Episode #203: Sanchal Ranjan, ZiffyHomes, “We Give You A Different Lifestyle To Work And Play”
Guest: Sanchal Ranjan is co-founder and CEO of ZiffyHomes, one of the leading real time online platforms for rental accommodation in India.
Date Recorded: 02/04/2020 | Run-Time: 46:26
Summary: Meb and Sanchal discuss the story behind ZiffyHomes and how Sanchal and his co-founder are finding an edge in technology to offer a more uniform platform to improve home rental utilization and experience.
The pair touch on the current state of the Indian home rental market and the opportunity ZiffyHomes is addressing right now.
They get into competition and what it takes to grow in this industry. While this company is experiencing incredible growth, we walk through some challenges the team has faced and even some lessons learned along the way.
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Links from the Episode:
- 0:40 – Welcome to our guest, Sanchal Ranjan
- 2:11 – Overview of ZiffyHomes
- 4:47 – Inspiration for launching ZiffyHomes
- 9:36 – Scaling the business
- 12:07 – The Y Combinator process
- 16:58 – What happened coming out of Y Combinator demo day
- 20:00 – Growth trajectory for the company over the last two years
- 22:49 – Using WhatsApp as a source of distribution and acquisition
- 24:24 – Interacting with customers and scaling the customer touch point
- 29:43 – The future for ZiffyHomes
- 32:49 – Biggest challenges
- 35:43 – Competitive landscape in India
- 39:40 – What the market in India looks like compared to the rest of the world
- 42:30 – State of entrepreneurship in India
- 44:47 – Best way to connect with Sanchal: ziffyhomes.com, @ziffyhomes, @sanchalR
Transcript of Episode 203:
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Disclaimer: Meb Faber is the co-founder and Chief Investment Officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria’s funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.
Meb: Welcome, podcast listeners. We have an excellent show for you today. Our guest co-founded his start-up in 2016. His company leans on technology to make renting and leasing homes in India more flexible, simple, secure, and entirely online, offering enhanced lifestyle and experience in the home rental market. In today’s episode, we discuss the story behind ZiffyHomes and how our guest and his co-founder are finding an edge in technology to offer a more unique platform to improve home rental utilization and experience.
We touch on the current state of the Indian home rental market and the opportunity ZiffyHomes is addressing right now. We get into competition and what it takes to grow in this industry. This Y Combinator-backed company has experienced incredible growth. We also walk through some challenges the team has faced and even some lessons learned along the way. Please enjoy this episode with ZiffyHomes co-founder, Sanchal Ranjan.
Welcome to the show, Sanchal Ranjan.
Sanchal: Thank you.
Meb: Sanchal, you are all the way halfway across the world, it’s almost midnight there. Tell the listeners where you’re located.
Sanchal: I’m talking from Gurgaon in India. Yeah, it’s 11:40 p.m., you’re right, and I’m really excited to talk to you for another one hour. I think I came back from office about half an hour from before, so I don’t mind. It’s early for me.
Meb: Life of an entrepreneur. We can understand those days well, lack of sleep. It’s rewarding but very exhausting. All right, so talk to me a little bit. You are the founder of ZiffyHomes. Tell our listeners a broad overview of what is Ziffy.
Sanchal: We are a corporate hospitality brand. We provide long-term living spaces for working professionals.
Meb: Is that something that didn’t exist in India? Is that something that was just not done well? What’s the story?
Sanchal: Yeah. It’s much of an evolved version of what you usually see as unorganized service apartments or different builders operating their own assets. So, what we’re essentially doing is that we are standardizing more supplies that we create with the help of builders. We work with them, we standardize the supply, and we have a uniform platform where you can find all list of services, like, not only the rooms but also laundry, housekeeping, food.
So it’s more of like a lifestyle platform that takes you away from all your daily chores [SP] and it gives you more flexibility, more time to spend with your friends, family. It has a small coworking space if you want. There are a lot of people who work out of their home or they have different policies. There are freelancers, there are consultants, there are architects who are on different assignments working from one place to other. So, they’re a whole set of people who currently want to have a hassle-free living space which is not essentially just your room but the kind of people you wanna stay with, you choose to stay with.
And more or less, what we have seen quite recently is that the globalization is becoming more and more prominent in different parts of country, and same is happening with India. Like, you know, you have lots of supplies already but people like standardizing these particular spaces. And because of globalization, people love to travel, love to move. A lot of people who are not Indians, they come outside from different places and they work on different projects on-site with their clients, with their customers. There are a lot of nomads, travellers who frequently visit for different reasons, for different experiences.
So it’s more of like, just like Airbnb provides you a more reliable platform to book your holiday experience in different parts of world, what we are doing is that we are working closely with builders and standardizing supplies so that we improve utilization, we improve your experience, and we give you a different lifestyle to work and play both.
Meb: And so is this a trend? Is this like, as far as industry dynamics…and you can weave in if you want to, a little bit of the foundation of the idea, is this something you kinda looked around and said, “This doesn’t exist in India,” or, “This is a trend that I see happening globally,” or is this something that you said, “No, it’s actually a lot more driven by the Millennial cohort?” Because, I mean, back in my 20s and 30s, I would’ve loved some of these situations where you don’t have the long-term commitments or whatever it may be about having kind of a turn-key sort of situation. Tell me a little bit about the foundation of the idea and kinda what was the inspiration.
Sanchal: Correct. So, inspiration was mostly about when I graduated from college and I started working with KPMG and I eventually moved to Deloitte when I joined in Delhi. And that’s the time when me and my partner, Saurabh, both, we struggled to find a more reliable, more comfortable, more flexible space that we are looking at, and I had to eventually change my house three times in that six months. Every time I was finding a compatibility with maybe the people I am staying with, or how far is it from my office, or the kind of food I’m getting, or maybe it’s closer to the market or the suburb area, or how far is the downtown from here. So, there are a lot of factors which always came into the picture and thought, like, you know, why we have different things in different places? Why can’t we be assured about the services all happening at one place at a time where I can be just focusing on work? And changing house is not something which is as easy as installing one app and uninstalling the other one. So it’s a high-threshold, high-movement key area.
So that was one of the inspirations that brought me and my partner, Saurabh, together to explore this particular area. We started with a couple of houses and we realized that, yeah, I mean, people really need this. We were able to sell 3 apartments in just 2 days, like, 12 people signed up in 2 days and they became the tenants. So we thought, like, “Hey, this is something which is really desired, people are looking forward to it,” and we had a waitlist of more than 20 people who would want to offer such spaces. So that was the moment for us to particularly start. And being a first-time entrepreneur, we never really looked into a huge market possibility. And we really got lucky that we eventually [inaudible 00:07:24] coliving industry has become so huge and people start following the trend of choosing options which are more reliable, which are more comfortable, and that’s what this platform provides.
And as far as we talk about India, so if you talk about the numbers specifically, the occupants here right in India is drastically low as compared to what you would find in San Francisco or New York. That’s because of less standardized property, and that’s something close to around 55% to 60%. So, imagine 40% of buildings which are ready to move essentially, I mean, you know, you can just go and stay in these properties but people don’t have access because of a couple of reasons.
One, the house owners or the asset owners, they don’t have platforms or hospitality partners like us who can provide them good rental yield on their assets. That’s one, and that’s why rental yield also in India is very low if you would compare it to developed countries like in the U.S., probably in San Francisco or in New York, which is more than 4% or 5% currently, and it’s more if you actually considered the X factor that a coliving platform brings into the picture. That’s not there yet in India on that particular scale, that’s one.
Secondly, if you talk about standardization, so the supply that we are actually talking about requires a lot of extra renovation work, furnishing, branding, adding common spaces like probably a small coworking area, or a cafeteria, or a place where everyone can sit and have lunch and dinner, or if you’re calling your friends, you can have a party or a cinema place or something like that. So these kind of spaces are not coliving compatible, and that’s why a lot of work needs to be put into eventually transform the spaces, and, in return, those house owners gets a reliable partner which can help them generate a better rental yield. So these two important factors is something that’s still keeping us ahead into our journey and helping a lot of house owners in return.
Meb: So, walk me forward a little bit. So, you started out with the idea, you wrangled up a handful of properties and said, “Okay, maybe this has legs.” How did you then go about scaling that and starting to build the flywheel of the company into where you are today? So, what would that have been? What year…where were you when you first got started? Was this 2016?
Sanchal: Yeah. It was 2016, month of September, that’s when we started out. Being a first-time entrepreneur, you have a lot of questions. You have unimaginable things to think about. You’re bound to make mistakes, we made a lot of mistakes. You need funds, access of funds is also another constraint while you are scaling. You need really good team, you need really good people who believe in you as founders, who believe in you on the concept side and they also believe on the product.
So we started off with three, me and my partner, that’s all, there was no team. And then we eventually did the same repetitive cycle up till 10 more apartments. That’s when we realized that we need an infrastructure around it. We need a product, we need to have a CRM to manage our leads. Back then, I was doing it on a pen and paper, keeping note of all the people whom I showed a house and following up on them So, everything and anything that we did was more of self-learned, need-based mechanism and we started building on top of it.
And as and when we went along with the journey, we realized that a lot of infrastructure resources are already available. There are a lot of SaaS products which help you manage home inventory at one single place, we started doing that. We hired really good people who have great sales background skills who have worked in real estate for quite some time who would actually help us to penetrate more suppliers we speak about.
And so, yeah, I mean, since then, in 2018 is when we got into Y Combinator. They released funds and we hired more people. We have now more than 15…we have launched more than 15 locations across India, and we have a team size of 55 people, we have more than 1,400 rooms, and, yeah, we are scaling fast.
Meb: Tell me a little bit about the Y Combinator process. I don’t know if we’ve had another Y Combinator company on the show, so tell me a little bit about the… A lot of our listeners will probably be pretty interested about the whole application process, how is the actual experience going through Y Combinator, and then the whole summary. That would’ve been, when, 2017, 2018?
Sanchal: 2018. So we were part of 2018 summer cohort of Y Combinator. The part of Y Combinator, the process of getting into Y Combinator was something which is not very much visible. There were, like, kind of three to four companies in every batch from India.
Meb: And that’s out of how many?
Sanchal: That’s out of, like, around maybe 80 companies, 85 companies is what I remember during our batch. And so, yeah, I mean, process, so let’s see how I figured out and how exactly the process runs. So, essentially, from the Y Combinator’s perspective also, we were a late-stage company. Essentially, there are a lot of people who have not even launched who just have a business idea. So I believe that it’s ideal for all these stages because it comes with a lot of value addition like the kind of people you need. Your immediate network expansion, becoming a global entrepreneur is very, very exciting as a journey in itself and it helps you with any problem that you come… The entire company really comes together and helps you with any problem or anything that you are stuck at. So, essentially, your learning curve across your entrepreneur journey improves drastically.
So, it starts with a very simple application process, and if you get through, you have an interview with one of the partners in Y Combinator. And if they like the idea, you get selected, they invest. So, in our batch, it was $120,000 was what invested by Y Combinator, and I think nowadays, it’s more than $150,000. So it gives you a head start by giving you the capital, by giving you the right guidance, right set of people. More importantly, what I’ve realized after my experience with YC is that now your reach towards global entrepreneurs has improved probably 10,000 times because this is the number of founders you actually get to reach to from different parts of this planet. As a whole, you wanna import something from China, you have founders from China. You wanna have engineers from India, you have founders from India. You wanna have access to capital from investors based out of U.S., you have founders from U.S. You wanna have a better understanding of how’s the market size maybe in Indonesia, you can do that.
So, all different set of people come together, people who have worked in very different kind of products. So if you talk about laterally what the kind of categories exist starting from biotechnology towards aerospace, automation, machine learning, analytics, operations, and so a hell of a lot of new ideas which comes into the picture. So, essentially, those three months of Y Combinator is something that evolves you probably if you’re not a part of YC or some really reputable accelerator platform, then you as an individual entrepreneur would probably take much more time to reach to a stage of launching your product than being into a part of that cohort. So, that’s something which is a real value addition than money.
And, secondly, you get to the Demo Day. Once you are ready with your pitch, once you are ready with your product or at least a prototype of your product, then you get to have sudden exposure to more than thousands of global investors who are coming to fund you. So, how it works is basically this entire funding ecosystem is more inclined towards the founders or probably giving you a more founder-friendly environment to raise funds very fast and go back and focus on your product.
So, essentially, fundraising should not become a full-time job for you to rather than work at a cost of what you can do on your product. So that’s a very important and that’s a very beautiful concept according to me. I wish we could have, you know, done that earlier. And so, yeah, I see that visibility for Indian companies towards Y Combinator has drastically improved. In the recent batch, there were probably more than 25 companies out of 130 companies who are a part of the cohort, so that’s happening, yeah.
Meb: So, the Demo Day experience must have been pretty exciting, nerve-racking. What was the follow on, yeah, at that point, probably some investors interested? So, I mean, you had bootstrapped the company then did Y combinator. What happened now you came out of Demo Day?
Sanchal: So there were a series of investments. I mean, the potential of Demo Day is limitless. I’ve seen companies who have raised more than $45 million in their series A, and all that happened only through your starting interaction on Demo Day. And then there are companies who raised average investment that you can say is close to around starting from a $1 million check and it can go up to $3 million to $4 million depending upon how a company is performing. Usually, companies are performing good or they’re…
So, it’s basically if you are a hot company, and being a hot company does not really mean that you get to become a successful company. So it’s all happening as a matter of traction, the matter of the team, the founders, and how your business model or how your idea is clicking with the existing needs of customer. How big is the market? What’s the track record of a founder as well? So it worked out good for us. We had good revenue, so we had a track record to prove up there, and, immediately, a lot of investors got excited and the States is hot, so we raised close to around $2.5 million from our Demo Day. And I’m sure a lot of companies raised better than what we did and maybe lesser than what we did. In both the cases, irrespective of how much money you raised during Demo Day, it happened really fast for a lot of companies. They were able to raise probably more than $2 million in just 1 or 2 days. I mean, that’s how fast and that’s how effectively it works for all the companies just about, off the bat.
So, I believe, yeah, I mean, that’s been the value addition. And then you go back, you focus on your product, and imagine that you are not only carrying money along with you, you’re carrying your three months YC experience where you had been trained with all the industry experts, including Y Combinator partners. And then you remain constant touch through our internal portal called “Bookface” and your all YC partners are always there to probably get you out of the soup or get you out of some problems that you are facing. And then we have our internal [inaudible 00:19:34] for India founders or the U.S. founders. It’s a close community, so that’s why it helps. It’s very much connected. And I’m sure that whatever problem that you’re building a product for, whatever product that you are building eventually and if you are stuck in a problem, people have really smart way around to help you out of that situation, so that’s a great value addition.
Meb: So, you guys were able to secure some funding. And then what has been the sort of growth plans and trajectory since that time? So, we’ll fast-forward maybe, what is that, a year and a half to today, how did you manage that growth expansion? I mean, is the main vision new cities, is it increasing services to the current tenants, is it increasing the keys in the cities you’re in? What’s been the whole kinda vision?
Sanchal: Our business model, so we are betting on good builders, building good supplies. So, from Demo Day to today, we have grown more than eight times. In terms of revenue, we are doing close to around $5 million in ARR, annual fund rate. And we are growing close to around 20% on MoM basis, month on month basis. And we have expanded to more locations. We have added more number of tenants.
So, [inaudible 00:21:02] as a company, it works in different directions at the same time. It’s about adding more values to existing customers, so we have a different team who looks after that. And then, at the same time, we are building new supplies. We are building our pipeline so that we can launch in coming months. We are launching in three different cities in the next three to four months, that includes Bangalore, and that includes Pune and Hyderabad as well. So, I would say that, yeah, and we have done a lot in terms of what our product was before YC and how it has evolved even today as something which is very different in terms of our offerings to our existing customers.
We are building a very enclosed community because YC also gives you or makes you understand that the value of community is something which is more priceless that’s more inclusive, that gives customer an idea that you are exclusive, you are exclusive person who gets to be a part of that particular community. So we have learnt a lot and we are slowly…it’s not a one-day job, so, for us, what we are doing is we are building an inclusive community, and, eventually, that exclusiveness of that community is dependent on how fast we are building and what the kind of people we are adding to that particular community. So that’s very exciting. I’m really excited about how that works out for us. We have now, with the help of bigger companies which are already part of YC, we are also including WhatsApp as one of our channel of acquisition or distribution towards our customers, so that’s something I’m really excited about.
Meb: Could you explain that? What do you mean by that?
Sanchal: So, if you’d see, WhatsApp has a very high interaction penetration in India. So, if you find more than 80%, 85% of people who have smartphones and an internet connection in India, they are on WhatsApp. So, given that high penetration of digitalisation towards a communication platform gives you an edge to be in touch with your customer very promptly. The conversion happens very fast. So if you have an API integration with WhatsApp, that’s something which is very, very helpful not only in terms of acquiring new customers but also being in touch with existing customers, something like [inaudible 00:23:33] or something like building a closed group of community or people, or even if you have any service requests that you have to put on or pass on as a feedback to ZiffyHomes.
So all of these pings, all of this communication has become very prompt with use of WhatsApp. People don’t want to have hundred apps for one thing, and then everyone is on WhatsApp, so that’s very exciting and has made life easier for a lot of companies, I believe, in India because a lot of businesses are based on WhatsApp as a platform itself like e-commerce platforms out there who are just dependent on WhatsApp and doing huge revenue. So I believe that these are the changes that we are seeing, and that every change that’s coming into our way, we are very excited how we can work together with these, you know, products.
Meb: So, I imagine, and you can speak to this, but the biggest headache on scaling, or at least one of them, scaling a business in your industry is I imagine there’s gotta be a fair amount of client interaction as far as the tenants. Because, I mean, the rental marketplace, I mean, the only time people contact their landlords or people that are managing property is when things break, or they have complaints. And there’s a full spectrum, of course, of tenants. There’s the ones that will fix things themselves and the ones that will probably call you every single day that the faucet is leaking. How do you deal with that? Is that one of the bigger hurdles as far as scaling, just interacting with the tenant, or is that something that you guys try to use technology to intercede? What’s the general approach to that?
Sanchal: Correct, so that’s a great question. So, you are right, the first thing is that we are changing that perception. So, usually, you as a landlord and you have the tenant’s number saved on your phone, if you get a call from that person, you already know that there is some issue. Like, that’s how the perception has been built that, you know, “Oh, my god, he’s calling. What’s leaking today?” So, that’s how it’s been built up. That’s how historically it has been. One we are changing that. I’ll come to that part how we are changing that.
Now, how do we solve this problem using technology is that every single person… So the traditional way how hospitality worked was that you have a concierge services available in a hotel to go and speak to a receptionist or go and speak to a person who’s gonna attend to you and solves your problem like this and you’re a happy customer over there. And that works in hotels because you can’t stay forever in a hotel, it’s a high-end cost. So we have built a concierge services inside ZiffyHomes application itself. So your application always speaks to you. So you have an issue, then just with the help of a couple of tabs, you can report it.
And every location has a decent [inaudible 00:26:39] of neighbourhood managers. Within an hour, that neighbourhood manager with the help of…depending upon the kind of problem that you face, they have a [inaudible 00:26:51] of one hour to report back with the solution. And that makes you feel very comfortable because over here, the responsibilities are divided, escalation metrics is there. And you don’t really need to call someone and then you’ll say that, “Hey, some very odd hour, maybe I’ll come back tomorrow and check. I am running out of time,” or something like that. So that process itself, everyone who’s a tenant feels more powerful today because they know that using the app, they have solution to everything.
Now, coming back to how we manage that is something that…so we have a reserve in place all the time for all the location that whatever leakages or repair and maintenance or whatever cost that is associated can be immediately paid and resolved. So you pay the money because you take reserve of 1% of your revenue from all locations, irrespective of there is an issue or not so that funds are always available at disposal whenever you need to basically contact. And now there are in-panel vendors, so the moment you raise a concern, not only the neighbourhood manager but the in-panel vendor also immediately gets your request. And by the time you get a response or a solution to that problem, that in-panel manager is also on its way to effectively handle the situation on the ground. So, it’s more of like taking a precautionary measure in advance and powering you with technology rather than being sceptical and waiting for a call and becoming crazy about, you know, “Hey, this guy is again calling me and I’m in trouble,” that’s one thing.
Now, not only that, that you’re gonna call your tenant for when your rent check is due or the tenant is calling you when something is leaking, what we have done is that nowadays, people are calling us, “Hey, when is the next party? When are we going to have fun?” Because we have these community events. Very frequently, we have organized people that they should enjoy, they should have fun. There are so many people who are staying at the same location and they need to interact, they need to meet people physically, and there are a lot of people being part of that exclusive community contributes value that it adds onto your fun flavour. And when it starts doing that, you start enjoying it rather than…
So, there are two approach. One is, like, taking preventive measures, and being very proactive, and taking your tenants as your friends, and building that community. That’s what we do as a company which is enabled by technology, which has a great hospitality experience. And then it comes that landlord-tenant relationship. We’re, like, very protective and conservative about getting your rental due check and becoming crazy about the issues which are there. So that’s how we look at that.
Meb: So you’re now in 2020, it’s a new decade. Where do you guys stand? You’re doing a little expansion. Are you gonna have to eventually raise some more fundraising? Is it something you’re just gonna kinda chill out for a while and try to grow organically? Are you gonna expand into other countries? What’s the next decade look like? What’s the future look like?
Sanchal: Correct. So, how we see this particular space is very differently than what investors usually are very much sceptical about the space in itself that you want a lot of cash. So one thing is about clearing the air over here that we are profitable on each and every location that we operate. That’s the point number one. So, coliving is not a money-losing business, it’s about money-making business. You are making money. You’re basically managing assets which are worth millions to those house owners. And if you’re managing those assets and you’re providing good returns to them, that means you are a great finance guy who knows how to do this stuff. And all these banks, all these wealth management managers are doing a great job and so is the responsibility on founders like us to prove that this business model works. We are generating X amount of revenue for you. So, that’s one.
As far as the fundraising goes, so one goal that we wanted to always achieve is that being profitable on each and every location, we are, and we have raised…other than equity, we have raised debt also. We are using debt for the use of working capital to expand to different locations which is working out really well for us. We have a great payback period of less than 18 months, so whatever investment we do, it comes back within 18 months, and then we can, like, deploy that funds to fund a new location.
So, expansion is something which is happening irrespective of whether we raised more equity funds or not. But, yeah, as we progress our journey or as we see our business growing on day-to-day basis, we have a great growth rate currently. And as much as there is a huge demand of such spaces, I believe this market is really huge and has a long way to cater to different segments. So we are looking at working professional, there are students, there are nomads, there are business travellers. So there are a lot of people who actually their family is scared, so all these people need some real kind of spaces at some point of time and that industry is evolving.
So, yeah, eventually we do have plans. There are investors who have already shown interest, and we can say that if we have the really right set of investor with whom you would really wanna work, it’s a futuristic approach, it’s a long-term gain. Someone who is being very impatient about becoming a product viral like TikTok maybe in a couple of years and taking your money back is not gonna work out in this particular space. So we are looking for people who are more futuristic, who see consistent revenue or positive cash flow as a great thing to happen in this particular space, and with that approach, maybe you would be looking forward to raising more funds in the coming six or eight months.
Meb: Tell me a little bit about what you think some of the biggest challenges are. And you can also feel free to look backwards on this and tell me if there’s been any particular memorable challenges. I mean, I imagine as somewhat of a landlord that you could probably tell stories for the rest of the night. Anything come to mind as to any of the particular struggles or challenges of either the past or looking into the future, too?
Sanchal: Yeah. I mean, it took us a bit of time to realize that finance is the most critical aspect of running this business. So, probably we were more frenzied about or maybe overexcited about how the start of ecosystem is, people who are raising billions and billions of dollars. And also that was a very different approach and I think we could have the more robust solution at a very earlier stage than we started off. We could have been more proactive towards our financial approach of accounting, which we are doing right now, but I wish I could go back and change. Maybe we would have scaled faster or maybe we would have been probably doing more than a couple of times the revenue that we are doing today. That’s one that comes on top of my mind. And, yeah, I mean, as I mentioned, like, we went to YC quite later than we could’ve done, probably when…I mean, I could have done that on the day one and we would have had a better start. We would not have, like, to reinvent the wheel at our very initial stages of expansion. So, yeah, those things.
House owners and tenants, I mean, you know, a lot of people have been really good friends of mine. One of my house owner has been my angel investor as well, so, yeah, I mean, that was a great validation for me. He used to run a very huge insurance company and he owned a couple of properties. We were a bunch of kids and we were managing this entire team. He liked the idea, he trusted us with his million-dollar property, that’s one, and we did a great job over there and then he ended up investing in us.
So, yeah, I mean, those are good memories. Bad ones were few where we could have had better control on financials, maybe. And, yeah, there are a lot of security-based features that we built eventually that could’ve helped a lot of people, a lot of [inaudible 00:35:19], probably, at the very early stage of being our customers. And, yeah, I mean, every day, I feel that, you know, we can do so much more. Probably when we’ll be having this conversation three years from now, I would have told you that, “Hey, why didn’t I realize this today on our first call,” and I would have been doing it on the other day. So, there are so many things.
Meb: I’ll set a calendar reminder for 2023 and you can come back on. You guys have gone and acquired a few companies. What is the state of competitors in India right now? Is it more like old-school sort of just very kinda companies that have been around forever that are managing properties? I mean, are there a fair amount of digital sort of first competitors? What’s the landscape look like at 2020?
Sanchal: So, usually, most of the supplies…on the supplies side, we compete mostly with the landowners who lack technology who don’t have in-house design team to take care of standardization that we do, so that makes our job easier. The market is very huge. If we talk about the real competitors over here is that entire offline market that exists and they lack technology, and that’s the main reason that’s keeping us ahead of our acquisition, that’s keeping us ahead of our gameplay in this particular industry.
We acquired Fella Homes, one of our competitors. They were great guys, I love those founders. In fact, one of those founders was the person who actually forwarded me the YC application link, so we all [inaudible 00:36:54] to this guy. They had applied, they got rejected, and, somehow, we got accepted when we applied, so that was a great thing that happened. And it was a very strategical move to acquire these companies. One was basically to expand our lease to more number of customers in a very short period of time because our unit economics were much more stronger than what they were doing at that point of time. And then we were ready to expand. We would have any event [SP] ended up expanding the supply and hiring more people into our team and moving to new cities and new locations, and that helped us to achieve at a much faster rate. They were a great set of investors who were working with the company that we acquired which eventually became our investors. So that’s, again, one great value addition that happened through that particular transaction.
More of a lot of the companies [inaudible 00:37:50] about coliving OYO is again. So, OYO is, again, into a lot of thing. They’re into coworking as well, they’re into hotels, primarily, and they are trying to do coliving as well. So we see that as a long-term competition maybe in this particular space because if you actually compare the kind of supply I’m talking about, that’s huge. There are more than 60 million working professionals who are migrants who are staying away from their homes, and all these people need affordable, standardized lifestyle format for themself.
So it’s a huge market in itself and anyone who’s really smart to build that technology and scale faster is going to do well. They can all make money, they can all co-exist into this particular space. It’s not winner-takes-it-all kind of a model, and, eventually, when the time is right, there might be some consolidation that might happen, and we want to be in the right side of that. So, yeah, I mean, that’s something which is there. There are a lot of new companies.
I believe that building a very strong, robust technology product and having the right unit economics, that’s very important. We have seen [inaudible 00:39:06] going very aggressive of what we were, so that’s a very sentimental thing towards anything that starts with [inaudible 00:39:14] and whether it’s a money-making business or it’s a money-losing business. And these questions are something which will find their answers in the coming time and everyone has to be really, really disciplined towards their business model and their unit economics, yeah.
Meb: We work always a cautionary example of the 20 things not to be doing as a company. So, Sanchal, you’re on the ground in India. I’ve actually never been, very high on my to-do list, so when I’m heading over there, I’ll download the app and you can set me up. Talk to me a little bit about the differences of just simply the scale and the kind of boots-on-the-ground overview of India and where it stands as a country in relation to what you guys are doing.
Sanchal: Correct. So, I believe, today, India is a great geography to look at. We have already seen big companies like Amazon, or Walmart, or PayPal. All these companies, they have made huge amount of investment. IKEA, they have made huge amount of investments in this existing ecosystem. And all these companies, WhatsApp, TikTok, if you talk about all these companies, they have…even [inaudible 00:40:30] they have, like, one of the highest revenue centres based out of India, and that’s happening for a couple of reasons.
One is like more and more population in India is getting access to internet. So, so far, this industry has been there existing just as a number that is shown in GDP. But, right now, given the size of the population, the demand that exists today and this population is now becoming digital in nature, so every industry has a great potential to expand and to cater that demand as fast as possible. So I’ve met a lot of investors based out of U.S. because we are a U.S. based company essentially, and being a YC company, we have pretty much good access to a lot of investors based out of Valley. So, I’d say that there are a lot of firms [SP] who are already global who have either shown interest to invest in India.
And I believe that a lot of people are catching up and a lot of people need to catch up fast because that’s where a lot of population is getting exposed towards the digital transformation that is happening. A lot of people are signing up for Amazon, Netflix, WhatsApp. Their customers are still growing today. And digital wallet finance system, fintech companies, there are so many fintech companies. There are so many MSMEs, medium and small-sized businesses, which are becoming online which are doing business on so many e-commerce platforms like that of Flipkart which is owned by Walmart or Amazon. So, I see it’s a huge opportunity and everyone should have a great amount of exposure, and probably entrepreneurs like us have that ownership to provide the right dataset for them to take the right investment decisions on basis of respective [inaudible 00:42:29]
Meb: And what’s the status of…you went to pretty classic universities in India. Is the entrepreneur sort of mindset…or a lot of your friends go the more traditional engineering route? Is entrepreneurship, in general, something that’s really taking hold as far as ecosystem over there? What’s the kinda general sort of feeling?
Sanchal: So how I see it is that people see Stanford, Massachusetts, and Yale probably as a validation that you probably have faced a lot of competition, you have probably worked hard to get there. So, irrespective of what you have learned, you know how to struggle and to be standing one of those toppers among the crowd, so that’s a great validation.
So, similarly, in India, if you talk about that, IITs, and NSITs, and IMUs are the validation that you have probably penetrated a huge crowd to become one on that crowd. So, essentially, you end up either learning about engineering, or becoming a coder, or it’s about becoming a management studies student. What makes you different from all the people in the crowd is that you know how to stand differently, you know the struggle. So, probably the chances of you becoming successful, a lot of people put bets on those people is because you have seen that competition and you’ll stand ahead of the crowd. So I see that’s why people, those who are from these colleges, they definitely have an edge.
But, yeah, that’s true for a certain period of time. Paytm, one of India’s financial…you know, fintech solution or payment provider, they are now a lot of things, actually. But the founder of that, Vijar Shekhar Sharma, he’s not from any of those IITs. So he has shown his perseverance across the journey of his life running a company for more than 10, 12 years before it became that successful, that famous. Alibaba invested into it, SoftBank invested into it. So, yeah, I mean, there are exceptions, but even in YC, more than 60% founders are from IIT, so people play their bats that way.
Meb: Sanchal, if people wanna follow you, what you’re up to, what’s going on with you company, if they wanna start to rent some of your properties when they’re in India, what’s the best ways to find you? What’s the best place to keep up with what you’re up to?
Sanchal: So, we are at www.ziffyhomes.com. At Twitter, it’s @veryZiffyHomes. You can reach out to me on Twitter, that’s @sanchalr. Anything that runs through our website, the entire team is very excited to speak to people, those who pass through or those who put on their requests or they wanna show around any of the properties. And, more importantly, for you, Meb, like if you are coming to India, just if you need to, you know how to reach out to me, just give me a call, shoot me an email. And for especially those who wanna have a trip planned to India, we’d love to provide them our hospitality and have a great experience in incredible India as well.
Meb: Awesome. Sanchal, thanks for joining us today and best of luck to you in your company’s endeavours in the 2020s.
Sanchal: Yeah. Thanks a lot, Meb. I really had fun and enjoyed having this conversation, and we so much look forward to 2020 being another great year for us.
Meb: Listeners, we’ll add show notes to Sanchal and his company, everything we talked about today at mebfaber.com/podcast. You can shoot us questions, thoughts, suggestions, criticisms, at email@example.com. Love to read the reviews. Leave us one. We promise we read them all. Subscribe to the show, iTunes, Breaker, anywhere good podcasts are found. Thanks for listening, friends, and good investing.