair loss. Everything within the wellness ambit was there. So that was the maximum volume of queries that we were getting. We built out that entire platform from very early to when we were doing around 1 lakh consultations a day. That was the kind of volume that we were able to achieve. But it was a combination of free consultations and paid consultations. The paid consultation percentage was very small. And several conversations were very small as well, where it would last only 6 to 7 message exchanges.
But nevertheless, I worked on that product for 14 months. And the insight it gave me is, the kind of wellness problems or wellness issues people have. There was a repetitive pattern that you could see around what people are not able to do.
Akshay: Before I come to your learnings from that, this consultation was a face-to-face consultation or it was like a chat consultation.
Aanan: It was digital. It was a chat platform.
Akshay: Not like a video conference thing.
Aanan: No. We had started audio back then, but video chat was still not available at the point I left the company. I think they have added that feature now.
Akshay: And they had employed on payroll consultants, like the physicians or whatever subject matter experts who were doing this.
Aanan: It was a blended model where we had some physicians and some doctors and some nutritionists on payroll, and then there were some who were third party, who were allocated chats and that were to be resolved within a particular time.
Akshay: And what was the goal there? Why were they giving it out for free? Was it like a freemium that you can get a short consultation free and then you pay? Or it was driving sales of their other products? During the chat, like with the nutritionist, the nutritionist might recommend a product that they would buy from 1mg. What was the goal?
Aanan: Before joining the company, I did very deep research into how people buy medicines offline. And typically, old behaviours die hard. And this is what we learned from our first company, where we weren't able to scale commercially very well.
I was very wary of not building anything that doesn't support existing consumer behaviour. So the existing consumer behaviour can be replicated from offline to online, but it can never be changed completely. It has to be some function of existing behaviour.
So when I was doing my research prior to joining 1mg, what I discovered was a lot of medicine buying happens on suggestive advice. Not specifically prescriptive advice. There are two classes of medicine buying. One is hardcore prescription where the doctor will also tell you where to buy the medicine from because that is the way they made their commercial. Second is where people go to a chemist and say, "ye ho raha hai, what should I do?" And the chemistry says, "buy this". What I understood was that in India, the Indian audience is very wary of paying for consultations.
They have no problem even if, let's say the drug prescribed to them is a 1000 rupees drug. If you include the cost of consultation within the drug, they have no issue with that. So that is the behaviour we want to capitalize on. And my idea was to keep the chat consultation free.
And we built an integrated platform where, let's say if the doctor starts typing a prescription, let's say he's to type that you have to take paracetamol. There will be a dropdown on the doctor's side where he can just click paracetamol and the user will then see a buy now box within their chat screen.
So we built a hyper integrated experience for the user within the chat which is not possible on WhatsApp. Because WhatsApp p they'll say "this is drug you need to buy". They'll take it to chemist, and all that stuff will happen. So it was a hyper integrated experience and that is the way we wanted to build it.
Akshay: So essentially that offline pharmacy and pharmacist as an advisor behaviour, you were making it slightly better-quality advice, but that similar behaviour you were translating it to online.
Aanan: And more credible.
Akshay: So what were the learnings from that? What did you learn when running that product?
Aanan: Fundamental learning was, there are two category of consultations that we saw. One were hardcore healthcare consultations where a particular person has a disease and they'll have to undergo certain procedure, whether it's pharmaceutical or surgical.
And then there are other categories of where people have non-critical health issues. But that is impacting them emotionally. Let's say they're losing their hair or their skin is deteriorating or they're gaining weight or their blood sugar level is not allowing them to consume the food at the moment.
So what my learning was that especially being a proponent of health span maximization, I didn't want to go to the disease route, let's say if there is a zero point, below the zero point is diseased people, above the zero point is you have to maximize your potential.
So I wanted to remain above the zero line and address the wellness issues more other than the disease issues and within that ambit of wellness issues, what I saw was that there was a lot of suggestions or a lot of information, but very few ways for people to actually adhere to that advice.
Just to give you an example, let's say a diabetic person goes to a diabetologist. They say, " my sugar level is this", and the first thing the diabetologist is going to say, "stop eating rice". Now, that is a piece of information that is of zero utility to that person.
A person who has consumed rice their entire life, telling them stop consuming it, it's not good for you is a no-good advice. It's not going to help them because now there are two things going to happen because of that ingrained behaviour. That person is going to eat rice anyways, earlier that was just damaging his or her physical health.
Now it's also damaging his mental health care. I have done something wrong. I have done something which doctor told me not to do. I think core learning that I picked up from those kinds of consultations, that if you want someone to change something, you have to enable that change.
You just can't tell them that, you do this or let's wake up every day at 5:00 AM. That is no good advice. Not very useful. Eventually, when we were tinkering with ideas of how to address wellness in general, our primary aim was to be able to address behaviour change.
And we didn't want to create products where people say, ki yaar now quit everything and start eating this. So we had to facilitate existing behaviours, and diabetes, thyroid, PCOD, obesity, weight gain, these were the issues. The wellness side of these issues were the ones that we were trying to address.
What we realized was that most of the people know what's good for them. When it comes to eating, everyone knows what good food is. So all this advice going on is just circular recycling of information.
Everyone knows what's good for them. The problem is not knowing what's good for you. How to adhere to that on a long-term sustainable basis and this is when we decided that Wellversed has to stand for creating products that enables these behaviours.
So instead of telling a diabetic patient, quit rice, you have to make rice that they enjoy eating and it doesn't impact them in a negative way. And that's how Wellversed came about to be. And again fortunately or unfortunately in the domain of consumer brands, which I specifically wanted to stay away from.
And on top of that, because we were creating products that was so unique, we had to again get back into manufacturing. No contract manufacturer was willing to produce the kind of products that we were doing, at smaller scales. And this is when I met my co-founder Aditya Seth who is the manufacturing and supply chain expert. And that's how our partnership started here.
Akshay: What's Aditya's background?
Aanan: Aditya comes from a 10-year experience in supply chain, specifically food products. But he has, very specific experience in getting work done from third party manufacturers, contract manufacturers, quality assurance, all legal compliances.
So actually getting stuff done on the ground. Once a food technologist and nutritionist have created a composition for a food product, how will it go into manufacturing procedurally so that you can produce it at a cost that allows you to sell it.
Akshay: Which company was he working in?
Aanan: He had his family business only.
Akshay: They were selling like an unbranded kind of a product or do contract.
Aanan: They were B2B suppliers of large-scale food products.
Akshay: So you quit your job and started looking for a co-founder, or what's the sequence in which stuff happened?
Aanan: Sequence was slightly convoluted, I used to do these design thinking workshops.
Aditya obviously was working in his family setup and he was expert at manufacturing, but parallel he was also doing an industrial design degree because he thought that eventually he'll get into designing specific manufacturing equipment. He was doing industrial design.
Within 12 months I had decided that I'll take the leap and I'll start a new company. And there was two-month period when I was at 1mg, but I was still thinking about what to do in this period. I was doing this design thinking workshops, trying to train people on the Stanford Design School process, what we had learned.
So we were just organizing design thinking workshops and Aditya happened to be at one of those workshops. That's how we met. And he was discussing that I'm doing industrial design to create equipments that can manufacture products. It seems energetic and we started hanging around and it was still very nebulous.
We didn't know that we'll end up doing this. In fact, the first product that we created was Namkeen replacement. We thought that Indians are very fond of Namkeen and you have high calories, high fat, high carbs, so that is something that needs to be replaced. That is the first product that we created.
But then we gravitated more towards staples because we wanted to be more center of plate kind of a company than peripheral products. That's how it happened.
Akshay: What was that Namkeen product like? Tell me a bit about that. Did you actually launch it or that was just a prototype you made?
Aanan: It was just an experimentation. I think we created 10,15 products before we finally centred on doing staples. And this was the time we also realized that a single brand cannot cater to a lot of people. Wellness is like religion.
Everyone wants to reach God, but everyone has a different ideology of how to reach God. And you cannot enforce one ideology on a different set of people. We knew early in our life cycle that if we have to maximize human health span, if we have to maximize wellness, we'll have to end up creating a Unilever kind of a structure where we have several brands and they're doing innovative products and they're centred on different wellness ideologies.
And that's what we're doing now.
Akshay: Tell me about that actual launch journey, launching the business, the product, the go-to market.
Aanan: As like formed proponents of The D school thinking, we very well knew that we have to experiment and find the product market fit first before we do anything.
Just to give you an example, that our company didn't even have a website and we were already doing, 35 lakhs per month kind of a sales. Our primary go-to market was Amazon, and we were doing hyper amount of testing in product compositions, in feedbacks. And back then Amazon used to provide you numbers of customers so we could speak directly to customers.
All that has been restricted now, you don't get customers from Amazon. We just created products; we listed them on Amazon. At one point of time, we had 50 products listed on Amazon. Some of them were selling, some of them weren't selling. So that helped us get large amount of feedback on what's working what's not working, both from the search perspective, what are people searching for, what are the kind of products people are searching for and what are the kind of products that people come back to. There are only two critical parameters to create a brand. One is whether that product is searched for or not. Second, if a person has bought that product, whether he'll come back or not. So those were the two things, or two pillars that we were critically trying to understand. And then we narrowed down the product.
Akshay: Which in a way could be summarized as the total addressable market and what is the lifetime value of a customer for that product or repeat behaviour.
And what were these products? Give me some examples and how did you get them manufactured?
Aanan: What we had done was, we had set up an R&D lab specifically for crafting these food products on a lower scale and Aditya was the one who was working on it. These were products like low carb flours, snacking products or oil free products and some supplements as well. Initially everything that we did was under the Wellversed umbrella, but slowly we started segregating them into different brands. So all low cap products became consolidated under Ketofy. All vegan products became consolidated under Ovego. All diabetic products got consolidated under Diamonk.
Akshay: In those Amazon experiments is where you realize that you want to focus on staples instead of snacks and all.
Aanan: Staples have a high repeat rate, and frequent repeat rate. That's why we stuck to that. And what we thought was, even if we do side of the plate products, they'll be separate brands.
We do have a brand called Unsnack that is dedicated to snacking products. It's called Unsnack because snacking is something you do mindlessly. So it's a mindful consumption of products. We do have that now. Now the way our model works is that we want to become a conglomerate of wellness brands in different categories, not just food.
We have functional food and supplements, we have skincare, haircare, we have fitness equipment. So these are the 3,4 categories that we are centred on. The aim of the company has now shifted towards maximizing wellness through these brands in a Unilever style.
Akshay: Give me some timelines here. When did you launch and run these experiments on Amazon? Then when did you decide that this is going to be our first line that we will focus on? And were you funding it through savings or did you raise funds?
Aanan: We started in 2018. All the tinkering was ongoing between July 2018 to September 2019.
September 2019 was when we raised our first angel round of 3,4 cr. Prior to this, it was being funded through my savings. And there was a person from Unilever, Govind Rajan. He was a Unilever guy and he himself had some lifestyle issues. He was a diabetic and he was the one who gave us 25 lakhs in a convertible note just to experiment, like just try things out.
He was a strong proponent of the company. So we tinkered for one year and that is how we came about the structure that we'll have to build it in this style of separate brand and separate products. And we were able to raise a seed round in 2019.
Akshay: And that seed round was for what?
Setting up manufacturing or spending on marketing, customer acquisition, and did you manufacture in-house or how did you fix supply? What was the way to do supply here?
Aanan: Initially a lot of what we did was, manufactured completely by us. We set up an extension to our R&D lab.
We had taken up a dedicated space for manufacturing. We had blue collar workers. All that was going on. What we learned was that a lot of companies that do contract manufacturing, take an example of Coca Cola. Coca Cola contract manufacturers all their products. But the entire procedural knowhow from R&D to, what the composition of the product is, to how procedurally it'll get manufactured, has to be done by the company and then implemented through a third party.
So the third party never does any procedural innovation or production innovation. All that has to be done in house. What we realized was that all this procedural know-how will have to be graded in-house and that's why the first manufacturing that we set up was in-house only. And now that we go to third party, we not only transfer the IP to them to manufacture, but also the procedural knowhow.
We know which machines they have to use, the procedure they have to follow, the SOP's that had to done, the quality assurance processes they have to implement. Everything has to be given to the third party to implement. They are just there. It's just like a franchisee model for manufacturer.
Akshay: And Aditya had these contacts with third party manufacturers. Otherwise somebody new to the field would've had to really spend a lot of time in convincing them to follow your processes because you were not a known brand. Like why would a contract manufacturer really agree to your terms and conditions.
And maybe they would've had some minimum order quantity restrictions and which would've probably made it unviable for you. Aditya, I guess helped solve a lot of those supply issues.
Aanan: Traditionally, how companies operate is that they will do, let's say 9 to 12 months of consumer understanding and product development and then launch one to two products and then they'll put all their marketing capital behind that product to scale it at any cost.
A lot of that is intuition based and experience based. What we realized that we didn't want to follow that approach because wellness trends, especially at this time are changing so fast that you cannot anticipate everything on the ground.
How the needs are evolving, what the customer really want. We wanted to apply that ideology of D school that will fail first and we'll see what's actually working on the ground. The way our non-traditional lab setup helped us was that we were able to create a large number of products at a lower volume and experiment with them. And we could churn out a product in, let's say two weeks and shut it down in another three weeks. So it was a five-week cycle of knowing this product is not going to work.
Akshay: How did you understand the trends and decide that, "okay, let's try this product?"
Aanan: It was a combination of objectivity and subjectivity. Obviously, we were part of lot of groups on Facebook or Quora, even WhatsApp groups. Broad macro trends, you could get to know from the kind of keywords that are being used. Let's say plant-based milk is being used a lot. So you get to understand a lot of different trends, and then you use those keywords that you have gathered subjectively.
Then you do detailed research on, let's say Amazon Pi, Google Trends and Semrush to understand their search volume and what's actually happening from an objective point of view.
Akshay: What is Amazon Pi?
Aanan: Amazon Pi is a tool that gives you access to certain data points and Amazon now gives you a lot access to a lot of data.
Akshay: It's like user analytics of Amazon customers which you can access those user analytics. Amazon charges for this?
Aanan: It for a seller account. Once the account reaches a certain size, then you have access to that.
Akshay: So once you figured out that let's say plant-based milk is a trend then you would go about trying to get some minimum inventory done and then list it and then see if it was selling and then get feedback from the buyers. How would you get feedback?
Because now Amazon doesn't share numbers. So it was based on the ratings or how was it?
Aanan: In the initial days we did get access to the numbers, so that's how we used to do it. Amazon just stopped this; I think a couple of years ago. By that time we had our website in place and if you go to wellversed.in all of our brands are listed there.
So to the end consumer, it seemed like a marketplace of a lot of different brands. Although the volume of sales that we do through wellversed.in is around 15% of our total sales volume, but that is a decent enough size for us to reach out to consumers and know what the feedback of the products is.
Akshay: Intelligence comes
Aanan: Within our growth strategy, we never project wellversed.in to become very, very large. Because the CACs are higher for websites and the kind of delivery experience Amazon or these Instamart guys can provide, we cannot provide because we sit on top of third-party logistics spares.
But that for us is a way to understand consumer pulse and consumer insight and structured sensory feedback from the users.
Akshay: Tell me the once you traced that Angle round of 3,4 crores, then what was the trajectory after that? What kind of monthly revenue were you seeing? You said you hit 30,35 lakhs. By when did you hit that and how did that progress and what is it today, the journey in terms of your numbers?
Aanan: When we raised the seed round, we were around at 40,45 lakhs per month of revenue. And I think after that Covid had hit in 2020, so this was September 2019 that we raised the funds. And in Covid we saw a spike in certain products, but some of our products had been shut down as lying within non-essential category for some month. 4,5 months were slightly turbulent.
And we hovered on 60,70 lakhs per month kind of revenue and that was ongoing. By the time I think July 2021, we were at 1cr per month kind of a revenue. And from there we raised another round from Jubilant FoodWorks: it's a public limited company that invested in us.
And from that point onwards, we have scaled very fast. We were around at 4.5cr per month kind of revenues.
Akshay: Why did Jubilant invest? When it comes to high-risk investment, which is what investing in a startup is. It is Typically VCs who invest it's not very frequent for a public listed company to invest at such an early stage.
They would typically come in once the business has reached a certain scale and they feel that with their distribution muscle, they can scale it up. But what was the reason here for jubilant to invest?
Aanan: There are two to three different reasons. One is that, we are slightly more stable as compared to other startups. Although we are trying to address new wellness needs, but from a fundamental DNA perspective, what we are doing is the stable business.
It's not that it is either win all or lose all. It's not that kind of a market. So essentially that kind of stability is there, that the company is not going to shut down.
Akshay: And you're focused on products which have repeat purchase. So that revenue stability is also there.
Aanan: So what we understood fundamentally was the value that they found in our team was twofold. One is what we understand fundamentally is that, no brand can be built without two things. There has to be some degree of innovation within its supply chain. You cannot just pick a product from China and start selling it and build a brand on top of that.
That is not possible. Some degree of supply chain innovation happens even with product like Micromax or that has directly being lifted from China. That is the price innovation. Second is that you address a new wellness niche, but with repeat rates intact. You're not mindlessly trying to scale a brand like a tech company.
Tech company and consumer brands have to be built differently. A consumer brand is like a child and a child takes nine months to get born. You can't just force feed it and grow it. I think those are the kind of value they saw in our team and from a strategic perspective, they're building an entire ecosystem for modern day consumer brand use cases.
Akshay: I guess, you did not necessarily need to build a very strong brand to generate sales because people would anyway be buying unbranded data for example. So that need to spend a lot on brand was not really there at the initial stages till a certain level.
Aanan: What we feel is that product market fit has to happen before the brand market fit has to be worked on. You cannot build a brand story and expect a non product market fit product to sell. It's like a primary school, secondary school, college kind of a structure.
A student has to pass through primary school for it to go to secondary school. We see there are three distinct phases of brand building. In fact there are five, but I'll just talk about three. The first is product market fit, whether the consumer is searching for what you have listed or not, if the search volume is sufficient or not.
Second, if the user has bought your product, whether they're buying it again or not. The product market fit comprises of these two things. The second is, The product channel fit. Whether you are selling it through the right channels and from a P&L perspective.
You have to take into account what your CAC is, what your distribution cost is, and if the P&L doesn't support it through that channel, you can't sell it. Just to give you an example, let's say you have a 99-rupee product. You cannot sell it through amazon.in.
You have to sell it through Amazon Fresh because the kind of distribution margins logistics that you pay to Amazon is not going to enable your product to sell. So that is a product channel fit. And the third is your brand market fit. So what is the broad ideology that the brand is centred on and whether it's going to resonate in the future as well or not?
Akshay: And what are the other two you said they're five.
Aanan: Post that, then you have mass communication channel fit. Once you cross certain scale, you have offline distribution fit, mass communication channel fit. So these are the two phases.
Akshay: Whether you advertise on Facebook or you do a TV ad or you do a print ad.
Aanan: It goes through a systematic five phases. First is product market fit, product channel fit, brand market fit, offline distribution fit, and then mass communication fit.
Akshay: Can you talk to me about your portfolio brands? And for each one, tell me where they are in this life cycle and what is their percentage contribution to your overall top line?
Aanan: What has happened is that we have done something very interesting.
When we were creating all these brands and we see a lot of different wellness niches bubbling up and they have to be addressed. What we realized was that although the approach is really great that you have to create a Unilever style of wellness, Unilever style of consumer brands, you cannot develop all the products on your own because, developing a market fit product and fine tuning it takes time, energy, bandwidth.
Although the innovation has to be there, but everything cannot be done on our own. So we thought of decentralizing this entire process of product creation. And how we did that was we created a program called the Wellversed Accelerator. What it does is that, since we excel at digital distribution, we open our expertise of digital distribution out to all the early-stage wellness startups.
Once you are part of the Wellness Accelerator, your product will list on Amazon, Flipkart, Zepto, Instamart all these channels through Wellversed, which means your product immediately gets a very, very high visibility. And we get access to what products are working, what are not working.
The structure that we have now created is that we accelerate brands in the early lifecycle. We understand which brands are working and we eventually acquire some of those brands. So all the product market fit innovation doesn't have to be done by us, although a lot of support is provided by our team, whether it is trademark support, supply chain support, R&D innovation, lab testing.
A lot of that is done by our team as well. So we have created a unique decentralized structure of finding product market fit products and then pouring brand capital on top of that. Right now if I talk about major brands, we have revenue of around 4.5cr which is contributed by around four major brands.
Akshay: This 4.5cr is current monthly revenue.
Aanan: Four major brands are, one is called Ketofy which was one of our first brands and it's a low carb lifestyle product.
It's low carb ataa, low carb rice, low carb spaghetti. Then we have a brand called Zero Sugar, which is a natural competitor of Sugar Free. It has no artificial chemicals. It's completely crafted from Monkfruit and Stevia. It tastes exactly like sugar.
It's one of the fastest growing products because, this sentiment that sugar is bad is percolating very fast within the community. And this product is an actual true one-to-one replacement of sugar. Going back to the ethos of zero behaviour change, so it doesn't have any after taste like Sugar Free.
It doesn't have any carcinogenic like aspartate. So that's one of the other brands. Then we have a brand called YouWeFit, which is clean daily use supplements.
So let's say it's protein alternative to whey, it's vegan alternative to Omega3. Clean alternatives to all daily use supplements. And then the fourth brand is called Wellcore. It's an advanced supplements brand centred on, energy for athletes, energy for high performance physical activities. So these are the four major brands.
Akshay: How do you find brands/founders to accelerate? You would need a fair amount of effort on that. VCs typically have a team which is dedicatedly doing the deal sourcing. How do you do that?
Aanan: We have a dedicated team of seven people that is specifically working on this. Now what's happening is that, let's say earlier we were setting up an entire R&D team that had peripheral support for manufacturing as well. Now as that manufacturing support team reduces, that is being consolidated into the accelerator team. You have a core R&D team that excels at creating great products supported by an accelerator team that identifies great brands.
This R&D team provides know-how to these accelerated brands of how to create great products on top of the marketing insights that we get for these brands that these products are working, these are not working. So you need to focus on these products. We have dedicated seven people team that is constantly profiling all channels for new brands.
When I say new brands, these are brands who have reached a sales of 3 lakh per month of sorts, where they have at least done something, they're serious about what they're doing. They have not just listed their product.
Akshay: That makes it relatively easy to identify brands because you're looking at listings on various platforms. You're able to flag that, 'okay, this is a new brand and its trending'.
Aanan: I think we have 10,000 brands that are logged in our database as of today.
Akshay: So this is how they identify. And then what happens? Do you take equity in exchange for the accelerator? Do you give them funds in addition to the knowhow and market access? What is the model there?
Aanan: The model is evolving. The initial model was very simple, where we opened up our distribution expertise to these brands in exchange for a very small commission that we charge them. So that was the model.
But going forward, as we are setting up a dedicated capital pool for these brands as well, we will consider investing in specific of these brands, where we will invest early on even at the acceleration stage. It's going to become a Y Combinator style of a model where we'll invest in large number of early-stage brands, but also provide them operational expertise.
So the risk with early-stage investment is that the expertise does not exist within a team. And that is where most of the funds are squandered away because they're not poured towards in the right places. The aim is to be able to eventually facilitate both early-stage capital and early-stage expertise and help them grow faster and either acquire them at one point of time or make them independent investible entities so that they can grow on their own and own equity in them.
Akshay: And how many such brands have you incubated and what are some of the promising ones in that, that you may be thinking of acquiring?
Aanan: I won't be able to take names, but right now we have around 40 brands that are in the acceleration phase, and the mandate for us is that they have to positively impact human wellness, one.
Second, the founder pedigree and the seriousness about the outcome they want to bring in the world and then we train them on the ideology of building brand love repeat rates and all that stuff.
Akshay: What kind of scale have some of these brands seen post joining the accelerator? What has been the success rate or the impact of joining the accelerator?
Aanan: So typically, we are able to scale a brand from 5 lakhs per month kind of revenue to 35 lakhs per month kind of a revenue. In the span of nine months. We have been able to do that for 35 to 40% of the brands. And at this stage, either we'll try to make them ready for investability where we'll make them or connect them to the right investment partners, or this is also our sweet spot to acquire the brand as well.
So let's say a brand is doing 40 lakhs per month. We have fair degree of confidence whether we want to acquire it or not. We'll either make an acquisition offer or help them raise funds and then take some advisory equity in them.
Akshay: Wouldn't you need a lot of fundraise yourself to really fund your acquisitions?
Aanan: Since we operate on a hyper financial engineered model so to say, we have access to large sources of debt capital that are able to power our acquisitions. And since these are contribution to CM2 positive businesses.
We are able to power a lot of our activities through debt financing, and we don't want to dilute to a lot of the company by equity. We will raise the next round as well, but it has to be done at the right valuations, at the right dilution. I think a lot of people, especially in their younger ages, they value equity capital more than debt capital, whereas it should be the other way around because equity or diluting unnecessarily.
And if something can be done through intelligent financial engineering, you should do it via that route. Some of the greatest businesses have been built totally without equity investments, players like Zoho and all, they have built it completely without investment.
So that would have been the aim. Obviously, we operate in a hyper competitive market, so equity financing is required when you need to push, and we don't want to power our P&L through equity financing. Equity financing should only finance specific brand building activities and tech development activities.
Akshay: Help me understand what is the kind of financial engineering that you have done here? Here's my understanding of how D2C brands would access debt. Typically it would either be bill discounting where, let's say if you were to get paid for what you sold after 30 days, you can take 95% of that today.
So invoice discounting would be one, or there could be something like say revenue based financing where companies like club and all offer that they'll give you a loan and every month certain part of your revenue goes towards repayment of that loan. So what is the approach that you are using?
Aanan: Typically we use two approaches. One is the traditional RBF, where the growth of a brand can directly be powered through RBF because it's the CM2 positive business, you are able to perpetually grow it through RBF because you have access to that.
Akshay: RBF is revenue based financing.
Aanan: For our own brands, we try to maintain a contribution margin off around 20%, which means they're easily able to be powered by revenue based financing.
For acquisitions, the way our acquisition work is that for a 40 to 50 lakhs per month kind of a revenue brand, its CM2 has to go to 20% first, and then only we'll acquire it. Second, the payout doesn't happen all at once. It's distributed over several months. While in the background the supply chain integration is taking place.
All that CM2 margin that you extract from the brand goes into repaying the debt. And that kind of financial engineering enables you to take money directly to acquire the brand and you don't have to dilute your company for equity financing.
Akshay: How did you figure this out? It's the first time I have heard of this and it is such an intelligent approach to scaling up.
Aanan: It's not unique, it happens in I would say serious businesses and slightly older businesses all the time. People are powering a lot of their activities through intelligent debt, and that's how they run things.
Akshay: Let's talk a bit about the future now. As a group what kind of target do you have? Say by 2025, what kind of revenue do you want to hit? What all channels do you want to be present on?
How do you see those channels contributing? What's the roadmap? I want to do a bit of future gazing.
Aanan: I'll start with the revenue roadmap first. Our target for financial year 26, which is by March 26, we should be able to do an ARR annualized revenue run rate of $1 billion.
So that is what our North Star metric for the near term is. So you have to become a $1 billion company in revenue by March, 2026.
Akshay: Quick question here to understand what is the meaning of 1 billion dollar. What are some other FMCG companies in India that would be more than $1 billion or around that level? Just so that I understand what $1 billion means.
Aanan: Mensa will also soon become a $1 billion revenue company, top line revenue. Okay. Then you have traditional player, whether it's Emami, Marico.
Akshay: Emami would be doing how many billion dollars?
Aanan: I don't have the exact number on me right now. But it would be much more than 1 billion.
Akshay: Tell me about your org structure, your headcount, and how you are managing the business.
Aanan: Right now we are around a 125 people company and we are broadly split into four divisions. The first and the driving engine of the business is obviously the e-commerce excellence, where we excel at selling across all the e-commerce channels. You can call it the distribution team.
Then we have a team called brand building. That does everything from designing brand communication, writing content about the products, creating social content, interfacing with celebrities. If distribution is the skeleton, brand building is the skin. Then we have a third team, which is the supply chain. Everything from research and development, quality assurance, interfacing with contract manufacturers, ensuring that the product reaches the consumer in the right format. And then the fourth team is: it can be clubbed with everything else but it's mostly around consumer and business insights, where you have internal business intelligence and external business intelligence.
Internal business intelligence is about SKU wise, day wise, movement of SKUs in certain geographies. So getting that kind of granular insight and external business intelligence is about what's going around the world, how are the trends moving. Those are the four broad divisions.
Akshay: The internal business intelligence teams helps you do your demand planning, your forecasting, and therefore provide information to the supply chain that how many SKUs to be produced and what is the product.
Aanan: Internal is about what's working and why it's working. External is about what could potentially work and why could it potentially work?
Akshay: Give me an example of the why here. Something that you figured out through the intelligence team that this is why something is working.
Aanan: We recently, in one of our brands called Wellcore, we launched a product which is a pre-workout. It's a non-stimulant-based pre-workout. Most of the pre-workout products that are in the market have caffeine, taurine and all these chemicals that give you a hyper buzz and a hyper kick, but they crash your energy in the long term. So the External BI team would study the overall market of athletic supplements first.
They would segregate it in what the CAGRs are. Pre-workouts, intra-workout, post-workouts, how are these markets moving? And then they will super impose that on top of social trends where, what are the kind of problems caused by these existing products.
So caffeine addiction, taurine addiction, stimulant addiction is one big problem that is cropping up within athletes, and causing crashes. These are the kind of broad trends that helps the brand team to then decide what product potentially could be launched and how the brand would be positioned.
It's not a systematic, it's a very nebulous process and there's no linear path to it, but we are trying to build structure into it where right now we have processes where we'll gather this information, condense this information, then do more research, condense this information and all that stuff. Trying to bring a structure to this chaos.
Akshay: So did this product work and did you figure out why it worked or it did not work?
Aanan: This product is working really well because the sentiment of addiction-free energy, which is what our positioning was, is working well within the athletic community.
So clean energy is on the rise in the last 6 to 7 years. And this is the sentiment we capitalize the product on.
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