Sramana: What kind of capital requirements did you have to get the business launched?
Mithun Sacheti: We budgeted $500,000 between the two of us. We were determined to launch the business once we had spent that amount regardless of where we were, and determined that once we had spent that amount, we would sit down and plan our next steps. That was the amount of money we were willing to risk. However, at the point of launching the business in 2008 we had spent $100,000.
Sramana: Where did you get the original $500,000?
Mithun Sacheti: It was from my savings. My brother and I both invested.
Sramana: What was your co-founder’s role?
Mithun Sacheti: He had a technology company, and he put money into the business as well. At the point of launching the business, we had both spent portions of our equity investments. He promptly agreed to invest in the business.
Sramana: Was it a 50/50 partnership?
Mithun Sacheti: No, my family is the majority shareholder of the business.
Sramana: What happened after your initial launch in 2008? You mentioned you had 40,000 solitaires and a few settings. What came next?
Mithun Sacheti: Two weeks before we launched, Lehman Brothers collapsed. Nobody was willing to listen to us at that point. We say at a point without selling a single diamond. We really struggled in terms of getting ourselves out there and heard. Luckily in October, a major TV station carried a story on us saying that it was amazing that anyone would buy solitaires online. That story actually started getting us traction. We relied heavily on PR for those three or four months. We were also perfecting the product as we moved through that time.
We started getting 150,000 visitors a day, but we were still having no conversions. We had one solitaire sale in October. A man in Japan was purchasing something for his mother in Delhi, and we had a very difficult time getting that transaction pushed through the payment gateway. It was a high-value transaction from an overseas card. That transaction set off every possible red flag that a credit card fraud department could imagine.
Sramana: How long was it before you started earning money?
Mithun Sacheti: In December things started to turn for us. We started adding more jewelry. We needed to have smaller value products, so we focused on that. At the same time we built out an exhaustive education system. People learned a lot more about what we were doing. That yielded benefits for us, and we began to see weekly transaction in the solitaire business. Shortly after that we were doing a couple of transactions per day.
Sramana: What kind of revenue did that add up to?
Mithun Sacheti: We had a couple of interesting things occur. Back in the day, people who wanted to buy higher value would look at us. We ended March just shy of $1 million in revenue. The interesting thing is that $200,000 came from one particular transaction. There were significant outliers.
Sramana: What was the $200,000 transaction?
Mithun Sacheti: A customer bought a pair of three-carat diamonds. She knew exactly what she was looking for. She knew what the retail price was. Our early adopters were people who knew exactly what they wanted and knew exactly what the retail price was for their solitaire.
Sramana: Are your customers all from India?
Mithun Sacheti: Yes, we sell only in India.