Kabeer Biswas, CEO Delivery Service Dunzo, chats with Sanjay Swamy, Managing Partner Prime Venture Partners.

Starting in 2014, with just WhatsApp, Kabeer Biswas has successfully taken Dunzo to another level. Kabeer is a graduate in Computer Engineering and has worked with companies like Airtel and Videocon.

Listen to the podcast to learn about:
1:49- Kabeer Biswas on starting Dunzo

5:31- Kabeer on scaling up, key challenges and building the team

14:23- Culture at Dunzo

19:21- The effect of COVID at Dunzo

24:34- Kabeer on what keeps him going

Read the complete transcript below:

Sanjay Swamy 0:53

Hi, everybody, this is Sanjay Swamy here and on today’s episode of prime podcast, we’re really excited to have the Founder and CEO of Dunzo, Kabeer Biswas with us. Kabeer, welcome to the show.

Kabeer Biswas 1:06

Thank you so much for having us.

Sanjay Swamy 1:08

Wonderful. So Kabeer needs almost no introduction to anybody in the startup ecosystem in India. Most people, especially in Bangalore, and the cities that Dunzo operates in, have heard of the product and have used the product and others are waiting for it to launch in their cities. So Kabeer, we have known each other from the very early days. And it’s been fun to see how Dunzo has evolved over the years. Sadly, we’re not investors in the company, but we’re enjoying watching the ride and of course, great customer experience and service. Why don’t you start by telling us how you got started, and how you see the building of this company in various phases and things for other founders to learn from.

Kabeer Biswas 1:49

You’re part of the starting story, aren’t you? So I think the first time we only met was when we used to actually function on WhatsApp and I think we delivered to your house and we sat outside your house and talked on the patio.

Sanjay Swamy 2:01

Very fond memories from that conversation. And it’s been quite a journey since.

Kabeer Biswas 2:06

Yeah. So it was a fairly straightforward way that we got started. And really what we ended up doing. So for me, and I used to live in Gurgaon with my earlier startup, which got acquired. And then I wasn’t doing much for about a year, year and a half in between at some point of time I moved to Bangalore. And so when I used to be in Gurgaon by itself, somebody who likes my things to be in order. And while you’re working at a startup, you’re like, yeah, or when you’re running when you’re working for like 14-16 hours a day, and by Saturday, Sunday, just to be very consumed with the kind of things that I was spending my time on.

And this was the time that Uber had just launched in India, all the way till the point that when it actually launched in Bangalore, I travelled down to Bangalore to try it out, this is around 2014 or something. I’m a sucker for magical experiences. I still really care about every time a product just works for a consumer. And so when I was moving out of Gurgaon, there was this thought that, I have so many things going on in my life if I could get a similar magical experience for it without having to take the effort that I do today. And that’s it, that was really literally like a one line wish list or wish of what could happen. And I took that thought, dwelled with it for nearly a year and a half didn’t do anything with it. At some point, I really liked the name Dunzo because you could actually make a verb out of it, and just registered it thinking okay, if I ever do something, this is what we’ll call it.

And then at some point, I was like, this thing is staying with me for so long that let me just try what I can do. What would an MVP for something like this look like? And WhatsApp is a great way to go ahead and test stuff out, I’ve always believed. And generally getting user feedback very early into a product and life cycle, or whatever you want to do as a project is very useful. So I just started on WhatsApp and told three people, I knew only three people in Bangalore, I think I have an idea why don’t just send me what you would hope somebody else would get done. And I will run them down for you.

You don’t have to do anything. So I started running those orders down. And somewhere the word of mouth really took off. I think I’ve really got lucky in the first three users; they were nodes in terms of user acquisition. And I think, at some point of time, I had like 10,000 users on WhatsApp, and just the traffic on Whatsapp was crazy. So I was chatting with people, I was delivering stuff at some point like college kids from NGOs to start coming and working at being able to either deliver or to chat. And this is all with zero tech, by the way Sanjay. Even WhatsApp, there were no API’s, we couldn’t really write any tech. And that’s actually still something that we’re figuring out.

Sanjay Swamy 4:39

I recall talking to you, just before WhatsApp Web was introduced, and soon after that, when we spoke, you said, Oh, my God, this has changed so much for us already, because we can at least do this from our laptops now.

Kabeer Biswas 4:53

Absolutely. It was a huge deal at that point.

Sanjay Swamy 4:57

So if we could trace the journey of the company, I mean, you had the very early phase. And then of course, the whole establishing product market fit, which seemed like it happened. Well, if you think about it in like making of this company in three stages. Can you talk about the three stages, assuming you’re kind of in stage three now of scaling up, and then looking more from the unit economics perspective and things like that, then perhaps earlier, dive in a little moment to the key challenges and and the key things you were looking for team construction in each of these phases, things that entrepreneurs are going through as well.

Kabeer Biswas 5:31

So I’ll break it into four phases, actually. And they can be very well identified in the case of Dunzo also. The first, was to just understand if there was demand for something like this, it wasn’t even product market fit. It was just validating if something that was my personal problem actually existed for a number of people and that’s really what we did on WhatsApp. It’s been the most hard working thing that I’ve ever done in my life, where refusing to build any product before we knew what we were building is very counterintuitive in the hindsight, because it just means that you’re just pulling everything together yourself.

But that was the first phase where we’re just trying to establish it, there is demand. Because I think my big learning out of having my first ever company that I had ever worked for is Airtel. And then another startup, which didn’t really go well. And in this case, if there is no demand, you can’t do anything about it. And so the first phase was just establishing demand. The second phase was and you can actually calibrate it with the size of the team and money that we have raised and all of those things. The second phase was when we actually went ahead and figured that demand existed. We raised our first round of capital, and that meant we put together a tech stack, we figured out exactly what were the user flows that we wanted to go ahead and standardised.

What would the product look like if it wasn’t on WhatsApp? What would the tech stack look like? There was no founding team when we were first raising money. A lot of the money actually came as incoming and a lot of our users actually helped with that, because they just kept talking about to people and I’m guessing there are enough venture capitalists. But yeah, that was the second thing when we went ahead and built out a team and said that, hey, here, now we need to take this demand, and figure out what the product will look like and what the business model will look like. And so we did that with about a million, million and a half dollars and about a year and a half of time spent. And we figured out that there was product market fit, and people were willing to pay enough money for it. And merchants are willing to pay enough money for it, that we could actually balance the scales. And I called true product market fit that is not a demand, but when your business model works. And so that business model started working at that point of time, which is about two and a half years back.

Sanjay Swamy 7:41

And two and a half years back would be how many years into the company?

Kabeer Biswas 7:46

One and half years. So in total four years or so about a year and a half into it we figured out exactly by saying now all of this work and it actually got profitable. That was the first juncture. Then basically saying ok, now this works, I’m gonna be able to scale it. It might sound this systematic in hindsight, it wasn’t. A lot of it, I think hindsight is a little perfect. And capital doesn’t necessarily show up just because you think it is done. It’s a more iterative process of how you go about raising money on something like this. But that also led to the fact that we were able to raise our first large round of capital, which Google led, so for the last two years has been about us scaling, for lack of a better word violent, to be able to understand really what needs to break and what works and what doesn’t work.

And how big is this market really, because I think you get product market fit, you get what is called profitability, then you really want to push the barrier in terms of understanding as to what is the size of the market that you’re going behind? And what does a growth dollar on a business like this look like? So literally up till about two years back, we have actually never spent a single growth dollar. It was all word of mouth. Like literally our first 700,000 users were completely acquired by word of mouth. And so that was the third part of it, to say, Hey, you know, let’s just see what breaks when you try to scale this, what are all the learnings that we can get? Again, not I think prestated, but hindsight, where I think this is all the things that were happening to us while we were trying to scale. We scaled about 50X in about two years time. And then I think, the fourth phase of this, where I think we have gone ahead and established demand, we have established product market fit, we have established the fact that you can actually deploy growth dollars.

I’m not saying efficiently, but you can deploy growth dollar as to how big the market is. And I think we proved out that the market is really big. And we are chasing something that looks like billions of dollars of what you call transaction value that exists out there. Now we have gotten into the cycle of saying, great now that all of this has been done, we need to now re-correct our business model that looks very different from what it looked like two and a half years back because the numbers in a micro value transaction. So our everyday transaction are taken at best be 70 rupees of revenue and cost has to be under that. So trying to make 70 rupees per order, that’s really what you’re trying to do. So when you’re running millions of transactions, how do you adjust the scales at 70 rupees, 65 rupees or 60 rupees? How does that look at scale? So we’re in that process.

And the one thing that I’m really happy about is in the last six months, we’ve had a lot of progress, where Bangalore went from a profitable city grew about 7x during the last two and a half years and is back being profitable. And this is again at EBITDA levels. So largely four big phases, I think the next phase will be most likely when we start 2021. There, I think now it’s largely going to be saying, we know how to deploy growth dollars efficiently, we know what we need to do when we go into a city in the first two, two and a half years time. So that we can go ahead and make that city a 100 million dollar business in two and a half years time and become profitable at the end of it. And so it’s just about going ahead and now taking all the learnings of the last three years and becoming very judicious and deliberate about it, to be able to build an entirely corporate level, EBITDA profitable business, that might take us another two and a half years from here. So that’s really what we think our next phase is.

Sanjay Swamy 11:15

So I used to think about these four phases: Kabeer, maybe phase one was probably the easiest in this regard. Team construction, especially at the senior leadership level and the rest of the team as well. What were some of the key things that you did? And what would you have done differently, If you knew, then what you know, now, in each of these phases?

Kabeer Biswas 11:40

So at team construction, my primary read is that I think, at least at Dunzo, we have always been a little late, at this point. I think on an average we’re about we have always been about six to nine months late. I think from this year onwards, we’ve gotten a lot more deliberate about it and we are starting to get people even before because you want to be deliberate about the kind of things that you want to do going forward. And big learning about what you call, getting or ending up getting people late, is usually what tends to happen is you’ve lived with this problem for six months. And this problem is now becoming too big for you.

And that’s when you start looking for somebody, and you end up going out and getting somebody to solve your problem, what you are facing today, and what can scale for the next six months time, but it doesn’t allow you to really go look out for the best people to be able to go ahead and solve the problems in the long run. So we have had some of these mistakes play out where people are fantastic on day zero, but six months in, unfortunately, the problem becomes too big now and they’re not necessarily able to scale and it’s not their fault. We got it wrong. We went ahead and had to get people in a hurry.

And we needed people who could solve our problem that existed for the last three to six months, instead of people who could solve for the next two, two and a half years. So that’s something that we’re now changing very quickly. If you recognise something that needs to get done, and you think that you need leadership to be able to come do that you just go aggressively out there and try and do it. Because if it’s not being done by somebody else is most likely being done by the founder of the founding team. And at that point, you need to recognise that your job is to be the most present person for the most important problems in the organisation, not for the ones that nobody else is willing to do. And if that can be imbibed, then it really helps. But I’ll be honest, all of this is hindsight.

Sanjay Swamy 13:25

Yes, that’s true. But I think, ‘fool me once, shame on you, fool me twice, shame on me’ is what they say, as long as one is learning from these. And in fact, yesterday, we had a session with Ashish Gupta, an internal session and he was talking about any problem that you realise it’s a six month problem, not a three month problem, because, yeah, three months by the time you realise you have a problem, and then it takes you three more months to fix it. So especially if it’s the people, the issue that you’re trying to fix. And it’s good that it is now you’re saying and you’ve been thinking much more proactively about how we construct the team. You guys have been also very well known and respected in the industry for the culture in the organisation. And it sort of translates into social media marketing and stuff where there is a sense of humour, and people just seem to be having fun at the company. Tell us some more about that and why it’s so important to the company?

Kabeer Biswas 14:23

So I don’t think it was as deliberate to where it got to. And I think we’ve tried to figure out what exactly is working and what exactly isn’t working a little bit again, in hindsight. But I think some of these areas of the business side which are a lot more right brained, and personally, I’m extremely left brained in terms of thinking and I’m trying to get better at it. I’m trying to get a lot better at being able to make big decisions to be able to contribute to stuff, reading a lot more about it. But on these, principally being let’s get the best set of people who can actually do something and just let them be that and that’s literally what the brand marketing team is. It’s a bunch of extremely motivated people who I think we agreed upon very early as to what it is that we wanted to achieve.

So we used to be a different looking brand. It was a yellow background with just Helvetica Neue, with a Dunzo written on top of it as a black font. And it was this brand that wanted to be by your side for comforting and all of that. And I think when we figured out PMF, etc, and then we decided to start scaling. At that point, we had like one session and we had like about six weeks of work that went in. We need to be able to change this brand to be able to make a statement, because we believe that given the amount of physical assets that we will put out in the real world, it’s important that we’re able to take advantage of that. Every time people come in contact with the brand and it needs to be able to make a statement for our delivery partners, for our merchants, and then finally our users to be able to recognise it.

And that was literally the briefing on that one, and then of course, multiple conversations happened, really what did we want to do with it? What did the brand stand for, and the lightning symbol that you see, when there’s a cold start on the app, it’s because we want it to stand for speed. And that’s something that we constantly keep looking for on our NPS results, that there was a number one reason that people end up using us, it’s usually for speed, we realised it. And it’s because between the three large parts of any commerce transaction, which is price, selection and speed, we said that we will own speed, and the other two we will build muscle on. And because it’s also got to do with the kind of users that you want to target and stuff. And for those set of users, if you were to give them an option of trying something slower versus trying something fast, what would they do and it was simple, they said, we’ll always want to keep getting faster. And so that’s it.

Those are all that’s all the work that went into. Since then we have just nudged, calibrated in case there was something that was off brand or off design and stuff like that. But I’ll be honest, it was just like a really motivated team that came together that I think is the most conjoined unit that I think I have seen. And yeah, I think they understand a lot of the sentiment of the user, and are willing to tap into that, and just do some incredible work. And I think that’s really the sentiment of the whole organisation, I believe, and at least with everybody else that I directly end up talking with.

An initial conversation, and the first few weeks is really saying, Yeah, I have just two levels of trust. That is hundred and zero, but nothing in between. And the only way this relationship works really well is if you are able to build things out that are going to do proud work to be able to make themselves proud because our users and our partners and merchants will experience, and we want Dunzo to be a sandbox for that for everybody. Because if you’re not doing proud work, then why have you been doing so much work? Just none of this is really easy to build out. And so if you’re going to spend this much time, always index on doing really proud work. And I think it’s not necessarily true that we have been able to get it across the org, to be honest, but in some pockets, it really shows up.

Sanjay Swamy 18:27

Now, that’s a very important point that if you’re putting in all the sacrifices, either to start or to join a startup, then the only guaranteed thing that you can get as an outcome is doing things that you’re proud of. And everything else may happen may not happen. Okay. So switching gears to these last six to nine months, you know, the COVID phase, which obviously caught everybody by surprise and a lot of businesses, they’re fundamentally under threat and had to rejig several things very quickly and you guys have seemingly come out very strongly through this phase and the demand and trust in the service here has seemingly skyrocketed. Did you all fundamentally have to do something very different apart from just working from home? And when did you realise that you could turn this threat into an opportunity?

Kabeer Biswas 19:21

I think some of the things that we have kept building for the last couple of years, those actually just came to fore during a time like COVID. And some of those are basic, and they sound like, we should be doing them. But we are one of those brands that really wants to be honest and over communicate for everything, which means we will over communicate if there is a problem, we will over communicate to our partners, investors, users and merchants. And then internally of course, and so we keep doing that for every possible scenario, which means that recently we had a performance management cycle run out in middle of COVID and I think at the end of that, over 150 questions show up for an all hands q&a, and it did mean that on a Friday evening, that q&a ran for four hours because we went ahead and took every question. And it’s just some of those things that we just want to show up for, for everybody who works with us and everybody who’s actually coming and contributing time on the platform, going to show up for a user, to show up for our partners, for our merchants and for for everybody internally.

That I think this comes to fore in crisis like this. And the crisis I think the first week was confusing, though I’ve always believe that there is the only thing that you’re building as a business and as a brand is the stickiness that you have with your consumers and whether you are making a real difference in their lives, so if you are making a real difference in their lives. If not today, tomorrow, it will, what you call, they will remember you and come back. I’ll be honest. And this is very personal as a user. I’ve travelled to cities because of my mom, and where there is no Dunzo. And I’m like I’d rather live in an area which has Dunzo. Life’s simpler. I can get what I want, I can get it instantly. And I am somebody who still places close to 150, 180 orders a month.

Because my house runs on it. I don’t step out. And I’ve not stepped out, just because Dunzo existed. And in a scenario like that the product just became a lot more valuable after that week to everybody. In fact, last quarter was one of our best quarters, I think, I’ll be honest, we’re still trying to assess the cost of human capital as to what this means in the long term and, and we’re always extremely worried and scared and communicating to everybody on the platform that hey, if there is an issue, please let us know. If you’re not feeling well, please let us know. If you think you have come in contact with something, please let us know. And so we opened up what you call multiple access points for people to be able to reach out. I think you’re one of the first ones who went out and got insurance for everybody on the platform who ended up using it for an order. We went and actually worked with our merchants.

And I think the most impacted parties in all of this have actually been the merchants. And we actually don’t see 100% of the merchants that were on the platform previously coming back. There’s definitely going to be some, in fact, I don’t know the exact number, but a significant chunk of merchant supply might shut down. And in our case, it is so that they could go ahead and make sure that they were on the platform and able to service consumers remotely, because nobody could anymore walk into that store. We went out and reduced commissions for frequently used items, so that users could actually go out and buy. Merchants would actually go supply it and not have to necessarily worry about the fact that I’m having to pay commissions for these.

These are frequently used items. We went ahead and changed out our payout cycles for them to be able to get money a lot more frequently from us. I think for us, it exists because of the neighbourhoods that we actually function in, most of the orders actually exist and stay within the neighbourhood, for us, merchants and users and partners end up forming a relationship. And we as a platform, end up facilitating and when facilitating it, it’s our job to make sure that in a moment of crisis, we only want to show up more for them. And I’ve said this internally, I don’t think I’ve said this publicly ever. I think the space that we are in we are a little bit like a David versus Goliath at most points.

For however much we might have done, we will always have. It’s the business of moving stuff around. The business of buying and selling stuff is the oldest business in the world. So the adjacency and the kind of somebody who could define competition could be so many. But in a bit like David versus Goliath. scenario we want to be David with and make sure that every time somebody does come in touch with the brand and experiences it. Yeah, thye remember it for the fact that there is heart in the centre of all of those transactions.

Sanjay Swamy 24:01

Very nice. On that note, I think whenever a founder is passionate about building a company and there are financial successes and outcomes that people look at and to me, those are always just outcomes. But what excites you the most? When is it something your customers say? Or partners saying, what makes you wake up or go back home after a long day? Of course we’re all staying at home, but I mean, the figure of speech and say it was worth it. All the troubles make it worth it. What do you look forward to the most?

Kabeer Biswas 24:34

So I most come in touch with what you call users and partners. And I’ll give you an anecdote of all of them. But I think the real world impact of this is nuts. I had never thought about it when we were running this on WhatsApp and never imagined it because I was running those orders down and I didn’t really, like it come from a place of privilege and to accept the privilege that we have. So you don’t necessarily understand the real world applications of some of this. So from the user side of it, I’ll be honest the kind of stories that we end up hearing is like you’d melt.

When somebody goes in and says you were able to save somebody’s life. Like, that’s not really where we started. But I’m glad we were able to do that. On the partner side of it, I know so many partners who have been able to go ahead and make sure that their kids are able to get educated better, they’ve been able to make sure that they’ve been able to get them to English medium schools, and they weren’t able to do that. And I’ll be honest, I think that segment of society doesn’t really have as many earning opportunities. So we have people who quit their retail job, quit their with a call centre job, who were making 14k-15k rupees a month. And on platforms like this, you can actually make 1000 rupees a day, if you work hard, and none of the other jobs actually allow you to even work harder to make money.

At that strata, 10,000 rupees extra per month means so much more. And again, understanding of that is fairly weak from the kind of privilege that we come from. Given, like when we get out of college, we just put a lot of money and 10,000 rupees more not meant as much. But at that level, it’s just like 2x-ing what they could make. And on the merchant one, and I’ll be honest it’s the part of the platform that I have done the least amount of work at, because we started off as a user partner, and then added merchants over the last last 18 months time, and a lot of it came to mean visiting merchants than hearing them out as to what their problems were. So I have this story, which really broke it for me in terms of what it meant. So there are Nilgiris on seventh main in Indiranagar. And there’s a lady who runs it. She has two stores in Indiranagar, this store employs 12 people. And so we launched them, I think about nine months back on the platform. I think I met her in February or something when I was talking to her, they had already seen success in one store in Indiranagar.

So they launched another one. This was a store, which wasn’t performing really well for a little bit because of the location, it was a little bit part of the commercial area. And the other one located in the residential area, tends to do better, because people will just walk out of the house and buy stuff. And this one wasn’t doing as well. And so then they got it on Dunzo and this store actually, they were planning to shut down when they got it on Dunzo but I think our team was able to convince them say, we have enough demand and your this store’s post order metrics are not really staying up. Why don’t you launch this other store where you can then get more demand over there.

That store is now going under renovation. On a regular Saturday, they do about 70k- 80k rupees of revenue from us, just in one day. The whole week usually comes in at about three three and a half lakh rupees every week, the month coming in at about 12 lakhs just due to this. And then now going out and renovating that location, and they would’ve had to end up firing like 12 people in that store, they would have shut it down. And now they’re actually able to renovate it and get more people over there. That was like, Oh my god, I would have never imagined the real world implications. And these stories are just like, what else would you do with your life that’s going to be so meaningful? And personally, a huge fan. But at the end of the day, about a year back we used to deliver on an average in 45 minutes. Now we deliver on an average in about 26 minutes. I think at some point of time, we will live in the future, maybe in 15 years where we’d get it delivered in 5 minutes. I don’t know what the tech for it will look like. It might be drones, it might be homes might change and have tubing tech in them which means you order something and it shows up via tube in five minutes time. You might have any of those but it might take 15 years to get. I want to live in that future man. It’s a fun place to be if you ask for something that shows up in five minutes. Why would you not want to do that? I’m willing to give a life for it.

Sanjay Swamy 29:01

That’s an awesome thought. And I think it’s a great thought to hold on Kabeer. Thank you so much for a captivating conversation. I know I can go on and on with more questions, but we’ll save that for another time. Thank you for being on our show and all the best in building this amazing company Dunzo.

Kabeer Biswas 29:17

Thank you so much for having us. You’ve made me remember so many stories from past. Thank you.

Enjoyed the podcast? Please consider leaving a review on Apple Podcasts and subscribe wherever you are listening to this.

Follow Prime Venture Partners:

Twitter: https://twitter.com/Primevp_in
LinkedIn: https://www.linkedin.com/company/primevp/