Transcript : Content, Community and Commerce for Pet Parents | Varun Sadana @ Supertails.com

Varun Sadana talks about building Supertails. He traces his journey from ideation to go-to-market and talks about the macroeconomic trends that he is betting on and the amazing metrics of a petcare e-commerce business.

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[00:00:00] Varun Sadana: Hey guys, my name is Varun. I am the founder at super tales.com. We are a pet care startup based out of Bangalore. I've had pets in my life. I've had three dogs. I got a cat in 2011. And this was not the time when people around me had cats, so the first problem statement to , and it's even worse when you have had three dogs as a kid, because you kind of assume this cat will be like a dog, and you want the cat to learn fetch. You want the cat to, you know, you say her name you know, you expect the the cat to come to you. And when you open the door, you expect the cat to jump on you. Obviously none of that will happen, the first interesting thing was

[00:01:57] and this was not the time when Google had that kind of an extensive understanding and obviously there was no ChatGPT 10 years ago and you know, I remember going to a vet and this first question they asked is, why did you get a cat? And then the second was the taboo and you are also from North India. Now, why would you get a cat, I mean, it's such a superstitious thing,

[00:02:20] so, so there was these things, and especially when you were growing up, you, you moved to a startup and then you, you start understanding

[00:02:32] It's all at end of the day first principles, right? So, so I went to Snapdeal worked there for almost five and a half years and, set up lots of stuff, saw the zero one journey there. And interestingly, when we, you know my co-founder Vineet and I were coming out, we wanted to start something in the pet care. And where did that come from you know, one thing, which MBA teaches you is

[00:02:52] so we said, Hey, you know, we need to figure out some idea. And, uh, interestingly, this, you start breaking down the problem statement

[00:03:08] brands will start becoming thinner people start spending on themselves. They, so very common thing that we, we saw across a lot of geographies. And this is 2017, B2C as a word, had not come into parlance back then. And, and we knew brands will get built. And interestingly, we, we also understood that people will start spending more money on themselves.

[00:03:28] And then we had something called as an oxytocin in theory, which is very interesting that, we felt that as and when you know, there is this hormone in our body, which is oxytocin and it needs to get fulfilled, so it's a love hormone, touching, kissing, feeling. And we, and what we understood was because people are getting married late, they would want this to get fulfilled,

[00:03:46] and then we saw Tinder was in India around 2017, that was the time (hindi) next we understood was the once Tinder, fulfils oxytocin, then pets. That's the next, next step, and interestingly, that feeling of companionship is a, has happened across the globe at certain interesting junctures, right. So, so, so we, we came back and we said, Hey pets as a category sounds very interesting, India is going through the same concept. Back in 2000 10, 11, 12, when I got married, people were supposed to get married at 24,25. Now everybody is getting married around 30 and this shift suddenly happened in five to seven years. This is not gonna change anytime soon.

[00:04:25] Our fertility rate has decreased from four in 2000 and from say 1990, I think, to 2.1 now. So that's a very huge drop. 2.1 is what? The 2022 number. And so now we will growing as a overall population and what we understood was,

[00:04:44] and pet ki follows a very interesting logistics curve right? And so there has to be a right time to build it, and it's a patient game and once it starts getting built, it will suddenly shoot up. With that thesis, we went to a couple of you know, investors and we understood, we had absolutely no clue about fundraise, fundraise,

[00:05:05] so started meeting a few founders and we, we understood interestingly in that whole conversation, uh, Vineet and I ended up meeting, and the Vivek from Licious so they had started Licious and you know, it was a very small company back then and they wanted to expand and, and because of this whole backend understanding on B2C that we had, that was a common parlance everybody was saying.

[00:05:31] Because we had all these whole thesis and background. We said, hi, this is a fight worth taking and, and we, we suddenly, we find ourselves in there. Right? And But the journey of those four years was outstanding, right. From everybody saying to everybody saying,

[00:05:51] and so, you know, the conversation's changing (hindi) and so conversation's changed this, the, the tipping point, I won't say the tipping point, but I think the one large realization happened during COVID, and, and the interesting thing that happened was that when the first lockdown happened, there is this whole oxytocin theory for us came back (hindi)

[00:06:22] And you know, all of us have a pet, all three of us. And you know, we, we started calling our vet and

[00:06:33] they have kept cats and dogs. So there's, we're just absolutely overwhelmed with the number of pet that, that are coming to the clinic. And we came back and said ki boss,

[00:06:57] is just a one blip in Covid, and, you know, is it a de-mon moment for us for payments in India, because I mean, everything changed after that one event, went the whole way but the payments the way it changed, so is it that de-mon event for pet care

[00:07:12] in India. And obviously then, you know, we went back academic, I mean that's something that we kinda like.

[00:07:19] And we went back and we said, Hey here, what is the tipping point after which a category doesn't look back? French category with main, main category. And we realized here, anytime a group of people do certain things, and that group of people is more than 10%, somewhere 10 to 15% suddenly explodes categories after that suddenly explode.

[00:07:44] Not like only pets, it's everywhere and just to give an example, call this a peer network effect here. I mean we, when we are kids, at least when we're growing up, we have girlfriends, boyfriend, our friends have one, so that's a peer network in fact we buy,

[00:07:58] a car you know, so I, I think that peer effect kinda starts becoming much, much larger at around 10 to 15%. And that was a time, you know, 2017 India only 5% percent households had pets around after this our understanding was it household have built. But then we did a large scale understanding of apartments, and we realized, This number was close to 15%.

[00:08:33] By the way. We did couple of you know, some of these surveys last month itself, larger apartments in Bangalore have anywhere between 18 to 25% of them having pets. And I will tell you what is the beauty of it? That this is a very reverse phenomena that has happened, normally things go from tier one to tier two.

[00:08:49] This is actually the opposite why you'll still see in tier two people have pets. Why? Because there's a space, there's a large house. And so people will have pets as soon as you move to an apartment pets became almost zero, and then it not suddenly the number is 20- 25%. Your societies have different groups, pet parent groups, well, this become very common. You if any society look from the window you'll see always a few people walking their dog right. And this was not a sight which was there ealier So, so I think early we felt has kind of crossed a tipping point, It has happened from the pet being a a guard dog, a functional animal, to the second step, which we are going through at a large scale, which is you know, it be people becoming parents to this pet (hindi) you know, it's a, you know, they, they are part of the family, but there is a third shift that is happening,

[00:09:39] and, and that's what Supertails is about. But people don't talk about it much. And that is the fact that there is a demographic difference in the set of people who are keeping pets. Imagine yourself when you were 20- 25 thinking when you move to a new city, I will keep a pet. The answer is no (hindi)

[00:09:56] i need to fend for myself first, I need to solve for myself the largest population of people who are getting pets today is between 20 to 30 years of age. And they don't consider as a kid because they say, I'm too young to have a kid. I'm too young to be a parent there are my companions. And that companionship word is something a large shift is happening towards companionship and who are we building for?

[00:10:23] And we were very clear, we're building supertails for the new set of customers who are Gen Z, who are early millennials, and these are the set of people who will who require so many more things, what does this, so many more things fundamentally, you, again, you go back and you, you know, academically you realize (hindi)

[00:10:44] what is the difference between us and India?

[00:10:45] Almost 80% of people who got a pet in the last three to four years in US and Europe are second or third time pet parents. 95% of people are getting pets in India are first time. Pet parents let's say you have a Labrador and I have Shitzu I mean, I max I can ask you five, seven

[00:11:07] (hindi) . And, and you know, now this does not, so practically the point we're saying is it does not follow the baby, human, baby curve, for two reason. Number one human baby me you know, the parents know, let's say they definitely know for eight months that the baby is coming, there is so many mental, physical, physical changes, (hindi) and you are prepared.

[00:11:33] The baby doesn't pop out one fine day. I mean, there is, you know what's going happen. And after that you take so many records. I have a three year old so I know (hindi)

[00:11:44] the kid will do this. And the next month you'll see the kid will start to do this absolute playbook in pets. What happens? So think of a 25 year old person. I went out to a party, everybody's conversing about a dog and I feel, Hey, I don't have a dog or a cat at home. And I'm missing out on something. I get excited.

[00:12:02] I go to Instagram, start following dogs pages and there is this huge urge that I need to get a pet. I need to get start searching. Should I buy, should I adopt? And suddenly somebody hooks me up and bam, one Sunday morning, I go out and get a pet in the expectation that my life is gonna change. I'll have better dates, ill have, you know, better mental health.

[00:12:25] Ill have a cooler life. I'll have a better friend circle. I'll also have the same conversation which my friends are having right now I can be part of circle also, I'll get a companion. There'll be so much love and cuddle up and we sleep and I'll name him or her this, you have all of these things. And bam, the dog comes to the house and the life just changes.

[00:12:42] And interestingly, the life changes for worse for the next couple of months. And it's a very, very bad time. And, and, and by the way this follows a curve, which is called as a Dunning Kruger effect, Dunning Kruger effect is a well known academic concept, which simply says the less, you know, the more confident you are it absolutely funny when it comes to it.

[00:13:04] It takes one day for it to change. Because the same night the dog is not gonna sleep.

[00:13:09] They're gonna whine the next morning, you'll wake up, they'll be potty everywhere, and they'll be peeing everywhere in two days the house will start smelling and one fine day you'll I need to take this dog to the vet. And they realize, oh my god, half the Ubers and Ola's are canceling. And I go there, reach the, vet I wait for six hours for the vet to tell me very nice, good job done.

[00:13:27] You know, take it back. Everything is fine. And then you start feeling here. Why? And then you decide he, you know, your friends are going on a road trip. You can't take the dog, cause the place is not pet friendly and this whole thing, after a couple of months, it's so low that exactly the place where abandonment happens,

[00:13:44] why do abandon pets? At the end of the day (hindi)

[00:13:51] I had a very different view about pets, now well, anybody who crosses this curve will fall in love. I'm sure there'll be a tipping point for you as well. You tell the world, Hey, if you wanna change your life, come to Japan. I'm sure it's true for, I see that about Bangalore, that if you want to change your life come to Bangalore, it's amazing. Once you get over the issues of the city it's a beautiful city. And you know, so that is called as the slope of enlightenment.

[00:14:14] And (hindi) when I take Gen Z and I, when I take this Dunning kruger effect, I totally understand what I need to build as supertails. And that's where the whole thesis started, We said, you know, and that's when you know, you, you had asked, yeah, how did you decide of leaving supertails, but this was such a solid insight for us that we said (hindi) And being an entrepreneur at heart, it was like (hindi)

[00:14:42] toh why would you like to leave it right?Very very difficult decision. No doubt. Its a company, it's absolutely very close to, to all of our hearts. And it's just been a fantabulous journey, but (hindi).

[00:14:56] Akshay Datt: if we compare with a human parent child kind of setup. So, you know, there is like one option is D 2 C, like say moms go mama, et cetera, which are doing products. And then you have communities momspresso and baby chakra, and couple of other startups.

[00:15:13] So what is it that uh, you wanted to do?

[00:15:16] Varun Sadana: So we were also deliberating (hindi) that will also come from the new set of people, and interestingly, what we understood is that this new set of people was also not, this gen-Z was not cooking at home, so which means the packet food penetration will increase.

[00:15:30] And that's what we're also seeing. All the numbers show the packet food in penetration. It was 150 million back in 2015, and I think this year it should reach anywhere close to 700 to 800 million, so that growth this happened in the last two, three years. Massive, massive growth attributed to Gen Z, so, and more so because pet food is large portion of pet food, the main ingredient ends up being meat. And we understood meat, and we said (hindi) so when we went out factory, we knew how to build a factory. We knew how to run a factory. And we said then it's about just selling that product. But we, that's where we hit a roadblock, we said, (hindi)

[00:16:07] I mean, you, you, you name some of this brand, Mamaearth and moms, they obviously, they required a platform like, you know, Nykaa to help sell their products, BabyCare you talked about and, and BabyCare required Firstcry to be a platform, obviously Amazon is a platform, but you require specialized platform.

[00:16:24] And then the second part of this question was here Right. Obviously (hindi)

[00:16:32] you have Petlove in Brazil and every place has one platform, but why is a requirement that this category will be built at the back of a platform? And, and interestingly, the answer lies in the fact that platforms get built wherever there's an indulgent behavior, so, you know, you don't wanna commoditize your purchase,

[00:16:50] so think of meat as a platform, think of meat as a, like, meat is special, sundays meat is special, I look at Licious as, as much as a brand, as much as I look it as a platform, I mean, it's a platform because when person thinks about meat they go to Licious as a platform, right? so, so yes, it's a brand, but it's more of a platform (hindi)

[00:17:14] In a very similar manner, nykaa or myntra, right? Was fundamentally important cause you're buying products for yourself, and you say, Hey, (hindi) I want the specialized one because I'm gonna spend it on myself babies even more, you always want make your baby feel special, so, so, you know, if you have to buy those clothes for them, you'll not even go Myntra or Amazon, you'll go to firstcry or, or some of those babies websites yaar yahan se you'll get specialized products.

[00:17:39] It's absolutely very similar for pets, pets are companion and they're very special. And so you know, I, we've, you, we understood why these platforms were getting built. Coming back to your question, the fundamental reason of B2C was (hindi) and for that we understood ki platform (hindi). In that thesis we had, we also were very sure ki (hindi) and we have our own brand called, which has couple of products which are already out and a few

[00:18:06] are going to launch very, very soon. But that came out to be large from a requirement that had to be solved in India. Cause most of the pet food was getting manufactured outside the country. They were not solving Indian problems and Indian problems are different. And we have seen in every category that has gotten built that Indian problems are different.

[00:18:24] Akshay Datt: Did you I mean, you know, one way is that you build a D 2 C website, which can eventually maybe like Licious just would've started as a D 2 C website, which then would've eventually morphed into a platform. On the other approaches, you've taken an approach that it is a platform and I will not only sell my own brand, but I will also sell pedigree, for example.

[00:18:45] So, so, so what approach did you want to take?

[00:18:47] Varun Sadana: Yeah. So I'll tell you the larger approach, right? and, and products is just one part of the approach. But, you know, I just go back and say and you know, we talked about

[00:18:54] fundamentally the platform that we want to build had to solve for that, ki let's say tomorrow I get a pet and I have absolutely no clue what needs to be done, I have to be handheld, handholding, you have to make me cross that valley of despair, I really, really can survive with this pet. And what we understood, what is, so this is a very simple case of we call primary,

[00:19:21] so nobody abandons a pet (hindi)

[00:19:31] people abandon a pet because (hindi) , so these are the real (hindi) as a platform we said we will solve for all three. The first is obviously we will sell everything under the sun, because people want to discover product. People want to make a very clear purchase for their platform.

[00:19:51] Number two, when somebody buys a product from us, we will handhold them because now we are more understanding for that customer and pet ki yaar as a category revolves around this largely because nobody else has that understanding of (hindi) India has about 80 odd thousand vets

[00:20:03] out of which 90% end up being for livestock, india's the largest livestock in the world. Cows, buffalos and goats, and chicken. So, so most of them fundamentally end up working for that sector. Practically seven, 8,000 companion tier one cities me concentration is higher, but this still 2000 and you know the amount of, we're talking about 10, 12 million pets and (hindi) fundamentally access to nahi tha the second with a large set of people coming in supply toh or problems (hindi)

[00:20:34] the has not eaten what do I need to do? Nobody's answering that question for you. And you want somebody, in a position of authority to come and tell you (hindi) know in a household the daadi and the naani were in a position of authority (hindi)

[00:20:55] The dog is not well who will solve it, simple problem, how, okay, how do I know my dog is unwell? I don't even know the parameters. If I go to Google and say they'll talk about 15 of them, one of them will always be true for your dog. Right. (hindi). Everything ends up being canceled in Google, right? So, practically, which we understood we have to give people access, and we said we'll do it in a very scalable manner.

[00:21:15] People have simpler problems. So suddenly (hindi) and they said, Hey, you come on the platform. You, you, you have access to rights, you have access to products, you have access to trainers, you have behaviorists, you have nutritionists. Just come and don't worry anything. We will handhold you. And to, to, to bridge this gap, we got a concept of what we call as a pet relationship manager, a pet buddy, right?

[00:21:37] Everybody requires that buddy, I I mean,who do you go to when you have a problem? And we said, don't rely on your ecosystem. We're giving you the ecosystem. Here is this person just ping them and they'll call you. These are people who are pet parents themselves, more experienced. They're not, vets they're not, they don't have degrees, but they massive pet lovers and more they have seen three, four, like I've seen three dogs, I can tell basically (hindi)

[00:22:00] obviously not in a professional authority but at least I can guide you what you need to do, and that's, that was the first layer we built. And then we built a whole layer of experts, as we call it, and we gave them to the customer. And said, Hey, as a ecosystem, we know what you require. The only thing we will do is (hindi), We will try and solve for the issues that you have.

[00:22:23] You should have a very enjoyable journey with your pet. You have a problem? Just ask, get confidence and move on. To the extent that when we know there is a problem, right, and people have issues and we say, then we guide them, go to this doctor. This is the one closest to you, we can help you book an appointment or whatever, but the idea is to handhold them (hindi).

[00:22:40] So, so that's the thesis of you know what we wanted to build as a platform. So it was not simple ki yaar just showcase very good looking photographs of pets, put a sale here and say (hindi) right? I think (hindi) right. Customers who (hindi). so the differentiation of the (inaudible) comes from what is the real problem we need to solve for us. Like I said, real problem was ki yaar our insight was ki yaar people who are coming in are young. It's the first pet time pet parent. Their life has changed and it has changed for the world.

[00:23:16] And, you know, interestingly, and we are here to handhold you. (Hindi).

[00:23:22] Akshay Datt: Did you see this as a subscription service? Because you can't I mean, at scale you can't be giving this out for free.

[00:23:29] Varun Sadana: Absolutely. So, so Akshay you know, a lot of these are, I would say, you know, the, the way we work is, and in our experience of startup, what we've learned is you, you take a cohort, you do your experiments, you start scaling them up.

[00:23:43] You scale it to an extent, when you, you know, then you realize, ki yaar do you want to monetize it? Or are you able to create efficiencies in such a way that you have a premium service, you have a 'freemium' service, or you have a free service. So different experiments lead to, you know, what we realize is different things.

[00:24:00] Akshay Datt: tell me that, that journey of your experiments.

[00:24:02] Varun Sadana: Oh yeah, yeah, absolutely. So you know when, when we started this thing. We said, how do we reach, how do we create a buzz that supertails is yaar? And we said, Hey

[00:24:10] Akshay Datt: and your like this is which month? Here, just put a timeline on it.

[00:24:13] Varun Sadana: This is May, 2021. Right. So, so,

[00:24:17] Akshay Datt: okay. And, and, and May, 2021 Super tails is like a first cry, but for pets, like that's what you were launching.

[00:24:23] Varun Sadana: Yes. so this whole thinking started around January, 2021. Obviously we, we were discussing when we were at Licious we, all three of us combined had like, I think almost two and a half years of of notice period, combined,

[00:24:36] I think I spent 7,8 months and Vineet did 7,8 months and Aman did 9,10 months so close to a year. We told them obviously that was the amount of love we had for Licious right, so, if they're, if they would've asked for more, we would've given more, so we, we start thinking about it in 2020 end, 2021, we moved out. First two months we thought, met a lot of customers, built our thesis. Interestingly, we were able to do a fundraise our first seed round back then itself, got the money around April, built a team in April and May, and May, June we launched.

[00:25:04] Obviously we were five years more experienced, wiser one of,

[00:25:09] Akshay Datt: you had a network like, did that, did that help?

[00:25:12] Varun Sadana: Yes. So I think that was, that is the biggest thing that changed. And I was coming to that as the most important point. I think we built a network, and, and that realization came when, you know, when we understood (hindi)

[00:25:23] when in 2017 we started needing funds right? We realized ki yaar (hindi)

[00:25:35] they were giving 10 minutes, 15 minutes (hindi)

[00:25:40] the other thing that also changed Akshay was that the whole ecosystem also changed. I can tell you this you know, ecosystem is just the founder network today is so helpful. (Hindi), right? And it's just amazing. And obviously some of them also help in fundraise. Some of them become angels, so many angel networks.

[00:26:01] So, so lot of things had changed. We had, you know, so much of success stories coming out of India. People were bullish. And then we also had this background with Licious where people were okay, you know I'm sure more confident on partnering with us, as a category. (hindi)

[00:26:15] Everybody was getting so of things worked in our favor to be very honest. And timing 2021 starting was a super good timing for seed funding. So a lot of things went quite in our favor to be very honest. We didn't expect, and luckily we had some capital because of, so we, we didn't want to go out and very honest raise capital we wanted to do our but, you know, don't incoming interest right?

[00:26:42] So, it happened so (hindi) right. And, and, and before we realized that in seven days we were able to have a term sheet and it was amazing, right? (hindi) which was one policy, large policy that we had, (hindi)

[00:26:58] obviously with that high we started to put our heads down and (hindi) I think, biggest thing that works for a startup. And it, that fundamental has not changed. It's always an execution game at the end of the day, if you can execute it better than others, you have one half the game. Actually, most of the game gets won because of execution (hindi)

[00:27:24] an unknown person there, the website was standing and we were having the first transaction, so, so that, that was that was superb. But, but now the question was, we hired a few vets also. Now the time, and you asked about experiments, so how did some of these things work, so theoretically we had some idea (hindi),

[00:27:43] but very few companies across the globe have been built where products and services kinda you know, come together, this category had products and services which had to be built. So we (hindi)

[00:27:57] so we yaar let's give it a pass and this is around June, July, and we said, let's do one thing. Let's announce ki we'll give free web consultation, and suddenly we started seeing a large set of people starting, coming to Supertails. Because they were getting a free access to our vet right. And we said, this is fine, and because of these people coming to our website, they started buying products also.

[00:28:17] And so there was the phase one, as I would say but it, it did its purpose very well, right? you know, giving ads for free consultation wasn't expensive. The tax were very, very, very low, so we weren't spending too much money in acquiring a customer. And once they came on the website, they started buying.

[00:28:32] But there was, we knew one problem will come and we kind of hit that roadblock very soon. This was not a very sustainable journey. Right. One because as soon as you make free consultation as paid, then the cats will go to the roof. And the bigger problem was that people who are coming for consultation were not buying.

[00:28:51] And the simple reason for that is in India, the penetration of packaged food is only six to 7%. 93% of the people basically give home cooked food. So (hindi) large set of people were coming who are not giving home cooked food. So they had no reason to buy as well. I mean, who were giving home cooked food. So they, they had no reason to buy.

[00:29:09] Akshay Datt: You, you were getting signups, but you were not getting transactions.

[00:29:13] Varun Sadana: Yes. And people loved us. So people were coming to the website, they were taking a consultation, they were loving us, but they were not doing, you know, practically not making a purchase. But we knew this will happen. So the, the good thing is (hindi).

[00:29:25] Akshay Datt: How many signups did you get? In in those couple of months?

[00:29:30] Varun Sadana: In August itself, we did around a thousand consultation that, that, that month. Thousand consultation and, you know, for a two, three month old company, I think a transaction also, we were able to do some 10 odd transactions a day. Right. Seven, eight transactions a day maybe.

[00:29:44] Right. So it's not a small business, especially, it's a very high AOV category. So we were quite happy, but we knew it was not sustainable.

[00:29:51] (hindi) We knew that the whole thing, the way it'll work is that we have to give this customer hand holding. And we flipped it in a way that anybody who comes to a website and buys a product, we said, we will, we now know more about you, we'll handhold you. And we got the concept of a pet relationship and then we increased the number of people that we had on the veterinary side on the (inaudible) side, and we said, yaar, please use our network.

[00:30:20] And this experiment started with 5% of the people in January, today we reach around 25 odd percent of our customer base. And in the next three months we are now, now in a state where we're scaling up. And we found a way where we can scale it up without massive costs. Interestingly, this whole services side of it is kind of creates its own you know, revenue also.

[00:30:42] So it's not a loss making entity for us. And what it feeds back is a massive amount of customer love and customer validation. So, so our repeats have gone up by almost 50, 60%. Right? And that's a massive number. I know, just because we are able to engage more with it and (hindi). But how do you engage with a customer?

[00:31:03] And, and we learned it from Chewy, Chewy was built on customer love. We said (hindi) but concept doesn't change that customer (hindi). So that's kinda worked very well for us.

[00:31:17] Akshay Datt: Chewy is like a first cry. What is Chewy for people who don't know.

[00:31:22] Varun Sadana: So the US market is around hundred billion dollars, right? And Chewy is the largest retailer in the US and it's actually an online retailer,

[00:31:28] so in hundred billion dollars, it does around eight, 9 billion dollars of revenue comes alone from Chewy, right? So, it's the largest in the world it has a, it is a listed entity as a, I think a last we knew it, its valuation was around 30, 30 odd billion dollars, right? so it's a, it's a massive, massive success in pet care. And similarly, there's pet Love in Brazil, there is Booqii in China.

[00:31:50] Akshay Datt: But Chewy is only an eCommerce.

[00:31:52] Varun Sadana: It's only eCommerce it, so it has services. So over time it has started to build services. But, you know, there was one thing that you talked about at the start of this conversation where you said (hindi), whereas Chewy does it as part of the subscription model where, you know, if you, if you are a subscriber to the loyalty program, and then you get started in the service, so lot of these models exist

[00:32:14] Akshay Datt: like Amazon Prime kind of a,

[00:32:16] Varun Sadana: yeah, so they call it, they call it autoship, so it's part of the autoship program.

[00:32:20] Akshay Datt: Mm-hmm. Got it. Okay. So you were I, I want to zoom in on flipping the model. Initially you said free vet consultation to get signups, and some of those would transact.

[00:32:30] Then you said, okay, if you transact, then you get some services. Was there like a minimum order value to qualify or did you open that up for everybody? Or like, how did you do that?

[00:32:40] Varun Sadana: Got it. So, so yes. When we, when we thought about the first few cohorts, so we said, yeah, let's try it with 5%,

[00:32:47] obviously, I mean, you, you first try it with hundred customers, right? and obviously you pick and choose some customers, and then when we move to 5%, we mingle the cohort, we said (hindi) are there, certain cohorts which perform better than others, and what we was realized was that is not true. Every customer, even if so, what are the kind of cohorts that you'll build?

[00:33:06] You can build it on the average order value, you can build it on the frequency of buying. You can build it on LPB any customer has given me x amount of money transacted more than a few times. What we realized was the cohorts fundamentally behave the same (hindi)

[00:33:20] that customer is happy and they will come back.

[00:33:29] Akshay Datt: You chose a 5% segment of customers and you sent them a mailer or something saying you qualify for like a free pet relationship manager?

[00:33:37] Varun Sadana: No, actually we did not do that. So we, all we did was if when you buy, we just call you or we message you, hey, and we tell you you don't qualify, you are there. So here is the person, and this is my name. And you know, in pet care it's very easy, okay? In and not very different from baby care, ki the name of the pet is the biggest icebreaker that exists. If I ask you, Akshay what's the name of your pet? Why? Because nobody asks the name of your pet, you know, are they (hindi)

[00:34:05] you have a dog, I'll not enter your house. Other people will come and start playing. But anybody who asks the name of your pet you start you know vibing so much more with them. You know, I named him Luca. I named him or her Luca, and then, conversation starts you know, this was my favorite character in this movie. And where did you get him? How old is he? What breed is he? What breed is she?

[00:34:24] This whole conversation starts, so this is exactly what we do, but it's very similar to babies, when, when, when two people are talking about babies, and they, they talk about. And that guy is so amazing and they drew the best thing, and it's very similar with pets. You know what my dog did yesterday?

[00:34:44] I, you know, this, this bugger knows when I'm gonna enter the apartment. You know those conversations happen, but behind those conversations, similarly in a baby, right behind those conversation lies a list of a thousand issues. So we kinda start with this bridge and we get over

[00:35:04] My dog has a very weird spot on, you know, on the skin. I don't know what it is. And I read about it on Google and they said, can be cancer. What do I need to do? You know, the dog sometimes howls in the night in very weird manner, this dog humps some of the people who comes to my house and I feel very embarrassed.

[00:35:22] And what I do, it's a very common problem. What do you do? You know, this, this, you know, it's been three months, but he always pees in the house When I'm not there, what do I do? The dog has so much of anxiety or the cat just can't leave me whenever I'm at home and I feel, is she even happy? I mean, these are so common, but

[00:35:41] (hindi) now the customer knows yaar just ping this person, this pet buddy of mine,

[00:35:49] Akshay Datt: Give me, gimme an example. Like so if I purchased, let's say a bag of dog food from supertails, then what would happen? What would be the workflow?

[00:35:59] Varun Sadana: Interesting. Okay, so let's say you buy a product and let's say you buy Royal Canin Royal Canin, maxi Puppy,

[00:36:06] that's a product, you know, you the, the animal is a puppy. It's a dog, it's a puppy. And I also know that it's a bigger breed, it can be a, a German Shepherd or, you know, that's one of some of the more common breeds. Or if you have bought Labrador Food, (hindi) so imagine ki meri paas conversation, me I have pointers to start, so when did you get a puppy? What did you name the puppy and why did you name the puppy somebody, you'll, you'll get a call, obviously you'll get messages that we're gonna call et, etcetera. And then when you get a call, you made, the conversation will start and it'll start with what is the name of your puppy,

[00:36:40] and, and

[00:36:41] ki you would've gone through this thing, have you vaccinated you know, so I, I'll talk about, we'll talk about those, deworming, we'll talk about those, and lot of people are very smart. They have done a lot of these things, but then you start coming to the real problems and do you, you think dog scratches, do you think when you don't want to right?

[00:37:03] and do you think you've been able to manage or, or a simple one, do, does your dog know your name? Like you know your dog dog's name, but does the dog know their own name? Does the dog respond? Hey, you want him to respond or her to respond right? do know the right Way of walking with dog does the dog walk take the leash, right? Does it walk on your right hand side or your left hand side. and I can tell you yes, there are some smart people who know it, but most of the people fundamentals.

[00:37:28] That's a factory, (hindi) . And, and certainly people have this thought process ki I will get a trainer and it'll get solved, I mean, which baby learned in two hours what need to do, no baby has ever learned. And and animals obviously have lesser you know gray cells,

[00:37:50] so they're not gonna learn in two hours, so they'll take a long time. But the persons who will make them learn as the pet parent themselves, and that's what we do. We connect them to a trainer or behaviorist. And we tell them, hey, if these are the five step things that are you are gonna do in the next two months, and after the first month itself, you will start realizing, or x number of days you'll start realizing the dog started to respond to your name, to, to their name, as a pet parent, you need that, you want that. And I can tell you, I never knew ki cats also, will start responding to their names. But because we had none of these things, it took us five, six years before my, my cat's name is Nifty. And it's only now that I call her by name and she'll come and start responding and we have a dialogue,

[00:38:32] I wish somebody should have told me when I got Nifty, because imagine when she was a kitten, I would've had those conversations with her back then, how was your day Nifty, and she'll respond "meow"? And so you know, I'll, I'll ask her a question, but, but there is a very daily thing that we'll have, you know, I'll come back home and we'll sit together and we'll have a conversation.

[00:38:52] It's, it's my way of admiring myself.

[00:38:55] Akshay Datt: You said that this is not a loss leader. How, how is that?

[00:38:59] Varun Sadana: So, so see, when you are connecting to an expert, you, we've kind of built a few cohorts there. I would say fortresses there where we are able to get the customer back.

[00:39:09] So one way of this not being a loss leader is in simple fact that I have 50% more repeat of this customer coming to obviously there, you know, I get that money back, but not just by this, obviously, you know, a lot of customers for the next time they come, they, they pay for the service. There are certain allied categories that we run.

[00:39:29] Obviously there are times when people want you know some treatment or they want some pharmacy, so we also do pharmacy through this route, so, and we write a prescription, obviously we write a prescription, so we also sell pharmacy to them. So, so this has started to become like, you know, the cost of whatever we incur, if we start to, you know, get back and

[00:39:46] Akshay Datt: The the vet consultation is paid, the pet relationship manager is free.

[00:39:50] Is, is that what you're saying?

[00:39:51] Varun Sadana: Yeah. So, so, so today when the pet relationship manager also connects to our, vet so we don't charge for it, but, you know there are certain cohorts where we charge, but any person who comes directly on the website and wants to talk to our vet it's paid for that. It's a nominal fee of 300 bucks. But yeah, very happy to customers are, what we've seen is are willing to pay for it because

[00:40:11] Akshay Datt: Yeah, yeah, yeah, yeah, yeah, yeah. The, the convenience of doing it from your home is absolutely a, a big, big plus factor because most of the times you may not even need to actually show your pet to the vet, but you want to discuss some anxiety you have or whatever. Absolutely. And, and we also feel that this whole ecosystem has not been built in the right manner.

[00:40:30] Varun Sadana: And I'll tell you why. See, pets are territorial, dogs and cats both are territorial right? I mean, they're not happy going to a vet in a cage, one, they're not used to the cage and second, they're not used to all these animals around them, ask one pet parent ki yaar I I mean, they dread the day they have to take it to the vet right?

[00:40:46] And if, and, and we feel a large portion of these issues can be solved online, I mean, the numbers around it, not by us, but by some companies across the globe where they say they claim 91% of issues can be solved online, and we, we, our numbers also, by the way, show a similar case. And what we've realized is that obviously these customers will keep coming back for issues which are, which don't require any kinda surgery or a massive amount of physical check,

[00:41:12] or, or, and, and by the way, you know, that way because we don't have to earn money through, you know, putting a knife or, or doing a surgery, I mean, it's easier for us to be more clear on the kind of consultation that we end up doing. I want you to go to a vet and show it to them physically. That's exactly what we do, this is what I'm thinking.

[00:41:32] You can always come back to me for a second opinion, but I think you really need to take your dog to a vet..

[00:41:41] Akshay Datt: Do you wanna build a prime, like a prime subscription kind of a model where you charge something and then for the you know, all of this gets bundled into that? Or do you wanna continue to do this as a way to build repeat purchase, increase the average order values, and, you know, overall increase the long term value of the customer?

[00:42:00] Varun Sadana: you are absolutely right. It's, it's, it's not a question of if, it's a question of when, so obviously there are certain priorities and, and we are a small lean team, so some of these things will keep coming and definitely, definitely this is something that we have to build,

[00:42:12] Akshay Datt: So as in right now, you're still building in the pieces which add more value, like you're creating more features so that you can eventually bundle it and monetize it.

[00:42:20] Varun Sadana: Hundred percent. So obviously there are p zeros and you solve for p zeros. And second, there are certain things which work better at a scale, so today, you know, if I know ki, okay, a loyalty program will increase my repeat and average order value, I can quantify that number, so, so now it's only a question of doing that. But if I have something else, which I wanna try today, because it might increase a repeat much larger, so I would, I would focus my nudges on that, see toh known hai, it's known for everyone as free service will work, a loyalty program will work, so, so it's just the function of when it's not the question of if and how do we kind of create that a real service display actually valuable, like Amazon Prime is absolutely worth every penny.

[00:43:03] It's absolutely worth every penny, and, and without naming some of the other subscriptions that we have, I mean, we question, (hindi) because fundamentally I am going to get the same service right, what is the differentiation? (hindi), It is just barely covering that cost.

[00:43:30] Akshay Datt: What are the p zeros in front of you right now? Like, you know, the, the more things that you wanna try and solve or, or the experiments you want to run.

[00:43:38] Varun Sadana: Yeah, so I, you know without going in too much detail, Akshay, I think the largely it has to be built on repeat, we have, and how, well, how better are we able to you know, I told we reach around 25% of the people. So I think the biggest thing is ki how can I scale it up to, let's say, you know, 75% of the people, 50% clarity is the 25% is being thought about because, and this lever, imagine if when I do 75% of the people using my products and service integration, and to them I pitch there is my loyalty service. Why would anybody go out of the ecosystem?

[00:44:13] I don't wanna sound ki we want to take it slow, but we have to rationalize it. I mean, there's certain things you can always hire people, right? and what we have seen, at least our experiences, lot of times we're seeing so many companies shutting down or, or you know, they're firing people. I mean, you don't want to be in that stage, so there are priorities. Ok. It's ok.

[00:44:31] Then obviously we take a call and we hire, so, it's just a matter of that.

[00:44:37] Akshay Datt: You wanna figure out a way in which, like, say you have 10 pet relationship managers covering thousand or 5,000 customers, so you wanna figure out a way in which these same 10 customer these pet relationship managers can cover twice the number of customers.

[00:44:51] Like, like that is

[00:44:52] Varun Sadana: correct, or it is, the experiments are happening as we speak in (hindi). And, and obviously that is also timeframe that we look at. This is a subscription service coming. So everything I'm talking about is nothing is like a punch, right? Everything is a couple of months here or there, right? so, you know, I was just trying to answer ki yaar why has it not been done by now till now, right. In one and half years of existence, right? It'll be done within the next few months it's

[00:45:15] Akshay Datt: what is the way in which you are improving the number of customers you can cover with the same human resource, like with the same pet relationship managers?

[00:45:23] Varun Sadana: Yeah, absolutely. I mean, interestingly, a lot of these technologies exist, so the conversational chat is here you know, scaling up without losing the efficacy, so scaling up is easy without losing the efficacy is a difficult part.

[00:45:35] Today, we get a certain repeat when we do it in a certain manner. The, the, the experiments that we are doing is largely one, how do we scale up without the loss of efficacy, and I think that's the focus. So, but on terms of mediums that exist, I think WhatsApp is a medium, is very solid the whole conversational AI conversational technology et cetera,

[00:45:54] ChatGPT et cetera is quite exciting. there are certain cases of voice AI also trying to get solved. We have not tried it yet. We're just exploring it as we speak. And you know, I also feel today it's quite raw, and I call you, I start having all those discussions with you, so now is the experiments is yaar how quickly am I able to reach to those issues fundamentally with the issues because that's what I solve, so our conversation, so in a very simple manner, it's the spiel, the spiel in a more complex manner. It is the whole structure of how I break through you and figure out what is the issue. And so multiple ways.

[00:46:32] So it's a very multi faceted problem. I think even if I say it, you'll feel about, but you know, that's one single SMS or a type of sms which works when it goes to a large base of customer, it just works wonders, so so that's how we look at some of these things.

[00:46:49] Akshay Datt: Amazing. Amazing. Okay. And how are you building your pet relationship manager team?

[00:46:54] Are you like hiring and training, or are you looking at hiring specific kind of profile or like, you know, are you like hiring for empathy and training for knowledge on pets, or are you, like, what is the way in which you're doing it?

[00:47:07] Varun Sadana: Awesome. it, it's amazing that actually you've told me the answer also, so This is built on three things. One is absolutely clear understanding that they have had pets in life or they have a pet, so, and, and the understanding of the pet, the second is a massive amount of empathy, and that, interestingly in pet care is not very difficult. You have a conversation with somebody for 30 minutes and you'll be 90% sure, you know, are they really a pet lover or are they faking it, so, so that is the part number two, and the soft skills, so for a pet relationship manager, these are the three large things that we look at. The training is something that we know we take care of. And so we, we're not worried if somebody, some people who know a little bit more than others, which is fine, but honestly that's not a requirement. It's 15 day crash course and then, you know, couple of hours every week that kind of refreshes them. And because we have a large set of vets, you know, everybody's happy because if somebody genuinely loves something, they would like to know more, also, a lot of times, you know, these people have similar issues with their own pets so you know, they are able to solve it.

[00:48:10] So you remember, I, we hear a lot of these calls and it was amazing that, you know the pet parent talked about that this is a issue that the pet is going through. And this pet relationship manager said, Hey, wait, my dog is going through exactly the same thing, but you know what? I never knew this was an issue.

[00:48:27] Right. And, and now, you know, and then this person shifts on a video call and, you know, both of them are showing the dogs to each other. Then there is something, and our parents said, Hey, I, I never thought it was a problem and thank you for helping me, because otherwise I wouldn't have, and both of them then go into consultation with a vet.

[00:48:44] And interestingly, it was nothing, right? interestingly, it was not an issue. But, you know I, actually remember that call because you know how much confidence you as a customer will get it is a community feeling which kind of helps to do it. So, soft skills being a pet parent and empathy those are three things .

[00:49:09] Akshay Datt: In, in, in the long term. Do you think you'll be able to replace a PRM with tech? because essentially a PRM is following a playbook that, okay, let me ask these questions, find out what is the core issue, and then give some suggestions. And then do a follow up. And if there is an escalation, then I escalate and I so, you know, does it seem like something which could be replaced by tech?

[00:49:31] Varun Sadana: Yeah. So if we talk about very long term, you know, I think it should happen short term. The, the India has a very interesting problem. Every person's want is different, the solution is both and let the customer choose, and this is what we feel at some level isn't getting so, and, and the question is also yaar ki do you need, you know, a lot of times a lot of companies, what they've done is just put a bot and the bot keeps answering. The bot doesn't understand half the things that we are saying. In India, we don't have English, also in English, you know, combination of Indian in English or a language in English, so, so the answer is three, four. It is a combination of AI, human, and between both of them, voice and chat. So it's a two by two, and, and between this two by two, lie all the people, my sense is, you know, it is evenly split or you know, it is in a proportion where you can't ignore any cohort,

[00:50:28] Akshay Datt: So help me understand supertails from the business perspective.

[00:50:32] What kinda you know, what kind of average order values do you see? What is like the how many times in a month or in a year does an average customer transact and like, share with me some of those metrics for people to understand this space a little better?

[00:50:46] Varun Sadana: Absolutely. So, so pet parent, so it's, uh, a decently high average order value business, and where does it come from? So so the way it works is that there are three types of people. One obviously, which is not too much relevant for us, people who don't give package food or give home food to their pet. The second chunk is much larger, which gives them mixture of home cooked food and package food,

[00:51:07] and then there is one set, which is the growing set of people who only give package food to their pets so there is obviously a decent amount of difference between packet food and, and on, you know, home cooked food. And one of the larger, I would say a problem statement is that You know, a balanced diet for a pet is very, very different.

[00:51:23] And, you know, (hindi) it was table scraps, which, you know, pets used to have over time. I know it has changed, but it's impossible to give a balance diet to a pet because it's practically quite different from a human diet, you know, they need taurine they need some of these things which humans don't require and in that proportion, right?

[00:51:39] Vitamin K and vitami n some of these other things the, the point being that still a large portion of people mix packaged food and home cooked food, but coming to what is the imagine somebody who only gives packaged food. The cost of food ranges between 200 bucks to 800 bucks per kg if you have a medium size dog, let's say 30 odd kg, the proportion is quite clear.

[00:52:01] They need to 2 to 3% of the body weight as food every day, so if you do the maths the cost will range anywhere between 5,000 to 10,000 basis you know average size of the dog, obviously, if somebody has a very large dog or a very small dog these numbers could differ, so, so, so the cost of keeping a pet only on the food front for a month, ranges between 5000 to 10000 rupees right now some people take smaller packs, which will last them for a week. Some people will, most of the people, like I said, mix packaged food and home cooked food. So case maybe we realize this number will change from 2500 bucks to 5000 rupees because it'll half, it'll not become zero. And, and so the average order value ranges somewhere around this number itself for us,

[00:52:42] which

[00:52:43] Akshay Datt: to 5,000?

[00:52:44] Varun Sadana: Yeah. Correct. So, and, and which you would realize is very, very, very different from any other category, because most of the category end up being between 500 to 1000 bucks. But some really good categories end up being 1500 bucks. But here the average order value is very high. Also the margin structures are quite good, this, this category sees margin structures between 30% to 50% basis the type of product. So it's, you know, an average of 40% is not a bad average. But then there are the other side of the product statement, which is also the fact that these products are heavier because there is, the weight is higher.

[00:53:18] So the, you know, cost of shipping becomes much higher as against, you know personal care, which will always lie mostly 500 grams. This, you know, people are buying, average weight is around five kgs, so five kgs of products being transported through, you know, air or surface. So supply chain is cost, and, you know, network supply chain networks end up being quite different for us.

[00:53:39] Akshay Datt: But, but this is pretty incredible. So this is like a, in the long run and extremely profitable business, I mean, even like Nykaa is seen as the poster child of profitable e-commerce, and I think your average order value is higher than what they get. And probably better margins also.

[00:53:55] Varun Sadana: Yeah. Yeah, yeah, yeah. So, yes like, you know, this is one of the parameters that we looked at that this category has an inherent way of being profitable, this is not a 1- 2% business, so category me the, the reason why probably it'll be slow in reaching that is, is the scale the category is at right now.

[00:54:15] So it's a sub billion dollar packaged food industry. Obviously in the next five years, hopefully it'll be a 3 to 4 billion industry. And, and also those are aggressive numbers. But you know, if and when that happens, obviously this category will see a massive model growth, profitability (hindi).

[00:54:33] Akshay Datt: And, and customers come once a month or more frequent, like on an average.

[00:54:38] Varun Sadana: Yeah. So the average buying behavior that we've seen is 35 days, so, yeah, so, so the customers who come much more frequently and, and look, we also have for us offerings are massive, or is maybe Akshay I must tell you the cohort of people is absolutely very, very uh, different, right? so anybody who gives wet food, let's say a cat, wet food, will not buy for a very long term. They'll keep buying and they'll keep keeping some packets, like 10 packets. But like I have a cat and you know, I don't buy for more than 10 days, I'll just buy, I give one packet a day. I'll buy a pack of 12, pack 12, and I'll keep repeating. I'll keep repeating (hindi) I need to buy a toy, I need to buy.

[00:55:15] So I don't buy for like, I don't keep like a 50 odd packet. But this interestingly is like is absolutely different for everyone it, there is no standard pack like for, for babies, or, or diaper pack of 24, there's no, not too much of standardization. Every brand does it differently because the brands practically when most of these brands are from outside the country.

[00:55:36] So something works for them in France and you know, at the same pack size, which comes to India, something works for them in Thailand, and the same pack size comes here and something works for them in US and the same pack size come here.

[00:55:47] Akshay Datt: What percentage of your sales is your in-house brands? You said you've launched some in-house brands.

[00:55:52] Varun Sadana: Yeah, so, so it's it's quite small right now because the, the only category we've launched is one product, which is a nutrition topper, the brand is called Henlo. And interestingly, this is, this is solving for the 93% of people who don't give packaged food, where we say, Hey, you need, you give home cooked food, it's not complete, so why don't you sprinkle on top of it? So, so yeah, today, so today at the scale that we are, we sell around 2000-2500 boxes a month, maybe a little more than that last month. So, so, so those are the, so it's, it's growing, but, but that target segment for that product is very different. Very soon you know, in the next couple of weeks we will launch dog dry food, that's, that's when we'll be like, you know, that that's a mainstay product in this category. So very excited for that. So let's see how that product grows. Because it's gonna be probably the only products which is gonna sell online only and like a new age brand

[00:56:42] you know the whole industry stucture was so tilted towards an offline kind of a thesis, right?

[00:56:45] Akshay Datt: One question Let's talk about this offline only. Like, you know, like Mamaearth all of them are going offline also now with their retail like retail experiences, retail stores, et cetera. So like, that is like something you also think in the long, long term.

[00:57:02] I mean, right now, obviously it'll be spreading yourself too thin.

[00:57:05] Varun Sadana: Yeah. So, you bang on the first part of the you know, answer that, the answer today is probably wait and watch largely because we need bandwidth for it. And I think online as a space is something that is absolutely open and we wanna win that offline in the future we are quite closely looking at this category of how we believe offline

[00:57:30] (hindi) right? but if you wanna go to a larger base of people, what if what is the offline format that works for them is gonna be a little bit different. We have some ideas around it, but I think we'll, we'll reserve those ideas for the time when we're happy to launch, and it's definitely not the next six months.

[00:57:49] That's something that we're absolutely clear, but we have not at all said no to that whole concept, we believe there is some power in offline. It's just that in this category, if my average value, sorry, average order weight is 5kg, I am not expecting everyone to be okay in, in, in carrying that 5kg pack.

[00:58:08] The second thing, like I also, you know, mentioned the start. My, my target segment is Gen Z, i, you know, in, in the next two or three years, I'm expecting that Gen Zs are will be okay in carrying that pack five year 5kgs, you know, how is their, you know, that Gen Z plus offline thesis, how does it come together, is something that we'll be very close looking at.

[00:58:27] But like startup teaches, you'll never say, never, never say no to anything. Akshay I can tell you we did a, a fundraise last year, which was around June, July. Yeah. We announced it a couple of months later. At that time,

[00:58:42] Akshay Datt: this was the 10 million dollar series A.

[00:58:45] Varun Sadana: Yeah. With, with fireside. You know, at that time we were around close to five million era, and obviously for, we're a small startup today, obviously we grow in double digits every month, so I think that's, that's the zero to one, which kind of keeps us excited. So, yeah, so that's how we're growing right now. So it's, it's a, a good journey. Yeah.

[00:59:04] Akshay Datt: Amazing. What works on Instagram? Like long form video, reels, images. What, what, what has worked for you?

[00:59:10] Varun Sadana: Interesting. So I think in Instagram in the last one and a half years, two years has changed massively. Drastically. When we started and the, the, the branch which been built before that, so there was this whole post covid brands started coming and getting built. Right. And that time the influencers larger microinfluencers, etc, was what right, right. And interestingly, very early, influencers probably, after a while doesn't work. Maybe not in our category one thing we never wanted to do was we didn't want to have those videos of good looking dogs and cats, and we didn't want people to just say (hindi).

[00:59:45] And that's something we didn't want Just produce high quality content and after that just leave it to, you know, data