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Ireena Vittal has spent over 30 years helping both conglomerates and startups grow their businesses in India, her story and career trajectory are absolutely remarkable, and we’re hoping to relive a lot of the lessons she's learned along the way.

The 3 rules for upstarts:

Sid

Ireena, thank you so much for joining us today, really looking forward to learning more about you, which, as I just mentioned to you as well, this is going to be not a very difficult task since there's very little about you online as it is. And so to kick things off, I wanted to begin with one of my favorite snippets that I saw in one of the articles we were reading about you while you were advising Mr. Biyani and the Future Group. You also started mentoring his two daughters on what we would assume is just what the world is like and how they should approach it as a founders, entrepreneurs and operators going forward. And so I wanted to start off by saying, since you now have all this experience in giving advice to very, very young people, could you start off by telling us how you would frame advice to the next generation of Indian working professionals and entrepreneurs coming into this jungle that we're seeing in front of us today?

Ireena

Well, I would say three things:

1.      One is never forget that you're optimizing life at the margin. If you have a job and a reasonable job, you're already in the top one percent of young people in this country. So celebrate. Be grateful and give back.

2.      Second, this market is going to look completely different by the time you're ready to die, so learn every day.

3.     And third, give. Give to colleagues, give to others because the same people you meet on the way up are the people you meet on the way down

Disrupting the coffee market 

Sid

Wow. I could have been a fly on the wall when you're teaching those two young women. that's awesome. You know, one of the things that we found really, really interesting when you joined Nestlé was that you, you joined coffee and other beverages. But coffee was core, right? 

Ireena

No. At the time I left, I was looking at coffee when I left. Yeah, when I joined, I did 18 months of training in sales and advertising and then worked in food service. And then I started looking at coffee.

Sid

So coffee, you're looking at coffee at a market at the time, dominated by tea. Today, almost everyone we meet in in our job is trying to disrupt some market or other…looking back at that time, what were your kind of experiences about trying to get things done and what do you think went right for Nestlé and what experiments were you doing? What, maybe didn't work out as well.

 Ireena

Nestle is an amazing company. It doesn't think  in terms of years, it thinks in terms of generations, because food habits change over a generation. And so I think the objective of the coffee portfolio at that time, I remember the coffee category was 60000 tons, of which I think the pure coffee  which was Nescafé, was five thousand and the rest of it was chicory and blend. And there was obviously no out-of-home consumption in the north, and the West was largely in the south, and it was more along the small stores and roadside. So I think the objective function of Nestle at that time, which I think is perhaps true even today, was two things. One was to build it in a thoughtful, respectful way so that it reflected how South Indians have coffee vs. how north Indian's have coffee, and second, was to do it profitably so you could continuously invest behind the category in the brands, the themes perhaps are still as true 30 years later. But obviously, the market context is  different.

Sid

So 30 years later, I mean, we're sitting here, I swear to God, I think we must be seeing one new coffee chain coming up like in every month, if not even faster. Have you followed this at all this this rise of coffee and and how it's kind of evolving, especially in the last five or six years in India?  What do you think is going to be a core metric of success for these guys? We've seen CCD go from where it was to where it is, we saw Starbucks. And quite honestly, at light box, we've been watching like, you know, 15 -20 coffee chains very closely, just from your experience and exposure. What do you what do you see happening in this space? And what will define a winner going forward.

What defines a winning brand?

Ireena

I think what will define a winner going forward will be two things:

1.      is how do you keep product quality as you scale?

2.     How do you ensure a strong store economics as you build out? 

Because eventually it comes back to this, the market will continue to grow because we are such a poor nation that we will, you know, every year, we will hopefully be a bit richer and the addressable market will continue to grow.

__________

“ Now it's a sensible player does not grow too far ahead of the market. Otherwise, you're bleeding money, and an even more sensible player always refreshes the brand and the product so that you remain both good on the palette and aspirational as a brand because people don't buy brands, they buy pieces of identity.  ”

__________

And to enable all of this, you make sure that you build a format that has fundamentally sound economics in a country where there's an economic shock every 18 months. So despite all the hoopla and the hype if you're building of business, I think in India these are the two guardrails. Does the next set of you keep coming to you because you're still aspirational and the product is still good? And does your existing - your super users, if you will, the 20 percent of guys who produce 60 percent of the business, do they still have a reason to be valued by you? Do they still feel respected by you. So what are you doing with consumers and product in retention and what you're doing with store economics so that your like for like growth is higher than the growth in salaries and taxes that you pay?

Sid

As you look at buying an identity in a market like you mentioned, that is ever changing do you have any examples of  brands that have been able to change the dynamic of either their relevance or differentiation over time based on what's been happening around them successfully 

Ireena

I think my favorite food brand is obviously Amul. It's still so cool and chirpy and Naughty and who would have thought that you'd have in a category like dairy, you'd have a brand that has survived and remain relevant over 40-50 years. And remember, in a 800000 crore category, it's about 40000Cr or so it still has a long way to go, but it keeps itself refreshed. If you look at the last couple of years, it's extended itself into one of my favorite extensions, which is chocolate, which is lovely. But even the core brand is exciting, and I'm giving you the most boring category which is dairy. And there are lots of brands like this, and I think at the core of this is to keep the same identity, but to change the language so that you remain relevant to the next generation. It's not to change who you are. It's to change the dress you wear and the language you use. But the soul of the brand remains the same. And more importantly, keep refreshing the product range. Consumers finally will come back for the products they buy into the identity, but they come back to the products. So don't mess with the product, don't cut too much of it out, and don't over experiment on price. And I think I mean, I can give you lots of examples, but Amul is a beautiful brand that has done this consistently and successfully from an area which will never get Private Equity, right?

Sid

You know, when we look at India a lot of times, of course, the relevance and differentiation of the brand is on one side. But distribution and how we innovate around distribution is on the other. And what we found very early on in our lifestyle as a fund  was people were looking at the internet as a distribution channel versus having to go through a store distribution that FMCG businesses have created in the past.  Can you just talk to us a little bit about how you see distribution, evolving or innovating? Or will you see anyone innovating in distribution in a manner that perhaps 100 or over 100 years ago, FMCG businesses were able to kind of help sprout Kirana stores distribute their product more locally?

Ireena

So you're absolutely right that distribution is often after you get the product right. The single most important driver of growth in this country is distribution, and a great example is seeing what companies like levers or Britania or to some extent Godrej have done in the last four or five years where they have taken distribution deep into the North Indian state of U.P. and Bihar and to some extent even West Bengal and Chattisgargh and got huge amounts of growth, right? And that's just my coverage. And by the way, the kirana model was created in the 60s, not 100 years ago, but in the broader point is that there is still a lot to be done in terms of covering offline distribution now online is very interesting. I think one of the interesting things you see in some of the DTC brands is since a lot of them are created for the top one percent, two percent, three percent of Indians, they do really well initially online, whether it's through their brand or from or through one of the marketplaces. But then something happens when the brand touches seventy five hundred crores of run rate. It's almost as if they enter a valley of death and then growth after that becomes excruciatingly painful or it becomes incredibly expensive because suddenly your take rate goes from 35 percent to 48 percent and your net realisation is a ghastly low amount, and that's when a lot of the DTC brands say, Oh shit, we need to get offline and getting offline, even if you look into the top 10 cities is damn difficult. So I think the two different things that are happening as we speak.

1.        One is It's very interesting to see that among the 30, 40 million consuming households, which is, say, about 160-200 million people in the top 40 45 cities where their bulk of consumption happens

2.        It’s fascinating to see that search has gone online and whether the searches for a cell phone or whether the searches is for baby products or for apparel, the research after research shows that almost 80-85 percent of them will search for a product and increasingly for a store that's online. And if you don't win in that search, then you're not even the consideration set. But a lot of transactions still gets consummated offline. And for two to five million to go to 20 million, 30 million in terms of transacting online, I think we have to wait a bit longer.

________ 

“ So I have a feeling that in India, the innovation has to be almost Schizophrenic, You have to win in online search, both organic and inorganic, preferably organic. But then you will need to be part of a broader fight in order to also be present, if not in five million outlets then at least in a million of them in the top 20 30 cities ”

________

And therefore, I'm waiting for aggregators and distributors to arrive, who will take 20 or 30 DTC brands which are non-compete and cover this market that that channel partner is still to be born and he or she will make a ton of money because a lot of these brands are ready for that expansion, but none of them have the capacity to do them there.

Sid

Do you think the new D2C brands that have now been coming up, do you think that they should first sell online? Or do you think that they just need to advertise and be searchable online, but should immediately be offline from a sales point of view, from a distribution point of view? Do you think that they should start purely online of the sales channel or do you think they should be in both places at the same time?

Ireena

I think being online initially makes a lot of sense, and it's not just a pure D2C. If I was a FMCG player today, levers, nestle or Amul, I would do all my best marketing online…but 30 years ago or 20 years ago, we would do traditional marketing and it would take six months, nine months to see what happened. And all of competition would turn up and see what was being sold. But today you could do it in six weeks and eight weeks online. And so I think everybody will do trial sampling and piloting online. But if you really want to win and mainstream, you will still need to be present offline. And the issue is who can justify the economics because covering offline as implications on cost are so, but more importantly on inventory and collections , which a lot of small brands struggle with. So I don't think it's an either or I think it's sequenced, and the issue is really the economics of rolling out into offline.

Sid

So, you know, it's interesting that you brought up this is how people are buying things even today and especially the things that the new distribution, that opening up and in northern India. one of the things I was really excited to talk to you about was the study you had done on how half the world shopped while you were at McKinsey, which is also a couple of decades, a couple of decades ago. And I think here we are a couple of decades later, and I think everyone's still trying to figure out how half the world shops. And I think one of the reasons is because it's perhaps its evolved, et cetera. But do you remember the study?

Ireena

it was not a study, it was a journey over 12 years, every 18 years. Yeah.

What does not change

Sid

But as the journey evolves, you know, one of the things that I, you know, we we talk a lot about internally is that, you know, Jeff Bezoz said, it's it's better to figure out what doesn't change every 10 years than what does change. So people aren't going to want slower delivery 10 years from now, et cetera, or higher prices or, you know, or, he said, smaller selection. I tend to feel sometimes that I want smaller selection rather than tremendous selection. But what do you think hasn't changed over this period of time in at least from an Indian context? I know that this was over, you know, many different countries. But where do you think things haven't changed in the way that we shop?

Ireena

Well, lots of things don't change. I think countries are just at different points in a continuum of shopping, and many, many things remain constant, even though every country says I'm different. And every category says, I'm different . So what doesn't change, I think, is that two levels.

1.        One is supply creates demand because consumers have no clue what they want.

2.        The most important driver of consumption is  addressable is the income, the discretionary income, because you add on categories depending on how much of disposable income you really have and how that matches supply.

3.        we have been seeing a steady hollowing of the middle in every single category because the same consumer goes for value on occasions and goes for a super premium in the same category, but nobody goes for the middle. So the middle is getting empty in every single category and every brand that was born in the middle and stayed in the middle is is dying or already dead. 

_______ 

“ And then when you think about how you make money, you make money in all of these countries through the same thing, which is you take cost out, you differentiate and keep a very, very sharp focus on smaller ranges, tighter supply chain and a price cost squeeze of one two percent and you keep your brand incredibly aspirational ”

________

because the brand becomes fuddy duddy will definately die. So a lot of things are quite simple, and a lot of things are quite evergreen, and everything else is a lot of noise.

Sid

When you say stay in the middle, could you could you expand upon that rather than stay in the middle?

 Ireena

So I'll give you an example. If you think about any category and you look at price points, so let's assume we have a price point of 10 and 15 and 30. What you will find over time from almost 99 percent of that is that this good, better, best pricing or this range you will find in the way markets are evolving a lot and it's in the same household, you will find that people will go for the Rs. 10 for certain occasions and people will go for the Rs.30 for certain occasions. But very few people stay in the middle at Rs.15.  And so if you look at almost all categories you're seeing simultaneous premiumization and commoditization. Often in the same household because people buy different things for different occasions. So I'm buying rice, I buy super basmati, when my boss is visiting and I buy unbranded or, you know, back in the store value brand for other occasions, I'm buying the soap. I'll buy Dove if I have a little baby or an old mother, and I will buy a three in one value pack, but the middle is getting empty. Similarly for tea, similarly for ghee, similarly for chocolate. So a lot of that tends to be hollowed out in the middle. And one of the biggest challenges of the 30 40 50 year old brand is because it's large, especially large brands. They end up becoming averages because they're serving so many customer segments. And so a disproportionate amount of central gravity of large brands is in the middle. And that's why they slowly die

Disrupting the chocolate market  

Sid

While you were saying that one of the case study that I remember kind of looking at was Cadbury Chocolate and have you have you followed chocolate industry at all in India?

Ireena

Marginally. I mean, There are two and half players. So Yes.

Sid

I was going to say wouldn't have taken much to do it. Are there brands that you think have been able to redefine. I was going to use Cadbury example, but brands that have been able to redefine their premium-ness or redefine themselves as a premium brand or as a more expensive brand over time that surprised you

Ireena

In India, in chocolates a terrific example is what Ferrero did for almost three or four years. I think it was in the late twenty nine, maybe 2009,  2008 to 2012. I mean, I think they played such a superb game. I've not been following them recently, but at that point in time, you must have been alive at that time. But at that point in time, a lot of it was actually big bizarre. And with some of the large stores, they actually reimagined the category. And with if you went during festive season, you would have these huge displays of ferrero roche and because it was because of the packaging and you know, it's golden and all of that. It was immediately repositioned as a big gifting item. And those years were almost golden years for fererro because they grew at a crazy pace at the pricing that they had, which was significantly higher than anything Cadbury had introduced. And this was it was almost like it was positioned as the modern version of Indian Mithai and nicely packed. And I thought that was amazing. If you went to a lot of people's homes in front of Ganesh instead of ladoos, you would sometimes see these because you could stack them up and they would look absolutely stunning. So I don't think it was accidental. I think they've done a fantastic job of not playing by the category rules they did not position it as a high end chocolate. They positioned it for the entered into the household through a very different occasion, which is what attacking brands usually do. And that damn product is very addictive. And so I'm assuming that they're retained their customers for a good part of the rest of the year. And they were a perfect example of how, in a category like chocolate, you had an attacker who came in at a significantly higher price point and re-positioned themselves completely

The importance of keeing product quality intact

Sid

Do you think one of the issues we face... so ferrero roche is obviously a foreign brand for all the distribution they've done in the branding, the quality and which is something you brought up at the beginning of this podcast is of a very high standard and which is whylike you said they retain their customers.. Do you feel like this quality of product can come out of India as well for some of these? We see a lot of products in India that do really well, that we think are Indian. Like I thought, Bata  for many years was Indian brand, but isn't Indian. There could be a come from somewhere else and they do very well over here by Indian izing themselves. And we think that they're Indian. The other day, I was actually literally having a conversation with someone. For 45 years old they thought jockey was Indian, and I said, No,  But do you feel like at times that and I feel like things are changing. People are using less shortcuts. And so the quality of products today are very young under 100 crore brands in the market. The quality of a lot of them are just unbelievable across. And I'm talking about direct to consumer food and other fast moving consumer products. Goods companies that have come up have really improved. But do you feel like some of these brands have done really well here because we haven't been able to compete on product quality?

Ireena

I mean, I don't think product quality is linked to state of origin, I think product quality is linked to two things it's linked to mindset. If you want good quality and you're willing to pay for it, and second, how much you invest in your supply chain because a lot of qualities have to be defined by the weakest link in your chain. And sometimes that's not within the legal boundaries of your business. It's somewhere down the line on supply chain, and you're right, all the work done to consumers across the world, no consumer knows which is a global brand and which is a local brand in India. I remember there was a shirt brand called Jack London, and it was seen to be a foreign brand that belonged to a local Indian player, whereas Lux or Lifebuoy will be seen as an Indian brand, or Surf or Nescafe - people think Nescafe is an Indian brand.. So consumers don't know they associate words and origin and familiarity with origin, but they don't know based on legal jurisdiction.

________

“ So I think I don't think brands win or lose. I think perception of quality and quality is heightened when it is a high involvement category. So it could be baby food or it could be diamonds, or it could be, you know, the doctor for foreign cancer treatment at these at these moments. You are more bothered about quality, but I don't think there's any correlation between origin of company and extent of quality ”

________

 I think the correlation is whether the owner cares and its matter of pride or not, and whether they invest in the weakest part of the supply chain. 

Sid

Do you feel like the ability to develop a strong supply chain across majority of consumer products today is well established in India? Do you think that there are areas that one needs to kind of work on and cold, cold chain? We've struggled with companies in our portfolio, for example, and companies we've also looked at. But in general, how do you see that playing out in India right now? Do I know back in the day it must have been issues and one can move forward as a result of our own supply chain. But today, is that also an issue?

The answer to all your supply chain problems

Ireena

I think it's an issue everywhere, and it's becoming a bigger issue because of the importance now to trace back to origin would be interesting to see how that evolves, but in India and China or any of the emerging countries, it's it's fixable. There are millions of case studies of people who've got good quality out of these countries. You just need to invest capacity at the right place. So if you have a third party manufacturer, good companies will have that quality control on their books, and he's placed 100 percent of the time in the store. You don't do the random testing of five out of a million pieces. Your guy is working in that factory through every possible shift and he's on your books, he's not on their books. You have a guy who's manufacturing small screws that go into your watches. You make sure that you have quality control on the Lathe machine that they use, and you will do surprise audits. So if you look at how companies have managed, this, because don't forget in emerging markets, a lot of supply chain is also outsourced. And despite this, managed to get great quality by ensuring they have the right specifications

1. Ensure that they have people in their ecosystem who are like minded on quality and not transactional.

2. Second, by making sure specifications are completely aligned with how you pay your partners

3. Ensure your commercial capability is twice as large as your financial capability, which means you have twice as many people in commercial contracting supply chain management as you have in accounting and Treasury management, and four making sure that you have checker and trust that you verify it, so these are protocols that multinationals and Indian companies have perfected over the last 40 years, and anybody who says quality in India cannot be done is fooling themselves because it can be done. You just need to invest behind it and have protocols.

Sid

No, absolutely. That's actually thank you so much for taking us through that part. It's really refreshing to kind of hear in the kind of detail that you did, why it's possible. And and I think I wish we had another podcast just for to kind of walk through some of that in more detail. But I'm going to leave that that part there. I know we have a limited time. I wanted to ask you to two more thematic questions. One, I've been I really wanted to ask you what you think the future of supermarkets is in our country and where do you think we think it goes? And I've been I've been wanting to bring back your lessons with, you know, one of your lessons to learn every day. So and I'm sure your starting point of understanding supermarkets is probably better than almost anyone else in our country today, along with department stores. But as you've been learning every day on on on, on this particular aspect of Indian Indian consumers and and consumer understanding, where do you think we're going? Where do you think supermarkets will play a role going forward and in which way? In what way in our lives in India

 The rise of Kirana stores, dark stores and future of super-markets

Ireena

Yeah. So first of all, help me understand what your definition of the supermarket is because there are so many of them, right? So when you see a supermarket what is that?

Sid

So I was thinking of stores where, you know, we would buy everyday products.

Ireena

But is it a 2000 square foot store and 8000 square feet?

Sid

I would say it's eight thousand plus.

Ireena

So eight thousand to forty thousand two hundred thousand, yeah,

Sid

Yes

Ireena

So which is which in an Indian parlance, would be more of a hypermarket, I think. That format will continue to exist. It might shrink in size as it becomes more omni. And you might have more space for curbside pickup and for home delivery and for exchange and all of that. But that format is definitely here to stay. I don't see a demise of that format because it plays a huge role in in material shopping occasions of the family. I think the foolish mistake some players make is that in smaller towns, because rent is lower, they expand larger stores than they actually should be opening. So as long as you don't fall into ego traps of that kind. And as long as these get smaller and smaller over time, it's because of technology and certain shopping occasions going omni. I think that format will continue to exist now, how quickly they evolve into a Hema version, which Alibaba is doing in China, or the AmazonGo version that is proving out to be true in the U.S. and I think will be the first one in London is really a question of the Capital labor trad, but that format will definately stay.

________

“ The smaller formats have always started because of the MRP. What most people forget is that when you're a small store and an organized store with all the costs of last store like the 7-Eleven, you always struggle in India because a disproportionate amount of your range is unbranded where you have no price premium and a disproportionate amount of quick pick up.Emergency pickup is all MRP products in which you cant charge a premium for proximity ”

________

Everywhere else in the world, if you're next to my house, you charge a premium for proximity, but here MRP prevents you from doing that. So the smaller format organized has always been endangered. Till private label replaces the MRP ranges, but the 20000 30000 square foot store, or the one hundred and twenty thousand square foot store, I think will continue to exist in a different of assets.

Sid

Do you think that the small, the small organic store could eventually evolve into perhaps stores that just do delivery in a manner that maybe restaurants are doing now and not have to be? It can still be close to you, but not paying the kind of rent it might be on a main road and therefore have the margins of come back into even an MRP pricing.

Ireena

Yeah, we're already seeing that. I mean, in several cities, including but not only Bangalore, we've seen in some of the most highly penetrated catchments for online. We've seen the birth of dark stores over the last two years and you have anywhere between 5000 6000 SKUs, their daily replenishment three or four times in the day. And they work like magic because they can. You can now meet the needs of the slots that you have in in dense neighborhoods. So that does that has already happened in Gurgaon and Bangalore, in parts of Chennai and Ahmendabad in India, but they're not going to. But to your point, they're not going to be on the neighborhood high street. They're going to be inside because the rental there will be abysmally low, right? And so that will happen. But remember, we have mixed neighborhoods and so those kinds of rich neighborhoods are few and far between and may be continued to grow. But a lot of others are mixed neighborhoods. And so you will continue to see the local Kirana will become a lot smarter. We will continue to do a lot more of them. But I find it difficult to believe that standard 7-Eleven kind of stores will survive or will replace these Kiranas. I think we either see Kirana's or you'll dark stores or large stores, but not necessarily, you know, there will be a top two in terms of aggregated supermarket, small stores, organized retail chains.

Sid

So, you know, we hear a lot about how Kiranas will survive, and I agree with you, they will. There are things that we, you know, from a from an industry standpoint or that that is missing today that will help us thrive. And is there something that because we see a lot of people trying to do a lot of things for on us, but they're doing it so that they can get something out of the Kirana as well outside of money? You know, whether it's data so they can give them more loans to the consumer that's coming in more loans or data back to the FMCG . But is there something that you feel is inherently missing that will really help empower local stores?

Ireena

You know, the reason for death of local stores has nothing to do with a costs or with the range of it privately, but it has to do with two things:

1. The kids, the owners kids, gets educated and doesn't want to sit in the store. So the education of the child of the current Kirana guy makes it non cool. And therefore you see this, for example, in apparel where a whole bunch all bunch of multi-brand outlets in smaller cities have now become exclusive brand outlets of larger brands because the child got educated is more comfortable sitting in an air conditioned store, which has a big brand name outside and which has a closed door so that he looks cool among, you know, in his gang, rather than sitting in a multi-brand outlet with unbranded stuff. So it's the generational shift of the owner who was uneducated, very comfortable, sitting versus his son, who doesn't want to do that or daughter.

2. The second thing is the replacement of the alternate value of the land that he owns, and in a lot of places it might be on pagri might be a piece of land that he loans, but the alternate revenue that he gets is becoming occasionally more exciting to him than what he makes in this store, especially as a lot of these stores have mundus who are paid below minimum wage and who sleep literally on top of the store, in the store and stuff. So as as some of that labor is vanishing and they look at the replacement value of what they could get and they certainly look at and say, do I want to really see?  I don't think you or I can decide structures of industries, including retail, right? Economics will decide that..  and so fundamental thing is this that I continue to make money or is it better for him to become a landlord? And rent that space out to somebody else. It'll be interesting to see if it comes down to economics and ambition like this. Almost always.

 

 Sid

Yeah, I think it's something that again, we have been spending a lot of time trying to understand the dynamics at play. I hadn't quite put it together in the way that you just did. But it's something that we've been spending time kind of thinking through. If I was to put the two things that you kind of, you know, you kind of brought out and said that, you know, the child, the next generation is willing to sit in the store and the family decides not to sell the land. In that context, what are there certain things that perhaps are being done outside India for local and local store levels to help them sell more or do more?

Winning the distribution game

 Ireena

No, I think the place to look is not outside India, and the place to look is what's happening with distributors because the same thing that we're seeing, the questions we asked about retailers when asked about distributors 10- 15 years ago. And if you look at large, companies who continue to have distributors, what have they done? It's quite fascinating that one of the largest FMCG companies had 80 distributors in a city like Bombay, and I think today they have, I forget, either four or six. But the volume of business that they do in Bombay has gone up four times. So you reduce the opportunity cost for transitioning out by telling the distributor, Why are you 200 cr shop? You should be running a 2000 cr shop and I will expand your area and give you everything from colaba right upto dadar which earlier, six distributors  used to handle now the whole area belongs to you. But as we do this, you have to invest in technology. We need to invest in proper accounting systems. You need to have a better quality staff. We need to automate everything. And guess what? We will also take your son and put him through a distributor training program and give him a fancy name. And. Make can feel part of a broader ecosystem, so we've already seen this happen 10 -15 years ago, very quietly, some of the better FMCG companies have already done this, and I think anybody who wants to support the kirana guys will look at these two factors the economics of opportunity cost. 

________

" How do you make him more viable and how do you reduce the risk of his business as his cost of inputs are changing? The biggest one of which is his people lost and the category mix? And how do you make it exciting for the next gen to feel proud of doing this business rather than being apologetic? So there are answers, and I don't think the answers are in China or Indonesia because those countries have very different structures. The answers will lie in India "

________

Choosing your (sounding) board 

Sid

No, that's that's really interesting. I wanted to talk a little bit about boards, and you obviously have a tremendous amount of experience and exposure being of independent board directors. We come from an industry where, you know, an ecosystem. Let me say where most people that sit on boards are there by virtue of putting money in the company, in the startup space. And as much as there is an allocation for board seats, most founders until very much later in, they're in there. So the lifecycle of their company don't really put anyone in that seat. It just kind of allocated, but nothing ever really happens. So I would assume that a lot of people that are listening to these podcasts that don't actually have an independent director or a director outside of a financial, someone who is an investor as a director. I wanted to kind of see if you could give some advice on how one should go about looking for an independent director, finding the right fit and what that process might look like for people that have never done it before or have businesses that definitely need them, but are really getting advice purely from people that are that are financial investors?

Ireena

Yes, I think, first of all, it's very critical to decide when. In my experience, founders go through three phases the first phases when you are the engine, you are driving everything. At this point in time, the only thing that matters is to find junior self and in a lot of places. This is about product market fit. At this point in time, you don't need too much of advice. Then you become somebody who's repairing the engine. You are still part of the system. You have three four guys or 10 people or 20 people starting to work in one place. The playbook is still not there, but you are still in the mix and you're still learning. Most people, even at this stage, don't necessarily need somebody who's stepping back and asking them questions about not just performance, but help. But there does come a time when you become the engine designer and somebody else is now the engine and user, usually at the same time. I see two questions coming up. One is, you know, a lot of stuff that you used to be easily has become complicated. You hired these big guys from large companies and they have their own ways of working and you're pulling your hair saying " But I could have done this in one week. Why is it taking you 30 days? " And then you find that people are making the same mistake again and again, stuff that you had done two years ago in one city. You find that as the new cities being open, people are making the same mistakes and there's been no institutional memory. So once you start finding friction in the business and stuff that you took for granted was not there. The second thing is this a founder told me, you start having very strong points of view in a man or a woman with the strong points of view as a dangerous man. So at this point in time, I think some founders say, " Hey, listen, we want. We need help. We need help around three things How do you scale?"  Because if you look at scaling up, scaling up is about designing, standardizing, replicating playbooks. Except that in India, you realize it's so heterogenous that you have to cluster markets and you rarely have one playbook. You have multiple playbooks and you version control them because every six months they change. So how do you build an organization that knows how to scale sustainably is one question that arises? The second question that arises is How do I bring all these people from many different places and all of who are very skilled, but I don't trust them the way I trusted my dorm mates or my co-founder. And when they tell me this is how you do things in larger companies, how do I know when they're when it's a sign of low aspiration? And how do I know it's a sign of deep maturity? So how do I build a team out of a groups of people? And the third one is how do I de-bias my organization against my own biases midst that I have started believing it because I'm reasonably successful and I've raised a ton of money. So if these are the kinds of questions that surfaced when you are drunk or when you are unable to sleep in the middle of the night, it might be a good time for you to say, " Hey, I need somebody who understands me but is an outsider and with whom I can bounce off stuff to make my team more effective"  so how do you find these guys? I think a lot of this is about chemistry. And so I I think most of the time you find it through word of mouth, you might have a funder who you really trust among a whole line of the lineup of people. And you might he might know people or you might have a fellow fund or fellow dorm mate who knows somebody. So in my experience, and again, this is just one person's biases. Again, in my experience, a lot of these relationships are trust based and chemistry based because there is no right answer. I mean, this is not a physics sort or an AI test with one answer. 

________

“ And if you have to trust somebody's judgments, then you've got to trust the human being. And if you have to trust the human being, then beyond credibility, which the person I'm assuming will bring, it's really about whether you see a lack of self-orientation ”

________

which means this person is thinking about you and not about himself. And there's a certain level of mutual respect and an intimacy in the sense of knowing how you think and how the other person thinks. So I think these are chemistry, trust based relationships, and often you stumble upon that person and sometimes you have to kiss many frogs before one of them turns out to be a prince. So don't be in a rush work with the person and see if you find somebody that will be part of your journey for the next couple months.