I first heard of Kutumb when their monster Series A was announced sometime in June’21 (about two years ago). Consumer social apps weren’t our strong suit then at Blume, and we hadn’t tracked the team actively, even though an ex-colleague had shared this as a potential opportunity with us. In recent times, I started hearing about Abhishek Kejriwal, the cofounder and CEO of Kutumb, from multiple sources, as someone with a strong insight into India2 / Bharat consumers, and as someone with a strong grasp of sparking viral growth loops. I got Vaibhav Gupta, co-founder and CEO of Chefkart to connect me to Abhishek to get his take on PMF (Product Market Fit), building for the emerging Indian internet user and how they user growth loops to drive rapid user acquisition at Kutumb.
Here is the transcript of our conversation. I think it is an incredibly useful resource for any consumertech founder, or for that matter any founder. Abhishek and team used clever hacks to identify areas of pain for the Next Billion Users (or India2 or Bharat users as is termed) including vapourware ads, and then ads asking for ideas from users. They spoke to thousands of users, and then identified community apps as the opportunity to go after. This is one of the deepest exploration of pain I have seen from an Indian founder thus far. Abhishek then goes on to share his perspective on PMF defining it from two angles, one qualitative, which is the intensity of customer reaction when they hear that the product could be discontinued / pulled. Second and a quantitative one is flatline retention and the level it settles at. He goes on to share his view of what an ideal flatline retention is for different apps.
The other interesting part of the conversation for me was on how they systematically set out to spark off growth loops. The first loop didnt work for them, but they struck gold with their second loop, and gradually network effects set in and the flywheel started spinning faster and faster. In the final section, he also talks about how they focus on creating liquidity to cold start markets. I thought this was quite interesting as well. We then wrap with his views on the two most common mistakes that Indian founders make – the first is not paying attention to market size, the second is investing in growth ahead of solving retention, and his advice for founders grappling with low retention. I thought it was an extremely interesting and insightful conversation, and one that founders, especially those in the consumer social apps space, will find interesting.
(Please find below, the transcript of my conversation with Abhishek Kejriwal. The transcript has been lightly edited for readability. There will of course be errors; please excuse me for them. The interview was conducted via a zoom call on 26th May 2023.)
The Kutumb journey, seeking customer pain, and honing in on the idea
Sajith: Hey Abhishek. So, my first question is to tell me a bit about the Kutumb journey, how it started etc., with a focus on the early days, including how the idea came and how you figured out ismain kitna pain hai (the user pain) and how do you go after this? So, it would be great to know the zeroth moment.
Abhishek: So, I was leading Product in a startup called Pratilipi. I don’t know if you know Pratilipi or not.
Sajith: Yeah, of course.
Abhishek: So, it’s a story-reading and writing platform in most of the Indian languages. Around 2019 – 20, Pratilipi organised a hackathon. where you create teams and come up with ideas for the next 1 billion users who were being onboarded on the internet because of Jio. Kutumb was not the idea that we selected in the Hackathon, actually it was a different idea. But Hackathon made me think that this is a real opportunity. Literally from 200 – 250 million internet users in India it’s going to go to 1 billion very soon, maybe by 2025-26. I could be wrong on the timeline, but one year here and there maybe. So, why not build something for them? And then we used to brainstorm a lot of ideas around this theme. What we used to do in fact is rather than making the product, we used to run mock ads. So, we had nothing, we just had a bunch of ideas. We used to run ads and get leads on those ads. So, it’s called Facebook Leads ad. And we used to do extensive user calling every day, I with my co-founders would be doing at least 100 calls.
So there was an open-ended ad that we ran, which was aapko kisi cheez ka app chahiye to batayiye (Tell us what app you need) and there were a lot of responses to that. And in those responses about 30% of the responses was mujhe apne community ka app chahiye (I need a community app). And then we were thinking that WhatsApp groups is doing it, Facebook groups is doing it, Telegram is doing it, so why do these people need another community app? Won’t it be an extra burden on them. But we kept on calling users as it was so prominent in those leads and we realised many different things. First insight was that not just any community but a proper association/organisation’s needs were not fulfilled via existing community platforms. Let’s imagine a Rajasthan Nursing Union, it’s a proper organisation which is affiliated with the Government of India. It has about 16,000 nurses and also upcoming nurses keep on joining the association. The president of that association said that “WhatsApp does not work for me because any chat platform I go to, be it WhatsApp or Telegram, if I put one message there would be hundreds of replies as chats.
So, members would get hundred notifications in a day and hence they would end up muting those groups. And if I convert into a broadcast group, there is no community, there’s just announcements. So, I need an app which looks like Facebook Groups but is not on Facebook, that was exactly the insight.” My second question to him was why not Facebook Groups? So, he said, “I have no control over Facebook groups like a notification should go for this post, it does not go. Sometimes it is shown in the feed, sometimes it is not shown. This post, I want to put it up, then this post I don’t want to put it up, then users can put a post and it’s in a random order. I want to start donations along with this group. So, I have to put a PhonePe link or a Razorpay link and they will donate there. I want to also integrate this. There were a couple of problems with Facebook groups.” That’s when we realised that the problem is real. People need a platform. People, not people, actually associations need a platform for better communication and for better fund management. These were the two major insights on which we built the first version of Kutumb and released it.
Sajith: Got it. Just a few questions. Very interesting. So, this hackathon was in 2019 or ‘20 sometime?
Abhishek: Yes.
Sajith: Pre-covid. Then Kutumb began before Covid or?
Abhishek: Just before Covid.
Sajith: And you actually ran ads saying kya app banana chahte ho aap (What app do you want to see built)? Something like that?
Abhishek: Correct. First we were running the ideas that came to us as specific ads, but we were not getting enough conviction from the users that yes, they want it. So, then we thought why not run a generic ad and let’s see what people have to say.
Sajith: Got it. So, initially you ran what is called vapourware ads. It doesn’t exist, but dekhte hai ki kya response milta hai okay (let us see what response we get), very clever. This is an interesting way to get ideas and then you launched it. When you launched it, broadly did you launch it customised for the Rajasthan Nursing Union or communities like that? Was it a white label app or was it an app with user customizable settings?
Abhishek: So, we were very sure that white label is not the right way to go. However, the association presidents were saying that they want a white label app in their community name, but the problem with white labelled apps are two, number one is it’s very difficult to get SaaS revenue out of Indian Associations. So, we were not thinking global at that point of time because the focus was on the next 1 billion internet users. And second is if as an end user I am a part of three different organisations, why would I install three different apps, give me that flexibility. So, although that was the need, we thought that maybe this is not the right way to go. So, Kutumb as an app would exist, but can we make the UI, which looks like a white labelled app? So, even when you open, let’s say if you are a part of one organisation, if you click on Kutumb icon on the phone, you would say that it is a Rajasthan nursing app and not a Kutumb app.
Sajith: Got it. So, you enable those colours and the skins and all that right?
Abhishek: Correct.
Sajith: Ok. Whatever data you’re comfortable sharing, just give me a little bit of the topline user numbers and if you have revenue numbers just let me know that. So, just the user numbers would be great to begin with.
Abhishek: We are at about 10 million monthly active users and about 3 million daily active users. We are hosting about 100K associations on Kutumb as of now. We are very early on revenue; we have started some experiments. Matrimony is one of the experiments that we started and is bearing good fruit for us.
Sajith: So, many of these are typically organisations is it? Is it a caste organisation, say something like Marwadi, Kayastha association or is it an employment association?
Abhishek: So, there are 4-5 major categories. one, which are the largest categories, are the Employee Associations, which could be nursing, doctors, teachers etc. And there is obviously a long tail in Employee Associations. This also includes farmers, poultry farmers etc. So, these are huge numbers. #2 what we have is Religious Organisations so this could be a temple, mostly temple trusts. #3 is Samajik Association, which is caste based. So, this could be Agarwal or Jat Mahasabha. But these are associations and not just any communities. There is an offline presence to them as well. #4 are Political Associations, so we have Aam Aadmi Party Punjab, BJP Bihar party and such smaller areas parties. These are the 4-5 major categories. And then there is a long tail of categories as well. For example, we also have Gram panchayats, RWAs (Housing Societies), college unions etc.
Abhishek’s take on PMF
Sajith: Very interesting. So, here I want to segue a little bit; let us talk about product market fit. So, first give me a sense of, is it something that a founder thinks consciously about, did you think about getting to product market fit, etc? Or was it more like a topic which never entered your mind, but you’re solving growth. I would just like to know, do founders think consciously of the term PMF?
Abhishek: So, at that time, maybe I was not thinking about PMF (formally), but if I am thinking now what I was doing at that time was thinking whether there is PMF or not actually. So, it was not coming from a direction that I have to solve for PMF. But if I launch another product now, which we launched six months back, we are particularly thinking ki PMF hai ki nahi pehle woh sochenge uske baad grow karenge (we want to invest in growth only after nailing PMF). So, we were doing at that time, jisse confidence aaya effectively, founder confidence bol sakte hai PMF ko. (what gave us confidence that it was working; what gives founder confidence is PMF).
Sajith: That’s a good one.
Abhishek: We were doing a lot of unbiased user calling. We were coming from the notion ki this app is not good for you or maybe you’re not liking this app so, what happens when the app does not exist in your life? Kal agar ye app chale jaayega to kya hoga. And we were recording those responses kitne log na bolte hai, ya problem nahi hai bol rahe hai, ya problem hoga bol rahe hai aur kitne log intensely bol rahe hai ki Sir please aisa mat kariye. (We were asking what if this app doesn’t exist tomorrow and tracking their responses, including intensity with which they were saying please don’t remove the app).
Now that is PMF ki that the intensity of the answer to the question ki kal ye app nahi rahe to aapke Jeevan main kuch badlaav hoga kya. Usmain there are a lot of people who were saying Sir aap aisa mat kariye hum kharcha de denge aap chala lijiye. (We knew we had PMF when users replied with strong emotion or intensity that please do not stop the app, we will pay so you can run the app.) So, that was the moment that was transformative for us where people were really worried. And even the admins of those associations were really worried ki Sir pehli baar mere paas aisa ek app aaya hai jisse main apne sanstha ko itna smoothly chala paa raha hoon. (First time there is an app that I am able to use smoothly and meets all my needs). In the past 12 years aaj tak maine itna fund jama nahi kiya. Agar aaj aap is app ko hata doge to problem ho jayega aap batao kitna paisa dena hai main deta hoon (I have been able to collect contributions from my users in these months as much as I collected in the last 12 years. I am happy to pay you so you can keep your app going). So, this was the time when we saw, obviously we saw the retention graph, we saw engagement and stuff like that and which is important, but woh pata nahi chalta hai (you won’t know) for example, aapke paas 3 mahine ka data hai, (you have 3 months data) now we would know let’s say monthly retention or week 12 retention, but we don’t know what happens at month 12. We don’t know what happens at month 24. Will people churn? Will users churn? What happens? That is why user calling is very important. And in user calling, this is a very important aspect that by pinching the user into a negative direction, am I getting an intense response from that user or am I getting an okay response?
Sajith: Very nice. You did calls before about what app you want, you said you did 100 calls daily, kitne log the team main tabhi (how many team members did you have then)?
Abhishek: Sir hum log to 3 hi log the. (We were 3 then)
Sajith: So you each did 40-50 calls per day. Is baar jab user product had launched & you wanted to pinch the user into a negative direction tab kitne call karte the aap log (this time after the product had launched and you wanted to pinch the user into a negative direction and get their response, how many folks were you then)?
Abhishek: Tab kam ho gaya, because we didn’t have so many organisations, we started with two organisations and Usme we had roughly 10,000 users. Jiske D7 pe hum call karte the, ki ab thoda product experience kar liya hai ya ab batao ya D14, D30 par hum call karte the. (We didn’t do as many calls after the product had launched as there were fewer customers or organisations, though they had 10,000 or so members. We used to call on Day 7 so that they would have had some experience or at least on Day14, Day30).
First day user ko poochenge to yaad nahi rahega (Asking the user on Day 1 may not get you meaningful responses) but after experiencing the app, if you’re okay to get rid of the app, then I want to pivot, I would not want to build that business.
Sajith: Got it. Which were these two organisations, if you don’t mind? If it’s not confidential or something.
Abhishek: So, one was a religious organisation, which was a Muslim Mahasabha.
Sajith: Okay.
Abhishek: And second was the All India Yadav Mahasabha.
Sajith: Very interesting.
Abhishek: So, we started with this, but we never knew that Employee Associations would become the biggest driver.
Sajith: Employee Associations is a big driver, ok. So, today if someone were to come and ask you, say younger version of you, a junior or someone just asks what is PMF or someone were to ask you, how would you define PMF in your own words?
Abhishek: So, I would define it two ways. #1 as I said, if the product is removed from the app store and from the hands of the user, what is the intensity of the pain that he/she gets? And #2 is most of the products are built on retention, they are not built on acquisition, they’re not built on anything else. So, is your retention flatlining and flatlining at a good percentage? If I am seeing the metrics, your retention should flatline. That is the second important metric.
The importance of flatline retention
Sajith: For consumer apps like yours what is a good D90 or D180 flat lining rate?
Abhishek: It depends, because ours is a very network effects business. So, once a user is a part of three organisations, the retention increases drastically. And as the product matures, our retention has increased drastically. We started with the D30 at 8%. Now our D30 would be in the range of 17- 20%. This is the average D30. And we would see flatlining somewhere around D90, which would be around 10-11%,
Sajith: 10-11%. Okay. Great. So, basically pain, if the product doesn’t exist & if retention is flatlining, these are good. And for non-network effects business, you think it can be a little lower like 7-8% or is it should be higher late.
Abhishek: It may be fine to run a business at 7%. Let’s say retention is flatlining at 1%, then the problem becomes that to get that retained user, the CAC will become so high that the return on invested capital will not make much sense. So, there should be a certain percentage where it flatlines, which is generally above 5-6-7%. If it is above 10%, it’s a good business to be in. Also, the exact benchmark of flatlining % differs drastically from sector to sector.
Sajith: This you’re talking about D90.
Abhishek: After D90, the retention is not flatlining to kuch problem ho sakta hai udhar (then there might be some problem). Again, this might be different for different sectors.
Sajith: But D90 above 5-6% and above is okay.
Abhishek: Correct. Every 20 users you are retaining one user to us hisaab se (basis that) your CAC is multiplied by 20, your CPI is multiplied by 20 uspe baith jaana chhahiye India main generally (this is acceptable for India). I don’t know about the US market, but yeah.
Sajith: Yeah. What do you generally target for your CAC now if you’re okay with sharing?
Abhishek: So, we get a very low CAC because most of it is organic. But after talking to a lot of other companies, what I see is that an average retained user should probably cost maybe 100-150 rupees. And you can make maybe 8-10 times that money from that user over a period of time.
Sajith: Got it. 100-150 rupees. Fair.
Abhishek: Sometimes where the average revenue per user is high, for example, it’s not just an ads business, but some kind of subscription model you can sell or some transaction is also happening, then maybe it can also go up to 300-400 rupees. So, it depends upon the nature of the business.
Sajith: This ₹100-150 is for an ad business?
Abhishek: For an ad business in India mostly.
Sajith: Yeah, so for transaction businesses it can be ₹300. Okay. So, in the early days you got the product insight that people want a community app and you started talking and created this app and you got users and suddenly you’re seeing there is a lot of love etc, people are feeling pain ki aisa mat kijiye (please) don’t remove the app. How did you then scale this? What was the GTM playbook? How did you guys 10x it? Tab tak (till then) how big was the team?
Abhishek: Yeah, so team was five people till we reached a million users.
Sajith: Oh wow!
Sparking growth through creating growth loops
Abhishek: We just had four founders and one product manager. But it was lucky for us because our growth loop started working, we were lucky to find our growth loop effectively. So, I think figuring out GTM growth loop or figuring out how to scale is after PMF. Once we knew that this product ko hi scale karna hai aur kahi dimaag lagane ki jaroorat nahi hai (you have blindly focus on scaling as you have nailed the product), so then we thought ab kaise kare (what to do). So, what we did was, firstly in our case we knew that ki ad chalake organisation leke aana (acquiring organisations through ads) is very tough to keep up. There are about three and a half million listed associations in India that we can keep in the category of NGOs.
Sajith: Three and a half lakh.
Abhishek: 35 Lakhs (3.5 million). But even at 35 lakhs, Facebook ads and Google ads will not work. For Facebook ads and Google ads to work you need at least an audience of at least above 20 million. Otherwise, your CAC will be super high. To hame pata tha ki kuch to viral loop banana hi hai. And we were focused ki do tarike se kar sakte hai existing president of association, ke bahut contacts honge wohi hame doosra association de dega ya phir ye president of association main jo log aa rahe hai If we can increase that sankhya like if we can increase that number of users joining in that association us main se hi koi nikal jaayega jo doosra association bana lega. (We knew we had to create some kind of viral loop. We focused on two loops. First, we focused on existing Presidents of Association, who we thought would have lots of contacts, from whom we could get other Associations’ Presidents and their users. If we can increase the number of Presidents, then we thought we could get more Associations via a growth loop. The second was that as the number of users increased, we felt some of them would start new associations of their own on Kutumb.) The second loop worked for us tremendously.
We started with the first association, tho us admin ne bola ki mere paas offline main to 12000 log hai, but Kutumb pe sirf 1200 log join kiye hai (The administrator of that association told us I have 12,000 members offline but only 1,200 have joined the association on the Kutumb app). So, now how do I do my work on Kutumb? So, we anyways had to solve that. And we created two features. We created reputation points and ID card. ID card was ki pehli baar ye organisation digital identity card nikaal raha hai to agar aapko praman dena hai (first time that the organization is releasing a digital identity card, and you should show your pride of association). You want to prove that you are a part of this organisation, you have to click on this link and join this group and get a digital i-card for yourself.
Sajith: Fantastic idea.
Abhishek: Second was reputation point, which is the number of people you refer and if they join, you would get that many reputation points. The person with the highest reputation points gets a certificate from the President of this association. So, that’s huge fame for them. So, usse kya hua ab who jo 1200 log the who dheere dheere 5000-6000 ho gaye. Aur woh 6000 main se we got another 4 admins who said mera bhi association hai mere liye bhi aisa kuch bana doge kya, phir us main bhi same loop chal gaya. So, hamare liye we got lucky ki it hit for us, the first feature that we made. (What happened as a result of this is that those 1,200 folks in the association grew to 6,000. And from that 6,000 we got another 4 administrators of other associations who wanted us to create something like the present Kutumb community for their associations too. This led to further loops in turn, and which led to further loops. We got lucky with our first feature which was a hit).
Sajith: Yeah, got it. So, two clever ideas creating this reputation or recognition are basically identity cards and reputation points. So that brought people in, and as more people came in, those people said this could be useful for, okay, I’m joining, let’s say the Yadav association, but I’m also my RWA (Residents Welfare Association or the Housing Society Complex) President and this could be useful for my RWA also. I’m a poultry farmer I could use for my poultry farmers group, so yeah.
Abhishek: In fact the other thing did not work for us, which is admin to admin referral.
Sajith: Oh.
Abhishek: Because the presidents were not as motivated enough to do it. We cannot shelve out ₹5lacs and give it to them. We could have shelved out ₹1000-2000-3000 but they did not give much shit about ₹1000-2000-3000 Rupees. So, that didn’t work for us but the other loop I mentioned before worked for us well.
Sajith: Got it. So, at that point, you were not spending any money on marketing at all.
Abhishek: No it was zero.
Sajith: Yeah. So, you started officially when? Just before Covid, Jan-Feb ‘20?
Abhishek: Actually, April ‘20 we started.
Sajith: When the country was in lockdown! And when did you hit 1 million MAUs?
Abhishek: Specific time? We took about I think one year to hit 1 million MAUs. Maybe a little later like June – July 2021 something like that.
Sajith: June-July 2021. Okay. And yeah, now of course you are at 10 million. When did the first round happen?
Abhishek: In August 2020.
Sajith: Okay.
Abhishek: Yeah, that was the pre-seed round.
Sajith: Okay. Who led that?
Abhishek: That was mainly Better Capital and a bunch of other angel investors.
Sajith: Got it. I think the Tiger round happened after I think after you hit 1 million was it?
Abhishek: No, so after that, I think at about 100K MAU, Surge happened.
Sajith: Oh.
Abhishek: And after Surge, after hitting 2.2 million MAU is when Tiger happened.
The two big mistakes founders make
Sajith: Okay, great. So, when young founders come to you now of course, you’re a experienced founder (Abhishek chuckles). I don’t know if you angel invest, so what is your general advice to them when they say bhai main launch kar raha hoon (Bro, I am launching my startup) or I’m working on this, are there certain caveats, views? What do you share with them?
Abhishek: Mostly I have seen founders making two mistakes. There could be other larger mistakes also, but I have seen these two as prominent. First is working on low TAM (Total Addressable Market) ideas, woh sochte hi nahi hai, woh sochte hai ki mere jeevan main yeh problem hai to sabko yeh problem hai (they extrapolate their problems to the wider market) and obviously Paul Graham says that waisa hi karna chahiye (you should solve the problem you face personally). But you have to see that the India market at your level could be a small market. So, pehle aap ARPU x number of people karke dekh lo ki TAM baithega ki nahi baithega. At least rough calculation of TAM. (Do a rough calculation of the people who have this problem multiplied by ARPU to size the market) So, if they start with the small market even if they go deeper in Series A, Series B main phas jaate hai grow nahi hote hai (they get trapped into a small market and are not able to grow).
And the second problem I have seen is that founders put a lot of money on non-retention products, like PMF hai nahi phir bhi paisa burn kiye jaa rahe hai (they burn money even when there is no PMF). So, that makes no sense to me, face the truth that PMF nahi hai, usko pehle solve karo GTM figure out ho jaayega (solve for PMF or achieve PMF first, and then you will be able to figure out growth or GTM / go to market). Like if you have a product with such value prop, GTM figure out karna itni badi baat nahi hai (it is not a big deal to figure out GTM) according to me.
Sajith: Yeah, very well put. Specifically, when they come to you & say retention is a problem, typically what is your reaction? How do you solve for a situation, when you start seeing that, let’s say there is a new product you guys launched from your stable and the retention, it’s not settling, right? Jo aap 5% bol rahe ho it’s not flatlining at that but 2-3% (Instead of flatlining at least 5%, it is flatlining at 2-3%). What are the steps you like to take quickly?
Abhishek: So, maybe you can increase retention by a small percentage by hacks, but you cannot solve for flatline retention by hacks. I don’t like the idea of ki aaj do notification dekhke kal 4 ya 10 kar denge, isse aapka D14, D7 badh jaayega but what about D180 woh nahi badhega & it’ll not get flat. To sabse pehle to you have to say this to yourself, ki hacks hatake fundamentally sochenge. (send 2 notifications today, send 4 or 10 notifications tomorrow. That could at best up your D7 or D14 retention but D180 won’t increase, and it won’t flatline. So you have to say I won’t hack my way through but instead think about what can fundamentally be done). And fundamentally you have to talk to users who are coming through to D180. What is that value prop and can we magnify that value prop?
For example, I was going through the Calm app founders journey. I was watching a podcast where they said initially, the retention was not flatlining, in fact it was flatlining but at 0.5% and which is low uspe baithega nahi apna equation ROIC nahi baithega (that won’t yield a good return on invested capital). But then he said ki woh 0.5% main se 50% (50% of the 0.5%) of the people were actually not listening to meditation audios. They were actually finding sleep audios and basically using it for sleep. Then he said can I pivot and make it a sleep company? And then retention flatlines at at much higher line (percentage). So, fundamentally you have to provide a very high value prop to the users.
Investing in growth, post PMF
Sajith: Yeah, thanks. So, post PMF I think by around 300k users, growth must have been happening. You also must have figured ki broad PMF ho gaya hai (we have hit broad PMF now) let’s not go crazy now, but we can keep putting some money into growth etc or we can start hiring. So, what are the steps that you took when you realised that PMF has happened and how did the org also evolve?
Abhishek: Correct. So, this has been a problem that I have been facing on how to grow by putting money. Because in our case there have been situations where we have put a lot of money on branding but there has been no ROI and organic is giving us such amazing ROI that we haven’t been able to justify paid ROI. Our performance marketeers, brand marketers have an uphill task always. So, we have been thinking about this problem for a long time, for maybe two years now, where to put money intelligently that at least if not at the organic growth rate, but at least can we push that growth rate to maybe 10% more or 20% more. Can we do that? We are still unable to do that and we are figuring out. So, we have spent a lot of time on, if we are growing, let’s say 3x year on year, can we push it to 10x? Is that possible?
Sajith: How big is the team now?
Abhishek: Currently the team is of about 60-65 people.
Sajith: And are you spending money now on acquisition?
Abhishek: Very little. It would be 5% of our monthly expense.
Sajith: Okay. That’s very low. Is it largely organic still? What is working now in this space? Because I’ve not seen too many organic growing B2C apps at this scale. So, I’m very curious what it is?
Abhishek: It’s still organic because what happens is there is a liquidity needed to create this loop also. So, for example, we had first 2-3 organisations from UP and then we had 1,000 organisations from UP only as a state. Now to create that loop in Telangana, the money that we are spending is on, can we go to Facebook groups? Can we find these associations? Can we try and arrange a meeting with the presidents so that we can create a liquidity in Telangana so that once we have a thousand associations in Telangana, then the rest will be solved. So, that’s where the effort we are putting. So, it’s quite a manual effort.
Sajith: Manual effort. It’s creating that geographic density.
Abhishek: Jaise hamare liye ye bahut aasaan nahi hai ki ki chalo performance marketing waala bol dega ki aaj main Facebook pe budget double kar doonga to group double ho jaayega. (Performance marketing is not scalable for us, in the sense that doubling performance marketing wont necessarily lead to doubling of outcome for us).
Sajith: You must have found some very interesting insights I am sure during these last few years of growth so if there are any that come to your mind you normally share internally you guys discuss in the group. I would love to hear if there are any interesting insights.
Abhishek: So, we were thinking while running the monetization experiment, one of the low hanging monetization experiments was ads. But CPMs have still not grown enough in India. Still, if you see tier 3-4 India, the CPMs are very low and it’s very difficult to build a large business out of those CPMs. I have to do maybe 350 million MAUs to build a $100-150 million revenue just on ads that’s the value of CPMs now.
Sajith: Sorry, to build a $150 million business of ad revenue, what do your MAUs have to be?
Abhishek: 300-350 million, at least.
Sajith: 300-350 million. Wow, matlab 30x aapko grow karna padega.
Abhishek: That’s a very difficult equation. I think CPMs are also increasing, the CAGR (Compounded Annual Growth Rate) of CPMs are also very high, but at the current state we have to go to 300 million MAUs. That is one of the revenue challenges. So, we thought aur kya kar sakte hai, we again did user calling ki kya mil raha hai yaha se aur kya mil sakta hai jiske liye aap paisa doge (what else can we do, so we called our users to understand what is it that we can give you for which you will pay us?). So, many people said matrimony because we have a good density of samajik (caste) associations and then we asked them shaadi.com ya jeevansaathi pe kyun nahi kar rahe ho (why aren’t you using shaadi.com or jeevansaathi.com which are two popular matrimonial sites). So, they literally have shown their shaadi profiles with the filter and shown dekho sir sirf 30 log aa rahe hai hamare area main sirf 30 log hai kya hamare caste ke? (If I filter for my caste and my geographical area, then I am seeing only 30 people there, surely there are more folks of my caste here?). So, liquidity penetration of Shaadi & Jeevansaathi is still not there. I think they’re doing a good job in maybe tier one and maybe to some extent tier two (cities) but below that they are facing liquidity issues. So, either the elder brothers or the parents who are already with us are now using matrimony for their children effectively. And conversions of matrimony is very good right now, although we are yet to expand it.
Sajith: Okay, so that’s an interesting first revenue use case. Cool, cool.
Abhishek: Decent large market. Jaise Shaadi bana raha hai $50 million. I think Bharat matrimony is at $60-65 million, Jeevansaathi is at $30 million. Toh kul milake (The total) current online (matrimonial) market would be around $200 million, tail length mila doge tho (adding the long tail of apps). I think they’re leaving another $150-200 million on the table because they’re not doing tier two and below. So, can we get to that revenue is the question?
Sajith: Commerce is something unlikely or you think there’s an opportunity there? Intra community commerce.
Abhishek: Still thinking on that, still thinking on that. There was some partnership which was proposed in one of the groups. So, we have a community of 500K farmers so they said ki tractor bechna hai inko and there was a loan guy also who said ki EMI pe le lenge to aap facilitate karwa do. (someone wanted to buy a tractor, and there was a loan guy who was happy to facilitate a loan). So, we have not done that experiment because that was just for one cohort. So, we thought ki pehle category wide experiment kar lete hai phir dekhenge (let us do a categorywide experiment, then we will see).
How he learns as a founder, and why compatibility in a founding team is more important than complementarity
Sajith: Got it. Interesting. Okay. So, how you learn, you mentioned learning about Calm from a podcast, or was it a video. So I don’t know whether you watch, or is it podcasts, do you read, or do you like talking, there are all kinds of founders, some love talking, some read. How do you learn as a founder personally?
Abhishek: I think three major things. #1 is YouTube. I have subscribed to amazing channels on YouTube. So, I do listen to a lot of podcasts. In fact, Lex Fridman is one of the podcasts that I listen to and it’s a 7 hour podcast. I like Andrew Huberman who has a great health podcast. Yeah, neuroscience. So, I like these podcasts on YouTube and I listen to them extensively. #2 is Twitter, twitter se utna gyaan nahi milta hai (I don’t get too many insights via twitter), although I have curated my following. It’s less of gyaan (insights or knowledge), more of a news kind of a thing but kuch to gyaan mil hi jaata hai (but you get the occasional insight or two). #3 is I do a lot of P2P meetings with other founders; ki SaaS main kya chal raha hai? Commerce main kya chal raha hai, to usse bhi bahut gyaan milta hai. (So, I ask what challenges people are facing in SaaS to a SAAS founder, and similarly what is happening in commerce to an ecommerce founder; that leads to several insights). I think YouTube and P2P are the major sources of knowledge.
Sajith: You recommended Lex Fridman, Andrew Huberman. Anything I might not have heard that you think is mind blowing like hidden gems, obscure gems or any one Twitter follower who gives you more gyaan than news?
Abhishek: YouTube channel I think would be The Barbershop. I don’t know if you have subscribed to Barbershop.
Sajith: I’ve heard of this. Shantanu (Deshpande) ka?
Abhishek: Shantanu, ka right! So, they talk very freely (on that show) sab kuch bata dete hai. For example abhi Avnish aaye the waha pe Barbershop pe, and they were discussing ki IPO karna chahiye ki nahi karna chahiye, & it was such a frank discussion mujhe bahut maza aaya. If Kutumb let’s say hopefully is valued $ 1 billion to us samay mujhe jo challenge face karne hoga who mujhe abhi se samajh raha hai ki kyun karna chahiye IPO kaise karna chahiye etc. (They share candidly on that. Recently Avnish Bajaj of Matrix Partners was on that show, and they had a frank discussion covering topics such as whether to IPO now or not. If Kutumb is valued one day at $1b, then I will face certain challenges then, and I got a glimpse of that today from that show. I got to understand why you should IPO and when). So, that is a very insightful podcast for me.
Sajith: Got it. Interesting. If I should talk to one founder next, who should it be? You may have to intro. So, anyone you recommend that I should talk to, who you learn from. It could be someone you know, someone you may not know, in which case that’s fine. But who is the founder you learned from?
Abhishek: Have you talked to Ranjeet from Pratilipi?
Sajith: Ranjeet I could talk to. I haven’t spoken to him recently. Fair. Thanks for this. Any question or anything you want to say, given the topic is PMF, early stage, building jo bhi maine nahi poocha, kaafi cheeje maine poochi nahi hai (anything I haven’t asked, though we have covered a lot of ground)?
Abhishek: What I have seen, although I didn’t cover, is for early founders, the founding team is very important. So, I got lucky with my founders, but I have seen other founding teams going through some issues. So, I think before PMF, founding team ko sort karna bahut jaroori hai (sort out the founding team), do you have a good chemistry or not? Log bolte hai ki aisa hona chahiye ki ek ka strength ‘A’ hona chahiye aur doosre ka strength ‘B’ hona chahiye, ek ka ‘C’ hona chahiya. I would say ki compatibility hona chahiye bas, that’s fine. Dekh lenge baaki ki skillsets hai ki nahi kyun ki agar skillset bhi hai and it’s not working out kya karenge phir skillset ka. (People overstress complementarity in a founding team – that one founder has to have strength A, then another strength B, and so on, but I feel compatibility is more important than complementarity, for missing skill sets can be recruited for, but on the flip side, if you have great complementarity but poor compatibility then what is the use of the skillsets?) There has to be great compatibility that if someone is, let’s say angry today, some other founder can relieve him. Some other founders are angry for some other reason, some other founder can support like because founder dynamics are going to create the culture of the company. And if there is no dynamics between the founder or less dynamics between the founder team…
Sajith: How did the four of you know each other? It’s a big team.
Abhishek: So, we are all from Pratilipi
Sajith: Oh all from Pratilipi. You are the second from the Pratilipi mafia, after Animall.
Abhishek: Yeah, I think both of us came out from Hackathon.
Sajith: Oh, same hackathon. Yeh hackathon ke baare main Ranjeet se poochna padega. (I need to ask Ranjeet about that hackathon). Anything else? Maybe I should stop recording here.