Listen to the podcast to learn about:
02:00 - Why Join a Fast Paced Startup
05:45: Lessons Learned at P&G
07:15 - Successful Transition From an FMCG to a Startup
15:15 - The Right Time to Hire a CXO at a Startup
21:30 - How to Think About Customer Experience
30:00 - Multi-Brain Thinking When Tracking Metrics
36:00 - Evolving Consumer Behaviour: Audio Interface, Time Tradeoffs and more
42:50 - Book recommendations by Vivek
Wildlife photography by Vivek; https://www.natureinfocus.in/indian-wildlife-information/zooming-in-on-nagarahole
Read the complete transcript below:
AMIT SOMANI 01:05
Welcome to the Prime Venture Partners podcast today I’m delighted to have with us Vivek Sunder, he runs food delivery at Swiggy. And he’s the Chief Operating Officer there. Thanks Vivek for being on the show.
VIVEK SUNDER 01:17
Thank you Amit for calling me. This is an absolute pleasure. I’ve been a listener of your podcast, to be on the other side is truly, I’m still pinching myself.
AMIT SOMANI 01:25
Yes, not at all. I think you’re being too humble and modest, and our listeners will figure that out very shortly. And every time I have spoken to you, I’ve learned something. So I’m kind of kicking myself as to why we haven’t hustled and got you earlier. So maybe Vivek we can start a little bit with your background. In terms of what led you to coming to swiggy, I know you have a very varied background, you worked in FMCG, you worked globally. So maybe just a quick snapshot for our listeners, in terms of how you ended up at swiggy. And we’ll go from there.
VIVEK SUNDER 01:54
I guess the lure of us fast paced, well run startups that are blitzscaling or on the precipice of blitzscaling is a very strong one for anybody who’s been on the other side. And as you know, the grass is always greener on the other side. When you’re in a large company, you realise that you’ve got the skills, but you’re effectively like a person who knows how to drive a car in the fifth gear, but for some reason, either the handbrake is on or the car is on the third gear.
So I think because of that fact, most people realise that, hey, listen, I can go to two gears faster, I can basically work much better without a hand gear. And so if you were to just look at that professional analogy, that’s the executive summary of why one wants to move, you have the skills, but somehow you’re not able to do what your skills can make you believe.
So basically, the gap between actualize potential and real potential, as you look at yourself, is perhaps the reason why the lure exists. And frankly, meeting Harsha and all the investors was truly the reason I joined. It’s not like I’ve not met other companies around the world, there’s always something that sort of doesn’t click in, either the company is at a late stage and therefore it’s sort of not really a startup, or it’s too early, and they can’t basically make best use of my skills. Or there’s something which is a value mismatch. This just happened to be the Goldilocks test. Everything is, right.
AMIT SOMANI 03:25
Absolutely And I’m sure you also have been a big part of the success, not just the founders, once you’ve come on board. So maybe just a quick bit, one is always very fascinated with P&G, and companies like that, like you said, the grass is greener on the other side. I’ve always been in tech and product and internet businesses.
And I’ve read a few books. I don’t remember the one from one of the founders or CEOs of P&G, but what are a couple of the things that you learned at P&G, over your career and in general? And then what are some of those that you’ve been able to apply at Swiggy and Swiggy delivery?
VIVEK SUNDER 03:58
Yeah, first of all, it’s a wonderful school, I would say that P&G is the best MBA that you can have if you don’t have an MBA, because it teaches you and pretty much doesn’t assume, by the way in the interview, think about it, Kotler was practically full of P&G example, which is the marketing handbook in business schools. And yet, in not a single question ever in the history of P&G, would you be asked a marketing question in the interview.
Five rounds of interviews, not a single marketing question, not a single sales question, and so on. So they believe that if we get people with the right values, the ability to work hard they’re smart enough to be able to do the analytical work that is needed, we can hone them on the rest. And I think that means that there is a very first principles approach to attacking problems, which I think is immensely useful in becoming a versatile manager.
I think that’s something which P&G helps you to do, because there is a large enough tent to give you the multi format multicultural abilities that are needed. I’m sure if you look at the best cricketers, you will find that they are good at home and abroad. You will find that they are good in tests, one day and the 20-20s. I mean, it’s not surprising that Virat can play all three right? And that multiformat multicultural abilities is something I genuinely believe we’ll need for business people.
And P&G teaches you that multi format and multicultural is obvious in any place. You got to work in places where there is very high ecommerce business and places which have very high traditional trade, you got to work in cultures which are very different across the world. So I think that versatility is the first thing I would say P&G teaches because it’s first principles starts with the consumer and works backwards.
So all of the famous aphorisms,start with the consumer and then work backwards is literally drilled into you. I mean the metrics are almost you ignore the metrics and focus on the consumer and maybe talk about some examples of how ignoring the metrics and focusing on the consumer gives you insights, which in hindsight, of course, is 2020. But when you’re going hard at a problem, often a very left brain analytical company, which lots of Indian startups tend to be, they just miss out on that.
AMIT SOMANI 06:11
No, I definitely want to double click on that as we go along. But before we do that, how was the transition? One of the questions we often have both for our companies, we invest in it as Prime as they scale up, and we’re looking to get senior star talent like yourselves, is how will the culture fit work? And obviously, it is going to be played out with both hands. I mean, the person who’s hiring you, or the company that’s hiring you has to put an effort to make you kind of be successful.
And you also have to adapt, 15-20 years at P&G is not going to be like, will just fit in, hand in glove on day zero, might take a little bit of time. So can you talk to us about that aspect of your journey at swiggy? And how would you recommend it for other people? Who are looking to get folks like yourselves?
VIVEK SUNDER 07:03
Sure. So I think the sort of one line summary is you’re moving from a place where, at least in my case, I was moving from a place where the products were fast moving to a place where the people were fast moving. So that’s one thing to keep in mind but on a more serious note, I think that if I were to think a little bit about what I’ve seen, I’ve obviously not spoken to a lot of folks in the startup ecosystem over the last three years, spoken to folks who are on the other side who are wanting to come, my sort of tips and sort of still learning as I’m speaking, I don’t think I have a full encyclopaedia. But I think the first thing to a lot of the younger companies is don’t hire if you’re not ready.
And then ready here is either financially ready. I mean, if you’re a startup, which is in a sort of seed stage, and so on, so forth, there’s no point in hiding something like that, they are going to be useless, and they’re going to be too expensive.
You also have to be sort of emotionally ready to give up. It’s like, No mother, who’s got an infant is going to engage a teacher, for the child. But a mother who’s having a preteen is perfectly fine to go and look for the best music coach or cricket coach or anything like that. So,when you’re bringing in somebody who’s got the expertise at scale, and a different order of expertise, you have to be emotionally ready to let the child go.
So I think that those two things, if you’re not financially or the business isn’t ready, and if you’re not emotionally ready, don’t hire, there’s no, it shouldn’t be a badge of honour to say that, I’ve had these amazing people from these amazing companies, you’re essentially just hiring a very expensive millstone around your neck.
And the second thing to keep in mind is, if you wanted somebody like the people that you started the company with, which is, young people, lots of hustle, maybe a little chaos, but obviously, fantastic problem solving, and so on so forth, then, you’re doing the wrong thing by hiring somebody like that, they bring in different skills.
And therefore, you have to hire when you want to effect some kind of change. And that change could be reducing the chaos quotient and increasing the sort of reliability quotient, or scaling to a place which you are not familiar with. And that place could be either a geographic place, or a consumer segment place, or a new segment of businesses as well. If, for example, Ola was moving from what it originally used to do to manufacturing, surely it needs different skills on manufacturing. So think about the change, you’re planning to bring into the company, either the core business or a new business and bring in that change.
The second point of it is, look at the end of the day that particular, I’ll speak a lot in analogies and similes. It’s effectively like an organ transplant. Even if you’re bringing in a heart or a kidney or something, it is an organ transplant. So to say that the organ that is being brought in has to change is true, of course, we do prepare the organ for the transplant, we don’t just say, pluck it from one body and put it in the other,you have to check for blood and so and so forth.
But you also prepare that organ, but equally, and this is something which I don’t think startups do very well, which is why the mortality rate for people like me is so high, they don’t prepare the body for the transplant. If you have a friend who’s had an organ transplant, they’re actually preparing the body to not reject the organ because the default setting of the body is to treat the organ as a foreign object and sort of throw it away, your own white blood cells will basically start to kill that organ. So I think preparing the body for a change, and I’m saying body because that’s the larger entity, you’re a single person joining a startup, preparing the body for a change is very important.
And I think that many people sort of realised later that there was this, and then we say, culture, Miss mismatch and culture fit and so on. I mean, you went in for that person, you knew that person is coming with a different culture. So what’s so surprising about it, so I think that learning from these other places where we naturally think of preparing both the recipient and the donor is part of it, I think that those are the second tip I would give you. There are very good books available. There are also practitioners available in the market who can prepare the body for a change, in this case, the company for a change.
The other pieces is that you have to think a little bit about the impact the CXO is going to have is that he’s basically going to take the energy and the passion and the missionary zeal that already exists in this company, which is why it’s done well enough to go and hire a CXO. And he’s going to take all of this raw material, and say, I’m going to basically make it happen at 10x scale or 100x scale or 200x scale, because that’s what he’s used to. It’s a very normal thing for him to basically be operating at 100x scale.
So very simply put, when I first came in, we were in something I mean, I started talking to Swiggy, I think we were in eight cities or something. And pretty much everybody, the founders, the investors were like saying,in India, we don’t know whether an internet business really has a place beyond 50 cities. And this is back in 2017, end of 2017.
Now I come from a place where the essentially 800 million consumers use the products that I was selling before this. So urban rural, all 3000 class one towns had a P&G product, and were deeply distributed. So to say that this business has a business which is sold for 300 rupees a natural normal business, which people always go out and eat has a role in only 50 cities was alien to me, like, really, what am I missing here? I go to the cities all the time, people are eating out all the time, people have smartphones, students are there, they actually aspire to do what their cousins in larger cities do.
So it’s very natural for me to think that this business should be in 1000 towns. And the experience that I would have had actually made me know about those 1,000 towns where and all of that. So I remember saying this thing, I said, look guys, I’m not understanding this. There are at least 800 towns in this country where there is a meaningful business of washing machines. And I’m not talking about washing machines that basically make Lassi, I’m talking about real washing machines. And I said the washing machine signals two things.
One, of course, income and propensity to spend, which is an equivalent of let’s call it household income, or household propensity to spend. And second, the feeling in the family or the psychology of the family to exchange some of that disposable income, to give relief to the wife of the family, to the housewife of the family, which is the truth mostly.
So I said, when you take those two things together, which is disposable income plus willing to spend money to give some relief to the wife of the family, or the primary caregiver of the family. Swiggy is a version of that and when you’re replacing the maa ka khana with sometimes baahar ka khana, that’s really what you’re doing, you’re having a little bit of a treat, and also giving, in some cases, the mother a break. So I said, I don’t know why we should be in only so many towns. So we did the following. We said, okay, let’s dump all the data of the people that have downloaded the app. And we have just said to them, sorry, not operating in your city now.
There were 700 towns that people had downloaded. And we had said, sorry, we’re not operating, they had not just downloaded, they had registered, that’s a very high intent to buy. You don’t put in your phone number and address and all of that without a thing. So I said guys, there are 700 places where they’re doing that. 500 of these places, the number of consumers is over 2000. So we’re going there’s enough market research and data that exists that we can do the business with that. So I think that scale is natural and people who run businesses at scale. So long story, but I thought I should explain that.
AMIT SOMANI 15:16
Yeah, no, I have a lot of questions. I want to sort of double click on but I think this will make a good transition to the kind of the Swiggy journey and what you’ve learned about consumer behaviour about the market, which you already started talking about. But just one quick sort of, not even pushback but thought on the previous comment, which is, I got your point about don’t hire too prematurely. You’re setting yourself up for failure. don’t hire without the cultural fit and getting the body and the organ both ready for it.
But oftentimes we also find that and maybe this is more true for early stage than later stage, people will just keep holding on to it. And therefore, it becomes too late to kind of get people in. And I am a practitioner of product management and engineering and so on. The founder wants to be the product manager for 12 years. And there is a point where you go, look either this is not going to work or something else that you’re supposed to do as CEO or co-founder or whatever is not happening, or maybe you’re not the best skilled person, like you said, in the case to expand from 10 cities to 800. So, is there any just quick thought on that before we jump to swiggy, about hiring too late as well, just like the inverse of the premature hiring that you talked about?
VIVEK SUNDER 16:25
Yeah, I think that’s a great point. I’m sorry, I did think it was an incomplete answer to say, don’t hire too early, I actually truly believe that. If you hire too late, then maybe staying on the medical analogy, then that organ, which needed a transplant has just made the rest of the body suffer. I mean, sort of stretching the analogy here.
But you’re absolutely right. So there is an appropriate optimum time to bring in. And maybe there’s a sweet spot of whether it is series X or series Y I’m not getting into, because that depends on the scale of the company and the nature of the space it operates. And also it, I think, depends on how fast is the learning curve of the sort of founder himself or herself. But I think that maybe too late is when a certain sort of rigidity has set in for that company, that this is just how we have done some stuff. This is why we’ve been successful so far. And actually, more importantly, more rigidity, not on this is why we’ve been successful so far, because kudos to you for being successful in where you are. More the rigidity on Oh, we’ve tried this stuff and it doesn’t work. I think that’s the rigidity, which becomes very difficult for anybody coming in new, to deal with.
And I think in many cases, the advantage I had was Harsha had his own doubts, but he just stayed out of it. He would tell me privately, his concerns and so on, so forth, but you stay out of it. So most of the people who are actually having to do this didn’t hear the sort of bird on the shoulder saying, but we have tried this before, and it’s not worked and stuff like that, I think that was an excellent sort of behaviour. And this is part of the whole preparing the body.
So I think it is before the rigidity sets in, I don’t know whether there’s a good way to measure this. I think maybe there’s an inversion sort of theory every six months, because things happen fast. In a startup every six months, you gotta ask yourself the question saying, if everybody in the founders will play different roles, like somebody will be a CTO, somebody will be a CPA or somebody will be a CEO, and so on, so forth,CFO etc. I mean, I guess they end up choosing CFOs relatively easily. I don’t know too many founders who trouble hiring a CFO.
But I think you have to ask yourself the question saying if this company was hiring a CXO whatever that X be, would it hire me? And the answer to that question, and by the way, you shouldn’t ask yourself that question, because you’ll have all positive and negative biases about yourself. Some people may be too humble and say, No, of course, I never get hired and some people missing on the other side, you should basically actually have a formal sort of almost a search committee saying would it hire me? And if the answer to that question is no, like, unequivocally No, then you should basically say I’m sort of screwing this baby up by basically doing the job.
Now, again, it’s the same story in cricket. Let’s be honest, I mean, I know how to play better cricket than my son right now. But I’m going to be a shit coach. So I should quickly get out of the way, yes, to get out of the way, and let him learn from a real coach, because I know I’m better than him. Because of course, he’s much younger and so on, so forth, but I’m not going to be a good coach. So I know that fact that me getting in the way of letting him not see a quick coach early is actually, in a way, not me being a good father and not loving him. If I love him so dearly, I should let him go to an expert.
I mean in that sense, the Gurukul system almost facilitated that. It says, Look, don’t assume that a parent is going to know so many things, just send them off. And you’ll find that he’s going to learn much better. Because your true love is when you actually make that person learn even better and make better than you. So I think I’m sort of mixing a lot of these things. But I do think that your point about thinking about when it’s too late is an equally valid one. And maybe we make mistakes on that side, too.
AMIT SOMANI 20:14
Absolutely, so let’s talk about Swiggy. And you obviously, are responsible for Swiggy delivery, but you also spend a lot of time thinking about the Swiggy customer experience. And what should the ethos of Swiggy be? You also obviously have a large team, I’m sure sort of influencing them and kind of guiding them and coaching them and so forth. So talk to us a little bit about the customer journey that you imagine, actually and what are the things that you guys have implemented and some lessons learned, perhaps that could be useful for startups?
VIVEK SUNDER 20:46
Sure. So the first thing you want to say is that we have made more mistakes on the customer journey than we care to note, literally, we could write a litany of it, I kid you not after this podcast, I actually have my CX team in here, doing post mortem. And not RCA, not root cause analysis, post mortem, after the patient is dead now let’s understand why it’s dead.
On a few things that we’ve gotten wrong. So I think in a fast, three way marketplace, where it’s real time, and it’s hyperlocal, we make more mistakes than we are happy with. So this is not a company who’s sort of Six Sigma yet, we would like to move towards that. But we’re not. That’s one big caveat we want to state in fact, this is part of our core focus area for 2021 recovery.
I think some of it is because of the fact. So I’m going to actually not talk about the whole shebang, because we could spend the next four days talking about it. But I’m going to give a very incomplete set, but an interesting in my opinion set of reasons why this happens. One is that there is a belief in the company, stated or unstated, that customer experience is about trade offs. Which is if I give the person a great customer experience, I will have to trade off either growth or more relevantly, unit economics and profitability.
I mean, in theory, that’s true, and therefore there’s nothing wrong with it. But often enough, this becomes the guiding belief that says the reason why we are not doing customer experience is because of the trade offs that we have had to have. And there is a financial goal to be met, and so on, so forth. And I think that’s because of the lack of either sophistication and creativity in the financial modelling or the lack of the belief that actually, if you’re creative, you can actually create a better customer experience and do it at lower cost.
And so there are a few examples that we have, where actually that trade off is worked in a sort of a negative way. We believe that if a customer gets really bad, sort of delayed orders, or whatever, that’s a bad customer experience. Sure, you would agree that that’s the case, right. And therefore, we in some cases say that we will trade off growth by basically constraining the radius during Sunday night when there is absolute chaos out there, right. But orders are peaking like crazy, you just can’t have so many people complaining about delays.
So let’s constrain the radius and trade off the growth because if you constrain the radius, the less restaurants are available as orders and so on so forth, because we want to preserve customer experience. Now, sure, that sounds logical. But the question is, there are some customers who actually do not mind waiting for an hour but we don’t ask, right? We don’t say hey, listen, this order is going to take an hour and a half because the restaurant is absolutely chock a block, would you still like to wait for it? No, we just constrained and when we constrain it, we have said, Oh, see, we made the trade off that everybody likes a fast order, or a fast enough order, and therefore let’s shrink the radius.
Therefore, let’s basically constrain growth, give up some orders in order for us to basically give that, now that’s bonkers. There are some customers who surely will be willing to wait that long. Not everybody is jumping like a cat on a hot tin roof to say that the food should be here in 20,30 minutes. So that’s something which we will figure out a way of how to basically deliver win win, which is that Yeah, those who are willing to wait, have it.
Cost is another classic one. We actually spend a lot of time thinking that if we have to get a delivery guy to do better service, you got to pay him. So if you pay him a lot more, than more of these delivery guys will come and therefore they will sort of provide good service. So my cost for delivery is going up. And therefore customer experience is improving. So it’s sort of a trade off. But the reality today is that we have actually run a few experiments where we have actually made the delivery partner focus only on one metric. Forget all the other metrics, just focus on one metric, make the customer happy.
Doesn’t matter when you press this button, that button, how many minutes you took this that and the other. We’ll deal with that shit. You just focus on making the customer happy. Now in the sense by actually giving him only one metric to focus on he thinks his job has become easier, because today he has to worry about 1000 other metrics. Was I there when I was supposed to, did I press this button? Did I reject the order and accept the order all that complicated left brain stuff? And so we basically change that and in certain zones that we are actually running, we are having a win win, he’s not asking for more money because we’ve given him only one thing to focus on.
So I don’t have to give him any more incentives because there’s one metric, and the customer is happy. And so you’re actually having a situation where the cost hasn’t gone up and yet the customer is happy.
And I think this is why, again, we sometimes take what is the generically true statement and apply it as a sort of rule of life. And I think that’s sort of linked to a point, which is a bit observation of mine, both of us are sort of coming from an engineering heavy background, but have moved into more of the product and consumer side things. I think the presence of any one brain, I think, is a bad thing. So if you are very left brained, and of course, it’s a problem for your right brain, and if you are only right brained, and good luck for you, because you will not even know how to count.
So I do think that there is right now, a little more of a left brain focus, a hard data analytics, all of that stuff, which basically affects us, and we actually leave money on the table, and we’ll have consumers also pissed off because of that. So I have like, hundreds of stories, even from yesterday, two stories from yesterday, it’s on the fact that we continue to be a lot of what is called default setting being left brain versus default setting being multi brain.
AMIT SOMANI 26:27
Got it, I love that point about the one metric to focus on. Truly the Northstar, a happiness metric for the delivery agent. And I can connect it to hospitality, where I spent a few years of my career, at the Oberoi hotels that is the Northstar metric, to make the customer happy. Of course, that’s a much higher and lower volume kind of play than the scale that that you guys are both delivering and aspiring to, Nordstrom and the other examples in the US are very customer centric companies, everything else flows from there right. So that is great.
I want to talk a little bit about this left brain right brain. How do you inherently analytical left brain engineer turned entrepreneur or engineer turned MBA turned CEO kind of culture encouraged right brain thinking right easy to say from the rooftops saying, Okay, let’s think right brain, let’s think customer empathy. But are there any practical tips that you have perhaps or things that you inculcate to bring about that thinking?
VIVEK SUNDER 27:26
So I want to say one interesting observation, which is because the default setting of the brain is left basically means the right brain is a muscle that sort of semi atrophy. But with exercise, we’ll come back, it’s not dead. It’s just a little atrophy. That’s my observation, which is some of the smartest product managers that I’ve worked with here, or business leaders that I’ve worked with here.
Once you have sort of opened that, or pushed open that door and shown them what’s possible. They truly try to make it a new habit to exercise both sides of the brain. And of course, over time, it comes in and that’s why we’re still talking to you about P&G, of course, you respect both sides. Diversity of thought, as it were, as opposed to just visible diversity of gender, and, and race and stuff like that.
So that’s one very heartening trend, which is that, while we don’t have it, it is a muscle that can be built, it is not one of those problems that hey, I don’t have the right brain, that doesn’t work. It is something everybody has got, we hire people with enough what is called versatility to do both. And I just wanted to lay that out there because otherwise people will think I have to go and hire from some obscure school. And some of the compromises, none of that is needed.
But let me first start with some couple of anecdotes. And maybe I’m going to try to make this a little more long winded. So apologies for that. But let me ask you the question, I mean, you’ve probably used credit cards when you’ve gone out to a shop. And I’m sure it’s irritating when you right swipe your credit card, and it doesn’t go through any app, enter your PIN again, or whatever it is,It’s irritating. Now that metric in our digital world is the payment success rate.
You have gateways and so on, so forth. Now, it is logical to draw a straight line correlation, pretty high r square on the fact that the higher the payment success rate, the higher the customer satisfaction, so far, so good. Why would you disagree with that logic, it says something that is an improving trend should lead to a payment success rate.
So now we have our payment success rate, unfortunately, is not determined just by the quality of our engineering and our code and our systems, but also the gateways. There is an external partner out there that we have to deal with. So our payment success rate is, let’s say, X percent. Now, obviously, the team has been told go guys, go hard at it. And I mean, there is a person who’s responsible for that. And he’s a really smart guy.
And he’s been tasked to go and get PSR to be as close to 100 as possible. Now, of course, he’s sitting there and thinking, How do I do that because it’s not in my control alone, there are all these various payment gateway partners and real life of what happens when their systems fail or they have a failure at their end, and so on so forth. So he’s basically been scratching his head on how to try to make this to as close to zero as possible or 100 as possible.
And that’s in my opinion, taking what is a completely valid statement, which is the lower the PSR, the more the customer detraction, but dissatisfaction and the higher the PSR the higher the customer satisfaction in basically taking it to the extremity, that therefore, perfection is 100 and customer will be truly satisfied only when it’s 100.
But the right brain person says hang on, if Amit goes to a store, and he enters his card, and he types in his pin, and the person says, Sir , the payment didn’t go through. Let’s be honest, he is mildly irritated. He enters it again, it goes through, he probably doesn’t even remember it. Okay.
However, if Amit enters and the number of times that he has to keep entering goes crosses a certain threshold, irritation starts setting in, he’ll think that I have entered the pin so many times, there’s probably something wrong with the machine. I don’t want to waste my time.
So it is not one failure that causes that to happen. So in the PSR model, or any engineering metric model, Amit, having four consecutive failures in one transaction, versus four Amits, having a failure is mathematically the same. It’s payment success rate, that’s one.
The second one is now imagine a world where Amit has had one failure. And he’s got an SMS that says 2000 rupees has been deducted from your bank account. And then the merchant says sir, payment didn’t go through. I haven’t got the money. You’ll have to enter the PIN again. Amit is not mildly pissed now, he is super pissed. The payment has been deducted from my account, what are you talking about? So I don’t know why I should be paying it.
No, sir. Here is the proof, here is the chit that you can keep, it shows it’s cancelled in 24 hours, you will get the money back and you’re sitting there and thinking, dude, you’re not even the bank? How are you committing to me that the money will come back? It’s my headache that I have to follow up with the bank, if indeed it becomes a double transaction, which means what it is not PSR that actually is the determinant of the customer.
So if you basically go back and look at this, it’ll tell you that no, there is a lot more nuance than this hard metric of PSR, that’s causing Amit to go apeshit crazy. Understanding that means that you will actually put a system in place that actually measures consecutive failures of Amit in one transaction differently from either having four failures in over four months, or five different people having these five different failures, one time failure nobody really cares much about.
So they will differentiate, the metric itself will change. And number two, if the payment failure is accompanied with a debit, then if you put a system in place that says sir, in 24 hours, I’ll make sure you get your money back else I’ll deposit this much money into your wallet, if you make a commitment of that nature. And let’s say you were to make that commitment. Amit says, Wow, this is a reliable place, I’ve never had a problem beyond 24 hours when they say they’re going to make good, it makes it happen. Now, it’s a real example from 24 hours ago.
But now if I tell you that straight line correlation of a PSR, to customers and so on, so forth. Of course, it’s true, but it’s not true to the extent so this is an example where understanding what drives the crazy chemicals of anger, irritation, frustration inside the human body is what needs to be put into a metricized form and then to basically be driven and I think that’s therefore it is, in the sense bi directional brain or sort of both sides of the brain to be applied. This is a real story.
Another real story, which is true for us is back in the COVID lockdown time period, whether it was real or not real people were spooked, not ordering food. The food is going to give me COVID The packaging is going to give me COVID the delivery boy or girl is going to give me COVID. So why the hell should I even order in from outside I’m going to get COVID was the reason why we had massive dormancy. People left the platform.
Okay, over 80% of the population did not order even though they were stuck at home and they can go to restaurants and order because it was spooked. So of course, as we said, What is the reason people are spooked, there is a scientific reason why people are spooked. They feel that they’re going to get COVID from these three places. So let’s invest in serious technology left brain to convince them that boss your fears are unfounded. So temperature checks, tying up with medical firms and proving that you can’t get COVID by basically touching the food. Hot food, for example, or basically doing contactless delivery. And to be fair, all of it moved the needle to an extent.
But here are the facts. We only actually still got the 20% active to move to 40% active which means 60% was still dormant COVID spooked, we used to actually call them COVID spooked dormants. Okay, so now if we left it to the standard operating procedure, they would have just said, work harder at it, man. It’s doubled in the next three months.
Just keep working harder at it, convince them, send them more information. So we created a docket. I’m not kidding with one of the medical service providers, that was a scientific explanation of how COVID does not get transmitted through this classic left brain has a problem, go solve the problem. Okay, the needle barely moved.
And then we went behind and said, look, let’s just understand from the consumers who have finally ordered, maybe there are 2% of the consumers who have finally ordered after three months, let’s go and understand what tipped them over to order. Was it the fact that they said, No I read the document, it was a great document, I read it, it basically told me that at this temperature, it doesn’t happen. All of that. Okay, if that was the case, it would have been proved to continue pressing the accelerator. The guy said, No, actually, my neighbours are also ordering and it’s been three months and they haven’t got COVID
AMIT SOMANI 35:48
I love it. And now I can tie it back to your TV commercial.
VIVEK SUNDER 35:55
Exactly. So this by the way, in pure behavioural science, it’s called social proof. So we said, look, guys, we can keep trying this left brain, convince them and bombard them with information. But people are going to first say, I’m not going to read this piece of shit. Secondly, you are biassed, you’re Of course going to tell me it’s safe. You being Swiggy. So we said cut this lets us do social proof.
And if you saw the IPL TV commercials, they were all about social proof, oh look Mr. Mehra has ordered, Mr. Sharma has ordered and so on. Nothing scientific there. Literally Not a single thing we put in there or scientific if you notice it is devoid of any science. Of course, there is a little double whammy effect of IPL and of course, and so on, so forth.
But remember, cases only started coming down in the last three months through IPL cases were still rising in India, IPL being, I’m talking September, October, November of 2020. Essentially the number of spooked dormants that came back was 2x. That came back when we did a scientific campaign.
AMIT SOMANI 36:52
Great, Vivek. We are running a little over time, but I’m loving it. So I’ll probably bother with a couple more questions as we wrap up here. So you said something very interesting about your first observation around going from 50 cities to 800. And I wanted to unpack that a little bit later in the show here.
So can you talk to us about some new consumer behaviour that’s emerging in the rest of India beyond the top 10-20 metros, which might also be beneficial to other entrepreneurs, even outside of food, who are looking to tap these markets like always been India heavy, I mean, holiday CCAC a be heavy or India one or whatever you want to call it right? The first 50 million users, depending on the company. So can you maybe give us some insights of, in what ways are Indians changing? Or the rest of India changing, which could be useful for new entrepreneurs?
VIVEK SUNDER 37:38
Sure. So a couple of thoughts of caveats. First, we are in 550 cities, 800 is potentially what we could get to. So we’re in 550 cities. So I’m giving you some stuff, which I think a lot of people will know. So it’s maybe a bit of a repitation.
But I’ll say that just for completeness, which is the whole point around people, having what is called a functional understanding and knowledge of the English font. But they still tend to use the local. If you actually go to a small town and see an auto rickshaw driver, he’s not reading any English newspaper, he’s reading a vernacular newspaper.
So it’s perfectly fine for him to go to a place and fill up a form, which actually hasn’t been English because he can functionally read the English script. But that’s not what his natural script is. So to assume that the same format, cluttered, lots of English sort of UI will work, when you actually start going down the city Pyramid is a bit of a stretch. Now what it means is, sure for the top 5% or 10% of students and younger people, it’ll still work, you won’t even notice the difference. But the moment you cross the cream of that city and start going down, it doesn’t work.
So you’ve got to think a little bit. And it’s not just the vernacular versus non vernacular difference. It’s the simplicity of the UI, versus the complexity of the UI that you have to think about. And again, this is something which I’m sure people are aware of. But this is one of those things, which is very important.
The second one is an interesting thing that I picked up whenever I used to go and open up, by the way being in P&G teaches you this stuff, you get very nosy you open up people’s cupboards and kitchens and pantries and see what’s in there because you just want to see what’s their behaviour. So we do the same with phones. When I go to these small towns, I say please show me your phone, they let me see the apps that are in there, and so on so forth. And one of the things you will find is that their whatsapps are less with stuff that they have typed out.
Because let’s be honest, it’s not easy to type out in Hindi and more about voicemails that voice messages that they’ve sent out. So they’re using the recording stuff and sending it to their friend because then it’s an asynchronous message that the person can listen to, which is very rare. I mean, you and I have WhatsApp so many times but we haven’t sent each other a voice message. So given that voice is a much more natural way to talk to people. We think that thinking about an interface that takes in voice and gives out voice is maybe actually better than something that is very reading heavy.
Again, something as an insight that people are aware of, I mean, Google, of course talks about it that the nbo may actually be coming in an voice and, and so on, so forth. So thinking a little bit about how do I have to interface with this consumer, both the language and the format of it, the UI of it is an important variable as you go beyond these students and the digital literates, thin layer across these 500 cities.
The second thing, which we often make a mistake off, is that there’s less money there. I’m sure there’s less money there. But actually, they are bigger value seekers, because they have more time, and they’re willing to therefore trade off the time for getting a better deal. So if you actually offer them a chance to, to get a better deal, they’re willing to do the trade off.
But it’s not like they are unwilling to spend their money, they’re just willing to wait a little longer to get a better deal, because they’re not that time stressed. So your promotional campaigns etc, have to be thought through very differently. Most of us think that oh a big jumbo coupon is only useful for a very rich consumer.
Sure, there is a space for a jumbo coupon for a rich consumer in a big city, which is a 800 rupee order or a 1000 rupee order. But for these guys who may tend to either have larger families, or may actually tend to order in a group, because social behaviour is much more common, it may actually become very useful for them to so it actually has two purposes. Classical nuclear family rich, urban, metro town dweller who’s basically buying a large amount because he’s spending an expensive restaurant coupon different from a person who’s basically ordering in large amounts. I’ll give you an example in Jodhpur, there are no samosa orders that we have seen that are below 10 samosas, one has to think that the reason why he brought samosa etc, etc.
Now one has to think of a single samosa, whereas in Bangalore, you will have people ordering two samosas and stuff like that. Now, part of that reason is, because if you ordered only two samosas, you’re actually not getting a good discount, because you’re sometimes below the threshold needed to get a good deal. So these guys understand that buying large is basically getting a discount. So you got to think a little differently about the discounting campaign. The third one is, if you have your company set up in what is called set forms, then you will basically have the norms of what is acceptable. Rigid, and the way to look at it is just like, maybe not to get too scientific about it.
But time flows differently. Einstein said it famously about being with a beautiful girl versus sitting in a hot oven, time doesn’t seem to pass at the same rate, the same thing is true, what is 35 minutes in a big city will be equal to 42 minutes in a small city. So if you set up your ecosystem to say anything about 40 minutes is a bad order. And therefore configure your system, you’re just putting arbitrary cost on DFS, he doesn’t need it, he is good enough, he is fine to wait another seven minutes, give it to them that at that point of time, you don’t have to then carry that load of less volume, but high cost in those cities, which then becomes a millstone around your neck. So nothing in hindsight, everything you will see will say is obvious.
But I think we just when companies expand, these are all configurations that unless you change, you will just basically put the same configuration out there and say, See, I told you these cities don’t respond very well.
AMIT SOMANI 43:12
Great, Vivek, I think we could go on for hours but I will try to wrap up and maybe just end with one short answer to this question. Because I know you’re a very avid reader. I think you do photography will include the link, I saw that beautiful picture in the National Geographic in the show notes, but maybe a book or two that you would recommend or one that you’ve gifted very often to people in the professional kind of sense
VIVEK SUNDER 43:39
Off late I’ve gifted Alchemy, which is a book by Rory Sutherland. He is obviously a guru on behavioural science. And he’s written a very easy to read book. And I think it’s a book that basically teaches people how to think about the irrational consumer and apply behavioural science in real business situations. Obviously, Nudge is also a very good book, but not just a lot more about the actual, what Thaler won the Nobel Prize for, as opposed to alchemy, which is a lot more it’s about creating as you know. So alchemy is a recent book that I’ve gifted a fair bit.
AMIT SOMANI 44:14
Thanks a lot Vivek. It’s been delightful. Lots of insights and really appreciate you being on the Prime Venture Partners podcast. Thank you again.
VIVEK SUNDER 44:22
Thank you, Amit. Pleasure being with you.
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