In my latest PMF Convo interview, I spoke to Romita Mazumdar, founder & CEO of beauty products co Foxtale. Romita is a VC analyst turned founder, who started Foxtale during the COVID-19 pandemic, speaking to 900+ women and 100+ brands to figure out the specific sub-problem she wanted to attack in the beauty space. Her earned insight was that Indian customers want instant gratification, and efficacy, and she designed Foxtale as a product to address these needs. Romita’s deep understanding of the space as a user, backed by hundreds of conversations, an open mind, and innovative approaches to marketing, have seen Foxtale emerge as one of the most exciting new consumer startups in India of late. 

In our convo, Romita takes us through

  • How she honed in on beauty as the space (hair care was the alternative she gave up on)
  • How she arrived at the limited SKU strategy, which has paid rich dividends to her
  • Her view of PMF, and the three metrics that she combines to validate PMF
  • How they got their first 1,000 customers, by working with skinfluencers
  • Understanding the difference between hero products and accusatory products
  • Her advice to younger founders, and why they need to spike on one of self-belief, passion, or obsession

This was an enlightening conversation, and it gave me perspective into the conception and build out of a fast-growing consumer brand. Romita is a highly self-aware founder, who understands the space well as a user, supports it with many conversations to hone that understanding, figures out the levers required to win, and puts in the effort needed to push those levers. I look forward to seeing Romita celebrate the achievement of a ₹1,000crs ($120m) revenue milestone, which was the original vision with which she started the venture.

Enclosed below please find highlights of our conversation. The complete transcript, from which I scraped the below highlights, is here.

Highlights of my chat with Romita Mazumdar

The Pick

Sajith: How did you come to picking Beauty as the best sector (to start in)? Was there any other idea that you rejected? 

Romita: So, for me, till today, it stays the same to me and I joke around it, not joke, I’m quite serious. I’m not a fancy founder. I never wanted to solve a world problem or anything mereko 1000 Cr ka business banana hai (I wanted to build a ₹1,000 crores or $120m revenue business). Everything in life till today, Sajith, very earnestly what I do is solve for that number. And I also sometimes don’t know that once I achieve that number, what next? Well, fundamentally, because I do think that will bring a sense of fulfilment that I still haven’t gotten. But having said that, I did know that for that number on the top line and bottom line, I needed something that has a revenue pool and profit pool. Second, I also had, for the longest time I knew consumer is the category that I like, right? So, it’s not a discovery I had to do as an entrepreneur. It was the category jo mujhe chamakta wahi tha (that I got). 

So, consumer was my domain and that is where I had pigeonholed myself over the three, four years that I had worked before this. But within that & in the category with revenue and profit pool, and the reality is that in consumer, all categories don’t have the kind of margins that BPC (Beauty and Personal Care) has.

So, there were three reasons I’ll tell you. One was BPC does allow you that kind of TAM (Total Addressable Market) and profit pool, but I initially wanted to do haircare. So, in BPC, colour (cosmetics), haircare and skincare, they all mota moti (broadly) are the same. Of course, skin has the largest gross margin, but more or less you can actually build a ₹1,000 crores ($120m) business with 15 – 20% EBITDA in all these three categories if you build it right. I was very intrigued to do haircare and now in Foxtale we are finally moving in that direction.

Limited SKU approach around ‘hero products’

Sajith: Great! One of the things I really love is your focus on limited SKUs; where does this come from for a founder who’s like, I mean young, right? And typically it took a long time for me to understand the power of fewer SKUs and I collect this kind of data. For instance, Red Bull for the longest time had just one SKU, it was the world’s largest brand with one SKU and perhaps the largest selling SKU. Apple today may have one SKU, which is similarly large, say $3 – 4 – 5 billion [Sajith Pai: In hindsight, Nvidia’s H100 may be the alltime largest selling SKU today, and of all time]. But I noticed this obsession of yours with fewer SKUs, etc., where does this come from? How did you get trained in this?

Romita: I have gotten asked this and one was simply data; Fair and Lovely, Nivea, how have they built, what is the pattern that worked for them? And while one was data, I don’t think simply data would’ve driven, it’s a belief that would’ve driven me to take this kind of bet. And I’ll tell you where that belief came from. So for me, my sources of learning, have been a lot of reading and user consumption. So either as a user, the brands I was consuming or as a reader what I was reading.

So what I used to hero worship was P&G. I don’t know how many books of P&G, I have read. My first book in the business world was the book written by Coca-Cola’s CEO, outstanding book that was, and that put me into this world of reading books around businesses, around CEOs, around founders, around promoters, around organisations, etc. And it’s still been, it’s one thing that I do every day, read something about a company. So, the kind of books that attracted me or the kind of books I learned a lot for was General Motors, Coca-Cola, Ford, P&G. And when you read in depth a lot about them, there is a very clear success pattern. They have seen success with one SKU or brand, two SKU or brand. They’ve moved into various categories with that brand. 

Because Patagonia was an obsession. Harley is an obsession. Red Bull is an obsession. So, as a user, Glossier was a beauty brand that I looked up to a lot. So, they were all limited SKU plays and their stories were driven by product. Their stories were not driven by trends.  And that’s what these brands taught me and that’s what attracted me to these brands as a user. So, a combination of these two along with what data had to say, which validated this view that if you play with limited SKUs, but you choose your ICP right and then that SKU plays very well with the ICP that you are talking to, then that’s when you build value with time. So, that belief came from engaging with a lot of brands in different ways who have been able to do that. So, to me aaj sab bolte hai limited SKUs you thought differently but mujhe us samay aisa nahi laga tha ki kya fodu idea nikala hai (today a lot of people appreciate our limited SKU strategy but at the time I thought of it, I never thought it was a brilliant idea or anything). I thought that’s how it’s supposed to be because that was the ecosystem that was influencing me. I think it’s just what influences you.

Romita on PMF

Romita: So, there are three metrics that we look as PMF. So whenever I launch a product, I don’t immediately put significant money into marketing the product. I put a very minimal launch budget of anywhere around ₹3 – 5 lakhs ($3,750 – 6,000), sometimes even lesser. And all that money is primarily towards social media. So, it can be influencer collaborations, people who are talking about our product, etc. Or it can be to get the pictures of the product, etc., done. But anywhere between 3 – 5 lakhs to no money goes into digital marketing, etc. For the first three months, I just look at organic pickup of the product, which means I check if there is a demand for this product in general. And if there is a demand for product, trust me, consumers will find a way to your product. And especially at this scale of the business, I have enough users who come to buy other products. So, if there is an inherent latent demand for the product, they will end up discovering the product on the website, and I’m also listed on most marketplaces. So if you want the eye cream, you will find it.

So, there is no point of me putting money behind a product if there is no latent demand in the market for that product. So, first is organic growth of the product, second is retention. So organic growth basically helps me understand that. Do I have to educate users? Or is that I just have to take market share. People already know what this is, people are searching for it, I just have to come up in the right searches so that’s one. The second is retention on the 90th day. Cumulative M3 is the retention metric that we track. But when we launch a product, we do M1, M2, M3 retention and we have a very clear defined number for it because then that determines, is the product a habit creation product over time or not. Because if the product is not habit permitted, even if I scale it I will only be on a treadmill because jitna paisa main daloongi market main utne hi users mujhe milte jaayenge (I will have to keep spending to get the incremental sale).

But if it is habit formation, then LTV is built. I’m putting money for the first purchase, but eventually I make money in repeat purchases. So, that’s the second thing and the third PMF we do, we call it relative NPS, I’m not a big fan of NPS as a metric, but we do NPS at multiple levels depending on the product. So, efficacy ke bhi attributes hote hai (there are attributes for efficacy), sensorials of the product, packaging of the product. So, we try and understand what are the various aspects of the product that have really hit home, what are aspects that people are very, very indifferent to? If there’s nothing that we stand out on and what are aspects that make people discourage them from using it again? So, a combination of these three and there’s a weightage to each of these three, and on the 90th day, they actually get a report which tells me the PMF score for the product.

And basis that depending on where it ends up lacking, first is whether there’s a TAM for the product or not. Second, whether there will be the repeat LTV for the product or not. And third is an explanation of the top two that where have we really gone wrong in terms of positioning or in terms of the combination itself. So yeah, so PMF is something that we observe very closely.

Sajith: Got it. So, your definition of PMF is the combination of these 3 organic growth, retention and relative NPS, the combination of that gives you a PMF score and which of course is your secret sauce, got it. This answers three of my questions. So, on GTM, and it’s very clear that in your world of consumer brands, performance marketing is the most critical thing. I mean it is typically the big driver. And I found it interesting that you start with no performance marketing for the first 3 – 4 months, it’s purely organic or influencer collabs, etc. And you’ve been doing this from the beginning. 

How Foxtale got its first 1,000 customers

Romita: On my website. So, before we even launched the product, what I had done is, see the way to discover a product is through marketing. Now I don’t have a network where I can get 1,000 people to come and buy. But people who are authorities of skincare, them organically talking about the product will get me my first 1000 customers.

So, three months before I launched the product, I made a list of some like 500 skin influencers and I reached out to them all individually personally, spoke to them on the phone and because there was no website back then because I had not launched the products yet, I just told my story and I said, just share your address, I’ll just send the products. If you like it, great, you give me feedback. If you don’t like it, I want to know what you don’t like about it so that I can then make changes in the product. I couldn’t afford to pay them and anything. So, not all 500, some 200 – 250, maybe lesser than that, agreed to share their addresses. We sent the product and what ended up happening is they not only shared feedback, they loved the product so much that in the year 2021, and we didn’t send them branded products, kyun ki tabhi launch nahi hua tha, (because we hadn’t launched yet) we send them plastic bottles product just with handwritten, Foxtale chipkake bheja tha. (labels pasted).

And in 2021 in December, influencers do reviews, which I didn’t know back then, but we suddenly started getting listed as the top five moisturisers of the year, top three cleansers of the year, top three serums of the year. And you would have all these fancy good looking bottles and then you would have a plastic bottle. So honestly, that’s what helped us, the first thousand customers, because the moment when we launched people were like, people searched for Foxtale before we had our website, and I could see that there. And when we launched our website, there was this love that we got after that from the first thousand customers.

So, even now that practice continues before we launch a product, but today we don’t have to reach out people. Our own customers will send messages to us ki aapka next launch kya hai (when is your next launch?) can I try the product? We do work with a lot of consumers before launching a product to test our product, etc. and to get feedback and we make changes to product basis that it’s a two year process that takes us to make one single product. So, because of which the products, there are a lot of lab trials that happen. So, there is organic conversation around the product that’s there, of course for us too, but do that organic conversations translate into purchases and do those purchases translate into repeat? That’s the thing, that equation that we end up trying to gauge.

Acquisitory products and organic products

Romita: So, we look at P&L at a product level. So, we actually track profitability per product. So, different products scale at different rates. Depending on the scale you give different performance marketing budgets to different products and the nature of the product and the price point, average selling price of each of the products is different. So the way we track is simply profitability per product. A serum is a great acquisitory product. We will always put a lot of digital marketing money there. But despite having a lot of money in digital marketing put there, it’s a product that has very high repeat. But it’s my new user acquisition vehicle. So, does it operate at 20% EBITDA? No, but it operates at a positive P&L and it grows tremendously.

It grows 30%, but that’s my new user acquisition product. There are products like cleansers and moisturisers; they are very big on organic behaviour. So even if I put digital money into it, people are not actively searching for best cleanser because waha pe loyalty itne jyaada hota hai (there is high loyalty there) and price point itna kam hota hai (and low price points) that people end up buying it from their nearest convenience stores or whatever. It’s not a discovery led product. But what ends up happening is when a person comes to buy a serum, they end up buying a cleanser, end up buying a moisturiser from me. The products are so good that they end up repeating on it very highly. And then there’s a lot of organic conversation around the product. So those products  (cleanser and moisturiser) also grow not as fast as acquisitory products, but they’re profitable at 20 – 25% CM3. So that’s what we track. So, there are acquisitory products, there are hero products. Hero products are the one that grow organically for us and grow profitably for us. Acquisitory products, we still grow profitably, but they’re much faster growing, but that enables us to get new users into the funnel.

So, that was the second reason I chose skincare because I knew that as a founder, you can have two arbitrages, one is operational, you’ve spent so many years building in the category that you know the dynamics very well. Or the second is you are a power user of a category. So, you basically end up replicating the behaviour of the top 1% of the users. So, that was me in skincare category. So, that was the second reason. So, all of these hypothesis were, there’s always data to validate. If you look at Nykaa, sabse jyaada serums bikta hai in skincare (for Nykaa serums sell the most). If you look at any of the new D2C brands, the serums pick up the fastest. But if you also look at the brands that end up lasting the most are the ones that are cleanser and moisturiser driven. But this was coming back to me as a power user. I’m okay trying the new serum of a new brand, but I’m absolutely not okay changing my cleanser and moisturisers and they are the two products that I will use every day. A serum I’ll use probably twice or thrice a week, but a cleanser and a moisturiser I’ll use every day. So, a combination of being the power user of the category and being very close to data in the market helped me bifurcate and look at it a certain way.

Self-belief, passion, or obsession: A founder needs to spike on at least one of these

Romita: To take up entrepreneurship, one of the three things should be peak – self-belief, passion, or obsession. And one has to identify what it is because that becomes their strength. Then you have to be aggressive about that strength and be okay with not having the other two. 

One is self-belief, which is I believe a lot of founders that I meet, especially the consumer tech unicorn guys, they’re like humko pata hai yeh solve hoga (we know how to solve it) and I’m the best person to solve this problem in the world because of X, Y, Z reason and my background, etc. Second is passion where you are not necessarily like I am the best person, but you feel very deeply about a problem. You say if someone has to solve it and I feel deeply about it, so I’m going to solve it. Third is commitment. Commitment is the nice word of saying it, but it can also mean obsession, which is like, this is what I’ve set my mind to. I’m now going to get it. Hell come loose, I’m going to get it. I peak on the third one. I don’t peak on the first one. I wasn’t at least big on, in fact, I’ve had to train myself on self-belief because now that I’m a founder, I also meet a lot of alpha personalities. So, I have had to learn to be assertive. I’ve had to learn to protect myself, because I’m not big on ego, I’m not big on self-belief.

So, those are things that I’ve learned skill sets for me over the last three years. But I’m very big on obsession. So if I set myself to something, I’ll do it. Now, obsession automatically means dedication. Obsession automatically means dheetpana in Hindi. So, confidence, I was far from it when I started off. A lot of times I still think I’m not there. I have to almost showcase I’m very confident sometimes, but I’m not there in terms of confidence. So, I don’t know confidence kahase aaya but mujhe pata tha (where confidence came from but I knew) that what I’m trying to build, if my products are great, I will build hero products. Two things: If I pick the right TAM and if I create a great product. If I peak on these two, I’ll be able to scale profitably in the market.

Her advice to younger / early-stage founders

Romita: I say two things. So, if you’ve committed to something, just dedicate yourself to it because there’s never not a right answer and there’s always multiple right answers. So, that is one; pick the right problem statement and dedicate yourself to fully solving it. But the second thing is that sometimes you will not pick the right problem statement. Sometimes your goal can be great, but the approach might not be the right approach. So, be self-aware enough to change that approach and constantly reiterate on it. I think knowing what your strength is, but beyond that, there’s no reason for me to have a right to win the market or even to get to a place that I have gotten to by God’s grace. I think the only thing that really works is honest, hard work and honest dedication to what you’ve committed to.

I have 350 employees. I have to pay to who believed in my vision, who are in it, who work with me for 12 – 14 hours every day. Because they believe we are creating something special. And at the end of three years, I want to give them something that they are proud of for the rest of their lives. And that’s what I want to create and that requires dedication. Between 26 to 30, I also have friends who’ve had a very good life. They’ve had three vacations a year. They’re all doing good jobs, whether in VC/PE or in other jobs. They had long marriages (ceremonies), they had long honeymoons. So they can go out on a Friday night and a Saturday night. All of my last 3 – 4 years, I’ve spent probably 14 hours a day working 6 – 7 days a week.I have dealt with problems that sometimes I am like bas 28 saal ki hoon (am just 28 years), why am I having to deal with this legal issue… So, it’s a transition of lifestyle that has happened, but it is a welcome transition because I’m so grateful for what I get to do. And it’s not today, I’ve been grateful for it every day. In fact, jitna company bada ho raha hai (the more the company gets bigger), the more I’m getting to do more PR, more external conversations than earlier when I was in my own bubble. I could just be with my own people, my own team. So, the reality is that there’s no substitute to dedication.