Y Combinator Startup Podcast - #127 - Vidit Aatrey and Adora Cheung

Episode Date: May 22, 2019

Vidit Aatrey is cofounder and CEO of Meesho. Meesho is a platform in India that allows people to resell products using their social networks. They were in the Summer 2016 batch of YC and you can check them out at Meesho.com.Adora Cheung is a Partner at YC. Before working at YC she cofounded Homejoy.You can find Vidit on Twitter @viditaatrey and Adora is @nolimits.Y Combinator invests a small amount of money ($150k) in a large number of startups (recently 200), twice a year.Learn more about YC and apply for funding here: https://www.ycombinator.com/apply/***Topics00:00 - Intro01:20 - What is Meesho?3:20 - Why not just sell directly to consumers?5:05 - What are the macro trends in Meesho's favor in India?7:30 - A trust deficit market8:55 - How does Meesho help users get online and start selling?11:45 - Most impactful user stories13:50 - Growth drivers15:50 - Balancing growth and quality17:25 - What if Facebook copies Meesho?18:50 - When did Vidit and his cofounder know they wanted to start a startup?21:20 - Their first startup idea and the inspiration for Meesho25:40 - When did they know Meesho was working?27:20 - How hard was it to pivot the business and how did they manage it?30:05 - As a CEO how does he stay in touch with users?34:50 - How has Vidit's role changed over time?36:55 - How has he learned to be a CEO?38:30 - What mistakes have they made?39:35 - What was his best decision?40:15 - What's a strong opinion he had about running a startup that he's changed since running Meesho?41:45 - How has the Indian startup ecosystem evolved?43:20 - Big problems worth solving in India43:05 - Can foreigners come to India and start a startup?45:10 - Best advice for aspiring Indian founders46:20 - After Meesho, what's the most exciting startup in India?47:20 - Why is Delhi the best IIT?48:15 - What's a must read book and why?49:10 - What's a startup idea he'd be working on if Meesho didn't happen?49:25 - In 100 years, what does he hope Meesho is?

Hey, how's it going? This is Craig Cannon, and you're listening to Y Combinators podcast. Today's episode is with Vodite Atre and Adora Chung. Voddite is co-founder and CEO of Misho. Misho is a platform in India that allows people to resell products using their social networks. They were in the summer 2016 batch of YC, and you can check them out at Misho.com. Adora is a partner at YC. Before working at YC, she co-founded Homejoy. You can find Vodit on Twitter, at Vidit Atre and Adora is at no limits. All right, here we go.

This is Adora from YC. I'm excited to have Vidatre, CEO and co-founder of Misho, which was founded in 2015, and you went through YC in 2016. So today, Misho is probably one of the hottest startups in India, if not the hottest startups. And I'm super excited to hear about, for everyone to hear about your entrepreneurial journey,

your thoughts and opinions on not just Misho, but the startup ecosystem here in India. So thank you for being here. Thanks so much for inviting me. I'm super excited to be on this podcast. Thank you. Awesome. So let's start off with, I love the name Misho, which I believe is short for Mary's

shop, which means my shop. And it obviously alludes to what Misho is today. Maybe you can start off with giving us a quick background of what exactly is Mishu and give us an idea of how big you are today. Sure. So Misho is essentially a way for anyone, literally anyone in India, to come from a and start as well as grow your social store and it could be on any social platform WhatsApp Facebook Instagram

tomorrow could be something else that comes up and what happens what has happened over the last three years is now we have close to half a million monthly active such social store owners who are making some income per month and these people are selling across all possible categories we started with fashion move to non-fashion lifestyle now it's food some travel packages cosmetics, like almost everything out there. If you want to start a store and you do not have

money to start that store offline, you come and start that store on WhatsApp, Instagram or Facebook and we give everything that you need in the ecosystem to do so. So most of those people before Misho existed, what were, did they even have a business or most of them you have enabled them to even have a business in the first place? Yeah, so I'll just set some context here. Right. So it's very, very common in India. Like 90% of total commerce happens in these small mom and pop stores and for every small shop that you see there are 99 other people who always wanted to start a store but just never could get capital India's not such a rich country most people do not have access to capital so these people who

never had the opportunity to start a store came onto a platform and became entrepreneurs for the first time because we do not need them to invest any money in working capital or setting up an offline shop you can come here start your shop on WhatsApp access anything from a supply marketplace And only when you get an order, you purchase that from the marketplace. So just taking away those barriers of entry, I would say. So almost everyone who is using our app today has become an entrepreneur because of us. They were not doing this offline, like almost everyone.

So when you think about then the end consumer, the people buying the goods from the resellers and the new entrepreneurs, were they buying it from other people like them before? Or what do you think about, you know, like why not just, I guess, sell directly? to the people themselves. Why not the middle man in the middle, I guess? Yeah, so 90% of total commerce, this is 2019, right? And today also 90% of total commerce happens in these small mom and pop stores. You will see in societies, people will just put a board outside their house and start selling

products. And most of these products are long tail, unbranded products, where there's no pull of the product, people don't know about it. What value these people add is these unbranded products through their trust relationships through this trust selling, they go out and push these products. They highlight what is special about it and then people start buying, then people start recognising this emerging brand. So selling unbranded categories through like a mall has never worked out in India.

It has always worked through these mom and pop stores. So when these unbranded products have to sell online if you see like all big destination marketplaces in India today mostly sell brands across all categories, none of them have figured out how to sell a lot of unbranded products. But now with these guys doing similar thing but not offline but on these social channels, you have started to sell these unbranded products and across all categories. So we're just taking the same value add that these guys were doing offline to the social platform and giving them all the tools that they need in this new digital world.

Most of these users, consumers I mean, have been buying the same kind of products from these small shops offline. They've not been going to malls or they're not been going to the Amazon of the world to buy these products. Got it. And are there, is there a timing aspect here? Meaning, you know, a lot of startups who grow really, really fast, some of the founders say it's due to luck, but luck is also due to, you know, good timing. So what are the macro trends in your favor in India that allows you to grow so fast today? We've been super lucky, right?

In many ways, right? So WhatsApp started to become very, very popular about five years ago in India. So, and WhatsApp was generally the first app most people used. So a lot of these people were coming online. Then about two years ago, Gio happened. Because of Gio, a lot of these people have come online for the first time. Like, record number of people in India, like hundreds of millions of people in India have come online just the last two, three years. For those who don't know what Gio is.

Yeah, so Gio is the new telco that has come and has drastically reduced the cost of data in India. So most people, a lot of people in India had phones, but they never access data because it was so expensive. But two years ago, Reliance Launchio and now people can go online for almost no cost. Right. And now these people have started to come using Facebook, WhatsApp, Google, now other apps, right? So these people are coming online for the first time. They have been on internet for just like a year or so. And because of that, and a lot of these guys in smaller cities like tier two, tier three,

or lower parts of the country, these are the people who are coming online because of geo and these people were buying mostly unbranded products because their monthly income is generally much lower than metros. They can't afford brands. They tend to buy more and more unbranded products. So us starting this business exactly at the time when geo was coming big was definitely very lucky.

UPI has become very big recently, which has taught a lot of people to start transacting online for the first time, which means people now getting comfortable by buying products. Like about 10 years ago everyone in India thought that no one could buy a fashion online. You want to touch and feel the product. Which is not the case anymore because everyone has tried it. People are okay with easy returns and they are buying again and again with a lot of trust, especially with people you know very well.

So a lot of these things have come together for us and fortunately we started this business at the same time. We started seeing this behavior about three years ago and we just kept building on it. Got it. And a lot of people say in India it's a trust deficit market. Maybe you can explain for a audience who's not from here what that means and how do you solve that problem in particular? So trust deficit is because of hundreds of reasons, right? So in India, most people do not believe in corporate companies. They don't believe in their own government. They don't believe in judicial system.

Court cases run for hundreds of years. Then they just never close. So most people believe that, hey, only I'm looking out for myself. So who do you believe in? You believe in your community, you believe in your friends and you believe in like someone that everyone believes in. Right. So it's very, very difficult for a new merchant to come and build trust with consumers

out there. What we end up using is we leverage trust of people in your own community who come and start these social stores and then start selling to people around them, especially in unbranded products where you have no idea what will happen to this product after a month, right? So you buy for example some apparel. and after a month all the color goes away. And I have a lot of these doubts and this is no brand.

I don't know, should I buy this or not? But when you're buying from someone in your community who you know very well, that trust deficit goes away. And this is exactly the reason why unbranded products in the offline world about a decade ago was getting sold to these small offline shops, but still in your community. Right? So retaining that just solves for that problem.

Like India as a country is like that. Cool. And so when you talk about who your average, user is in terms of the reseller, entrepreneur. What was their life before and after Misha and kind of, how do you help them get online, essentially? How do you help them get used to selling goods online? Whereas before, if they were even doing it,

it was totally offline and maybe in person? Correct. So our average user, like 90% of our users are women. And more than 80% of our users are tier two and tier three in below cities, right? So most of these are people with low financial incomes, a lot of these are aspirational entrepreneurs, people who want to start a business, but for a very long time.

I can tell you anecdotes, right? When we started this business, we spoke to a lot of people who were doing this, like without us, which was a big pain, by the way. But when you speak to them, it mattered to them so much. This lady who was saying that for the last 20 years, I go to my husband every year and ask him that, please give me money so I can start my boutique, or I can start my store

selling products but she never got money right and when she came onto a platform and we gave her everything that she needed without needing any investment on day one she was super happy because she could fulfill that dream that aspiration of starting that store right so this is my typical user most of these users are people with low financial incomes in smaller cities

who are looking to start a business who are looking to do something of their own right And most of these people, what we have seen over time, and just to give you some sense of our product, most of these people, because they've not done this business before they come onto a platform, we spend a lot in terms of how do we train these guys. So if you come onto our platform on day one, you will see a lot of content telling you what should we do on day one, day two, day three. Even if you don't do well very after that, when we put you in a mentorship program, where we connect you with some top trainers for a month

and these guys will tell you how do you start a business so these people have never done it these are all the entrepreneurs in your system too as well yes these are like our top 5% of the users who want to do this because they get recognition yep so it's like you start your own startup ecosystem within misho that's great exactly so these people are helping each other out like I'll give you an example we have a Reddit type community in our app

which is called misho community and people come and say hey I'm a new user and I'm based out of this place in India and I don't know what to do to get started with this but I really want to do this and then you see like hundreds of other users coming forward and telling them what should you do on day one like how should you get your first set of 50 customers how should you curate and bring that value out

so people start getting interested but people start doing this the community helps each other out I love the stories in which you've changed you obviously changed some people's lives what is the what is the best story for you Who is the best user in terms of whether they're just doing a lot of, they've increased their income a lot or you just change their lives so much? So it's just never been. I'll give you some understanding about how these women are, right? So a lot of our users are women, a lot of them are housewives, like 70% of our users are housewives.

A lot of these women have been looking to start a business not just to make money, right? But to also get some sort of professional identity. Right? No one, it's very common in India. These women feel that no one gives them any respect. Like my husband doesn't feel that I'm adding enough. My family doesn't feel that I'm important enough. But now, when I'm known as a business owner in a community, people start recognizing me.

I have a professional identity. I can also go out and say, I run my business. This is what I did last year. So that feeling is very, very important empowering. So our most impactful stories are not just about how much money this person makes. It's a lot about what were they doing before. So we have widows who are not able to sustain their family, feed their kids, etc. There are women who are handicapped.

So these are educated women but handicaps who no one ever gave them jobs. So all kinds of stories are there and this is the impact which tells us, hey people are finding value. In terms of income, our typical average user makes about $150 to $200 per month as income. My top 510% does about $400,500, right? But I don't think that number matters towards so much. It's about wherever you before and how his life has changed. Most of these people are anyways not doing this as the primary income for the family.

Most of this is secondary income for the family which is if it is 15, 20, 30% of your primary income is significant. It's getting like a raise one year earlier for the family. Yeah. But a lot about how you empower me, what identity do you give me, people start giving me more respect. giving me more respect is like much, much more important. Got it. That's very inspiring. So in terms of what's driven growth so far, obviously there's a timing piece.

There's you're enabling e-commerce, you're enabling entrepreneurs to start their businesses. Is there anything else specific to what you're doing internally to help you drive this growth? So I think we keep solving some very hard problem every six months. When we started off, we were just enabling existing guys who were doing this because we saw this behavior. A lot of people in Gujarat and Kanatka were running these WhatsApp stores even before us.

Because they had gone out, met suppliers, figured out how to do courier. They figured out how to use tools on WhatsApp etc. But there were few. So in like six, seven months we onboarded a lot of them and then we did not know what to do. And then we changed our product completely because we had to create users. Like we have to create our resellers. None of them are doing themselves. So we changed that and suddenly so many people like every,

Every tier two, tier three women out there became our target customer. And then the second thing that we did was how can, and which is still the north star of the company, how do we grow income per reseller every month, which meant growing number of categories. So we started with only ethnic fashion over time we just now do everything. Now we have even set up a supply chain from China. So you can not just access supply which exists in India, but even cross-border. So now you can offer better variety, you can sell even more unique things.

you make more money. Then we said, hey, can we enable not just housewise, but other people? Then we started going out. We onboarded students. We onboarded retired folks who are trying to make pension. We have a lot of men who are unemployed who do not have jobs and they are running these shops to sell these products. So it's now practically everyone. You're basically going to eventually employ all of India. Yeah, we want to. Cool. So as the trap that some startups get into, a lot of startups get into, when they grew too fast is a quality issue. And I heard you say something very interesting, I don't know where, but in another interview. And you said, you don't really want to scale customer support because

it's unsustainable. So I'm really curious how you balance growth and quality as you continue to grow really fast. Correct. So it's always been a cycle, right? So you grow very fast, and then you realize you've carried so much debt around a lot of ops, a lot of manual things, and then you start focusing how do you improve quality. And I think we see that cycle almost every six months, but both are important. Last year was crazy growth for us. Like we started with a number and the number we ended with, most people can't imagine how that has happened.

But during that path, if we started optimizing for quality, we would have broken down as a system. And as soon as that year ended, like last two months post-Divali is generally a lean season here. We just spent all our time in fixing whatever debt we had carried. So you have to do both because if you keep, for example, if you keep scaling customer support, If you need customer support, that means there's something wrong with the product.

So you have to go back to the drawing board and understand why are people calling me? Right? And then you start optimizing for, hey, my product is broken in these places and I have to solve them out. So not just in terms of cost operations about what overhead you have, but just giving a great experience. You need to solve for these things. And at this stage, we focus on it, we have a dedicated team within the company focusing on this, but in the early stages we had to compromise. Sometimes we'll just focus on growth sometime in this quality.

Got it. Yeah, that's great. It's taking a step back and looking at how there's a certain point, there's a certain bar in which if you dip below it, then you kind of have to pause and then go fix this stuff and then just keep going to the next level. That's great. All right. So you probably get this question a lot, but I'm going to ask it anyway. What if Facebook does this or what if Amazon?

Why wouldn't just Amazon or FlipCard or anyone just win this space? Yeah, about Facebook, I just think this is one. of the so many things that are going to happen on Facebook ecosystem because people are spending so much time there is Facebook starts doing everything. I'm sure they'll not do what they're doing right now. If you look at, for example, China, like Tencent invest in so many use cases that are happening on VChat because they can't do everything themselves. It's impossible. And it's not in their DNA as well, right? So you build a platform which does something. You do not want to go out and onboard two lakh suppliers and make sure their quality is right. But

that's not your business. That doesn't seem like in their day. And you can't do this every day. Like you start a new business because you want to capture all use cases. Like the way to do it is like partnering with us. And we do work with them very closely. Like we share what our users are telling us, what can improve, how can these platforms become better in terms of enabling commerce for these people in smaller cities. We do that. But I don't think it's viable. Even if they start doing, it'll have to stop at some time because this is one of the few things that are going to happen on WhatsApp. It's not the only thing that's going to happen. In fact, makes their product more sticky.

Correct. People are doing this. They recognize it. Like, we are creating new merchants for them. Yep, yep. And these people are going to come back. You're making them bigger. Yeah.

Stickier, yes. Cool. So I want to take a step back and go all the way back to your college years in which I'm guessing you were starting to think about I want to do startup. So you and your co-founder met in college. You were classmates. Tell me a little bit about when do you guys know you wanted to start a startup together? And what were your initial ideas?

Yes. So in college practically we did not think about doing a startup. Okay. And in college we were said, hey, we're going to go out, get a job somewhere, chill out, like have fun, whatever, right? But we used to work on a lot of projects together. I still remember we worked on our college project that we do in the last year. We worked on certain things that we went out for competition.

We worked together so we knew each other very well. But that time we're not thinking about doing startups. And it's not just us. this is 2008 to 2012. Starting startups was not a cool thing to do. That started after Flipkart became bigger about 2014, 15, and after that IIT is like, hey, everyone wants to do a startup. So it's pretty cool phase.

But what happened back in 2015, like three years out of college, I was working with in Moby here. Sanji was working with Sony in Japan. And randomly... No, he was in Japan. Yeah. So he was working there and one day he randomly calls me and saying, hey, I'm looking to join a company in Bombay because I want to come back to India.

And can you rest check that company for me? And I said, why do you want to work with them? It was a startup. If you want to work in a startup, let's do something ourselves first. If it doesn't work, then you go there. And just on that call, with no idea and nothing in mind, we agreed that, hey, we will do a startup. And from next day, we started focusing on, what problems can we focus on?

started, we created a Google spreadsheet, listing all the ideas we had, talking to people around us. But that's how it was. It's all unpredictable, uncertain, no plan around it. At that time, I was planning to do an MBA. Everything changed. That MBA is no longer needed. You got your MBA.

Yeah, it's because I just felt like a very good friend of mine. I know I can work with Sanji for 100 years of my life. And when he's saying that he wants to work in a startup, like there was no better opportunity for me. Yeah. In some sense, the best teams are they knew they wanted to work together, regardless of an idea, and then they just came up the idea along the way. Correct. All right, so you guys decided to start working together. I know, I think the first idea you had was fashion year, or is that true?

Yeah. The first one you actually started working on. So tell me a little bit about that. You know, how do you come up the idea? How did you figure out like it didn't work? And then the pivot into what is, I guess, the first version of Misho that is today. Sure. So back in 2015, like doing OteDGELD, so.

to over hyperlocal was very popular in India like everyone thought that hey almost everything will be sold on demand hyperlocally and we thought everyone is working on problems but no one is looking at fashion so we said let's build hyperlocal for fashion and we build fashion here think of it very similar to what Swiggy is for food but just for fashion we did that for four five months we learned a hard lesson it doesn't work because in fashion fulfillment is like the third thing that is most important the first thing is selection which you can never have around you but that was like the lesson

that we learned but the good thing was right it became a starting point so when we built out that marketplace we used to go to these small shops in Bangalore and used to onboard them as suppliers and these small shops are everywhere like in Kormangla where we are right now and Hsr are everywhere and my pitch used to be that hey I'm gonna take you online and these guys will say we're already online what do you mean by that say I sell them WhatsApp and then you understand like one level deeper what does that mean the same key I have created a WhatsApp group of all my existing customers who have ever bought from me.

And every time new stock comes into my store, I take photographs of all of them and post in that group saying, hey, these are the few products left. If you want to order, you order right now. Got it. So it was like leftover. Yeah. So these guys are like reengaging with their customers on WhatsApp. And this guy was saying that I sell 30, 40% of my like total business every month on WhatsApp

now. And my like brother who's in Whitefield does like much more than that, we thought that was super exciting and then we met a lot of other small shops and we saw the same behavior. And the good thing was no one India knew about it. So we thought, hey, this could be the idea we should work on. Right. And we had learned a hard lesson with like what we were doing before. We learned like at that time we were speaking to VC. They recommended hyperlocal school, you will get funded, etc. This time we realized we have to do something that we believe in ourselves. And when we had spoken to these 50 hundred such suppliers offline, we are very confident, hey, this is going to be the

next big market, a lot of these SMEs are going to use WhatsApp. So we just built a tool. Think of it as mobile only, India localized version of Shopify, tailor made for doing commerce on WhatsApp Facebook. And we built it out and we started going to all these small shops and saying, I know you sell on WhatsApp, use this tool. And I know you sell on WhatsApp. We used to go to exhibition, etc.

And that product started to grow very well. And with the same product we went to I-C, we, we, raised some round, angel round. But six months, nine months down the line, everything changed. It was a tool which was free. So you're not making any money. It was growing. Retention used to be lower than what

we expected. And when we used to speak to our users, we realized that about more than half of our total users were not the same segment that we intended this product to be for. It was not that offline shop. A lot of them were

housewives who were running there, boutiques on WhatsApp. So everyone say, I run my boutique on WhatsApp. It's called X-Y Z boutique, like with its boutique, like Adora's boutique, and they will create a logo and they're selling there. And then we understood what they were doing. Like most of these women were based out of Gujarat, which is like the big manufacturing sector in India.

So it's easy to access supply in that state. So most of them were women based out of Gujarat who were going out, getting phone numbers of these suppliers, adding them on WhatsApp, getting products from them curating and selling it to their customers. And when they get order, they collect money, give to their supply, who directly ship it to their customer. And they're running boutiques on WhatsApp. And you're so inspired when we met these women

that if everyone in India could start a shop like this, it will be very powerful. So in some ways, it's cool that you thought people were going to use it in one way, but actually there are another set of customers they were using in another way, and that's what actually started growing. And it happened by itself. Like, I don't know, by luck, by chance, but people just came

and they started using that tool to do something we never expected. What was the point in which you thought this is it? Like, was there like a certain metric you were tracking and it was just growing really fast or there was a story where like, oh man, this is going to be huge?

So right after we discovered this because our existing product was also working, so we created two teams within the company. So Misha was what we were doing earlier and we created another product called Misho Supply. And we, I separated a team internally. So there is to be one room for Misho and one room for Mishu Supply. And these guys were building out the tool so that everyone could do what these women were doing. That was Misho Supply and we did this on WhatsApp. So we did

not build an app this time. Like Sanji wouldn't have let me start another website. They hear already with two different apps and they were not going to be a big business anyway. So we started doing this on WhatsApp. We used to connect with these women, send them products. based on whatever data we have. We created a supply marketplace on the backside, had an office in Gujarat, same chicken and egg problem, I don't know what all we did at that point in time,

figuring out how do we get some supply to sell. But just on WhatsApp with no app, no website, in six months, we're doubling every month, every month. And this was still going at the same space, retention was lower than what we expected. We thought that I could not do two businesses. I have to choose between them.

And I can see this business, this business is exploding on WhatsApp. If I build out and have what will happen? So we just shut it down. And we renamed Misha Supply to Mishu. And that became the only focus we will work on. How hard was that? Because most people have a really hard time

trying to let go of this one thing. That's actually not doing that. It's actually doing fine. So it was very, very hard, but it was not as hard because I had Sangev. I have seen so many friends around me who were just not able to pivot because it was a hard conversation with their co-founder.

And the co-founder starts not believing you. Because the belief that me and Sanjee have is not because of what we are doing right now is because we know each other for more than 10 years. This did not matter. Right? So I said, we both understood what's happening. We said, let's take a call. And then we convinced all the team members over time they also came on board.

Initially, everyone pushed back. And they keep changing what we are doing every six months. Right? even though that was course correction, like now if you see it back, but it was important. So I'm saying just because you have a co-founder, you trust blindly, it was easier. But I'm very sure if I was starting this company with anyone else, I would not have been able to do these two pivots and most likely would have been done back there. How did you announce it to, there's the hardest piece is probably making the decision itself.

And then the other hard part is telling the whole company, hey listen the thing you signed up for we're actually going to do this other thing how did you manage that whole process so first because I was very clear we did this for six months it's not a small period we did both for six months after six months I could see okay I know we have worked on this for the last one and a half years right there is sweat that has gone into this but this is working right so you have to be logical about this if it keeps brewing you will make money and the other thing that happened at that time you were struggling to raise money

We were one of the few companies after YC who did not raise a lot of money a demo day. So we're struggling to make money. Here we were making money by charging our suppliers. Here we were not. So it was very clear what you have to do. By pure need. Yeah, just that pure need, you have to do this. So everything was pointing to one direction.

So then we knew that we have to do this. The next thing was how do you get the consensus in the team that, hey, whatever you worked on for the last one and half years is not going to be the core business anymore. And then when we just sat around with our team, I think they understood over time. It took weeks. We used to come back and discuss the same thing again. And everyone will put forward, hey, let's give more time. Let's keep investing there. And I was saying, you need to focus on one thing.

That's about belief. You can't do 100 businesses, even if you want to. Yep. Right. And over time, people came about this and everyone agreed on the same thing. And then he started focusing on this. And even then we continue to grow. fast. Like in just three months after we made the shift of shutting this town and just

doing this because it was growing so fast everyone was very clear, hey we made the right decision. Yeah, that's great. So when when startups start becoming really big companies, the CEO's role changes a lot and many times they get further away, the distance away from the actual user and what they actually want. So I know you do, you've told me some in private conversations, some really great things that you actually do to keep in touch with the users. So we'll love you to share what you can about what you do there to make sure you're in touch. So our business is a unique business, right?

So most people build products for themselves, that they use themselves, right? Because they felt they need themselves. In our case, we are building for a different segment. Like, I am not a woman and I'm not a housewife, right? And we've always recognized this as one of the core problems since day one. If you have to build for an audience, which I'm not them, myself, then have to stay close to them. There's one line I tell most people. The best thing to do is build a product that solves your own problem.

The second best thing to do is build a product that solves a problem for someone who can't solve their own problem. And we realize that I'm solving problems someone else but have to be very close to them. So since day one, every user that we used to on board used to come to our app, I used to add them to on WhatsApp. and I say I'm going to do customer support for you. Any problem you tell me, every time we're thinking of launching a new feature, I will check with everyone what do they feel about. And just keep talking to them. And over time, I've built relations with a lot of those folks.

Even now, like a good number of 150, like 100 to 100 people who are top users are added on my WhatsApp. And if something gets delayed, they're still ping me. But because of that, I get to know what's happening on ground. You know right away also when stuff is wrong. It's very, very important. It's like a check-in balance on the. the whole company. You release one bad feature because you're not using it right now, you will not get to know about it. But my user will come forward and tell me, hey this is

broken. So that is very important and I think as a whole company, it's not just me, as a whole company we have built a culture which is very, very user focused. Because the day you start taking assumptions, start thinking on behalf of your user and say this is how it should be you start doing mistakes. So all my management goes and says, in the call center every month for half a day and just listen to user calls, just understanding what they're facing today. And everyone comes out with something new that they never thought about. We do something and I think one of the very few companies out there, as we do town halls for

our existing employees in the company, we go out and tell them what's working well, what's not working well, what numbers did we achieve, what are we planning to do going forward, what new things we launched, right? We realize that our users who are these store owners on these social platforms are also the same part of the company as our employees. So then I started doing what we call is We Hear You every month where I create a video and I talk about what kind of things we did last month, what kind of things we are planning to do, and what are the things that are not working well and we work on them.

It's like a town hall for our users and it has got amazing response like every user comes back and response there. And with very big answers, what needs to change, what is not changing. Most people love it. Most people look forward to it because it's like I get to know from the company, hey, what's happening. Everyone, like most of our users feel part of the company. We also do like a few other things. Like one of them is most of the celebration that happens in our office. We generally call most of our users in Bangalore to come and participate with us. So we are having a party after maybe a funding round. We call our users who also like have fun with us.

Yeah. So we get to talk to them, do like whatever they want to. That's great. Just staying with them. Yep. All of this is just to stay close to them. Yep. Because if you're close to them, they'll keep telling you what are they feeling about.

And then you'll not make those mistakes that most people end up doing. Mm-hmm. Yep. That's the first thing you talk about staying in touch with your first 100 or so users. I actually tell a lot of founders. That's what you do what Vodit did because that will keep you in the loop at all times. And the weird, we for here, we hear you, sorry. In hindsight, that is genius.

And everyone should do that. If I ever start a startup, I'm going to steal, I'm going to be stealing that one. I'm sure. I think it's like one of the best things we have done like in the last one year. Yep. And it just works amazingly well. We get to know so much feedback every month. Every person in the company knows what our users feeling.

It's just amazing. And I think everyone should do it. So in terms of your role, Tell me a little bit how it has evolved over time. Obviously, when you had no users, you were on the ground being super scrappy and just building stuff and talking to users yourself. How has that evolved over time to what you are today,

which is a company of hundreds and hundreds of them. How many employees do you have? Now we have 700. 700 employees. Yeah, so what is the difference now? So I would say until we got to product market fit, right? My whole job was just to figure out what the business model will be in the long term.

So I was doing everything on the demand side. Like I got my co-founder and another very like a good friend and early member of the team who was looking at a lot on the supply side. But I was like, I have to figure out what the business model will be. And doing these pivots, talking to users, just keep talking to them what's working, what's not working. I did everything on the growth side, on the product side. We hired our first product manager after we did our series A. And we hired our second product manager after it did a series B.

So I was just doing all of that work because I knew it's my responsibility to figure this out. And after we had very clear signs that, hey, this is scalable. We have reached product market fit. My job changed suddenly. You have to get the team so that we can manage this growth right after this. So after this, my role has been just on hiring. Like hiring people who believe in our culture, who believe in our values, who believe in the mission that we have. like solving for people who are like the kind of users we have

and hiring them and just making sure that our if we change our direction which I don't think is right making sure like doing course correction at times making sure the direction of the company is right motivation motivating people at all times but this is my work now yeah yeah do you ever missed all days I do I do like many times I just go back I still spend a lot of time with the product team

not so much others because I like it like understanding what do people want more right so it's like once you get a habit of doing this right it's very very hard to come out of it but you know business needs it I need to hire people so that we can sustain this yeah what are the as you've grown over time through your role what are the resources here in India that you've leveraged or elsewhere to help you help you do well so I think as a CEO and as a founder the best way to learn is always talking to other founders and I have seen every problem that I have is never the first problem right so I have built a network

through our investors through our board members who have other portfolio companies fortunately have built a good connect with a lot of like founders who have built great companies such as Swiggy OLA others right and going to them talking to them hey this is what I'm facing did you face the same thing and they would say always say yes and then you understand how did this all for it and I think this is the best way to learn. Like everything else. I read a lot of books, like everything that is out there related to startups, founders. But all of that is not in context of what you're doing. A lot of those books are written outside India. Yeah. But when you go and meet these founders, you

understand what's happening. Like even just within our YC circle, I spend like we, me and Archith, who's the founder at ClearTax, we take a stroll every Friday morning. I love that. And we discuss what are we doing. That's all. And my what is working, what is not working, and he will tell me what is working for him, and I will go and try it out in my company, and vice versa. And it works fabulously well. So I think the only way you can learn is found this, speaking to other founders. Yeah, having a strong peer network is so important.

Speaking of which, what's a big mistake you've made that you, now that you're talking to lots of founders listening to this podcast, that you hope they never ever make? And yeah, what did you learn from it? I think we made the first mistake right after we decided, you want to start up. So at that time we just kept listening to VCs. On day one we went to VC and asked them what do you want to do right? The second thing once we started we went to VCs looking for funding and they said if you do this and you get to

this metric then we'll fund you and we spend the next three months just getting to that milestone and then we went back to them and was like okay now now you do this and you get to this then we're never ending. Never ending. Yeah and then we wasted four months of our time but it was such a big lesson after that I've never gone to them understood what should I do because I know they don't know. Right? So it's the biggest mistake most first time founders do. They think, hey, they are going to fund us. Like if you just listen to them, things are going to work out. But it's never the case. You have to believe in what you're doing. You have to believe in the idea. You have to

believe in the product. You don't have to make someone believe in something. You just do it for them. Yeah. Yeah. Makes sense. VCs no matter how smart they are, they're never going to be the expert in what you're doing. That's for sure. So what is the best decision you made in the early days of Misha when looking back was super critical to your current success. I think my best decision ever was to start this company with Sanjeev. Right? Like almost a lot of other mistakes that I've done have not been such big mistakes because I started with him.

We just gave us time. And we could go through that whole process of changing whatever we have changed in the business. Right. Hiring people who are like us. Hiring people in our own network. Going through those highs and lows that we were never prepared for when we are doing a job. So I think the single best decision I have made. made is starting it with him.

That's good. And I guess what's one strong opinion you had about running a startup that has completely changed a reverse since you started, aside from the VC thing? Yeah. So it's coming back to the same thing, right? So everyone that I used to go to, like a good chunk of my friends were doing startups at the time you were thinking of doing a startup. And most of them used to say, hey, if you don't solve your own problem, it's very hard.

So on day one, when we were thinking about the model, we thought, hey, we'll build fashion for us. I don't like to go to a mall, but I still want to try it. But I start thinking about my own problem. In all times, you may not have problems that you want to solve right now. You may not recognize them. It doesn't mean that you can't solve others. But because so many people told me, I thought I can't build a product for someone else. It has to be my own.

But when we went through this whole discovery process, I think that I don't hold that opinion anymore. You can build for others. It's hard, definitely much, much harder than building a product for yourself. But in many cases, especially I think for the next 10 years, most products that we built in India will be built for tier two, tier three audiences. Right? And most of these people who will be building starters will come from Metro, will come from IITs. And they will not be themselves.

Yep. But you still have to solve for them. Yep. Yeah. I think it's also so important if it's your user is not yourself, is that you care deeply about the users. Yes. And it's clear from how you talk that you do.

do care. All right, so switching topics a little bit. I want to talk a little bit about the Indian startup ecosystem because it's been growing pretty rapidly recently and it seems like things are starting to click, which is great. So maybe first question about that is how how has the ecosystem evolved since you've started? Like what have you seen and what works and what doesn't? I think one very positive thing has happened in the ecosystem is when we started, everyone was like, tell me what are you a copy of either in US or in China. Right. And because of that, we struggled a lot in our early days because we could not figure out a

parallel for this in either or US on China. And people say, hey, all big Indian businesses so far in tech have been a copy of one of the other. You can localize it, but they are still inspired by something. But what has happened? Over the last three years and a lot of that has changed because, again, of Reliance Geo and with UPI which is the new payment system in India, people are able to transact online and people are online.

So now you are building products for like the tier two, tier three, tier four. They don't behave in the same way as Western users do. So you can't get the same Western inspired product into India and make it work for them. Right? So now a lot of new companies are coming up who are taking a very new approach. Like first time building out for these users understanding bottom up what they're probably are. Not thinking top down this is how it should be because this exists in US. Yeah, makes sense.

So I think this is a very big positive development for India. Aside from what you're working on, are there other big problems in India that you think founders could focus on or should focus on? Yeah, yeah, and most of this would be for the same audience, right? So all of these users, tier two, tier three, T four users have come online in the last three years. And we have started to solve commerce for them, which is obviously the most basic need. But then people will start focusing on, hey, can we solve housing for them, education for them, healthcare for them.

I've seen the journey it just started. Over the next 10 years, people will figure out everything for these guys. Yep. Because these people right now use only WhatsApp, Facebook, maybe a couple more apps, maybe Misho and that's all. Yep. Yeah. Right. So how do you solve for where do they spend more time? How can you build entertainment for them, everything else?

So I'm sure there are hundreds of possible idea that will come for, but it will come from the same audience. and people who are close to them will be able to figure out the right answers. Yeah, makes sense. Do you think it's possible? It's great that people in India are building stuff for themselves now. Makes total sense. Do you think it's possible for foreigners to come into India and start a startup here? Would you suggest it at all?

I think it's definitely possible, but it's difficult. And now, especially for sure. Like, 10 years ago, you could have just done, like, got Uber here or maybe something else here, and that would have worked. But now if you have to go and understand nuances of someone that you don't culturally relate to, it's harder. So I'm sure people can do it. And the great thing is, especially for Western audience, unlike China, people mostly build product in English. And since people speak English outside, they can come and build for the same audience.

But understanding how do people use it, a lot of that has to be learned out. So someone who can do it, maybe can build it out. So it's harder, but not impossible. What is your best piece of advice for aspiring Indian founders? My best piece of advice for aspiring Indian founders will be just go out and stay very close to users. The only thing that has worked for us and I think will work for a lot of people when they build out for this audience is being super user focused.

Do not listen to anyone except what your user says. Stay close to them always. Do not assume things for them. Challenge everything that exists as a default right now, as what status quo is. the UX the same, do you build it out in English or do you build down vernacular languages? Or you maybe the journey, user journey would be very different. Maybe you have to let go of saying, hey, I will not have a call center. Maybe these guys need to speak to someone to get their problem solved.

Like you have to challenge all notions that are good and bad out there. Because a lot of these users think in very different ways. We have seen if you speak to a user on phone, suddenly the trust level goes up. Yep. Because they think they're speaking to a person, not a company. they trust a person more than a company. I'm saying you'll have to challenge a lot of ways of how startups are built, of how products are built.

But if you stay very close to users, if you're super user-focused, people will figure out answers. And there need to be a lot of problems solved for these audiences. That makes a lot of sense. All right. So I want to finish off with a lightning round, which is like five quick questions. So one, after Misha, what is the most exciting startup in India?

It's hard. I would say share chat, right? Share chat, because there are one of the few other companies who have built a product for India, right? Building out for the tier two, tier three. Like a lot of people are coming and spending all their time on share chat. Yeah. So for the audience, what is share chat?

So share chat is a vernacular social network in India built for smaller towns and cities. And it's where people come. go through content in their own language, written by people around them. There's so many languages in India. Do you know how many? Yeah, there are a lot. Too many.

Yeah, yeah. So it is said that a dialect at least changes every two kilometers in India. Oh, yeah. So it's insane. Yep, cool. So you went to IET Delhi. So one, why is Delhi the best IET? I think being in the capital office helps.

And if you see most of Unicorn founders in India are from IT Delhi, you look at Flipkarts, Matto, and a lot more, right? It's always been, and I'm proud of it. If you asked me, why did I start this company? I was super inspired by what Flipkart founders did, right? And I said, if they can do it, we can do it as well. And that's what inspires, and a lot of IT daily founders go out and start companies. So I'm sure people took this because people were close to capital.

That is definitely there. Sort of becoming like a Stanford equivalent in Silicon Valley. Yeah, for sure, for sure. What's the best IET after Delhi? I don't think there's any of the best topic after me. But if I have to pick a name, because a lot of my friends, very close friends, come from I.T. Kharapur, I would say ID Kharapur. Okay, fair.

What's a must-read book everyone should read and why? There's a book that I read every year. And again and again, it's the hard thing about hard things, right? Because I just feel for a founder. By Ben Horitz. Yeah. Because you go back and a lot of situations you face, it's just written in that book.

And it's written, it's not saying, hey, this is good and this is bad, but it's a very neutral perspective. This happens. And sometimes you have to take calls, right? A lot of things I've done, enabling me to take the right decisions,

I saw many times use framework that exists in that book. So I've read it, I think, four times in the last four years. I just go back and revise everything. Yeah, that's my favorite. When people ask me, what book should I read related to startups? That and Founders at Work by Jessica Livingston are the only two books. And I remember reading it during a rough patch during my startup.

And I was like, thank you. Oh, my God. I'm not the only one. All right. What's a startup idea you'd be working on if Misha didn't happen? I don't know. But as I said, if I do a startup today, I will do it for the tier 2 and tier 3 audience. I will not build it for the Metro audience.

Makes sense. All right, last question. In 100 years from now, what do you hope Misha is? I think 100 years is a long time. Like business chain, tech will change. I don't know if it will be mobile, it will be something else, right? So 100 years are very, very long term for technology. But as an organization, I think one thing that should stay until then has to be that,

hey, we should stay user-focused. And I think if that framework is there, if the team continues to believe in that even 100 years from now. I think we will stay for 100 years and we'll build products which will be very scalable, which will impact lives in ways that most people can't imagine. But I think it will be a company which will still be user-focused. Could be doing something else with new technologies, I don't know. That makes sense. That's a great answer. Cool. Thank you so much. Awesome. Thank you so much for having me. Yes, cool. All right. Thanks for listening. So as always, you can find the transcript and video at blog.combinator.com.

And if you have a second, it would be awesome to give us a rating and review wherever you find your podcast. See you next time.