If you have an open and transparent culture, an open door policy, you encourage ideas, experiments and failures and thus innovation
Sandeep Aggarwal is the co-founder of online marketplace ShopClues.com and the CEO of Droom, an online-based marketplace for used automobiles. A former equity research analyst for a San Francisco-based financial services firm, he set up ShopClues in 2011. In this interview, he talks about why candidates should join start-ups like ShopC-lues, the initiatives they undertook for employees and the e-commerce industry in general.
You have raised about $100 million from Tiger Global. Please take us through your journey of how you started ShopClues and how you man-aged to get funding for the company.
We started ShopClues in 2011 at a time when the eco-system was not fully developed and at an early stage. Earlier, businessmen were looked down upon and the country was not very friendly with start-ups in general. I started ShopClues at my home in California. For the first six months, I was workingon my own. Soon, I teamed up with Sanjay Sethi and Radhika Aggarwal and some others who are not part of ShopClues any more. Initially, I funded the company with my savings. In August 2011, we raised close to $2 million from some of our friends. But, we had faced a lot of problems as well. A very famous venture capital fund approac-hed us to raise $5 million from them. So, we said no to our earlier investors and decided to work with this VC fund. However, that deal did not go through. There was a lot of resilience in what we were doing and so things kept chugging along.
The entire team was uprooted from the Silicon Valley to Gurgaon. Though we were Indians, we did not spend 15-20 years of our prime life in this country. So when we came here, we were just like any other foreigner. We started out with a staff of five. No one knew about us and there were times when we would second guess ourselves as we hadn’t even launched and there were already national level e-commerce companies like Yebhi, Flipkart and Fashionandyou. But, we had an innovative and disruptive model. We turned out to be India’s first marketplace and unlike our competitors who spend a lot of wasteful expenditure on marketing and cash on delivery. Cash on delivery has a 35 per cent return rate. E-commerce is not an industry where you have an 80 per cent gross margin. In fact, no company, including Amazon, actually makes money. We developed a culture of not throwing money at the problem.
In January 2012, we raised our next round of funding and this was close to a $5 million. In January 2013, we raised $15-20 million and then the latest was from Tiger Global. We have had our ups and downs. When we started, we were in the Top 30 companies and now we are the fourth largest e-commerce company.
Have you found it difficult to get talent?
In 2011-12, it was difficult to get talent as they didn’t want to work with a start-up in its early stages. Right now, e-commerce may be a very attractive industry, but when the industry first came into being, people were very vary of e-commerce in general and didn’t even want to consider it as a career option. Now, that situation has been turned on its head. With money flowing into e-commerce startups, now we are facing a scarcity of talent.
You identify yourself as an SME marketplace. Is there any particular reason why you do that?
India has 27 million SMEs. China, India and large businesses as they have the money, resources and have their own organized retail. There are millions of people who sell something for a living but do not have the capital or the sophistication or the technology & knowledge that will help them succeed. So, we wanted to create a platform for them. Our partnership with SME sellers is complementary and we help them to participate in the organized retail rather than being on the sidelines.
When I spoke to your team members, they talked about having to handle multiple roles and responsibilities. How easy is it for talented people from MBA schools to work here at ShopClues?
I’m not underestimating anything that we do for a living, but it’s not rocket science. The rocket science is not marketing, finance or produce management but the start-up attitude. If someone brings in a lot of energy, passion, with a sense of owners-hip and responsibility, sees the glass as half full rather than half empty, not taking no for an answer, someone who can deal with the ambiguity – now those are the kind of people that we are looking for. These soft skills are in scarcity in many candidates today.
I agree with you on that, but how scalable is this model?
It is very scalable. Whether it is Flip-kart, Snapdeal, ShopClues or Droom, we are technology companies in retail rather than retail companies using technology. We invest a lot in technology so that certain tasks can be automated for accuracy and speed of completion. If you are investing the right technology for the right problem, then I think it is very scalable. A lot of organized retail companies have been operating for 12-15 years, but they have not achieved gross revenue as each of the top e-commerce com-panies have achieved in just the last three to four years. The e-commerce industry has a huge potential and is very scalable.
People are your biggest asset. What initiatives do you do for them?
We focus on helping each other unleash our true potential. We make sure there is no politics in our environment, no bureaucracy, no biases. They feel like they are in the best jobs of their life. We believe in adaptations, prototyping and fast iterations. We encourage people to do experiments, fail and fail fast and in turn learn from mistakes. Not everyone gets the same thing right the first time, but with the power of iterations, our people are empowered and they are able to achieve a product that is very good for the user. If you have an open and transparent culture, an open door policy, you encourage ideas, experiments and failures. The current millennial generation is very technologically savvy, have a lot of capacity and stamina. If you give them the right opportunity, they blossom.
Why should a candidate consider a start-up as a career option?
I think one should consider a start-up as a career option because this is where you are not driven by whom do you know. So favoritism does not work here. What works here is your energy, passion and your merit. These companies are not driven by your age, gender, region, beliefs etc. If you can do bigger and better than what you are doing, then you are a superhero. Everyone in his environment has the equal opportunity to be a superhero. In a start-up environment, you can push your limits, learn, get exposure and work very closely with the CEO. There would be no hierarchies as these are typically flat organizations. Even monetarily, it can be very rewarding with ESOPs. The downside of the start-up would be will it run out of money, whether the company is viable or will it get acquired. But, there is no job security even in a big company. More than the downside, there is a huge upside: You will make more money and have a better career than your peer group.