Sramana Mitra: Let’s do a few case studies of your portfolio. We can do three or four of these. Take us through the evolution of these companies. When did they come to you? What did they have? What brought your confidence and what happened as they evolved?
Kanwaljit Singh: Let me a take an example of a company called Mama Earth, which targets the baby and the mom. The company is about two years old. It was founded by a couple when they realized that there was not a good choice of products they could use on their child across various personal care requirements. They decided to start this company for not just themselves but for millions of parents who are looking for safer products for their child.
I met the founders pretty much at the stage when they were conceptualizing this. Interestingly, right from day one, their focus was that this is not a discounted or a cheap play. They wanted to create products that were positioned at the millennial parents. They wanted to give them products which were more superior. They managed to get certification from a US-based organization called Made Safe which has a six-month process for certifying the products.
That was the start of the engagement. They had conceptualized the brand. They had created a range of products through working with R&D experts. They were just about to launch it. That was the time when I had invested in this company. Over the last two years, they had been able to do a great job of establishing the brand among this community. There are some interesting learnings. They started the brand as an internet-first brand.
They launched it on Amazon Launchpad. They launched the brand on some specialized Indian baby marketplace. The focus was on building a community of moms who would endorse and recommend this product because they were users and liked the product. An interesting learning for us is, if you can target some core community of consumers and they become almost like your surrogate spokespeople, the virality of that becomes an interesting way to build the brand.
The company has been working with some of the largest Mom and Baby sites in India. That gives them that credibility. Once they’ve established this basic brand in the internet space, they are starting to go offline. That is a typical roadmap that we’re seeing companies follow.
Sramana Mitra: Internet-first.
Kanwaljit Singh: Distribution on internet is one part of it, but even more importantly, they’re using internet as a means to establish the brand credentials.
Sramana Mitra: What are the metrics of that? What do you look for in terms of an internet-first brand? How many customers? What would be called success in building an internet-first brand before you decide to go offline?
Kanwaljit Singh: The basic metric is always going to be how the consumer is accepting the brand and demonstrating their affinity to buy on a regular basis. Most of these businesses are high-repeat businesses. The metric is the cost of customer acquisition. We do look at the obvious metrics like the long-term value, but the most important metric for us is the adoption of the brand as the regular brand for repeat purchases. We use various metrics to track that. Once you get that confidence that consumers are starting to accept it as a regular purchase, then it gives us the confidence to start looking at other distribution plays.