Daybreak - Titan’s Caratlane & Bluestone started at the same time. But one sparkles brighter than the other

Episode Date: June 19, 2024

Bluestone and Caratlane set out with the same dream. They both wanted to sell everyday fine jewellery online. This was a pretty alien concept in a country like ours, where gold and diamonds are seen more as an asset rather than just an accessory. And for a lot of people, buying gold and diamonds online is completely out of the question, even today. But both these companies were committed to the idea that there was space for fine jewellery online. And turns out they were right. Today, pretty much any major jeweller you can think of is selling their jewellery online. But somewhere along the way, they went on completely different trajectories. 

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording.

Intermission launches on March 23rd. To get an alert as soon as we release our first episode, please follow Intermission on Spotify and Apple Podcasts or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. About two decades ago, two fine jewelry brands in India were starting to find their feet.

Both of these companies were trying to pull off something that had never been done before. They wanted to make everyday wear fine jewelry. So basically gold and diamonds that you could wear any time. You know, pieces that you didn't have to save for a special occasion or store away in a locker somewhere. Now, this was a pretty alien concept in a country like ours where gold and diamonds are seen more as an asset than just an accessory.

But that's not the only audacious gold that they had set out with. They had another big dream, which was even more unbelievable at the time. These two companies wanted to sell fine jewelry online. And this was unheard of at the time. Firstly, these were two newcomers in an industry dominated by legacy brands. And secondly, for a lot of people, buying gold and diamonds online is completely out of the question, even today. And when you think about it, it does make sense. If you are investing in an expensive piece of jewelry,

you will want to see it up close first. But both these companies were committed to the idea that there was space for fine jewelry online. And turns out they were right. Today, pretty much any major jeweler you can think of is selling their jewelry online. And thanks to all the exciting things happening in this space, now everyone wants a slice of the fine jewelry pie.

All of the world's top VCs, corporate heavyweights, they're investing heavily in Indian jewelry companies. And to a great extent, it's because of what these two brands had set out to do. Now, if you haven't guessed already, the two companies I'm talking about today are Bluestone and Carrot Lane. Now, while both set out to do the same thing, somewhere along the way, they went on completely different trajectories. Carrot Lane charged ahead of Bluestone in more ways than one, its revenue is. is close to three times that of Bluestone at the moment. And it has consistently dominated the fine jewelry space in India for some time now.

Meanwhile, despite starting strong, the Ratan Tata-backed Bluestone is still struggling to become profitable. It has told its investors that the aim is to become profitable by next year. And now that it's eyeing both an IPO and a billion-dollar valuation, Bluestone has made one thing clear. It's done playing second fiddle to Carrot Lane. Welcome to Daybreak, a business podcast from the Ken. I'm your host Rahil Philippos and I don't chase the news cycle.

Instead, every day of the week, my colleagues, Nickda and I will come to you with one business story that is worth understanding and worth your time. Today is Wednesday, the 19th of June. Both founders, Caritlan's Mithun Satchetti and Blue Stones Goraing Kushwaha set out with a similar vision. Satchetti comes from a family of prominent jewelers who've created pieces for the elite. So from powerful landowners back in his great-grandfather's era

to high net worth individuals during his father's time. But he wanted to move away from all of that. He recognized that there wasn't much on offer for people looking to purchase more affordable everyday pieces of jewelry. And he saw a huge opportunity there. And he got right to it. He wanted to build a brand that made beautiful jewelry at an affordable price point. And then there was Kushwaha, who also wanted to build an everyday jewelry brand.

He recognized that the biggest challenge would be to change the way the average Indian consumer looks at fine jewelry. And like I mentioned earlier, another thing both founders had in common was their desire to sell their jewelry online. So for the first few years, both founders were, went all out trying to build consumer trust in online high-value purchases. And up until 2015 to 2016, both companies were on par in terms of scale. By that point, both companies had managed to raise significant funds from VCs, Carrot Lane from Tiger Global and Bluestone from Axel Partners, Kalari Capital, Ratan Tata and K. Ganesh. Everyone seemed excited by the prospect of building on.

online first jewelry brands. But the downside of that was that VCs backing both these businesses were hesitant to explore offline channels. The Ken reporter Akriti Bhala actually spoke to former employees of both Caratlane and Bluestone. And they told her that VCs were cautious because of the substantial capital needed to launch a jewelry store. They would have to take on huge costs like real estate and inventory, which they weren't ready to do. So instead, both Bluestone and Carrot Lane adopted a similar strategy. To tempt more customers to shop on their websites, they tried to give the best possible offers on their jewelry.

And this was when the two companies faced their first major hurdle. Because that strategy just would not work for multiple different reasons. You see, here's the thing. Even with the best discounts and the most snazzy ad campaigns, people were hesitant to make expensive purchases online. Most customers said they would prefer physically inspecting the products before buying them. Because at the end of the day, buying fine jewelry online isn't the same as buying a light bulb or stationery on Amazon. You are spending a lot more money and therefore you need to be absolutely sure of your purchase.

And this was the game changer that set both of these companies on separate parts. More on that in the next segment. 2016 was a major milestone in the Carat Lane story. This was the year Titan came along and acquired a majority stake in the company. Sure, the company was doing well before Titan came into the picture, particularly with Tiger Global's backing, but Titan's arrival took Carat Lane to a whole new level. That's mostly because Titan is the dream strategic investor for any fine jewelry company.

It has a 40-year legacy of creating market leaders in non-existing categories, like Tanishk in jewelry and the quartz watch industry. So if anyone could scale this business profitably, it was Titan. And that's exactly what it did. With Titan, Carit Lane suddenly had two big things going for it. One, the stamp of approval that came with Tanishk added a whole new level of trust amongst its customers. Plus, with Titan's deep purpose, pockets, Carat Lane didn't have to worry about funding anymore. So now, expanding its offline

presence was no longer an issue. By 2023, Carat Lane was launching about 35 new stores every year, and that's reflected in the nature of a majority of Caratlin's sales. In Caratlin's early days, jewelry discovery and purchases were mainly online. But today, 90% of customers who buy in stores start their journey of a product discovery and selection online. Basically, post-Titan growth really skyrocketed for Caratlan. So it makes sense that Titan eventually went on to fully acquire the company last year. Now, on the flip side, Kushwha's Bluestone stayed the course. Like I said before, it's not that Bluestone hasn't seen rapid growth.

It just hasn't seen growth like Carrot Lane. And while the type of backers may not be everything, it definitely made an impact. One factor contributing to their divergent parts could lie in the nature of investors. Carrot Lane thrives under the strategic umbrella of a corporate heavyweight like Titan, while Blue Stone is backed by financial investors. Deepak Tulsa, a jewelry growth consultant and founder of a consultancy firm called My Wisdom Lane, explained it to us. He said, usually in a VC-backed business, there's undue pressure to show numbers, and the passion of the entrepreneur takes a backseat. Meanwhile, in a promoter-backed business, they are passion-driven.

Basically, most VC-led businesses want to make the most of the opportunity and exit. They aren't really attached to the brand, which adds up when you think about carrotly and success and how it achieved both scale and sustainable profitability. with Titan behind it. Meanwhile, Bluestone with its A-list VC lineup wasn't able to scale its business to that extent. Like Bluestone promoter Kay Ganesh put it, the company never had an umbrella over its head. There was no unlimited cash and no vault.

Each of these companies also have very distinct corporate cultures. Multiple executives and industry insiders said that this probably had to do with the geographical roots of the world. these startups. So Bluestone, located in Bangalore's dynamic startup ecosystem, pursued bold growth strategies. Meanwhile, Carat Lane, based in Chennai, stuck to a safe, traditional, cost-conscious approach. So where does that leave things? Well, Carit Lane's profitability in the fine jewelry sector stands as a rare achievement, not accomplished by many, including Blue Stone.

So if Bluestone wants to turn things around before its big IPO, then it needs to find a way to assert itself as a market leader and not just a follower. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters and podcast extras. Head to the Ken.com and click on the red subscribe button on the top of the website.

Today's episode was hosted by Rahil Filippos, produced by me Snigda Sharma and edited by Rajiv Sien.