Ganesh Balakrishnan Co-Founder Flatheads chats with Sanjay Swamy, Managing Partner Prime Venture Partners.

Listen to the podcast to learn about

05:00 - Ganesh’s Early Entrepreneurial Journey from Momoe to Shopclues

13:00 - Why Ganesh launched Flatheads: Thesis & Insights

26:00 - Why Ganesh Applied to Shark Tank

31:00 - What’s Next for Ganesh & Flatheads

Read the complete transcript below

Sanjay Swamy 00:40

Hi, everybody. Sanjay Swamy here again with another episode of the Prime Venture Partner Podcast. I’m delighted to have Ganesh Balakrishnan here. Ganesh is the co-founder and very well known entrepreneur now from Flatheads, and many of you would’ve seen them on Shark Tank. Ganesh, welcome to the show.

Ganesh Balakrishnan 01:00

Thank you, Sanjay. Glad to be here.

Sanjay Swamy 01:02

Wonderful. So it was great catching up with you a few days back and I was amazed to hear your journey. And of course, many people are perhaps familiar with a small piece of the journey at Flatheads, but I guess we’d like to cover three things.

One is a little bit about your background itself, both growing up as well as what education and things like that and your early career journey. Then would like to spend some time on the Flatheads experience and, of course, I’m sure a lot of people are intrigued by what happened when you stepped out of the tank and came to your decision then, and where do you go from here?

Our audience, of course, are full of generally entrepreneurs, and I’m sure there were a lot of takeaways and learnings over these several years that you’ve been an entrepreneur, both with Momoe and Flatheads, and it’d be great for you to share some of your insights. So that’s the background of this episode. I personally believe that there is no such thing as a failed entrepreneur. I think there are unsuccessful entrepreneurs, but we generally learn the most from such experiences, and so I think that’s where I think most people would benefit a lot from, from your insights. So let’s start with a very quick background of yours and growing up and college and things like that.

Ganesh Balakrishnan 02:15

Sure. So I’m a small town kid, brought up in Nashik. My dad was in a public sector company called HAL.

Sanjay Swamy 02:28

As was mine.

Ganesh Balakrishnan 02:30

Yeah. Small trivia. Sanjay, you are my senior from the school in Orissa where I spent a couple of years. Yeah. Of course, we didn’t overlap because a there’s a long gap, but-

Sanjay Swamy 02:40

Hey, we may overlap. Why do you tell everybody all my secrets?

Ganesh Balakrishnan 02:45

Yeah. I don’t want to date myself. So post that, I joined iit Bombay, I was a mechanical engineer and graduated during the Y2K boom where I was one of the rare guys who said, “I’m not going to go into coding, I’m going to stay in core engineering.” Went to the US, became a refrigeration engineer and worked there for a company called Ingersoll-Rand. Got a chance to set up their engineering center, captive engineering center in Bangalore. So moved back to India in 2004.

Then decided to get on a general management career path, so had to do an MBA, and that was from IIM Bangalore. So I graduated from IIM Bangalore in 2008.

Since then I’ve been in business and marketing roles, so consulting with Bain & Company, innovation and strategy with Honeywell, and then 10 years of entrepreneurship across three startups and one unicorn, have run PnLs and done marketing roles as well. So we had a mobile payments app that we launched called Momoe in 2013, which was offline payments. I was the CMO there, co-founder and CMO. So building out the app as a tech forward funky product for the techie crowd. Pay with mobile when you’re out with your friends at a pub. That was the core proposition to begin with.

Sanjay Swamy 04:04

This was pre UPI days?

Ganesh Balakrishnan 04:06

Very much pre, yeah. So this was when 3G had just launched, right? So we were pretty much one of the first people to do this in India in terms of offline pure mobile payments. I think Ezetap was doing square kind of payments with hardware. We were completely hardware free, so we were a payment gateway on mobile. So did that for three years. We got acquired by ShopClues, which was a unicorn at that time. Transitioned over to their merchant ecosystem and ran their entire merchant ecosystem PNL. We were one of the small profitable PNLs inside that large burn e-commerce PNL that there was-

Sanjay Swamy 04:45

So is that a time when being profitable was not fashionable?

Ganesh Balakrishnan 04:48

Yeah. At least the merchant side we were profitable, right? So that was something that we used to proudly show to the board. Post the lock-in was over, got out and started a D2C brand called Flatheads. So 2018 is when we kicked off the brainstorming on it. Flatheads is a casual sneaker brand, specifically making great shoes for work for the Indian tropical climate, right? So that was the thought process. Launched it in November, 2019.

And I was the co-founder and effectively running the business. So my co-founder, Utkarsh, was a designing guy, so he was handling design sourcing, supply chain, and I was handling the entire demand side of the business. So branding, marketing, channels, international expansion and so on. So that’s been my background.

Sanjay Swamy 05:30

Wonderful. Maybe we can dive in perhaps to the two startups. We start a little bit with Momoe, in terms of… I recall seeing the app in a few places and, of course, trying it out as well and I think we briefly met at that time.

And if I look at it in hindsight, it was probably a bit too early for its time, and I think the tech ecosystem or the payments ecosystem was still on the card rails and not really very mobile friendly at the time. And I’ve also been there very early on the card rails when it was not quite mature for mobile payments. And at the time the only thing that was really working was the wallet based approaches.

And it was just before UPI came in, right? And I think UPI changed all of that and put an end to the closed loop payment type of ecosystem. But share a little bit of your learnings from that experience, right? And why you decided to take the exit when you had the opportunity to present itself.

Ganesh Balakrishnan 06:35

Sure. So as you said, we were probably a little early in the game because payments on mobile, especially with the 3G, as you said, with OTP and all that, the failure rates were pretty high, right? So we actually had to build a tech stack for payments, which actually works on effectively Edge as well. Because as opposed to a mobile recharge, which happens, even if it fails, you can go back and try again 10 minutes later. At the restaurant, you can’t do that. When you leave, you have to leave, right?

So one learning there was if the infrastructure is not supportive, it’s a hard business to make work, right? So we actually partnered with a Wi-Fi provider inside restaurants to go together and set up Wi-Fi wherever we were enabling payments, right? So something, for example, the flea market, we actually worked with Airtel to put up a tower in the flea market because of the congestion that happens when crowds come in to enable payments.

So those are the kinds of things that we had to work on in order to reduce the friction and increase the adoption of the app. One big thing that we learned was what does product market fit mean? Just to give you an example, when we did restaurants and retail stores, we used to give cash backs for people to come and acquire and then start transacting on the app, right? So we had cash backs that were split over four payments. So the hypothesis was once people do four payments, they become regular users.

And we were continuously bleeding on those cash backs as every mobile transaction payment company is. But then we launched a mobile payment at the toll booth at the NICE Road in Bangalore. For some reason, and I know what the reason is, the reason is people hated change, right? The toll was 83 rupees, right? And three rupees was never available, you would get stuck in the toll, you would spend time, your bag would be full of chocolates if you’re on a daily commuter, and you would never be able to get rid of those chocolates. Those are not palatable either. You can’t eat them.

Sanjay Swamy 08:45

That’s interesting, right? Post UPI, the sales of these chocolate companies have gone down because they were being used as change.

Ganesh Balakrishnan 08:55

Yeah. Absolutely. So found in one of the forums, in the IT forum, somebody had posted that, “Hey, there’s this new payment system called Momoe, what is this? Has anybody used it?” And then some 20 people replied to that saying, “Great system. Never have to worry about these chocolates in your bag again. Just put your money into it and get it done.” Right? Within three months, 30% of our payments were coming from the toll booth. We had given no discounts, no cash backs, nothing.

And we had done no marketing because on the NICE road you’re not allowed to have billboards because of the speed, they don’t allow you to have billboards either. So we had done zero marketing, it just went organic, right? Out there. So that gave us a feel of how customer adoption works without doing anything, your CAC is almost zero and suddenly you start getting virality.That is where we saw product market fit happen in front of our eyes.

Why we decided to exit to ShopClues, so we were actually out there raising our series… Well, at that time, series B. And we were out to raise about $20 million. That is when Paytm raised their massive Alibaba round. And every investor we went to, the first PR release that Paytm did, they said, “We are moving it offline now.” Right? So the biggest question that was there when every investor’s meeting was, “You guys are raising $20 million, here’s another guy with $600 million out there, what are you going to do?”

So one thing we realized was we had to scale very rapidly. We were adopting the city by city micro pin code by pin code expansion kind of a model. Now that wasn’t sustainable anymore. We had to grow very fast. So we had to find either somebody who had a nationwide merchant network or somebody who had a consumer network or both, right? And then piggyback on one of those rails. Otherwise, building a two-sided ecosystem is very, very slow and very, very high burn, which is when we started talking to a multiple set of players.

Also, regulations played a big role, right? So this is the other big thing that we started realizing. If you are in a highly regulated industry, and payments is one of the most highly regulated industries, you’re dealing with people’s money, right? Things can change very rapidly. Raghhram Rajan introduced payments banks as a proposition. All the big telecom players came in, Airtel, Vodafone, everybody.

And so suddenly, we were dealing with massive players with unlimited budgets pretty much in this ecosystem. Second UPI came through. I’m sure you know the story of UPI because you’re one of the guys doing it. So that completely changed the unit economics of our business. We were doing card payments, right? So our cross margins were 2%, and then the top line was 2%, and then you had to work with that. UPI completely changed the game, it became free, right? Suddenly business models turned upside down. So that was another big thing that we had to contend with.

KYC became more difficult because they started cracking down on a lot of the PPI licenses, wallets because they wanted to push UPI, right? So a lot of those things started happening and it became increasingly difficult for us to manage the work. So we wanted to find an anchor, and that’s when we’ve spoke to a lot of e-commerce companies.

Eventually, ShopClues worked out because they also had a gap in their leadership team, which we could fill as a void. That’s where the deal finally came through. But the beauty of ShopClues was, if you look at banks, right? The biggest private sector bank at that time who had a massive merchant retail merchant base where we could enable mobile payments, was ICICI.

I think they had two and a half lakh merchants in their list. ShopClues had on their e-commerce platform more than one and a half lakh merchants. And while we were there over two and a half years, we grew it to almost five and a half lakh merchants. These were merchants who were retailers, who were basically micro SMEs, microenterprises who were also selling online, right? So we brought them onto the platform.

And the beauty of our system was we had a billing POS where you could also quickly take a picture of whatever product you’re selling and you could digitize it onto the ShopClues platform as well. And then we had built out a cataloging engine in the backend, which would take that product and figure out the similar product with a much better picture, and we would put that up as a catalog. So they had a cataloging pipeline built because of the POS we had built up, right?

So that was a win-win for both ShopClues and for us. We could acquire their entire merchant base and enable payments there. At the same time they could get their catalog and make them digital. So that was the thought process there.

Sanjay Swamy 13:30

Got it. Well, we could dive into that a lot more, but we have some more interesting experiences after that to discuss. So what led to Flatheads? What did you think? Why did you think that timing was right, the opportunity was interesting, and that you were, well, set up to execute on it? So tell us about the business itself and then the thesis behind it.

Ganesh Balakrishnan 13:50

Sure. We exited Shopclues in 2018, and one of the things that we saw was… I was handling the merchant ecosystem. So there were a bunch of merchants who were actually building micro brands inside the marketplace, right? Even at a 500 rupee order value, they were building positive economics businesses. And people were coming and repeating on their products because the products were great, right?

So they were building micro brands inside. Well, you can call them labels, but they were building it inside as a profitable unit economics business, right? Which is when we started thinking about you know what? If you look at how this has played out in Europe, in the US, and in China, every time you hit that inflection point of disposable income where people start saying, “Hey, okay. I’m done with commodities, right? Let us really think about why should I have an emotional connect to a product beyond just the functional value?” That is when brands are born, right?

And we have been a brand starved nation for the longest time across categories. So maybe this is the inflection point because disposable income has started hitting that. You can see those signs in the horizontal marketplaces getting to decent scale as a percentage of the overall retail market. You can start seeing vertical marketplaces coming through in the online space like Nykaa, Myntra, right? Building those out. The next phase we felt was the age of brands that was going to come in the next 10 years in India.

And the beauty of doing it digitally first is you can be low inventory, you can play, I can almost put up a picture. For example, right now what we’re doing is a pre-order where I don’t even have the shoes in production. I’ve just put up the catalog picture and people are buying it already.

So I can cut short my working capital cycles by quickly putting out catalog images as renders even and gauge interest and then quickly start manufacturing according to what the sales intelligence tells me. There is a lot of nimbleness that you can build into your supply chain without locking up inventory in multiple places as offline guys do, right?

So that was a piece was going in. The second piece was also the entire plug and play engine that was built out in India, right? The delivery was possible in most parts of India that you wanted to reach, right? You had to plug in with the warehousing and delivery partners and that was always there. Shopify was there, Woo commerce was there, you could build out your website in 24 hours and launch. The marketing engines were there, there’s Facebook, there’s Google, there’s Instagram, and many more of those guys were launching every day.

It was basically a plug and play game, right? You didn’t have to set up the infrastructure, which we had tried in 2011 before. So it just felt like the right moment for doing D2C. Why footwear? Because my co-founder is a shoe fanatic, if you will, or a shoe freak. Utkarsh is a designer, so he owns about 150 pairs of shoes. He even buys shoes to cut them up, right? He’s crazy that way. To see what the material is inside.

We’ve always been talking about shoes and one of the insights that we had from the Indian experience was sweating is a huge problem, breathability is a huge problem. Your shoes are like microwaves. While you are comfortable in your t-shirt every day, your feet aren’t that comfortable. They’re sweaty, they’re not breathing enough, they’re smelly, a whole bunch of problems there.

And if you look at it from a consumer behavior perspective, people are shifting from semi-formal wear to casual wear at work, right? Jeans were becoming the order of the day. I remember Goldman in 2017 announced that employees were allowed to wear jeans. If the stiffest bank can say, “Hey, we are allowing jeans,” then pretty much there is a change happening, right?

So we said maybe this is a great moment for us to look at what is the casual Hush Puppies equivalent, right? Hush Puppies has done a great job of comfort as well as appropriate semiformal and formal wear. Can we do work appropriate casuals? So that was the thesis of the idea. And build it specifically for the Indian tropical fact. So that was the thought.

When we dug in further, it turns out we are the second largest consumers of footwear in the world. Obviously, because we are the second largest population in the world. And the casual footwear market itself is more than a billion dollars in size. And while there is a lot of clutter, there are niches beginning to form, right? You can see Crocs building out a 600 crore brand solely based on comfort and bohemian style, right? Style doesn’t matter. It’s all about comfort.

Then there is Roosh shoes in the formal side built out on pure customer experience and education on what a great leather shoe looks like, right? They built out a 600-700 crore brand. So there are examples of these hundred million dollar brands being built out in India in the last decade. We said, “Hey, maybe this is a good shot to give in the workforce casual segment.”

Sanjay Swamy 18:40

So walk us through some of these assumptions, what worked, what didn’t work, and what surprised you both positively and not so?

Ganesh Balakrishnan 18:50

So one assumption going in was if you position sneakers in the 2000 to 5,000 price range, it’s broad enough, but you will hit a good middle point between the mass, which is the Batas and the Liberties and the Actions of the world, and even the marketplace private labels like HRX. And the international labels like the Nike, Puma, Adidas, which are typically the marque shoes will start at 4,000 bucks and above in terms of their range.

So the thought was 2,000 to 5,000 is a good price point. Make shoes which have a good USP that you can talk about and have an affordable premium kind of positioning. That was the thought. And we said great shoes for work. So we said, “What is aspirational for the corporate workforce?” Entrepreneurship is aspirational. Everybody wants to start up someday. We said our branding and marketing strategy would be to get entrepreneurs to wear it first, right?

So reach out to all our entrepreneurs, reach out to all VCs and say, “Hey, this is a quintessential startup shoe. Why don’t you try this out and give us your feedback?” So that was the hypothesis going in that that will work. Couple of mistakes there. Number one, I think price point, we should’ve done a lot more homework on where the volume moves. I believe that number is now closer to 1,200 to a 2,500 price point where you will actually see volumes. You can build a very good niche brand in that 2,500 to 5,000 segment, but the volumes will not come, right? You have to set your expectations accordingly.

You can’t expect to sell on Amazon when you’re sitting at a 3,500 price point. It’s not going to happen. So pricing makes a huge difference. And accordingly, taking pricing as a target, we should’ve worked backwards into the supply chain.

Our approach was let us make the shoes with a good USP, let us try if we can play on with price to get a product market fit, and then we will accelerate on and build our supply chain backwards. We were off by 1,500 rupees, I think. And that was a huge gap.

Second, within four months of launch, the whole concept of great shoes for work went away, we hit the pandemic. And the core proposition with which we launched actually did not exist anymore. So now you’re saddled with inventory, your shoes are not going anywhere, you’re paying for storage every day.

And we were really in survival throws, right? We were trying to figure out what to do. We actually asked our suppliers if they could give us masks, and we were selling masks for the first part of our lockdown. So all those existential pangs were happening at the same time. So given that maybe a couple of investors of ours told us, “You know what? The best thing right now, the way this pandemic is going, take a one year vacation, close all your books, tell your employees to chill and come back after one year and then restart your business after one year.”

Sanjay Swamy 21:30

The three Ps In your case were pricing, pandemic, and pause, ironically.

Ganesh Balakrishnan 21:35

Nice. I like that. And fourth is place. The fourth P will emerge because the place was… We were doing a lot of road shows, right? This is an experience product. We made shoes with natural materials like bamboo, banana, linen, fiber, and so on. You really had to experience the weight of it, it was less than 500 grams.

And you pick it up and suddenly your eyes light up, right? Oh my God. What is this? And then when you wear it, you feel the AC on your feet when they’re moisture-wicking and it’s pulling out your moisture. That experience actually was much better delivered offline than online. So online marketing was always more expensive because a picture is a picture of the picture. How much of a story can you tell online, to hold your attention?

Whereas offline, whenever we did roadshows in, say, a WeWork or a startup office or IT parks or something, we always converted one in three customers who walked in the door. And that is phenomenal, right? So we wanted to do a lot more of offline.

We were looking at a kiosk model and we were evaluating that, but once the pandemic hit, we became paranoid about offline. What if our inventory goes into a shop and then the shop shuts down for four months with the pandemic lockdown? We could not afford inventory being locked in one place, right? So we always postponed the decision of going offline to a later date saying, “Hey, we’ll deal with it later.” Right? Maybe that was not the right decision to make. In retrospect, many things there, but yeah, that’s the fourth P that went wrong.

Sanjay Swamy 23:00

Got it. So how did this play out? I know you had raised some funding as you disclosed on the show, but in your mind, when was it clear to you that you were in trouble?

Ganesh Balakrishnan 23:10

I think after Diwali 2021. We were at a crossroad, right? So our second range of sneakers we had already launched and that was done. We had to make a decision on whether we need to invest into molds and create our own sneaker, which is the third range. Until then, we were using open molds, right? This one had our own logo and stuff like that. It was a capital expense, right?

Also, one of the things that we realized is that in the casual segment, consideration is very low, right? You need to catch the attention of the person to why these shoes are better. That consideration can be short circuited probably by having a potential celebrity or a gateway to a celebrity on board, it was a thought process, right? So that those two investments had to be made.

So we were in the process of raising funds, we had just deployed our second raise of 5 crores. First raise was on the paper plan. We did about 5 crores. Second raise was 5.2crores. Again, both of them through angel networks. We were just starting to deploy that, and then we decided that we will do these two things. We will invest in our own molds and we will get a potential celebrity on board. So Gaurav Kapur, the IPL commentator came on board, right? Now with these things in mind, you have to make a lot of commitments on volumes because you’ve invested in actual manufacturing.

Also since you have a celeb on board and potentially he’s introducing you to other celebrities, you need to spend on marketing in order to do the reach, right? So now we had to deploy more budgets accordingly. So hence fundraising became a lot more urgent. It was Jan, Feb, March when things were still rolling around. A couple of people were saying, we will put the money in, but need a lead investor. The classic runaround. When April hit and when we launched the shoes is when we really had to get the money in. We had a couple of term sheets on the table, but then the market tanked.

April ’22 is when whatever term sheets and discussions we were having completely went cold. And that is when we realized we were in trouble, right? We invested all this, but the money never came, right? So that’s when we hit the wall, if you will. We had a couple of months of runway. That wasn’t enough. Utkarsh and I had deployed our own money in there saying maybe we will be able to raise through at least an angel bridge around again and then get going. But unfortunately, our angels were also not deep pocketed enough to do a bridge as well, so it wasn’t meaningful.

Sanjay Swamy 25:40

Well, you’re not the only one that hit the brick wall in, I would say March through July of last year. I think it took a lot. I think at some point we felt very early this year or last year that, I mean, strongly advised all of our companies to just immediately assume that they needed to extend their runway for 24 months.

And not everybody was able to do it as well. I mean, some businesses, you can’t just dial down the burn. Some were lucky enough to get rounds or bridges, but I think a large part of the ecosystem and unfortunately in your case, they didn’t have the ability to raise in time. And I think this is probably the most important thing in the venture and startup ecosystem is timing, right? And some of these things are out of your control and they say luck plays a role. It certainly does, right? But it is what it is.

And so how did the Shark Tank episode come about? Because you didn’t have a large ask, right? I mean, for the show probably, but 75 lakhs is not that much of capital to ask to raise. So what was the best case outcome going in?

Ganesh Balakrishnan 26:55

Yep. So we had applied for Shark Tank in April, right? Which is when we were talking to three investors every day pretty much right at that time. And we said, yeah, if this opportunity is coming and if they air quickly, we might still have a shot at this. Because we had spoken to a couple of season one participants who in the wake of the Shark Tank airing, had actually managed to raise funds as well, right? Half a mill, one mill rounds at least.

So that would at least keep us going. So that was the thought there, which is when we applied. We got shortlisted in June, which is when we knew that we were out of money where we were putting our own money to burn. Not burn, at least keep the business afloat, if you will. And they called us to present in August when everything was done, right? We were pretty much at the end point.

So it was almost like a last ditch effort when I walked into that room. The intent was to at least see if some interest is there and then try to see when the episode airs, we are able to garner more interest and get that going, right? So that was the intent, to be honest. It was partly trying to get the investors, the sharks on board, but also partly to see if this can actually give us some tailwind to raise some money before everything goes kaput.

But the episode was shot in August and it aired in January. So that is a lifetime in the startup world, right? So unfortunately, that part did not pan out the way we wanted to. But yeah, that intention going in was that. So the ask wasn’t great for us. We had gone in saying, “Hey, we need to raise a proper round.” But just in terms of the appetite there, if you look at the… They do a basic analysis of what are the average checks that were written in Shark Tank episode one, in season one. You would find that that number is anywhere between 50 to 70 lakhs, right? Which is why we said let’s not shoot for the moon.

The deal with the Shark Tank is if the ask is not met in terms of the number, right? Then there is no deal, right? If the sharks can’t come together, if I say I ask for two crores and the sharks can’t come together for two crores, then there is no deal. Whereas, if you say one crore for X percent, that x percent is doable, right? So they will ask for a different valuation, you will ask for a different valuation. All those negotiations are in place, but you cannot close at a lower value than what you asked for.

Sanjay Swamy 29:25

I see. Okay. Interesting. I wasn’t aware of that. So what would you like to share about the episode that isn’t obvious to people who watched the episode?

Ganesh Balakrishnan 29:35

So a couple of funny things happen, so maybe I will start there. Because there has been a lot of talk about the emotion and the drama that happened there, but let’s talk about the funny stuff. The angel investor that was there on the call that I called when I stepped outside, he is a classmate and a good friend of mine. He’s actually a Chennai born, Tamili guy.

And guess what? He doesn’t know a word of Hindi, right? So they stepped out, I didn’t know this, but they told me that, “Hey, you have to put the phone on speaker and you have to talk in Hindi.”

And I didn’t realize that on the other end there’s this guy who doesn’t know Hindi at all. So I just said, “Hey, this is the offer. What do you think?.” And he said, “Hey, you got a deal. Sounds like it’s a good deal, you should take it.” And I was shocked because that deal was not good by any standards, right? I had made up my mind that I’m not going to take the deal, but I was generally going to call him and ask him anyway.

So that was a surprise to me. So after the episode was over, I called him and I said, “Hey, why did you say that? If you were actually listening, first thing you would’ve said is, ‘Don’t take the deal.’” And he said, “You know what? I didn’t understand a single word of what you said.” Yeah. So that’s how the cookie crumbles I guess.

Sanjay Swamy 31:00

It’s pretty funny.

Ganesh Balakrishnan 31:02

So what was seen as a huge twist in the episode, hey, his advisor told him to take the deal and then he stepped in and said, “Don’t take the deal,” was actually a comedy of errors.

Sanjay Swamy 31:15

Oh, that’s pretty funny. Any other tidbits from the show that you’d like to share?

Ganesh Balakrishnan 31:25

The actual show went on for more than an hour, one hour, 45 minutes, right? And mine was the last pitch before lunch. So it was 1:30, I think, and the back and forth rapid fire was going on and suddenly Aman pipes up and says, “Isn’t anyone hungry?” So everybody was hungry and that’s why the tempers were also high.

But I think one thing that I saw in the episode in retrospect when I watched the airing is that halfway into the conversation, it started off as an entrepreneur pitching to a bunch of angel investors or sharks. Somewhere in that conversation it shifted to entrepreneurs talking to other entrepreneurs. That was really cool to see.

They started sharing their experiences, they started saying, “Hey, you know what? Sometimes the businesses don’t work, but it’s okay. Good to take a pause.” And at the end, hugs all around and people getting emotional and stuff like that. I mean, that felt more like I’m meeting another startup guy and we are talking, we are exchanging our own life stories and having a drink together almost. That was really cool to see.

Sanjay Swamy 32:45

Yeah. I’m sure you’ve probably built a lot of relationships since. I’m sure after it’s aired and just like our conversation here and over the last few days, you’ve got some new found stardom here. So tell us some anecdotes on how you’re dealing with it.

Ganesh Balakrishnan 33:00

So this was completely unexpected, right? I was actually honestly embarrassed when I walked out of that room because I had broken down and stuff like that. But just the outpouring of empathy and people sharing their own stories saying, “Hey, you know what? I was in a very similar situation. I did two startups, both of them didn’t work. I’m back in a job right now, but now you’ve given me the motivation to try again.”

Or other entrepreneurs saying, “We’ve been through this situation right now, we are facing this in our startup. But it is great to hear that sometimes you just need to pause, reflect, and then think about the best course of action, not just keep pushing mindlessly, right? So a lot of those things came through, which were very interesting. I always thought that I was alone in this misery, right? It wasn’t so. There were so many people out there, that was very clear, right? And that resonated-

Sanjay Swamy 33:50

That’s frankly why I reached out as well because I’ve also been through this a few times and from my mCheck days or even earlier in life. And I think as a VC, we pride ourselves on being the best friend of the entrepreneurs that we work with. And then even ones that we don’t work with, we’re always happy to make time. And I just saw the episode and said I should reach out and also we met the next day.

But I felt really that, look, I think life is about enjoying the journey. And the journey teaches us much more, financial success is an outcome. Doesn’t always happen, but I’ve always maintained there is no such thing as a failed startup if you learn from it.

In fact, I think sometimes unsuccessful startups, the founders learn a lot more because you try so many other options. Sometimes if things start clicking, you just keep executing, and that also is obviously what we all hope for, but it doesn’t really happen that way, right? So I’m sure you’re in the majority, actually. I think this is the minority of entrepreneurs where things just go to plan, right? So in that sense. But tell us a little bit about what’s next for you and Flatheads and what are you looking forward to next?

Ganesh Balakrishnan 35:10

So still the fundamental questions about product market fit and the right go-to-market strategy is not answered yet, right? So if we are resurrecting Flatheads in any way, we have to start again from scratch and do this all over again, right? Of course, you have a lot of learning, so you’ll probably not make the same mistakes again, so that is a plus point. But effectively you’ll have to look at it as a new slate.

So with that in mind, I’m really thinking what is the best way to take this forward? Is there a larger umbrella under which Flatheads can sit? Maybe your portfolio of brands, maybe another brand where this becomes a sub brand, specifically in the sneaker segment where we have a little more leeway to experiment and play and figure out the right positioning for this going forward, right? So that is one thought I have.

Potential buyout or an acquisition kind of a scenario. The other thing I’m exploring is are there operators who are interested to come and run this on a daily basis where we can work together and make Flatheads what it needs to be. On my end, I think the takeaway from that entire episode was also that, hey, I need some financial corpus, I need some stability in my life. 10 years in and I’m broke. So maybe it is time to consolidate a little bit and then come back again with renewed vigor later.

So given that, I don’t know if I’ll be able to do this as a entrepreneur with sustenance anymore, which is why I’m saying is there an operator kind of a role where I stay on with and be the face of the brand building and public kind of stuff, that there is an operator who comes and runs the everyday show. That is the other option we are exploring.

Right now, we have done something exciting, we’ve launched a limited edition set of sneakers called the Not Out Edition, taking from Amman’s statement saying, “You’re down, but not out.” Right? There is some phenomenal traffic that is coming on our website. We launched it at 8:30am this morning, we’ve already sold 250 shoes, right? It’s unbelievable.

Sanjay Swamy 37:16

249 before me. I’m the 250th, I guess.

Ganesh Balakrishnan 37:20

Oh, you’re the 250th. Brilliant. Thank you for that. So there is a lot of momentum and there is a lot of goodwill and this is almost like the entrepreneurs dream, right? This is brand awareness built in Pan India. And even internationally, people in the US are buying shoes from Zappos now.

So that virality is something that we’ve got. Now what do we do with this virality right now is the key, right? So I’m keeping it alive while I try to figure out the next steps for Flatheads. I’ll ask you this question, would you invest in Flatheads right now in this situation?

Sanjay Swamy 37:52

I don’t know. Certainly like to take a look, but I just don’t know. I mean, the devil is always here in the details.

We don’t typically do D2C, but I would say I think one of your biggest challenges would’ve been distribution. So I was surprised to hear about the pricing piece, but maybe the show has given you the visibility and the distribution that no marketing budget would buy you, right?

So it might suddenly become a viable investment opportunity for venture capitalists who do D2C specific. Because really, there’s product market fit and then there is distribution, which are two big things that need to be solved. And the second one seems to be solved if you can get the PMF going.

Ganesh Balakrishnan 38:35

Absolutely. So exactly what you said, right? I didn’t mean to put you on the spot, Sanjay. But my intent of asking that question was suddenly, is this an investable business? I don’t think so, right? There is still a lot of work to be done in order to figure out the right way to do it before it becomes an investable business, right?

Sanjay Swamy 38:55

Yeah. But sometimes some of these things, if they are two, three dimensions, there’s the team, there’s the time, there’s the timing, there is distribution differentiation and product market fit. And you may have just cracked one of the biggest things by accident, not by plan. That doesn’t matter, right? You might rather be lucky than good, as they say, right?

Perhaps it’s time your luck turned to your advantage, right? So I really applaud you for keeping it going and looking forward to still figuring out. So what you’re saying is the the journey still continuous. And I think that is what an entrepreneur is about. So I wanted to close by saying, hey, maybe it is a new incarnation of Flatheads or third time is lucky type of situation, but we big fans wish you all the best and would love to stay in touch and I’m looking forward to receiving my pair of Flatheads and wish you very well, very best in the journey ahead.

Ganesh Balakrishnan 40:00

Thank you. Thank you, Sanjay. This is great. I had a very nice conversation. I think a lot of the behind the scenes, which I’ve not talked about anywhere else I’ve told you guys, so there are some good nuggets here, which will be interesting for our podcast listeners. So good fun.

Sanjay Swamy 40:15

Wonderful. Thank you so much and talk to you soon. Cheers.

Ganesh Balakrishnan 40:20

Cheers. Thank you. Take care.

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