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Scale, Profitability and Culture with Rajiv Srivatsa, Co-Founder Urban Ladder

Rajiv Srivatsa, Co-Founder of Urban Ladder chats with Shripati Acharya, Managing Partner, Prime Venture Partners after he decided to move out from active role at Urban Ladder.

On this episode, they discuss Rajiv's journey of building Urban Ladder, becoming an entrepreneur, building a company culture and his future plans.

Rajiv is Co-founder of Urban Ladder and has helped build it towards becoming the #1 omni-channel brand for furniture in India. Urban Ladder has Raised 5 rounds of ~$100Mn capital from several VC Funds.

Podcast Transcript:

Shripathi Acharya 00:20

This is Shripathi Acharya, managing partner at Prime Ventures. Welcome to the podcast series by Prime Venture Partners.
Prime is an early stage VC fund investing in technology and product focused businesses. Today, we have with us Rajiv Srivatsa, Co-founder of Urban Ladder, delighted to be in conversation with him. Welcome Rajiv!

 

Rajiv Srivatsa  0:38  

Thanks Shripathi, always a pleasure meeting you guys.

 

Shripathi Acharya  0:41  

So let me start out with a question which is on my mind which is you're Co-Founder of Urban Ladder, Urban Ladder is such a successful brand, a consumer brand. So your thoughts on, why you decided to move on?

 

Rajiv Srivatsa  0:54  

As a founder. I think it's always a very hard decision to move on from the startup that you've founded. But I think We also have to realize as to what the priorities are. So number one, I continue to be the board member, I continue to be actively engaged with Urban Ladder in a very different capacity. And that's something that I've been sort of consciously thinking about to be able to work with Ashish directly on the strategy as well as on the people front. And that's something that I will continue to do for the foreseeable future. But also, as a board member, you also realize that there are times in the company when there are better suited members, a fantastic team, that's just better suited to do what the company is going to be doing right now, which is for us. I think, in our evolution is very clear that omni channel retail, building a very profitable business and making sure that the brand stands out as a very strong product and service brand, is the key to what our going ahead path is. And when we started we started as a technology company, we started as a brand which was purely selling online. And today if you had asked me there are just lot stronger people to be able to build this kind of business. So you also evaluate that and today, the team that we have is really well suited to do that, and it's been doing that from a turnaround perspective. The last but not the least, I think as a professional, you also have your own professional leads, right. And though it's number three in your list as a founder, your first founder, and then a board member, and when you are a professional, and I've been also thinking about, I just touched last year, what is it that I want to do professionally. And there's a bunch of excitement that's happening on various other spaces. So I thought, let me take a break. And I still don't know what exactly I'm going to do next. I thought, let me start on a clean slate, because it's been 18 years of working. And I thought, let me just take a three, six month break and then figure out what next.

 

Shripathi Acharya  2:33  

Well, I remember the first days of Urban Ladder when we had both you and Ash going on in our office and you're going around and doing customer research and all that stuff. Seems like a long time ago. So I'm going to take you back to maybe few years back, and tell me about a time when you had that first wow moment as the founder instead. Okay, we're onto something here.

 

Rajiv Srivatsa  2:58  

There were i think quite a lot of wow moments in the early days, especially because you're doing a startup for the first time. And I remember the time when we were sitting in the Angel Prime office at that time for the first four months before we actually moved into our own office. So, thanks you guys for that. Because we used to have a lot of very useful discussions during that time. For us, the first wow moments actually came when the first customer got a product, and they actually had a great thing to say, or the first wow moment came when we got our first genuine social media review on Facebook, saying that, we had a fantastic product and a fantastic service. We also got our first wow moment when we actually rolled back a bunch of things that we had done, when we started, we started All India online. And there was such fantastic feedback from Bangalore where we were delivering ourselves and really bad feedback from Delhi and Bombay and rest of the cities where we are working with third party logistics providers, right and for our startup at that time, we are funded $1 million dollars, we were just 45 days into our business to actually pull back 30% of our business, we said we're not going to deliver India, because the customer feedback was not really the kind of feedback that we wanted for Urban Ladder as a company. So we actually lost in 30 40% of business. We opened literally overnight operations in Delhi and Bombay, in addition to Bangalore, and said, we're going to only be in these three cities for the atleast foreseeable future. So I think those were, some of the wow moments. The first investor, maybe the first hire on actually a lesser salary, of than what they were getting because they were just joining for the vision and the values and what we were doing right. I think all of these first wow moments, first moving into our office, we took a in Marseille in Bangalore, we took a four bedroom, very old house, just moving into the office, lot of moments that I can recollect from those first few months and few days of starting of Urban Ladder. At the same time, i think these wow moments continue in very different versions today when you open a new store. In a new city, there is a wow moment, when a new hire joins and they have their first one there's a wow moment, when a new customer service person joins and they take the first call is a wow moment. So, I think the kind of wow moments today are very different, but they still continue for the team. 

 

Shripathi Acharya  5:06  

So basically predicating the success of the business, on people buying something like a furniture which they are used to touch and feel, entirely online. How long did it take for you to get convinced that this was actually going to fly? Now, of course, I know that you have also gone into omni channel and we'll have a different conversation about that. But, how long before you're saying. Okay, now I know that this is going to run as a business itself and there is not something the Indian consumer will be averse to.

 

Rajiv Srivatsa  5:32  

So while I covered so many on the wow points, the one big one that I deliberately did not cover is, we're always very clear that there was a market for furniture and while we started online, we knew that the customer based on what they were going to buy, we're going to alter in terms of what categories we we're in, what's the price points. Now we actually got pretty lucky that the customer found that product market fit and helped us find the product market fit very early on. And in hindsight, it felt like the why that happened as to because Indian customers, as you said were not really geared for buying furniture online. So I think a few things that we did well, when we asked customers as to how they bought from us, I think we merchandised very true. We did not merchandise either too hyped up, nor did we show the product in bad images. And that time you had either these two extremes, people used to put up pictures which were completely fake, or really, the product would look extremely crappy. And we made sure that the product was beautiful, displayed in a very good setting with very good merchandise. And people actually got a feel of the finish of the wood, all of that. And that was a big part. Two is the online product, which was the actual website experience, we made sure that that was also true, it had no fab, it was made sure that , we put a stick figure right next to the product to give a sense of the size. We did a bunch of things right on online product also in terms of just ensuring that customers got a sense of what the product was, the kind of features, the weight all of that. Last but not the least, I think just making sure that customer stories and handling those customer interactions. Because it was not like everything was hunky dory on day one, we would get a very good customer story, which we would put up on the website and on Facebook. But we would also get a complaint because , maybe we screwed up on something. Handling those complaints in a very true manner, helped customers get assured that this is not a fly by night operator, this is not someone who's out there to screw me on my money. There's someone who was willing to listen, who is not going to fake it was not going to say that they don't have any issues. They just got to acknowledge the issue and move on and fix that issue. And I think customers got that trust. So somewhere the product the design came out the merchandising and online product. And the trust came out in the way we were interacting with customers, and the good word of mouth spread. So I think in hindsight, it seemed like okay, maybe customers are just waiting for some of these basic things to happen, before they bought something as big as furniture online. There's not that the touch and feel, because at the end of the day, if you see in again hindsight, most of the India's furniture market even at that time was carpenter driven and carpenter would show an image on a paper and pencil and customers were Buying either of that. Or if you go to a real store, they would actually buy most things out of a catalog and customers were buying out of catalogs which had poor images, and really deplorable customer service. So, again, this was something that we figured out in hindsight, we also had the same worry that customers would not buy something online like furniture. But, we went in with some belief that customers given the right product, given the right service would buy. And that really, is what happened.

 

Shripathi Acharya  8:23  

That's a really fascinating, analog you put there about the carpenters is actually showing the image. It's not like the sofa, which he's making is there, and what you're doing with all of those things that he called, he actually had pictures of people sitting on the thing and the depression that would be on the couch. And I recall thinking that well, that is actually giving trust. So, it's really about trust between, how do you actually deliver trust online. So being an entrepreneur is all not a bed of roses. So, tell me about a time when you probably felt the weight of the world on your shoulders, right. I mean, we don't talk about that as much. But you know, that's the reality.

Rajiv Srivatsa  8:54  

I think the weight of the shoulders on entrepreneur is probably a lifelong thing. Once you decide to be an entrepreneur, and the A lot of such moments also. And it could be very different things,  you had people leaving for a variety of reasons, let's say, when you sort of build a great team, and for a variety of reasons, let's say there's either a massive market out there where, they're getting very good roles, or, for a variety of reasons people leave, I think that's one thing that entrepreneur always sort of takes it close to their heart. Two is when let's say, you've done an implementation of a project, and that's not gone well. And that's sort of impacting customer service. For example, we had a big system upgrade last year, but we've timed it really wrong, and the customer service scores really went south, and you don't want to as a company that's built on customer service, you don't want those kind of things to come and impact your customer service score. It could be let's say maybe some conversations a vendor that did not fructify or some negative press, I think you're not able to have worthwhile career path for someone that you really got in with a great aim. I think that a bunch of reasons which are usually people related or product related. That, usually has a lot of heartache as an entrepreneur. But the good part is, I think just like individuals have a lot of staying power, and go through a lot of these ups and downs, even as a company, I think a company is also a living organism at some level, also has its staying power to go through these ups and downs. And over the last seven years, I think we've had both ups as well as the downs. And today we are at, I think, a far stronger position than ever before with the charter of being a profitable, efficient company. So I think that's just part of every company's life that will have to go through that. And as an entrepreneur, you not just have your own staying power, but embed that as a culture and today, the team that I see at Urban Ladder given some of the difficulties that we went through in the last six-seven months in February and March of this year. I see a far stronger team, just them as professionals, as well as sort of the bedrock for on which Urban Ladder is far stronger.

 

Shripathi Acharya  10:51  

So, now the things actually distinctly remember about you and Ash go when you're starting the company is about the focus you guys had on the customer experience. And actually I heard the book The four Steps To The Epiphany from you guys. I heard about Lean Startup, but you said, Okay, now read that book, which is, of course a Bible. And, it's fascinating that I think you guys actually followed that before you started not I don't know, many people would actually know about that. But what is an advice that you would have for when we have entrepreneurship on a rise, the quality of entrepreneurs increasing, which is very exciting? Any one piece of advice you'd like to say, hey, look, this is, which is coming out of your experiences you'd like to share.

 

Rajiv Srivatsa  11:31  

I would think just getting your customer satisfaction score. Now there are multiple ways in which you can measure customer satisfaction, it could be the CSAT, which is customer satisfaction, it could be the Net Promoter Score, which is NPS, which could be Customer Effort Score, which is the CES and there's a lot of literature out there on all of these three measures, but getting these parameters right from day one in whichever way or form. You are not just because you're raised a lot of investor money, or just because you've a fancy idea. Do not ever get that into a bad zone. Because, that for me is an area money well spent. Because that's literally the first marketing money. Customer satisfaction and customer referablty.  Is literally the best marketing tool. It is not the amount of money that you guys blow up on Facebook or Google, that is the best way to make sure that there is trust built in the brand. That is the best way that you can ensure that there is a lot of positive vibes in the people joining you. Because, let's say you're building a brand in India, people that want to join you because they have heard good things about you as a brand from their friends. So when you invest in customers right from day one, to build a brand, which they can trust, it not just improves a score, which is the Customer Satisfaction Score. It reduces your marketing costs, it improves your overall economics, because those same people will come back and buy more, it improves your ability to get smart talent. And so don't look at customer service as just a function, look at it as a cultural element. And make sure that you're getting it right from day one. And, do not scale up till you get that right. 

 

Shripathi Acharya  12:56  

Very well put because so much easier to retain a customer, then acquiring brand new customers. And, so loyalty and credibility adds a lot. So, what is an advice that you have heard being given to entrepreneurs, and there's a lot of it out there, which you would debunk, and that you would say, is the worst kind of advice?

 

Rajiv Srivatsa  13:15  

I think burning money, and we have seen some debacles of late even in this, US stock market. But I think the whole thing about burning money to achieve crazy scale, and there are times when the macro environment demands it from you, maybe investors demand it from you. But I think that whole, I won't say it's the worst advice in some situations, you probably have to do it. But I would say more often than not, you should not do it. And I think that's something that you will have to take care of. Just because you have a lot of capital, scaling up things are going the wrong way. Just getting too many people too fast, getting a fancy office, blowing money on ads. All these are things that look great on paper, to get the next round of funding, but really you're not building a sustainable company. And for us, always it's been about sustainability. And even in those rare times when maybe we also made that same mistake, we've always pulled back. And for me, as an entrepreneur, anyone who says you can just go buy your customer, I don't think that's the right strategy. Just by investing a lot of money in ads, you have to make sure that you're scaling your fund the foundational product up, you're scaling your systems up, you're scaling your culture up. And there are ways and means to do all of that stuff. So just because you've got capital, just don't blow it and try to do this all unnaturally. I don't think it's possible. Let's make sure that you have a clear way to do some of this stuff, and then do it. Once you've done that right then you can hyperscale but before you do all that you can hyperscale. And also the other thing is as you expand to newer customers, the product market fit becomes a question mark again. So do not scale up too fast thinking that just because you've got. Let's say X number of customers, 10 x customers, you can get to the same product, doesn't happen. It may not happen to the same product, it may not happen at the same price. So while scaling up just make sure that you are always factoring in that, at what costs are you getting the new customer, and maybe the new customers coming in a much higher cost. So you should not be scaling up too crazily too fast, just the interest of scale.

 

Shripathi Acharya  15:08  

So, it brings me into an interesting question. Just say, I made a point here argue that when you are looking at a new product area, you have to go through that discovery and product market fit, exercise again, even though you might as a company might have evolved and gotten that fit and scale in some other area. So, I would think that that must have happened, when the omni channel discussions happened within Urban Ladder. So, maybe you could tell me a little bit about, how was that life was this was an online culture in the company, and you're introducing this completely foreign, and maybe an object which is people are not even like 40 they're probably against it. So, how did that conversation happen? And then the decision strategically to move towards it?

 

Rajiv Srivatsa  15:51  

I think, two parts to it. One, we were figuring out that lot of our own customers are coming back and asking us, where's your store so that I can buy a bigger product. Two is as we expanded to the next set of customers, this conversation was becoming much stronger than our early set of customers. It is not like we had not heard this from day one. It was just that we were hearing that far, stronger as we expand it to a wider brand and a wider set of customers across a wider set of geographies. Three is, it was also showing in our data that the cost of marketing acquisition for the next customer purely online, given the competition, very discount driven, heavy competition online, was becoming higher and higher, in terms of just a pure online business. Last but not the least, I would also say, there was a clear trend emerging that, we did an experiment. We had this Urban Ladder next initiative instead of a ladder, where we have five projects at any given quarter where they will go try things. A couple of initiators were around trying something offline. So, someone tried something in office, someone tried this in partnership with somewhere. And the kind of interactions in the kind of activity that gardener. Was pretty heavy. And it was very easy for us to try this as an experiment. We didn't know been a big store and stuff, we just converted a part of our own office into that. So, when we tried that as an experiment, and we saw that it was not just customer research and the increasing marketing costs, just the kind of interactions that the customers had with us the amount of purchases that the customer was making offline, and the  integration that we had in terms of online offline, was proving to be that, hey, this could be big. Only when we got some of those data points, we actually said, Okay, why don't we now try opening a store and this was I remember September, 2016, where we took that call. And we were also clear that, hey, we were going to be a single brand. Because we are, I think in that year, expanded to a wide set of catalog items. And we were pulling back in terms of the catalogue, we were clear that we were going to be a brand. We applied for a single brand license also around the same time saying, hey, let's be a brand. Let's be very clear on the kind of design that we want to go to customers. And the fact of life is 99% of branded business happens offline. So we did not want to be in a channel where business is, and, it just made prudent sense also to be in a channel where business is. So I think it was multiple factors and it just worked out really well that the integration happened really well.

 

Shripathi Acharya  18:03  

But was it a difficult past to get the company culturally aligned on it like the DNA of the company?

 

Rajiv Srivatsa  18:09  

So, thankfully, what we did was we sort of tweaked our value system, because when you are becoming a single brand, when you are becoming a retail company, you also have to be a lot more prudent on efficiency and profitability. And, that's something that we treat the value system. But thankfully for us the way we did even physical retail, there was a lot of DNA of the online company that went into it in terms of either the merchandising, in terms of the way usage of data, in terms of usage of technology, even today, all of that sort of percolate. So, thankfully, we didn't have to really alter the company or its DNA, we actually use the best of what we had tweak the company values a bit and then launch retail.

 

Shripathi Acharya  18:40  

So what next for Rajiv Srivatsa ?

 

Rajiv Srivatsa  18:43  

Well, I am exactly the discovery process. It's been three weeks, literally, that I announced. And I said, let me just look at what next in a completely blank slate. So I'm just talking to a lot of different kinds of people, startup founders, venture capitalists, having my own startup ideas. I think it's going to take me another three, four months to really land at some place, but I will certainly keep you guys posted based on where life takes me. 

 

Shripathi Acharya  19:04  

I hope you find your product market fit. Right. Thanks, been great having you.

 

Rajiv Srivatsa  19:09  

Thanks for having me and it's always great talking.

 

 

 

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