How Snapdeal Survived and Thrived in India’s eCommerce Battleground

Hans:  Hi guys.  First of all, since I’ve known you guys for almost seven years now, since 2012, I’ve seen you guys go through quite a bit of up and down.  So, how is Snapdeal doing these days?

Kunal:  Thanks Hans and obviously you’ve been a great partner for all these seven, eight years and have seen the company go through various twists and turns along the way.  You know, after going through a bit of a challenging phase a couple of years ago, I think our company found a great opportunity in refocusing ourselves and in a way going back to our roots of building a marketplace that serves the needs of the next 400 million e-commerce buyers in India.  Where what has changed structurally in India over the last three years is with the 4G revolution that Reliance Jio brought and other telcos followed suit.  The buyers and sellers of very value-focused goods have only come online significantly in the last three years.  So, we found ourselves to be in sort of the right place right time where we had a big brand because we had invested a lot in building it over the years.  We had a lot of traffic.  We had an existing technology platform.  We had all the supply chain built out and a very, very good team.  We said if we focus our energy on categories that are more suitable for this audience where they’re very aspirational but want affordable goods, I think that focus and discipline has really helped us as a company.  And as you said, over the last couple of years we’ve seen our order volumes grow almost three times.  Last June we actually became profitable at a company level and post, which we decided to reinvest all our margins back into growth.  And over the last one year we’ve been adding nearly a couple million new buyers every month now.

Rita:  So, Hans as you said, you have known Snapdeal for a really long time.  And can you help understand how throat-cutting the e-commerce business is India now and why is India such a competitive place for e-commerce giants to play?  Like Amazon or Flipkart who was bought by Walmart?

Hans:  I think a lot of people look at India e-commerce space as what a second version of what has happened in China e-commerce space.  So, back then in the 90s and then 2000s you have eBay buying EachNet in China and fighting against Alibaba launched Taobao.  And over the 10-year period you see Taobao, Tmall, JD, Pinduoduo, all grow up in China and valuation of Alibaba grew from, which did invested $180 million in 2003 to now $0.5 trillion plus $150 billion on Ant Financial.  So, a lot of people look at what happened in China as what could happen in India.  And therefore a lot of money got poured into India on e-commerce companies.  In Amazon in particular because kind of lost China to JD and Alibaba doubled down on not missing out on India.  Yet GDP per capita in India is a lot lower than China in 2000s so it ends up having a lot of subsidy, a lot of money poured in, and everybody focused on growing GMV at negative gross margins.  So, that made the battle over e-commerce in India extremely bloody.

Rita:  How does Snapdeal fit into the picture then, if Amazon and Flipkart is pouring so much resources and money into the market?

Hans:   I’ll let Kunal and Rohit answer that question.  I think that what they have done from when they were sort of an inspiration inspired by Groupon to what is now going through a Tmall and Taobao version of India, it’s very localized, is quite interesting.

Rohit:  What we see happening in the market in India is that the businesses that are being built by other companies are very inspired by what happened in the U.S. or in the Western markets where the audience is much more homogenous, it’s much more richer, and as it is buys a certain type of product.  As Hans just mentioned that the GDP per capita in India is much lower.  And a large number of Indian users who are coming online now, they do not have that kind of income.  And they do not want, or they don’t find the platforms that exist very relatable for themselves because what they buy is not available online.  The pricing in which they buy things is very different from what is being sold.  And the overall experience that they expect is very different.  So, Snapdeal fills the gap for these consumers by bringing online what they buy otherwise offline, which is value for money, high-quality selection, not necessarily branded, and also delivered to them in a very engaging way because unlike the rest, again, a lot of Indian users are not trying to save time.  They’re trying to save money.  And as a result they are actually even willing to spend a little more time, enjoy spending more time on shopping apps if it helps them save a little more money.  And Snapdeal is a platform does things in which not only do we bring that selection, which is relevant for this audience, also in a manner which is very engaging, very seamless.  Even if you don’t know what you’re looking to buy you can just come to the app, start browsing, very seamlessly start showing you certain products.  While you’re at it you can play some games to win some coupons, which will help you save money and consumers are completely okay with that.

Rita:  But you have made a conscious decision to not be merged with Flipkart.  Instead you actually launched Snapdeal 2.0 focusing on that particular group.  Can you walk us through how you make that decision?

Kunal:  Yeah, I think it was an interesting period for our company where we had many discordant– typically when there’s M&A there will always be voices that say it’s a good idea and then voices that say it’s a bad idea.  But you would think that there would be a resolution in the end.  I think in the end where we as entrepreneurs and as a team felt that given a resolution was not being reached, it was important for us to step up and take a decision about what should be the path forward for the company.  And we believe that given Indian e-commerce is still very early; in a country with over a billion people no more than 100 million people have bought a product online.  So, why fold our cards right now?  We require a little bit of refocusing the business but we saw back in 2017 what everyone probably is seeing now in 2019, that there was going to be a flood of new users, hundreds of millions of e-commerce buyers are coming online, and there is no platform that serves the needs that Rohit mentioned right now for them.  And it seemed like a dream then.  It seemed like something on paper and not many people believed it could be done given the irrational competition that we see in India.  But despite that I think we just worked with a lot of focus and discipline serving the needs of these particular customers with this type of selection, with the type of service and experience that they wanted.  And it seems to be showing quite promising results.

Rohit:  I think the other thing that worked really well for us, which has made all this happen is to set up our entire organization with a clear focus of serving the needs of these consumers, which also means that we set up our supply chain fulfillment and logistics capabilities in a manner that we can sell products which are $5, $7, $10 and fulfill them while still making money at the time of selling these products.  Whereas all the other companies that have been set up in India, they’ve set up their logistics in a manner that they just can’t profitably sell a $7 item and as a result, as a consumer, even if I want to buy a $7 item, the only choice for a company to sell it is to make losses while doing that.  Whereas we as an organization, once we are very clear of who are target audiences and the kind of selection we want to sell, focused on making sure that we are profitably able to sell that selection and bring their selection on board.

Hans:  As you tried different models from Groupon and to sort of a shopping mall, Tmall model, and then now more to a C2C marketplace, Taobao model, how do you decide which model to use over time?  And how do you think this compares to the Amazon, Flipkart B2C model?  And how do you think consumers decide where to go and shop what kind of goods?

Kunal:  Yeah, it’s a good question.  I think I would give you credit for us moving from the Groupon model to the marketplace model because I think if our meeting in Beijing in December of 2011, we might still be running a Groupon business or not running a business at all.  So, I think credit goes to you for that answer as you know.  But I think over a period of time, at least one thing which is there, which is a good aspect of our company’s culture is we’re quite intellectually honest where if we see that something’s not working, we are open to changing.  But not like every day.  It’s not like we make changes on whims and fancies.  But after spending a decent amount of time and looking at a lot of data, if you think some aspect of our business, big or small, needs to change we change it.  You point it out to two big changes of Groupon to marketplace and then within marketplace from being focused on brands to the long tail.  But even within these changes there are a lot of smaller changes that probably are never known out a company.  But the big team is just constantly looking at what our customers are saying, what our seller partners are saying, what our team is saying, how the competitive landscape is evolving and whether we need to change something or not.  The key is we keep an open mind to change and we don’t become too stubborn about that it is our way or the highway.  I think that seems to be the theme in our culture from day one.

Hans:  You’re very kind.  I think that a lot of ECs like to think that their ideas matter a lot, but as we all know execution is much, much, much more important.  How did you guys figure out how to evolve the company and what are some of the lessons or takeaways that you can share with other founders and wannabe founders?  How to navigate a company through those kinds of dramatic changes?

Kunal:  Yeah, I think navigating our type of high-transaction velocity, B2C, or consumer businesses, consumer Internet business is very challenging.  It’s like this bullet train that’s just going in a particular direction and how do you take a quick hard right or hard left?  It is very, very challenging and given we’ve done it a few times, I guess the main learning I would say there is around having very, very high amount of clarity on the goal and then making sure you communicate that very, very abundantly and repeatedly to the team.  So, like in our company if you are to wake up any of our team members at 3AM at night from their sleep and ask them, “What are the goals of Snapdeal?”  They wouldn’t even need to think for two seconds and they will tell you what are the top three goals of Snapdeal from quantitative goals.  And those cascade down from Rohit and me down to everyone in the company.  It’s the same sheet of goals for the most part.  So, I think clarity of goals, doing very few things, being very focused and disciplined on a few high -impact outcomes, and then constant communication with the team in different shapes and formats.  Communicating what is working, communicating what is not working in an acutely, intellectually honest manner.  Those are very critical.  But then all said and done there is a big element of luck also where fortunately for us that whenever we’ve had to take a hard left or a hard right the overall ecosystem in the market is also headed in that direction.  We just ended up taking a hard right or hard left in a direction that the market was anyways going to go.  I don’t want us to take all the credit for it.  I think luck also does a play a bit of a role.

Rita:  When you were rebooting Snapdeal by selling its logistic and payment arm of the company, what are some tradeoffs you guys have to make?

Kunal:  You know the learning we have is that whenever you are in trouble, everyone will try and squeeze the last drop out of blood out of you, especially when you’re selling assets and people think that the overall company is in a bit of a distress situation.  I think the tradeoff we made in selling those assets was we couldn’t optimize for value.  But at that point in time it was more important to sell them and harvest them for cash then to optimize how much cash we could get into the company.  Those businesses were worth more than what we had to sell them for.  But in hindsight it was the right thing to do.  The certainty and speed of doing those transactions were more important than optimizing for the last dollar of value.  That said, in hindsight those are also good decisions to sell those businesses because we realize that our business, we as a company are far more successful at focusing on one deep problem and solving that, rather than trying to solve multiple deep problems of payments, logistics, which are in the end very different businesses.  Everything looks similar or everything is transactions and commerce, but each business has its own deep nuances and they can be very distracting away from your core business. And fortunately in India over the last few years, at least on the logistics side, there’s a very vibrant ecosystem of third parties, third-party logistics companies, which are run by entrepreneurs like us who are tech savvy and have built good technology, good processes.  So, we are now one of the largest customers, if not the largest customer, of most of the third-party logistics companies that serve e-commerce businesses because 100% of our volume goes to third parties.  We don’t do any captive logistics of our own.  Similarly on payments, there’s been an explosion of number of payment companies that have come into India.  All the global multinationals from Google and Facebook to Walmart, Amazon.  Everyone’s running payment companies in India.  So, it seems to be a business which nobody wants to make money in.  And everyone is willing to give away a lot of subsidies and coupons and cashbacks to consumers.  So, we are more than happy integrating all of them as long as they’re willing to give promotional dollars to our consumers and their expense.

Rohit:  The other tradeoff which we had to make inside the organization, I would say, which again in hindsight was the right tradeoff to make was forcing ourselves to discipline and pick our priorities right.  I think the way the Indian startup industry grew up is that everyone started looking at China and the U.S. and started seeing that all the successful technology companies in these countries are in a lot of businesses.  What they didn’t see is that those companies became successful at one business first and then after starting to generate cash or money or profits in one business, they started reinvesting that to build other businesses.  In India I think there was a sense that if you’re at technology company you should start doing many, many things together and that’s how everyone in the organization also starts thinking, forcing ourselves to pick priorities and saying, “Hey we’re going to do only one thing.”  Or within that as well, just picking priorities, which are not more than two to three at any point of time, no matter how lucrative the other opportunities sound, was an important tradeoff for us to make and which we still make on an ongoing basis.  Which in hindsight is absolutely the right thing to do because as Kunal has well mentioned rightly, what seems like a great opportunity and should be doable, the moment you get into the details and stared doing that, to do it better than anybody else is incredibly harder than just doing it for the sake of doing.  And I think we learned that through experience as well that it’s very critical to force ourselves to pick two or three bets so that we can spend the time and energy and the cycles required to make those things work.

Hans:  You guys made the most dramatic improvements in the business when you guys were running out of cash.  Most funders tend to believe that in order to make dramatic changes they need capital to help to do that.  How are you able to achieve what you did specifically?  What are sort of the two or three things that happened that you did to make this transformation possible?

Kunal:  Yeah, I think a few things we did.  One, we looked very dispassionately at our business and given we are essentially a marketplace that has thousands of categories and 200 million plus listings, we very dispassionately looked at the unit economics of each category, each product, each subcategory, and unit economics post-fulfillment, post-marketing like fully loaded costs of selling, servicing, and order.  And we tried to make an assessment that if something is negative unit economics, is it because we are inefficient or structurally those products or categories can’t be sold with positive unit economics at this point in the Indian market?  Could be for a variety of reasons.  So, if we felt something had the opportunity to be made more efficient, to more efficiency can be made positive unit economics, we did that.  And wherever we think that with all our energy, all our efforts, we can still not turn a category or a line of products into positive unit economics, we just cut them out.  And it seemed like a very unpopular decision back then that for instance, smartphones is the largest category by GMV in the Indian market.  Where for some platforms it may be 60%-70% of their GMV potentially in some months.  And we said, “Look there is no way to make money in this category post all fully loaded expenses of marketing, fulfillment, customer service, etc. Let’s get out of it.”  And we will come back into that category when the market cools down or there are some new brands that want to work with us on commercial terms that work for us.  So, I think it seemed unpopular then that, oh, like a lot of people said that then people will stop coming to you because you don’t have this head category.  Actually none of that happened.  What happened was consumers started building a much more sharper profile of what Snapdeal is and what Snapdeal is not.  Like consumers don’t look at Snapdeal as a place which will launch the latest, jazziest smartphone and give you cash backs if you buy it on the flash sale.  There’s nothing wrong w that.  It’s just that they don’t see Snapdeal as that.  They see Snapdeal as a place, it’s like a dollar store.  You come, you don’t know what you want to buy, we’ll help you discover some interesting products, and you’ll most likely check out with something in your hands.  And it takes a little bit of time for that positioning to sink into consumers but if you are sharply focused on what you will do and what you will not do, it does eventually solidify in the consumer’s mind.  So what that did, Hans to your question, is like in high-transaction velocity businesses, the most amount of money that companies lose is on unit economics because it compounds with your high velocity of orders.  So, the number one thing we focused on was just making sure at a company level, at a category level, at a product level, we are generating positive economics post all expenses.  The second thing we did was, as we discussed earlier, we sold off assets where we didn’t think we could ever make money and decided to work with third parties and build deep partnerships with third parties where maybe they’re able to manage their businesses, their logistics or payment business more efficiently than we could, or they don’t need to because they have a lot of capital to run those businesses.  Third thing we did was just made sure that we don’t bloat the team, that we work in a very, very lean structure.  Our whole company, for the scale of business we operate is very lean.  There’s 750 people in the whole company fully loaded, which is by Internet company standards very, very, very lean.  The whole company is on one and a half floors in one building and it’s quite incredible.  And we have not seen an increase in headcount over the last couple of years.  It’s stayed in the same zip code despite the fact that the orders have grown.  So, that operating leverage kicks in where your revenues keep going up, but your fixed operating costs don’t go up.  And as a result your bond goes down materially.  So, I think these are two, three things specifically that we would have done.  There are some others also.

Hans:  What are the others?

Kunal:  I think there’s a lot of optimization that we would have done on things like what we pay for collecting payments as an example.  Our philosophy is that this type of business, you build by conquering one basis point at a time.  There are generally no broad brush strokes that will suddenly improve your unit economics, suddenly grow your business, suddenly make you profitable.  We are very, very focused on small basis point improvements also and I think those, over a period of time, compound into large numbers.

ROHIT:  I think also, some of the other things that we did was once we decided that this is the kind of business we want to be in, which is positive unit economics serving a certain type of consumers, serving a certain type of selection, then our business was not built this way for t he longest period of time.  Slowly and steadily we started moving everything in our entire business in that direction, which means that while we started focusing on selling value-for-money products, our apps still looked like it was built for selling branded products.  And then one piece at a time we started changing the navigation of our app whereas earlier there was a lot more focus on showing categories, brands, banners, merchandise, etc.  We wanted to focus incrementally towards showing a more continuous feed of products because this is what our consumers were telling us.  A lot more traffic and a lot more purchases were happening through Browse than through Search, which means that from a consumer behavior standpoint we were seeing that these are consumers who don’t necessarily have an exact idea of what they want to buy but they know they want to buy something and they want to browse around.  Which means that making the navigation easier for them to start seeing products, almost like a social platform, became very important.  The entire way we do fulfillment and logistics, we went through a complete change because earlier we used to obsess a lot more about speed of getting a product to a consumer, whether we can get it in one day or two days.  As you started conducting experiments, we realize that consumers are okay to wait for four days as long as the product is 50 rupees cheaper.  And in fact they would prefer that because they think, “I don’t need the product tomorrow, but I can definitely use the 50 rupees I saved by waiting for a day or two more.”   So, we changed our fulfillment mix in the way we get products to end consumers to make sure all of that saving we’re able to pass back to consumers and then help them buy more from our platform.  So, I think there’s, as Kunal mentioned, it’s not one thing, I think the major thing that we decided as a company is that, which we still very strongly believe, is that for commerce businesses the product market for definition is incomplete without economic fit.  We feel if the economics are not right then any product can be made to fit into any market.  The true test of the product market fit for a commerce business is when you’re a product market as well as economic fit, which means that while you’re selling products to consumers you are able to sell them in a way that you make money.  Unless you can do that, at least at a unit economics level, we just felt that there’s no point in being in that category or in that line of business.

Hans:  Great leaders can make decisive and efficient adjustments on a battlefield based on what’s happening.  So, based on the things that you guys have done in the last few years, what does that tell our listeners about the state of e-commerce market in India?  You guys started off doing the more branded goods, fast delivery, one-day, two-day guarantee, and a lot of Western companies going to India, they focus on the top of the pyramid that they think are the most valuable, maybe 50 million people or so.  Yet you, over time, choose to go after the more mass market and with unbranded goods.  That’s more like dollar shop, almost like Wish and Taobao model.  How big is that segment market in India and do you consciously decide to change based on what you see on the marketplace?

Kunal:  Sure.  Actually you’re right Hans.  I think when folks who have more exposure to the developed world, which is far more homogenous or wealthier, they tend to believe that most of what is sold in every country is reflective of what they see in the developed world, which is mostly branded goods.  That branded goods, people would feel intuitively contribute to the largest part of the non-grocery retail buying in any country.  In India it’s exactly the opposite where out of about $220 billion of non-grocery food, FMCG-type categories, there’s about $220 billion of sales that happen every year in those categories in India, overall not just e-commerce, in offline, online.  Of that, no more than $5 billion is branded.  And about $160-, $170 billion is actually unbranded.  And a greater share of branded is already online, like for smartphones, most estimates would put it at almost 50% of all smartphones are sold online because it’s a highly price-elastic purchase.  So, if you get a discount, small discount, why would you not move your purchase online?  It’s the same product.  But for unbranded, this $160 billion market is barely online, maybe not even 1% is online.  And the reason for that is the buyers and sellers of that merchandise have only started coming online in the last couple of years after the JIA-led 4G revolution in India.  So, the market size we see as being theoretically infinite for now and this pie is getting bigger by the day, not smaller because the overall retail pie is growing because the overall GDP is growing in India right now.  So, we see tremendous headroom from here on and given, as Rohit mentioned, our platform, our brand, our positioning is set up to serve this type of selection and buyers of this type of selection, we feel pretty optimistic about the runway in terms of growth ahead of the business.

Hans:  People who look at India, it’s 1.3 billion people and GDP per capita is just under $2,000 per capita.  Yet you focus on the 400 million user base.  What is roughly the GDP per capita of your target audience?

Kunal:  Yeah, I think 40% of our users are– 80% of our users would be below $15,000 and 40% of the users would be probably below $5,000-$6,0009 for a family, for a household, not at an individual level.  And so, that’s broadly the distribution we see.  But the average is generally not a great determinant for how the distribution actually works.  But anecdotally we see enough users who on our platform were making maybe as little as $200-$300 a month.  So, in the $3,000-$4,000 a year type of income bracket.  So, we feel that as the income levels go through the $3,000-$4,000 mark and as, Hans you’ve also said before, that the inflection point in most geographies happens at $4,000, we are quite optimistic that the next $1,000 that gets added to the $2,000 of GDP per capita is going to be spent on a lot more discretionary items rather than utility items.  I think that’s where we fit in nicely for this audience.

Rohit:  And also one of the other things as you mentioned Hans, we believe that while working in a market which has low GDP per capita, it becomes extremely critical to build your model in a very low-cost manner because we can’t influence the income that people have today; that will take its own time for it to grow.  But what we can influence is what products are we selling to them and how are we able to get those products to the hands of end consumers.  And those will get determined by their income levels today and as a result, making the call that this is the income level of people, this is the price at which they like to buy products, and those are fixed data points for us.  It’s our job as a company to work backwards from there and figure out how do we profitably sell these products to these end consumers and get them into their hands, which is where we choose to spend most of our time and energy.

Hans:  I think sitting in Upper East Side in New York or Park Heights in San Francisco or in the bay area, when you design products it’s easy to design for people like yourself or your friends.  But time and time again, not to pick on those cities, those cities are all great, but time and time again it’s designing for the mass market on the global basis and in designing for even users that use “low-end” android phones, that has only 1GB in ram, that’s actually the much bigger market and that’s the market that’s readily available and underserved that allows you to build the multi-billion dollar outcomes.

Rita:  So, starting up a company is never easy, not to mention transforming one constantly.  What was the hardest thing along your journey?  Is it the pushing investors or is it the skeptical media or is it your staff, your team?  What was the hardest one?

Kunal:  When you’re building a company, especially sort of a prominent consumer brand which touches lives of millions of people every day, every month about 75 million unique visitors on Snapdeal.  So, it’s a very large number.  So, almost everything you do, if you sneeze, people are watching.  And it does become challenging at times because you don’t want the constant external tracking to influence your day-to-day decisions and not allow you to do what you need to do, even if it is tough or unpopular.  I think for us, we’ve been running a business for long enough that we’ve known how to cope, we’ve learned how to cope with the external pressures and all the scrutiny that comes with running a prominent consumer brand in India, especially in the tech space.  That we have gotten better at I would say. I don’t think we are great, but we are a little more inert to it now.  I think the part, which is always hard when you’re going through a transformation is how do you instill the sense of belief in the team that you have but you also have at the same time a lot of insecurities of your own because we don’t know all the answers, it’s like we can’t look in a crystal ball.  We can have a hypothesis, but we know there’s a lot of– the Pacific Ocean can fit between the hypothesis and the actual result, there’s so much in the middle.  But to the team you have to instill the belief that we can actually make it happen if we are very focused.  And I think that can be a very grueling journey.  It can be a very demanding journey emotionally and physically because to each person who has a doubt on your team, you can’t make them feel that they are the hundredth person who has brought that doubt to you.  Like you can’t come across as being tired or fatigued or insecure in front of them because to them they are looking into your eyes and seeing, “Is my leader confident that we can pull it off or not.”  That’s all they want to see.  So, to them you have to come across as being confident, secure.  Not overconfident but also transparent that here are all the things we think we can do but here are the things we don’t know how we can do, but we’ll solve it together.  And I think that probably is the most challenging and also the most demanding part of going through a transformation.

Rita:  Does it help that both of you are high school friends?

Rohit:  I was actually going to say that as you were asking the question, I was thinking about what my answer would be.  And one of the things of being co-founders for 12 years and spending 14 hours a day sitting like three feet from each other does to you is we can complete each other’s sentences.  I don’t think I would have given a different answer even by a word as compared to what Kunal said about what is the hardest thing to do.

Kunal:  Even the easiest periods are hard without a co-founder.  So, you can imagine the hard periods are impossible to cope with if you don’t have a co-founder you trust, you believe in, you depend on.  Like I remember in 2017 there were days when I would be on the low and Rohit would step in and say, “Don’t worry.  We’ll make it through,” and maybe vice versa.  And I think sort of being there for each other is so critical especially in the tough phases, especially when everyone around the world, everyone outside of the company is out for your blood, you feel like that, and just sticking by each other and giving each other the support implicitly also, not just explicitly is super critical.

Rohit:  I think it applies both and we’ve seen that as well between the two of us.  It’s incredibly helpful, both in the good times as well as the bad times, to have the support of co-founder along because, as Kunal mentioned in bad times as well, given the position you are in, you can never be seen as insecure.  And there are so few people in the world you can share your insecurity with because at the end of the day you have a plan and you have a certain hypothesis.  You have a strong belief it will work.  But only time will tell will it really work.  And there is always, always, always that doubt in your mind as well whether this will really work, what happens if it doesn’t, how should you make it work, etc.  And I think having a person to, without being judged, exchange those talks with and have an open conversation with is so incredibly helpful.  Even in good times because as we go through good times, it starts becoming easier to believe that everything we do will work out.  And having one person to just bounce those thoughts off where you know the person has no other agenda but the exact same agenda as mine is so enriching to a conversation and a decision-making process.  I think that just, it’s almost unimaginable how one would do without it.

Rita:  Many people say that one shouldn’t go into business with their friends, otherwise they wouldn’t be friends anymore.  And I bet you guys have differences, too.  But how do you resolve the differences between the two of you?

Kunal:  Yeah.  I think if we didn’t have differences the company would need only one of us.  So, I don’t think the company should have two of us then.  I think both of us bring different perspectives.  Doesn’t matter what’s right, who’s right, who’s wrong.  Obviously, we have, I wouldn’t say differences but differences of opinion on particular topics.  But not as obviously holistically or comprehensively on the direction of the company.  But on particular topics we may have differences of opinion.  What we generally do is we’ll get in a room, in a meeting room, and discuss in great detail what our respective perspectives are.  But at the end of the meeting we would always have decided whether it is my perspective, Rohit’s perspective, or some hybrid of the two, then and when we leave the meeting room that is our collective perspective and it doesn’t matter whether we enter the meeting room whether it was mine or Rohit’s.  It doesn’t matter.  Then anyone else in the company, if they walk up to me or Rohit about that particular topic, they’ll hear exactly the same thing.  Sometimes you see people try.

Hans:  Right, for sure people do try.

Kunal:  But I think over a period of time people work with us long enough and most of our team has, like the average tenure of a team member in Snapdeal is 4.5 years.  At some point people may have tried and they realize it doesn’t matter.  You can talk to whichever of them, they’re going to say the same thing.  They’re always fully aligned.

Rohit:  I think one of the other things that is so critical, and I think you learn the importance of it more and more over a period of time is just, having completely unshakeable trust in each other’s intent.  Our judgments may have errors.  We may have a certain point of view, Kunal may have a certain different point of view, and even our collective judgment tomorrow may turn out to be the wrong judgment, which happens all the time.  But just having incredible ability to trust each other’s intent and making sure that that is never questioned while you’re discussing sometimes very intense topics of very high importance as well is so critical.  And I think one of the other things that we’ve seen happen is because of the way we make decisions with this very high degree of trust and very consistent decisions after they’re taken, we’ve seen that there has started, over a period of time that has flown to our larger team as well.  I mean actually they see this as the right model to work, not only for two co-founders but also as a management team.  Where we’ve seen that within our management and leadership team as well, there is an incredible degree of trust in each other’s intent and while people respectively have different areas of responsibility, they’re core focus is on something else.  All of us by and large trust each other with doing their part of the job really well and doing something, which is great for the business.

Hans:  This amazing journey would not have happened if Kunal had stayed in the U.S. and worked for Microsoft and get the green card to be able to stay.  President Trump even used you as an example.  Yet you see so many incredible Indian executives do so well in the Bay Area in tech, and not only in tech and also in academia, in many other industries in the U.S. rising to the very top.  How do you see sort of the flow of talent from elsewhere back to India these days and how is that impacting development of internet sector in India?

Kunal:  I think we obviously continue to see the inflow of talent.  The interesting thing is a lot of the entrepreneurs are turning, a lot of people are returning post either business school or having worked for a large company or a startup in the U.S. but most of them are coming back not to work at a company but to start a company in India.  And I think that trend is quite visible in recent times.  Rohit and I get pinged all the time by folks who are returning or planning to return to the U.S. through common connections, not with the intent of joining us or interviewing with us or getting a perspective on where to look for a job, which company to join, but a very, very focused approach to starting a company and, “Here is my idea,” or “Here are three ideas I’m assessing, what do you think?”  Which I think is a great trend because obviously folks who’ve spent time in the U.S. working with, especially with tech companies in the U.S. have very unique perspectives.  They’ve seen how methodically, sensibly companies are built at least in the Valley with deep focus on product.  And we are seeing that have a very positive impact on our overall ecosystem.  And I think that trend will continue.  As the Indian internet ecosystem becomes larger, more mature, more success stories come out, you’re going to see more and more people give up the opportunity cost of a great lifestyle with high income in the U.S. to come back to India, work for zero salary and start a company with the dream of building something big.

Hans:  Rohit, do you see the same thing?

Rohit:  Yep.  I think one of the other things that’s going to happen is that even till maybe a couple of years back the size of the Internet industry in India was relatively smaller because the number of Internet users online was smaller.  I think in the last two years we’ve seen a true explosion of Internet users in India.  And as a result, one of the other things we are seeing which is happening now is that companies that start, because they have access to a very large number of users have started scaling much faster than they used to scale as recently as five years back.  And as a result I think we’ve seen a lot more people getting excited about coming back to India.  I agree with Kunal that many of them choose– I think we still see a lot more people coming back to India right after they graduate versus working for a few years in the U.S. and then coming back.  I think as the industry matures and becomes bigger in size and more success stories happen, I think it’s going to become more and more lucrative for people who have even worked for a few years in the West to come back to India.

Hans:  We have a hypothesis that whether Chinese companies have grown up a lot over the last decade.  Some of them, like Xiaomior ByteDance are expanding beyond Chinese borders.  However if you look at something like Oyo out of India is expanding rapidly globally even when Indian Internet market is a lot smaller than China’s.  Given the language ability and more international exposure it seems like more Indian startups can expand beyond India sooner than Chinese companies do.  How do you guys think about that and feel about that hypothesis?

Kunal:  Yeah, I think so.  We’ve started seeing two or three examples, you mentioned Oyo, I think Ola has done some international expansion.  UrbanClap has done some international expansion.  It is still early days and I think these companies and some others are obviously pioneering the international expansion.  What would really turbo charge the confidence in Indian entrepreneurs to globalize their businesses is as we see more incontrovertible or undeniable success stories of Indian companies, Indian startups that have gone global.  Like for instance I would say Amazon or eBay were the pioneers amongst the U.S. tech companies to go global and did it extremely successfully.  That then charted the course for so many companies like Uber and others to also do rapid global expansion.  I think we are in the early stages of that in India and depending on how well and I hope and wish all these companies, Indian companies that are trying to go global do extremely well.  I think as we see more successes, we will see more companies out of India do that.  We obviously are talking more about consumer companies, a trend that is already significantly underway is on the B2B SAS companies where the product is being built in India but being sold to a global market.  That ship sailed a while back and I think we are going to see a lot of fairly large B2B SAS companies get created, product companies get created out of India selling to a global audience.  In many cases we may not even know that they are an Indian company, just by virtue of the fact that most of their revenues come from global customers.

Hans:  We’re much more globalist at heart than nationalist, so we love seeing companies that can spring up all over the world and build globalized businesses.  I think we would be honored to have the two of you as GGV scouts to help us to invest in those companies and groom the founders into leaders and build global business.

Kunal:  Absolutely.  Anything for you Hans.

Hans:  Thanks.

Rita:  So, we’re going to go to the final round of quickfire questions.  Both of you just say the first thing came to your mind.  Who are your source of inspiration these days?

Kunal:  So, it would be more traditional, traditional business entrepreneurs like Uday Kotak who runs Kotak Bank in India or Sunil Mittal who started and runs Airtel.  I think they would be my sources of inspiration today.

Rohit:  For me I think it would be still a lot, thematically the Chinese e-commerce companies, which think very differently, and which build a lot more engaging experience for users as compared to what we see the Western e-commerce companies doing.

Rita:  What is a habit that you have that changed your life?

Kunal:  I think maybe not the habit, but I would say having kids changed my life, for the better.  Definitely for the better.  I think especially when you go through a tough period in your professional life, being able to come home to a family and kids who are just so happy to see you and don’t really care about what’s going on in your work life, I think it’s so refreshing and it completely reenergizes you.

Rohit:  For me it’s actually I get up before 5:00AM and it’s that couple of hours in the morning when I’m up before anyone else and I spend time either reading or thinking.  I think that just centers me for the rest of the day and the week and that habit has been pretty good for me.

Rita:  What is the most frequent advice you have given to young entrepreneurs?

Kunal:  Focus.

Rohit:  I knew the answer was going to be the same before he answered it.  I think every single person we meet just tell that there are so many things that you can do, don’t get carried away by them.  Just pick one, do it really well.  If it doesn’t work out, leave it and pick another one.  But at any point of time just pick one.

Rita:  What do you do when you are stressed?

Kunal:  I mean I don’t think there is anything specific one would do but yeah, maybe spend time with the kids or watch something on Netflix.  Usual stuff.  I mean there’s nothing–

Rita:  Spacing out.

Kunal:  -nothing particularly different that I would do.

Rohit:  In my case well I either read books to my kids or I read books for myself.

Hans:  I ask one more question.  What does 9 and 6 mean to you?

Kunal:  Nonstop work.

Hans:  What’s your schedule like?

Kunal:  Look, most entrepreneurs are 24/7.  So, in respect of whether we are in the office or not or in traveling for work or not, we’re always on.  And we’re always on not because we need to but because we like to.  We like to stay connected to what’s going on in our business.  We like to stay connected what’s going on in the ecosystem.  It doesn’t fatigue us, it doesn’t tire us out, because we are mature enough now to know when to take downtime when we need to. But outside of that we’re sort of always on but mostly because we enjoy it.

Rohit:  I think the definition of what are the working hours has also evolved.  All of us use media as well.  I think now is the time as Kunal mentioned, we are always on but at the same time it’s not like we have no downtime at all.  I think the downtime has also become similar to the uses of mobile Internet downtime snacks, rather than like two weeks of downtime when you’re completely disconnected.  I just think we’ve lost the ability to do that at all.  And we don’t feel stressed out because of that as well, because we just enjoy what we do.  We are not doing what we are doing because we have to, we are doing what we’re doing for the amount of time we are doing because we like to.

Hans:  So, as you guys build a culture at work, how do you encourage employees or staff to feel the same way and not be “forced” to work 9:00-6:00?

Kunal:  Yeah, I think our culture is absolutely not one of face time.  We have no prescribed working hours.  People get in, in and around the same time, they start leaving whenever they think their work is done.  We don’t prescribe any timings.  Our office is open five days a week, but I think our entire team is also always on, and again by choice, I would like to believe.

Rohit:  I think also we’ve seen that companies and cultures can do lip service to flexible timings or they can truly embrace it. We like to believe that we truly embrace it.  And we’ve seen in our office as well, people just perform very differently at different times of day.  There are certain people in our company who are exceptional performers who like to come in quite late and they stay up till late.  There are other people who are equally well-performing who like to get started as early as 7:00AM.  So, I think just being comfortable with the fact that everyone is different in how they perform and being accommodating as a culture and trying to enable that culture within the organization is quite important.

Kunal:  Rohit and I, also, by that example.  Rohit’s an early sleeper, early rise.  I’m a late sleeper, late riser.  And so, our team jokes that as a result they get emails from both of us 24 hours a day.

Rohit:  So, after Kunal goes to sleep my emails start coming in.

Kunal:  We make shifts so that we have the entire 24 hours covered.  Yeah, but jokes apart, I think given we ourselves, we are both similar in many ways but so different in so many ways and yet are sort of high-octane, high-performance professionals.  It’s no different.  We recognize and appreciate and empathize that similar differences would be exhibited across our team also and we leave the room for them to do that.

Hans:  Right.  Well what you guys have is a very special and more rare than what has happened with Amazon and Microsoft and Facebook, Apple, is more in the norm.  What you have at Google is much harder to have co-founders who can stick together.  So, thank you for your time today.  It’s been a pleasure and honor to have known you guys for seven to eight years.

Kunal:  Thank you Hans.  Thank you so much for having us.  This was really fun.

Rohit:  Yep.  Absolutely.   Thanks a lot for having us.

Hans:  Thank you.

Rita:  Thank you.